Weekend Reads for Advisers: Love and Math, Luck versus Skill

Categories: Behavioral Finance, Private Wealth Management
Weekend Reads

Here, in case you missed them,  are some of the most interesting blog posts, articles, videos, and photographs that I came across during the past couple of weeks:

 Math

Luck versus Skill

  • Bob Seawright (@rpseawright) recently wrote about luck and skill in investing, arguing that we tend to underestimate luck’s role pretty dramatically. He opened with the story of the 2006 TradingMarkets/Playboy 2006 Stock Picking Contest that was won by Playboy’s Miss May 1998. “She won out over many professionals with lots of experience and vast resources who spent pretty much all day, every day studying the markets,” he says. “That result provided still further evidence for what we should already know – market success (however defined), especially over the relatively short run, is more a matter of luck than of skill.” So when the Wall Street Journal‘s Jason Zweig (@jasonzweigwsj) tweeted about the blog post, asking: “when you beat the market, was it luck or skill?,” it didn’t take longer for someone to chime in with “how many years in a row would make it skill?” For Seawright’s answer, read The Wyatt Earp Effect (The Big Picture).
  • In We Owe the Beatles to Luck, Cass Sunstein asks: “Are some people destined for success, or is the whole idea of destiny a myth, a comforting tale that we tell ourselves? When artists or political leaders become household names, are they just lucky? You might think that the Beatles, probably the most successful popular musicians in the last 50 years, were bound to succeed. But an astonishing new book, Tune In, by Mark Lewisohn, suggests otherwise. (Bloomberg)

https://twitter.com/laurenfosternyc/status/401312472357150720

Investing

https://twitter.com/laurenfosternyc/status/401421535111815168

https://twitter.com/laurenfosternyc/status/402912959149522944

Retirement

And Now For Something Completely Different

  • One of my favorite photo projects: Big Appetites (Boffoli Photography)

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/JLGutierrez

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