Has your investment success so far has been based on luck?
If it is you are unlikely to be successful over the long term as at some point your luck will run out, most likely when the bull market ends.
But how do you know if you have been lucky or if your investment success is based on skill?
It’s easy to confuse the two. And I am sure you have never met an investor that has said his success is only based on luck.
So how do you determine if you are a skilled investor?
Knowing the difference is especially important if you invest in funds. You want to determine, preferably before you invest, if your fund manager’s track record is based on luck or if she is really a skilled investor.
I have read and thought about how to tell skill and luck apart a lot.
Not because I wanted to apply it on someone else. I wanted to know if I have so far just been lucky or if I have some skill as an investor. For if I have just been lucky I want to give my money to someone skilful as soon as possible before I lose everything.
The best writing on the subject I could find is an article by someone I admire and have followed since at least 2004.