Advanced Investing

Past Winners Rarely Repeat

The Role (Roll?) of Chance

An S&P Global study of over 2,400 American investor returns over a three-year period from 2015 to 2018 suggests that less than a third of fund managers were able to beat their benchmarks. It appears that luck, rather than skill, drove those results. More interestingly, even those who initially delivered rock star returns couldn’t deliver the goods in subsequent years.

The takeaway? Good performance over a three-year period has almost no predictable ability. History may repeat itself in many parts of human life, but in finance is seems less easy to pin down. Perhaps board games are a safer place to take chances.

Source 1.“S&P Fund Manager Study Shows Luck a Big Factor in Outperformance." Bloomberg, 3/5/19
Source 2.

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