The key question is how you determine the difference between skill and luck. Is that difference statistically significant and is their a different set of inputs that lead to this output?
For instance, Taleb's example of fund managers that beat the market for five years in a row. You start with a cohort of 10,000 and a 50% chance of beating the market each year. There will be a group of 300 or so fund managers that consistently beat the market 5 years in a row. This does not differentiate the lucky from the skillful. 1) Analyzing other cohorts that had higher success rates and 2) their investment strategies and decisions would be necessary to make the determination.
Well, a broken clock is right twice a day. Someone who always calls for a market correction will eventually be right. The real question is how will the investment strategy fair over decades or longer.
We may have different takeaways from the book. My takeaway was that one should invest in becoming skilled (learn strategies that work in the long run) rather than seeking or worshiping those who may just be lucky.
For instance, Taleb's example of fund managers that beat the market for five years in a row. You start with a cohort of 10,000 and a 50% chance of beating the market each year. There will be a group of 300 or so fund managers that consistently beat the market 5 years in a row. This does not differentiate the lucky from the skillful. 1) Analyzing other cohorts that had higher success rates and 2) their investment strategies and decisions would be necessary to make the determination.
Well, a broken clock is right twice a day. Someone who always calls for a market correction will eventually be right. The real question is how will the investment strategy fair over decades or longer.
We may have different takeaways from the book. My takeaway was that one should invest in becoming skilled (learn strategies that work in the long run) rather than seeking or worshiping those who may just be lucky.