A day at the races: Delving into the balance between luck and skill

‘If a fund manager is successful…are they simply lucky with their calls?’

clock • 4 min read

Sometimes it is easy to distinguish luck from skill, David Jones write. Other times, maybe it’s not so straightforward.

Let's try a simple thought experiment designed to calibrate our appreciation of the problem. Let's say someone calls 20 coin tosses in a row correctly; is that luck or skill? I think we would all agree it was luck. However, if a champion darts player hits 180, we would probably say it was attributable to their skill and countless hours of practice. Winning at the roulette table? Luck. A professional player winning at poker? Skill, and some luck. Me hitting a hole-in-one in my first, and only, game of golf? Pure fluke—as evidenced by the rest of my scorecard. Tiger Woods getting a hole-in-on...

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