Tuesday, March 4, 2014

Skill vs. Luck

"[T]he aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through 20 years of wide-ranging operations . . . involving much investigation, endless pondering, and countless individual decisions.  
Are there morals to this story of value to the intelligent investor?  An obvious one is that there are several different ways to make and keep money in Wall Street.  Another not so obvious, is that one lucky break, or one supremely shrewd decision - can we tell then apart? - may count for more than a lifetime of journeyman efforts.  But behind the luck or the crucial decision, there must usually exist a background of preparation and disciplined capacity.  One needs to be sufficiently established and recognized so that these opportunities will knock at his particular door."
From The Intelligent Investor by Benjamin Graham.

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