Down to luck: why today’s hedge funds can’t rely on just skill

Have hedge funds got so good at investing that luck now dominates the field?


A long time ago, a college professor explained just how hard it is to discern skill from luck with an example I'll never forget. Imagine you get a letter saying AT&T will go up next week and it does. The week after, you get another letter saying Microsoft will drop, and sure enough, that's what happens. After receiving five such letters from an anonymous stock picker, would you consider investing with that person? How many times does the person have to get specific stock movements right to

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