Is Warren Buffett Brilliant or Lucky?
A whole lot of both, most likely. Warren Buffett just finished the annual Berkshire Hathaway shareholders meeting, and apparently doled out his normal dose of insights. Should people care what he has to say? There is one school of thought that says that markets are sufficiently efficient that investment returns versus the market average are luck. This is saying that investors are like people who know nothing about football playing the office pool. The point spread on each game already incorporates any available information about line-ups, home-vs.-away and so on, and those playing the game in the office might as well go over versus under on any given game. Whoever wins the pool does it by just the sheer luck of somebody happening to get more lucky guesses than anybody else. By this analogy, a stock picker is equally likely to pick a basket of stocks that over-perform vs. under-perform the market in any given quarter, so over-performing or under-performing the market in any given quarte
