WAS BENJAMIN GRAHAM SKILLFUL OR LUCKY?
Last weekend’s Intelligent Investor column looked at the extreme difficulties of disentangling skill from luck when you are evaluating investment performance. Graham, of course, was the founder of security analysis as a profession, Buffett’s professor and first boss. He is universally regarded as one of the best investors of the 20th century.
But Graham, who outperformed the stock market by an annual average of at least 2.5 percentage points for more than two decades, coyly admitted that much of his remarkable track record may have been due to luck.
The next time you find a fund manager boasting about how skillful he is at picking investments, remember that the great Benjamin Graham credited much of his own phenomenal success to luck alone.