Accounts Quote by Eugene Fama
“After taking risk into account, do more managers than you’d see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding 'no.'”
About This Quote
Persistence alone rarely yields superior performance; most managers' success is due to random variation rather than skill.
In simple terms: Skill vs. luck in investment outcomes.
Key Takeaway
Persistence rarely beats chance.
Themes
behavioral finance
efficiency market hypothesis
managerial performance
risk assessment
statistical significance
Mood
skeptical
analytical
Type
analytical
advisory
When to use this quote
- evaluating fund manager track records
- designing performance benchmarks
- allocating capital to managers
- regulatory oversight of investment claims
Key Concepts
randomness
skill measurement
investment persistence
economic research
Practical Applications
- risk-adjusted performance analysis
- portfolio construction
Questions to Reflect On
- How can investors differentiate true skill from luck?
- What metrics better capture manager persistence?
