Active Quote by Eugene Fama
“People would be a lot more skeptical if they understood that there is an incredible amount of chance in the results that you observe for active managers. So the distribution of outcomes is enormously wide - but that's exactly what you'd expect by chance with lots of active managers who hold imperfectly diversified portfolios. The really good portfolios contain a lot of really lucky picks, and the really bad portfolios contain a lot of really unlucky picks as well as some really bad ones.”
About This Quote
Active investment results vary widely due to chance; true skill is hard to separate from luck.
In simple terms: Investment outcomes are often random.
Key Takeaway
Focus on diversification and long‑term strategy.
Themes
risk
chance
investment
skill
Mood
analytical
skeptical
Type
advice
financial
When to use this quote
- stock selection
- fund manager evaluation
- retirement planning
- risk assessment
Key Concepts
statistical variance
portfolio theory
randomness
Questions to Reflect On
- How can investors differentiate skill from luck?
- What role does diversification play in mitigating chance?
A Different Perspective
Skill may be overstated in short‑term performance.
