Gulf Oil – A Lucky Gift From Boone Pickens

So much for my superior analysis!

Michael Mauboussin is the Director of Research at BlueMountain Capital Management. In the past, he served as Head of Global Financial Strategies at Credit Suisse and Chief Investment Strategist at Legg Mason Capital Management. He is also currently Chairman of the Board of Trustees of the Santa Fe Institute, a leading center for multi-disciplinary research in complex systems theory that has been a leader in studying the role of luck and skill in investing. 

In an interview with Charles Rotblut, Mauboussin gave this simple test of skill. He said, “There is actually a very interesting test to determine if there is any skill in an activity, and this is to ask if you can lose on purpose. If you can lose on purpose, then there is some sort of skill.”

Personally, I am not willing to “lose on purpose” to test my skills at stock selection or portfolio management. Instead, I will accept the fact that luck plays a part in the results. This requires us to construct and maintain portfolios that can survive a bit of bad luck and still meet the longer-term goals we all strive for. 

T. Boone Pickens left this world on September 11th at the age of 91. I never had the opportunity to thank him for adding a few dollars to the savings for our clients at the time. So Boone, here is a big THANK YOU.

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Disclosure: Anderson Griggs & Company, Inc., doing business as Anderson Griggs Investments, is a registered investment adviser.  Anderson Griggs only conducts business in states and ...

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