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Comment by onion2k | Hacker News Reader

That only works if you believe the skills needed to choose a fund manager are the same skills needed to choose stocks. That's seems unlikely.

If I've consistently picked terrible stocks for years, performing at 20% less than the market, and then I meet a fund manager who has has consistently performed at 20% above the market, are you suggesting I can't know whether or not he's better than me?

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Indeed. Past performance is a terrible indicator for future performance, especially for fund managers. A Morningstar study found that there is no correlation between historical performance and future performance, i.e. the top 25% of funds in one year was spread evenly across the spectrum in future years.

This was after adjusting for survivorship bias.

So, you cannot look at performance as an indicator.

For the past few years, yes you can. For the next few...?

Surely you have an idea why you picked stocks that seemed good ideas but were not. What was the missing piece of information you did not have or the missing model you were not using?

Survivorship bias may hint at you not being able to.

Whether stock picking is luck based or not, there are (almost) no fund managers currently working who performed 20% under the market over the last 5 years.

Indeed - it's like saying if you can't identify good football players, you shouldn't go about choosing good coaches / managers.

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