This is the second in a series of essays about why investing is difficult to learn.  To read the first installment, click here.

2. It is difficult to distinguish the contributions of skill vs. luck.

Imagine that you bought Google stock on December 31, 2011 at a price of $645.90.  As of mid-December, the stock is at about 720.  This is an increase of about 11.5% in a little less than a year.  Was this a good decision?  How much of the decision should be attributed to skill vs. luck? Read the rest of this entry »

The skills required for successful investing are difficult to learn.  In the next few essays, I discuss four obstacles that thwart the education process.  They are:

1. The feedback loop is extremely long.
2. It is difficult to distinguish the contributions of skill vs. luck.
3. It is difficult to maintain objectivity when making judgments about your own investing skill.
4. The process sometimes requires substantive amounts of unlearning. Read the rest of this entry »