Speculation: No ordinary gamble

There are few industries where a success rate of six out of ten is considered a glorious achievement. Pilots or doctors with such a strike rate would be deemed criminal, and yet the best fund managers routinely boast of being right just 60% of the time. That means that about 40% of all investment decisions end up costing money. And that’s if you’re very good. For most investors, the strike rate is lower. If nothing else, investing is a humbling enterprise. For those pursuing speculative stocks, it is more humbling still. Deciding to invest in a speculative situation is...

There are few industries where a success rate of six out of ten is considered a glorious achievement. Pilots or doctors with such a strike rate would be deemed criminal, and yet the best fund managers routinely boast of being right just 60% of the time. That means that about 40% of all investment decisions end up costing money. And that’s if you’re very good. For most investors, the strike rate is lower. If nothing else, investing is a humbling enterprise.

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