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Today’s gem is this chart displaying 2 scenarios of 20-yr investment performance:
- starting in 1960 and beating the market by 5%
- starting in 1980 and underperforming the market by 5%.
It’s the old “luck vs skill” debate. Uncomfortable truth, but luck plays a major role in investment success. Being in the right place at the right time can make or break a career. This is probably why we know so many legendary investors that got their start in the 80s/90s and virtually none that got their start in the 60s/70s.
The lesson here is: Market outcomes are out of your control. Focus on your process and maintaining the longevity to see many markets. And never let investment success get to your head ;).
I took this chart from this blog post (fantastic read!).