In episode 626, someone suggested that success in investing is just luck? 

Cameron: Somebody on TikTok was trying to convince me that success and investing is all about luck. How would you respond to that, Tony?

Tony: Well, do you think it’s luck the stock market’s gone up on an average of 10% a year for the last hundred years or more? It’s hardly luck, is it?

Cameron: No. But what about your success in investing? Is that luck?

Tony: There’s an outside chance it is, but no, it’s distilling, you know, things I’ve learned over the years and applying them and refining them and cutting out things that don’t work. That’s the scientific method. It’s not luck.

Cameron: My reply was, if it was one person that applied the value investing principles and was successful with it over the long term, then maybe you could say it was luck. If it was two people, perhaps. But when there’s lots and lots of people, you know, Buffett and Munger and all of the people that they’ve brought up around them, you’ve learned from them and others, and people have learned from you. Our dummy portfolio is still performing 2.3 times the STW. When you see lots and lots of people, person after person after person, applying the same basic principles and getting similar results, I think it’s hard to put it down to luck.

Tony: My favourite Buffett writing is an article he penned called “The Superinvestors of Graham-and-Doddsville.” And this is back in, I think, the 80s/90s maybe, when a guy called Eugene Fama was all the rage saying the market was efficient, and you weren’t able to ever reap long term returns or beat the index because as soon as you had an edge, it would be built into the share price and everyone would jump on it, blah, blah, blah. And Buffett turned around and said, hey, wait a minute. How come I’ve done all this for the last twenty or thirty years and I know fifteen or twenty other people I grew up with, I went to Columbia University with, and they’re all doing the same thing, and we’re all beating the market? So he wrote a paper called ” called “The Superinvestors of Graham-and-Doddsville”, which spoke, not just about himself, but about other fund managers he knew that had put Ben Graham’s work into practice, and were beating the market consistently. So, no, it’s not luck.