Paul The Octopus
>> Monday, July 12, 2010
What is with the craze over Paul?
To make things worse, he correctly selected Spain to win the World Cup 2010!
Picking the winner is a 50-50 chance. It is either one or the other. It is not too difficult to have picked the winner of 4 out of 5 games by pure random chance. But it is still fascinating how fate plays its dice.
Similarly for investing, a fund can either out perform or under perform. It is a nearly 50-50 chance of picking the winner. Hence, it can be by pure luck that the financial adviser has selected the winning fund 4 out of 5 times.
The analogy of selecting stocks by using a dart board or through monkeys have yielded similar performance from fund managers. But the fund manager who managed to be one of the lucky few to pick all the winners acquire fame much akin to Paul. Their legendary status will last unless their "prediction" powers fail them the next time.
I wonder what they will be asking Paul to choose next?
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