Note: This article is courtesy of Iris.xyz
By Alliance Bernstein
In a fiercely competitive world, active managers are constantly looking for ways to advance their performance edge. One good place to focus on is how to become better forecasters.
If just looking at averages, the active management industry has a spotty record. But some active investors manage to beat the market consistently, suggesting that they possess some degree of skill. If you can identify them or become one of them, the payoff is large. The question is, what separates skilled investors from unskilled ones?
Many people will answer that question by pointing to credentials or other markers: the manager seems especially smart, acts more authoritatively than others, shows more conviction or appears on TV more frequently.
The problem is that none of these factors is necessarily correlated with increased predictive capabilities. In fact, some of them have a mildly negative relationship to it. In a world engulfed in random noise, performance itself is a fairly unreliable measure of skill in the short run.
So what, then, are the traits common to the most skillful investors?
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