Stock Market · True or False
Is it true that high returns are proof of high skill?
False. Short-term luck can resemble skill in rising markets.
Short-term returns can be entirely driven by luck and market conditions — confusing luck with skill leads to overconfidence and eventually to overexposure.
Increasing risk after a streak of good returns, attributing them to skill when they may reflect favorable market conditions that are about to change.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- False
- Track
- Stock Market
- Topics
- behavioral-finance, performance
Also asked as
Do high investment returns prove high skill? Can luck explain short-term investing success? Why strong returns do not always mean good investing?
The scenario in full
High returns are proof of high skill.
Frequently asked questions
Is it true that high returns are proof of high skill?
False. Short-term luck can resemble skill in rising markets.
Do high investment returns prove high skill?
False. Short-term luck can resemble skill in rising markets. Short-term returns can be entirely driven by luck and market conditions — confusing luck with skill leads to overconfidence and eventually to overexposure.
Can luck explain short-term investing success?
False. Short-term luck can resemble skill in rising markets. Short-term returns can be entirely driven by luck and market conditions — confusing luck with skill leads to overconfidence and eventually to overexposure.
Why strong returns do not always mean good investing?
False. Short-term luck can resemble skill in rising markets. Short-term returns can be entirely driven by luck and market conditions — confusing luck with skill leads to overconfidence and eventually to overexposure.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.