Always thought that skill needed to be boosted by luck to outperform the market ...maybe more so than I thought
A stats guy has come up with this, p being probability -
p(outperform) = p(outperform|luck)*p(luck) + p(outperform|skill)*p(skill)
Which rearranges to the following.
p(skill) = [p(outperform) - p(outperform|luck)*p(luck)] / p(outperform|skill)
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