ETF Specialist

What Do the Scripps National Spelling Bee and the Pursuit of Alpha Have in Common?

Ben Johnson, CFA

Reading coverage of this year's Scripps National Spelling Bee, I was struck by how neatly the evolution of this Super Bowl of spelling seems to align with the concepts put forth by Michael Mauboussin and co-author Dan Callahan in "Alpha and the Paradox of Skill."[1] In this paper, the authors state that:

In many competitive interactions it is the relative level of skill that matters, not the absolute level of skill. In many fields, including investing, the dispersion of skill is shrinking, which leaves more to luck.