Buffett himself responded to this point 25 years ago. Read: The Superinvestors of Graham-and-Doddsville

As an anonymous reader states “Buffet does not have a direct hand in the management of his wholly owned companies”

So you would have to rule the first one out. Prestige yes he gets the deals because e is on everyones radar, but what about in his early years 1956-69 when he ran his partnership fund? He whipped the market then. Luck? maybe that he is Warren Buffett.

I don’t think its random or coincidence that most investors that studied/worked under Buffett’s mentor Ben Graham have outperformed the markets over long periods of time.

I mentioned before that all publically available information must be subjectively interpretted and therefore can’t be consistently rational. From the above example I would like to add that publically available information could well be ignored until they re-surface later in more obvious forms, creating an inefficient market.

Lots of lotto players have a “system” for picking numbers. Those people win the lotto just as often as those people who guess, so you could say that luck is responsible for winning the lotto.

I agree that the existence of Warren Buffet does not disprove efficient market hypothesis. Buffet himself has agreed that securities’ market performance does reflect the available information IN THE LONG TERM. Buffet and other long-term value investors call this reversion to the mean. In a nutshell, it means day-to-day fluctuations cannot be predicted with any certainty, but long-term performance can be predicted using available factual data.

Thanks for reading my rant, which has no citations and is based completely on my opinions

What proponents of traditional theories often do not consider is that no matter what publicly available information are there, all of those information must be subjectively interpretted. It is not realistic to claim that the subjective interpretation of the market participants will always or almost always confirm rationally with the underlying fundemental, thus creating an efficient market.

Oh the other hand, managers of billion dollar funds have a much tougher job. They can not possibly take advantage of small flunctuations because the sheer size of their fund could in fact move the price and destroy the potential gain in those flunctuations. They can’t go into and out of positions in a matter of minutes like amateaurs. For them , it would take months. Furthermore for mutual fund managers, they are restricted to investing a maximum 5% to each stock. As a result they may be forced to invest in less ideal stocks. Managers of large funds carry systematic risks that makes it hard for them to even meet the market average.

Since beating the market also is determined by how much money is managed and the consequent systematic risk, I really do not understand why people make generalized assertion about the unlikelihood of beating the market average.

Also we need to define what profiting by pure luck means. Profiting by pure luck means all of the participants were doing the exact same thing, and a few of them emerges with superior return. Buying the lottery is an example of pure luck because every single person chooses the numbers at random but someone is gonna win that multimillion jackpot.
In the case of Warren Buffett, it is obvious that his approach isn’t the same as the majority of the participants. The evidence? Perhaps you could read his letters to shareholder, and compare that to common people’s approach to the market.

I agree with you that markets are “generally” efficient, but more so to do with how quickly information is dispersed.
Markets can still do silly things from time to time.
Markets are people, and people never change.
Greed and fear.