I was asked this question during a job interview I had some six years ago with a St. Louis-based brokerage firm. I bombed it. And it has haunted me ever since. How could I fail to articulate a coherent response to such a simple question? Well, it’s complicated, so allow me to explain.

First of all, if the success of Warren Buffett were easily understood and replicable, clearly there would be many more wildly successful investors in the world, but of course there are not. While I concede that this observation comes dangerously close to efficient market theorist’s six-sigma explanation of Mr. Buffett’s success – that with so many coin-flipping investors you are bound to have an outlier like Buffett simply by chance – I do not think it is a null hypothesis that can easily be rejected. The truth is there are very few investors even in the same ballpark as Buffett. But why? Is it just chance?

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