A recent article in the Financial Times cites the example of Neil Woodford, once a darling of the investment community, whose recent years of underperformance represents a cautionary tale regarding the respective roles of luck and skill in the investing world.

Woodford’s story is not unique, the article notes, and while successful people can begin performing poorly due to overconfidence or laziness, variances in investing performance often occur when “good ideas don’t work forever because the competition catches on.”

Regarding the issue of luck, the article cites Michael Blastland’s recent bookThe Hidden Half that argues how “much of the variation we see in the world around us is essentially mysterious.” But humans pay particular attention when “genius” performance is followed by mediocrity. “Mediocrity followed by genius just looks like genius—assuming the mediocre performer gets a second chance. Not all do.”

While skill does matter, the article concludes that “in a competition in which all the leaders are highly skilled, randomness may explain the difference between triumph and failure. Good luck plus skill beats bad luck plus skill any time.”