Jim Simmons vs Warren Buffett: Who is a better investor according to Kahneman

Elaborating on Buffett's huge influence on the market, the late economist said, "He (Buffett) buys companies and when he buys them and invests in them, he affects the market. So, Buffett is in the fortunate position that when he makes decisions, the mere fact that he made them has a tendency to make them correct."

Luck played a role in the legendary investor Warren Buffett's stock-market success, said the late Daniel Kahneman in an interaction with Moneycontrol in 2023.

Kahneman said that he would be more confident about the stock-market performance of a quantitative hedge-fund investor such as Jim Simmons than Buffett.

The noted economist, psychologist and Nobel Laureate Kahneman died on March 27.

In the interview given to Moneycontrol, Kahneman said that he didn't know the individuals, but luck played a huge role in Buffett's success.

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"But beyond a certain point, Buffett doesn't operate in the stock market," said Kahneman.

Elaborating on Buffett's huge influence on the market, the late economist said, "He (Buffett) buys companies and when he buys them and invests in them, he affects the market. So, Buffett is in the fortunate position that when he makes decisions, the mere fact that he made them has a tendency to make them correct."

Given this, Kahneman said that he would feel more confident in the performance of a quantitative hedge fund (such as Simmons) than in Buffett's performance. That if he were to bet for next year, he would say the quantitative was more likely to be successful.

"But," he added, "Buffett has been very successful and he's clearly a very good judge of management and a good judge of prospects of different ideas."

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There was no denying that Buffett is an outlier in the investment world, so does Kahneman think that luck had a big role to play in the Oracle of Omaha's ascent?

To this, the author of Thinking, Fast and Slow and a psychologist who studied decision-making in uncertain environments said, "There is no question that there is a large component of luck."

He added, "When you are operating in a very uncertain environment, consistent success means certainly having an element of luck. There is an element of skill, but you need both. And when you look retrospectively, it all looks like skill, but you should know that more luck was involved than you are inclined to think. Generally, we don't give enough weight to luck."