Inside Active by Bloomberg Intelligence Michael Ervolini on Separating Skill From Luck
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Aug 5, 2026 Michael Ervolini, author of Skill Versus Luck and analyst of decision-based portfolio analytics, explains why outcome metrics mislead. He discusses focusing on buys, sells and sizing to separate repeatable judgment from chance. Conversation touches on behavioral bias, counterfactual portfolios, AI’s role, and how better decision analytics could reshape manager selection.
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Decision Analytics Reveal True Manager Skill
- Decision-based analytics reveal what managers actually do, not just their outcomes.
- Michael Ervolini argues combining decision analytics with outcomes gives confidence about which skills are persistent and likely to repeat.
Skill And Luck Are A Continuum
- Skill and luck lie on a continuum where better skill reduces reliance on luck.
- Ervolini says conventional outcome analytics force allocators to 'guess' and over-interpret results, causing misidentification of skill.
Automatic Decisions Mask True Judgment
- Humans make most decisions unconsciously, so outcome-focused review fuels overinterpretation.
- Ervolini recommends pairing outcome analytics with decision metrics to overcome automatic biases in allocator judgment.
