What Do the Scripps National Spelling Bee and the Pursuit of Alpha Have in Common

Highly skilled players, fierce competition, and split spoils.

Ben Johnson 13.06.2019
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Reading coverage of this year's Scripps National Spelling Bee in the U.S., I was struck by how neatly the evolution of this Super Bowl of spelling seems to align with the concepts put forth by Michael Mauboussin and co-author Dan Callahan in "Alpha and the Paradox of Skill."[1] In this paper, the authors state that:

In many competitive interactions it is the relative level of skill that matters, not the absolute level of skill. In many fields, including investing, the dispersion of skill is shrinking, which leaves more to luck.

They go on to frame this concept using a familiar example from the world of sports:

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

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Ben Johnson  Ben Johnson, CFA is the Director of Passive Fund Research with Morningstar.

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