The problem is, even such performance shows no skill at all. It only provides the illusion of wise actions. University of Chicago economist Eugene Fama demonstrated decades ago that it is impossible to beat the market. The unpredictability of individual stocks is inevitable and therefore trying to pick individual stocks is futile.
Baron and Hershey asked people to evaluate decisions after they learned their outcome. A surgeon decides to operate using a risky procedure. Is that a wise decision? The answer should not depend on whether or not the operation succeeded, but it very much does. People evaluated the quality of the surgeon’s decision more negatively if they later learned that the patient died than if he lived. Francesca Gino, Dan Moore and Max Bazerman show that the same is true for ethics. People are just as outcome biased when they evaluate how ethical an action is.
So, when evaluating performance (of any sort), don’t argue with success. Just ignore it, and evaluate the wisdom of the decisions that preceded it. The only way to truly evaluate the wisdom of actions is therefore with the benefit of true ignorance!