It was the exam question we all dreaded. Back in the mid-1990s, when I was an undergraduate at the London School of Economics, lecturers used to enjoy torturing students by posing a simple yet (to us) devastating question.

It went something like this. Given that modern economics states that it is virtually impossible to beat the markets for any extended period of time, how come Warren Buffett keeps on doing so, year after year? Does this mean finance theory is bunkum – or does it mean that Buffett cannot possibly exist, that he must instead be a figment of the media’s febrile imagination?

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