lizgdal,
to clarify, the article accepts bad-day fund skill is real, (and equally important, actionable, and thus initiated this thread).
but it rejects that they understand why.

klement wrote:
"shifting from underperforming funds to outperforming funds on a bad day is performance-enhancing. Funds that outperform significantly on bad days in the market are significantly more likely to outperform in the long run. The authors find “that managers with the skill to outperform on the 5% of days with the worst market returns generate about as much unconditional future outperformance as managers with the skill to outperform on the remaining 95% of days”. That is a strong finding because it essentially says that true skill reveals itself in tough markets"

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