Ten Attributes of Great Investors By Michael Mauboussin

Michael Mauboussin and Credit Suisse have put out a piece entitled "Reflections on the Ten Attributes of Great Investors."  It's basically a clinic on being an investor, it's fantastic.

There are so many quotable passages that you really should just read the whole document.  Each underlying attribute has multiple paragraphs of rationale behind it.  But here's a quick summary:

Mauboussin's 10 Attributes of Great Investors

1.  Be numerate (and understand accounting).

2.  Understand value (the present value of free cash flow).

3.  Properly assess strategy (or how a business makes money).

4.  Compare effectively (expectations versus fundamentals).

5.  Think probabilistically (there are few sure things).

6.  Update your views effectively (beliefs are hypotheses to be tested, not treasures to be protected).

7.  Beware of behavioral biases (minimizing constraints to good thinking).

8.  Know the difference between information and influence.

9.  Position sizing (maximizing the payoff from edge).

10.  Read (and keep an open mind).     


Embedded below is Mauboussin's 10 Attributes of Great Investors:





Mauboussin is an excellent resource for investors looking to refine their approach and process.  We highly recommend his books such as, The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing as well as Think Twice: Harnessing the Power of Countertuition.

Michael Mauboussin on Skill Versus Luck and Developing an Investment Process

Michael Mauboussin, head of global financial strategies at Credit Suisse, sat down with Motley Fool earlier this year to talk about investing.

In it, he touches on skill versus luck and notes how investors need to have a process.  He says this is comprised of 3 things:

1.  An analytical component (financial statement analysis, etc)
2.  A behavioral component (patterns of mistakes and learning from them)
3.  An organizational component (what's going on in your environment that allows you to be more successful)
 
He admits that evaluating your process is a difficult thing to do, but recommends utilizing an investing journal.  Mauboussin says doing this can fight hindsight bias and creeping determinism.

He touches on numerous other topics and embedded below is the full interview with Mauboussin:



For more from Mauboussin, be sure to read his books, The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing as well as Think Twice: Harnessing the Power of Counterintuition.

Credit Suisse Monthly Hedge Fund Commentary

Continuing document dissemination day here at Market Folly, we wanted to present you with Credit Suisse's monthly hedge fund commentary. Though the report is from February, it still does an excellent job of framing how hedge funds have positioned themselves from the year and where their gains or losses have been coming from. Additionally, you'll get a look at Credit Suisse's Tremont hedge fund index and its performance. This research joins the commentary we posted up yesterday where we saw hedgies were re-shorting the euro and buying equities.

In the report, they present findings relating to various fund strategies and we just wanted to quickly touch on some highlights. One of the interesting things we took away from their research was their data on managed futures funds. They note that from the period of 2007 to 2009, managed futures correlation to equities dropped. As such, these funds saw positive performance in the crisis but negative performance during the great equities rally in 2009.

Turning to event driven funds, they found that many managers in this arena felt that 2010 would be much more conducive to deal-making and as such would provide them with ample portfolio opportunity. Dan Loeb of hedge fund Third Point LLC certainly agrees with this and made special note of event driven opportunities in his recent investor letter. In regards to global macro funds, Credit Suisse actually found that many funds held fewer strategic positions as there was a range of uncertainty surrounding governments and central banks toward the beginning of the year. We've covered the thoughts of a few global macro funds on the site including Prologue Capital's recent commentary and some past thoughts from Woodbine Capital where they thought that the most important macro issue was global rebalancing.

Overall, the report is an interesting glimpse at how various fund strategies have been positioned in the first quarter of the year. Embedded below is monthly research from Credit Suisse and their Tremont hedge fund index:



You can directly download a .pdf here.

For more hedge fund research that we've covered, check out Bank of America Merrill Lynch's recent hedge fund trend report as well as Goldman Sachs' list of most important stocks for hedge funds.

Event Driven Is Most Sought After Hedge Fund Strategy (Monthly Industry Report)

Below you will find Credit Suisse's latest monthly report on the hedge fund industry. This report is a bit different than other documents we post here at Market Folly because it is more-so focused on the industry in general as it details sections on the investor's perspective, risk management, and various marketing strategies hedge funds are using. This report is unique in that it also has an operational look at things and should be useful for those in the alternative investment space.

An interesting fact: event-driven is now the most sought after hedge fund strategy by investors, displacing global macro. In terms of long/short funds, Credit Suisse found that for every $100 of equity, various l/s hedgies have long exposure of $125 and short exposure of $87. This falls in line with what we've seen previously regarding hedge fund exposure levels.

Embedded below is Credit Suisse's monthly hedge fund industry report:



You can directly download the .pdf here.

For more great research on the hedge fund industry, we highly recommend checking out Goldman Sachs' look at the top hedge fund long & short positions. Additionally, head to our post on how hedgies have their shortest position ever against the euro.