New Graham & Doddsville Issue: Mauboussin, Greenwald & More

A new issue of Columbia Business School's Graham & Doddsville newsletter has been released.  It features interviews with Professor Bruce Greenwald as he retires, and Mark Cooper of First Eagle Management.  It also features a conversation with Michael Mauboussin of Blue Mountain Capital and Tom Digenan of UBS Asset Management.

Lastly, it also interviews upcoming fund launch: Rishi Renjen's ROAM Global.  Prior to launching, he worked at Maverick Capital, TPG-Axon, and Glenview Capital.

This time around, Graham & Doddsville also includes student investment pitches from the Pershing Square Challenge. 

1st place this year was a short of Stericycle (SRCL), 2nd place was a short of Credit Acceptance (CACC), and 3rd place was a short of Spotify (SPOT).  The issue also showcases pitches on short CH Robinson (CHRW), short Harvey Norman, and long Digicel credit.

Embedded below is the latest issue of Graham & Doddsville:



You can download a .pdf copy here.

And if you missed it, be sure to check out the recent past issue that includes interviews with Lee Cooperman, David Poppe, and John Harris.

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.

Mauboussin's Talk at Google: The Success Equation: Untangling Skill & Luck

This week, we're posting up the various "Talks at Google" that focus on investing.  These typically feature authors of well known investment books.  Next up is Michael Mauboussin who talked about his book The Success Equation: Untangling Skill and Luck in Business, Sports and Investing.

Mauboussin is well known for his work on the more psychological/behavioral aspects of investing.  We've previously featured his talk about developing an investment process.

His talk touches on the concepts of the roles luck and skill play in success and failure and how you can provide a framework to analyze their contributions.

Embedded below is the video of Mauboussin's talk at Google:



Be sure to check out Mauboussin's book The Success Equation as well as his past work, Think Twice: Harnessing the Power of Counterintuition.

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.

Think Twice: Harnessing the Power of Countertuition by Michael J. Mauboussin (Book Review)

Our book review series continues and today we'll be reviewing Think Twice: Harnessing the Power of Countertuition by Michael J. Mauboussin. You may be familiar with Mauboussin as he is the Chief Investment Strategist at Legg Mason Capital Management and he has also been an adjunct professor of finance at Columbia Business School. Needless to say, he's had a storied career in finance and is a credible author on the subject. However, this book is not specifically about financial markets, but rather the process of decision making. We enjoyed his work because it offers a refreshing look at a topic applicable to all of life. Don't get us wrong though, the content still definitely applies to financial markets as well.

Think Twice takes a focused look at how you can recognize and in-turn help to avoid common mental mistakes. Mauboussin outlines topics such as the misunderstanding of cause and effect linkages, how people don't consider enough alternative possibilities in making a decision, and how often people rely too much on experts. We found the over-reliance on experts bit intriguing seeing as that's what we do on an everyday basis here on the site. After all, Market Folly serves to track the 'smart money' a.k.a. hedge fund experts. Needless to say, this section definitely gave us reason to reflect. If you think about it though, it's true. People do tend to seek out experts because they perceive that expert to have more knowledge than them on a given subject and then often blindly trust their expertise. We just found that whole notion fascinating because it's true.

Mauboussin's book flows nicely and is a shorter read at just over 140 pages. Due to its brevity compared to most books, we actually cruised through it twice. Some of the main takeaways from the book are to examine as much data as possible as well as to use common sense and logic. (Insert 'well, duh!' here). Another main focus of the book is on pattern recognition. While it does not specifically cite this, we figured one can easily apply this to technical analysis and analyzing financial markets in general. People seek to identify patterns even when sometimes there are none.

In the end, Think Twice helps refine your decision making in all walks of life. However, there are definitely strong tie-ins to how investors think and make decisions regarding their investments. We read through it with the topic of finance in our head, seeking as many tie-ins as possible. After all, it only seemed natural. (One interesting focus was on that of crowdsourcing and the 'herd mentality,' two traits certainly found in financial markets). This book is a little bit different than the typical work we review and it was a welcome change. The topic of behavioral finance and decision making on a broader level is definitely one worth looking into seeing how it plays a prominent role in everyday life, and in particular, investing. While the book does flow nicely, be warned that it does use some complex language and you'll probably end up looking up one or two terms like we did. (So much for our college degree). Think Twice is ripe with examples of the decision making process and truly opens your eyes to something that occurs everyday seemingly effortlessly and subconsciously. One thing's for certain after reading: we're conscious about it now and hopefully can use countertuition for the better.

Definitely check out Think Twice: Harnessing the Power of Countertuition by Michael Mauboussin if you're intrigued with the topic of decision making as it applies to financial markets and life in general.


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Make sure to also check out some of our other recent book reviews as we're starting to build a series of them.

- Riches Among The Ruins by Robert P. Smith
- The Greatest Trade Ever by Gregory Zuckerman
- The Murder of Lehman Brothers by Joseph Tibman
- Street Fighters: The Last 72 Hours of Bear Stearns by Kate Kelly
- The Ivy Portfolio: How To Invest Like the Top Endowments by Mebane Faber

Don't forget you can find other insightful books on our recommended reading lists as well.