Harnessing the power of counterintuition is a multidisciplinary book on how to improve your decision making. The goal of this book is to present a step by step process for. Considering the results for an appropriate reference class can enhance the quality of forecasts. Oct 18, 2016 michael mauboussin is a managing director and the head of global financial strategies at credit suisse. Lets learn how to take the outside view and make better decisions. Harnessing the power of counterintuition, michael mauboussin discusses how we can fall victim to simplified mental routines that prevent us from coping with the complex realities inherent in important judgment calls.
I was not wowed by this book therefore 4, not 5, stars but had several ahas. Jan 07, 2015 michael is the author of the success equation. Mauboussin, dan callahan, and darius majd, the base rate book. Nov 05, 20 the role of luck and skill in investing. Jan 19, 2018 this is our fourth post from a michael mauboussin podcast. My guest today is michael mauboussin, who is the head of global financial strategies at credit suisse and is on. We provide the base rates for sales growth rates for a large sample of companies. Framed around eight common decisionmaking mistakes, mauboussin draws on disciplines including psychology, complexity theory and statistics.
The ratings agencies also have very good base rate data on the rate of default by rating. In his provocative new book, michael mauboussin untangles the intricate strands of skill and luck, defines them, and provides useful frameworks for analyzing their relative contributions. May 05, 2015 in thinking fast and slow, kahneman suggests we first start with the base rate. Bluemountain investment research december 20, 2017 how well do you compare. Best michael mauboussin podcasts podcasts withabout. Michael mauboussin is the head of consilient research at counterpoint global and fortunately, a regular guest on the show. Michael mauboussin and michael mauboussin from conversations with barry ritholtz, and one michael mauboussin from the knowledge project podcast. Michael mauboussin research papers from credit suisse. We published a piece a few years ago called the base rate book if you search for the base rate book and michael mauboussin, youll probably find it. Harnessing the power of counterintuition harvard business press, 2009 and more than you know. Mar 30, 2019 after reading michael mauboussins excellent base rate book, i applied the gross profitability screen to my existing portfolio. Dec 16, 2015 10052016 michael mauboussin the base rate book.
A few notes i took after reading michael mauboussins base rate book. Five evergreen shares and one test evergreen investing. Mauboussin explores in his book the success equation. Author michael mauboussin states on page 143 that almost everyone agrees decisionmaking is important yet we dont teach students how to make good decisions. What i learned after reading michael mauboussins base rate book. Michael is the director of research at bluemountain capital management in new york and was formerly the head of global financial strategies at credit suisse and chief investment strategist at legg mason capital management. As a result, investing requires a clear sense of whats priced in today and possible future results. Integrating the past to better anticipate the future credit suisses global financial strategies team has published a new. Michael mauboussin on his book, more than you know moi. I think what appeals to me about mauboussins interviews is his clarity of explanation. We looked at a fairly large sweep of history of corporate performance back to, in many cases, the 1950s, but in most cases, certainly the 1980s.
The base rate book integrating the past to better anticipate the future people who have information about an individual case rarely feel the need to know the statistics of the class to which the case belongs. Integrating the past to better anticipate the future. Harnessing the power of counterintuition, in which mauboussin is discussing what he calls the expert squeeze, and when is the best time to utilize man versus machine, saying. The data in this book not only offer a basis for an assessment of the rate of regression toward the mean, but also document the mean, or average, to which results regress. He offers concrete suggestions for how to put these insights to work to your advantage in business and other dimensions of life. Gross profitability or gross profits divided by total assets measures a companys ability to make money and is used as a measure of quality. This book provides the base rates of corporate performance for sales growth, gross profitability gross.
Michael mauboussin research papers from credit suisse full. Reflections on the ten attributes of great investors. Michael mauboussin is credit suisse first bostons chief u. The future of asset management, with ted seides and brent. That is the question that investment strategist michael j. The base rate book by michael mauboussin goodreads. The ratings agencies also have very good base rate data on the rate of default by rating, so that can be a helpful input into the. On october 3rd, alpha theory hosted the success equation book club with the author, michael mauboussin, and 35 pms, analysts, and allocators.
Now updated to reflect current research and expanded to include new chapters on investment philosophy, psychology, and. This report shows the base rate of sales growth rates for a large sample of. Discover all stories robinson crawford clapped for on medium. However, one problem with this rule of thumb is that a reliable base rate may not always be available, especially where the activity is one that does not have simple linear relationships between cause and effect which unfortunately is likely to the part of the skillluck continuum where the rule says you need the base rate to guide you. What i learned after reading michael mauboussins base. Michael mauboussin on his book, more than you know moi global. Countering the inside view and making better decisions. The base rate book sales growth credit suisse plus. Todays conversation is with one of the finest intellectual investors and academic at heart, michael mauboussin. Michael mauboussin big decisions, luck, skill, complexity. Successful active investing requires a forecast that is different than what the market is discounting. Heres a great excerpt from michael mauboussins book think twice.
The base rate book 6 lovallo, clarke, and camerer created a matrix with the columns representing the reference class and the rows. So base rates, i think, your own bottomsup work, combined with some of the base rates to try to inform you, and i would just go back to this graham notion of margin of safety, and if its close you shouldnt be playing. Michael mauboussin discussed his book, more than you know. Integrating the past to better anticipate the future credit suisses global financial strategies team has published a new report, the base rate book.
Michael mauboussin successful active investing requires a forecast that is different than what the market is discounting. Mauboussin led the discussion on an array of investing topics centered around the central theme of luck and skill in our profession. Feb 15, 2010 smart people, dumb decisions by michael mauboussin originally found via simoleon sense. Mar 23, 2020 the central bank signaled it would do practically anythingextending loans to big and small businesses, backstopping funds to municipalities and purchasing hundreds of billions of dollars of government debtto help an american economy in a race against time. If you ask people to offer adjectives that they associate with good decision makers, words like intelligent and smart are generally at the top of the list. That is, 50% of small business survived four years, there is a 70% chance of rain, there is a 15% chance your stock portfolio will go up this year. Executives and investors commonly rely on their own experience and information in making forecasts. It was authored by michael mauboussin while he was at credit suisse. Michael is an astute researcher of behavior, decisionmaking and complex systems, and i reached out to him to get his reasoned temperature on the current climate. The ratings agencies also have very good base rate data on the rate of default by rating, so that can be a helpful input into the thinking.
Optimism and overconfidence can creep into our forecasts. This is a really important place to start, because the issue of luck in particular spills into the realm of philosophy very quickly. The base rate book 4 executive summary the objective of a fundamental investor is to find a gap between the financial performance implied by an asset price and the results that will ultimately be revealed. Over the holidays i recalled a conversion i had with a colleague where in early 2019 we spoke about the results of the q1 2019 cfo survey, which had the headline recession expected by late 2020 and stated that sixtyseven percent of u.
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