Capital Allocators – Inside the Institutional Investment Industry [REPLAY] Michael Mauboussin – Who’s on the Other Side (Capital Allocators, EP.99)
Mar 23, 2020
Michael Mauboussin, an investment strategist at Blue Mountain Capital, shares insights on the intricacies of investing. He emphasizes the importance of focusing on process over outcomes and discusses the four types of investment edges. Mauboussin highlights key behavioral traits of portfolio managers and the impact of group dynamics on market efficiency. He also explores the role of data analytics in both investing and sports, drawing fascinating parallels with lacrosse. His research reveals how understanding these elements can unlock better investment strategies.
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Process Over Outcome
- Constantly re-evaluate your investment process, especially after losses.
- Consider skill vs. luck, analytical soundness, behavioral management, and agency issues.
Investment Edges
- Investors can gain an edge through behavioral, analytical, informational, and technical advantages (BAIT).
- Having an edge isn't enough; you must also effectively monetize it in the asset market.
Behavioral Edge
- Market behavior is driven by group dynamics, not individual biases.
- Focus on how people behave in groups, particularly over-extrapolation and the shift from wisdom to madness of crowds.
