Invest Like the Best with Patrick O'Shaughnessy Michael Mauboussin - Man + Machine, Moats, and Power of the Outside View - [Invest Like the Best, EP.37]
47 snips
May 16, 2017 
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Episode notes
Markets Need Just Enough Inefficiency
- Markets must be 'efficiently inefficient' so there is enough profit to justify information gathering costs.
- Use an economic-profit framework to measure how much active managers actually extract from markets.
Measure Alpha In Dollars, Not Percent
- Evaluate active managers by dollar value extracted, not just percent outperformance.
- Multiply gross alpha minus benchmark by AUM to see true economic profit contribution.
Regulation And Tech Reshaped Investing
- Regulation and technology have materially shifted investor behavior toward funds and indexing over decades.
- These structural changes altered who supplies liquidity and how information is aggregated.