The Intrinsic Value Podcast - The Investor’s Podcast Network

MI364: Lessons From Michael Mauboussin w/ Shawn O'Malley

Aug 12, 2024

Michael Mauboussin, author of 'More Than You Know,' teams up with Shawn O'Malley to unpack valuable insights about investment philosophy and market psychology. They discuss how the stock market functions as a complex adaptive system and the significance of having a clear investment process. Delving into the common traits of top investors, they explore how stress and biases can cloud judgment. The duo highlights the effects of innovation on markets and the importance of adapting strategies in the face of changing environments.

01:01:27

Episode guests

Shawn O'Malley

Michael Mauboussin

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Episode notes

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Quick takeaways

Multidisciplinary thinking is essential for investors, enabling them to challenge Wall Street norms and understand the market as a complex adaptive system.

A strong investment philosophy fosters disciplined decision-making and helps investors focus on long-term success rather than short-term outcomes.

Psychological factors, such as stress and emotional biases, can distort investment decisions, emphasizing the importance of maintaining a rational, long-term perspective.

Deep dives

Multidisciplinary Thinking in Investing

Multidisciplinary thinking is emphasized as a vital approach to investing, enabling individuals to challenge conventional ideas prevalent on Wall Street. The speaker highlights how such diverse expertise can lead to a better understanding of the stock market as a complex adaptive system, driven by the interactions of countless participants. This viewpoint aligns with insights from the New England Complex Systems Institute, which categorizes economic behavior similarly to the dynamics of natural systems. By viewing the stock market through this lens, investors can appreciate its capacity for evolution and adaptation in response to global events.

Intro

2min

Navigating the Investment Landscape

11min

Investing Insights: Skills vs. Luck

9min

Emotions and Social Influence in Investment Decisions

4min

Navigating Market Psychology and Investment Strategies

6min

Insights on Innovation and Market Dynamics

25min

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) shares his favorite insights from Michael Mauboussin’s excellent book, More Than You Know.

You’ll learn how the stock market is like a complex adaptive system, the importance of having a clear investment philosophy, the psychology of investing, how innovation and competition affect stock returns, how Mauboussin uses complexity theory as an investor, plus so much more!

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

02:00 - Why multi-disciplinary thinking matters so much to investors

03:55 - What a good investment process looks like and how to build one

05:39 - Why results can be so blinding to investors

08:39 - Why the magnitude of returns can matter more than frequency

10:13 - What are the commonalities between top investors

19:04 - How stress and other biases distort our thinking

25:57 - What the original Dow Jones index looked like

29:07 - How the boom and bust cycle for new industries unfolds

30:57 - Why companies’ assets don’t last as long as they used to

36:29 - Why using historic P/E ratios can be fraught

44:28 - How the wisdom of the crowds works

45:04 - How extreme events shape markets and the St. Petersburg paradox

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Michael Mauboussin's book, More Than You Know.
Nassim Taleb's book, The Black Swan.
Richard Foster and Sarah Kaplan's book, Creative Destruction.
Chris Zook and James Allen's book, Profit to the Core.
Pulak Prasad's book, What Darwin Taught Me About Investing.
Check out the books mentioned in the podcast here.
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