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Capital Allocators – Inside the Institutional Investment Industry cover image

Michael Mauboussin - Pattern Recognition and Public Markets (EP.370)

Capital Allocators – Inside the Institutional Investment Industry

NOTE

Quality Pattern Recognition: Intuitive Expertise vs. Experience

The effectiveness of pattern recognition depends on intuitive expertise, which combines intuition and expertise to deliver good outcomes. Intuitive expertise works in domains with predictive models that are proven to be effective, distinguishing experts from those with mere experience. In certain fields, like plumbing, experts are reliable, while in predicting interest rates or oil prices, qualifications may not lead to accurate predictions, highlighting the importance of distinguishing between expertise and experience.

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