Posts filed under “Cognitive Foibles”
Michael Mauboussin began his career at Drexel Burnham Lambert in the 1980s through what he describes as a random stroke of good luck. He worked closely with Bill Miller, former chairman of Legg Mason Capital Management, and is now head of global financial strategies at Credit Suisse. He is also an adjunct at Columbia University School of Business.
The role of luck and randomness in the investing process has fascinated Mauboussin for years. Some of his earlier work looked at problems of cognitive bias and why investors find it so difficult to change their minds, even when presented with overwhelming evidence of error and failure. He is the author of numerous books, most recently “The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing.” You can listen to the full interview with Mauboussin here or below; You can download an MP3 of the podcast here.
This is the fourth episode in our new series “Masters in Business” that I’ve created with Bloomberg Radio and Bloomberg View. You can listen to the show on Bloomberg AM on weekends and nationally on Sirius XM channel 119. All of our prior podcasts are available on iTunes.
Next week I’ll speak with Jack Brennan, former Vanguard chief executive officer and current chairman emeritus.
• The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing
• More Than You Know: Finding Financial Wisdom in Unconventional Places
• Think Twice: Harnessing the Power of Counterintuition
• Expectations Investing: Reading Stock Prices for Better Returns
Michael Mauboussin at Credit Suisse
Regular readers know I enjoy discussing behavioral aspects of investing. The reasons for this are twofold: First, we can’t control the markets, but we can control our own reactions to it (at least we can try). And second, many studies have shown that investors suffer from a behavior gap between what they should garner in…Read More
Yesterday morning, we learned of Rupert Murdoch’s bid for Time Warner for as much as $85 dollar a share, or more than $75 billion. Soon after, the annotated chart below showing the Standard & Poor’s 500 Index began circulating on trading desks and websites, suggesting Murdoch’s offer signaled a market top. Source: Financial Insyghts LLC…Read More
When was the last time anyone got good investing advice from the front page of a newspaper or magazine or from a television pundit? That is the question I have been pondering during this market cycle. Whether it is the price of equities or the state of the economy, I have grave reservations about relying…Read More
Things to try in a market correction: • Respond emotionally, giving in to your lizard brain. It does a good job of keeping you alive, so you might as well hand over management of your portfolio to it. • Rely on your gut instinct to lead you out of trouble. After all, your instincts helped…Read More
Hat tip Josh Brown Today’s chart comes to us from Patrick O’Shaughnessy, author of the forthcoming book, “Millennial Money: How Young Investors Can Build a Fortune.” O’Shaughnessy makes the observation that investing is “almost free” and investor behavior tends to matter more than their actual investments. As an example, he cites this chart. Continues…Read More
click for ginormnous chart Source: The Chart Store “I Love the ’80s” was a BBC television miniseries that examined the world through the lens of 1980s pop culture. (VH1’s riff on the show can be found here). I bring up the ’80s because of a wonderful chart from Ron Griess who runs The Chart…Read More
MTA Presentation: Risk, Trading & Neurofinance: “This Is Your Brain On Stocks” Click through for the free registration: MTA New York Chapter Meeting June 23, 2014 Featuring Barry Ritholtz presented by Bloomberg L.P. The New York Chapter of the MTA invites you to our next chapter meeting on Monday, June 23, 2014. We are…Read More
In yesterday’s column, I wrote: If you have an issue with Social Security, then fix it. The regressive taxes to fund retirement benefits top out at about $117,000 in 2014. Why not simply raise that to $250,000 next year and $500,000 during the next 20 years. Congratulations, you just made Social Security solvent for the…Read More