Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
"The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all.
Thank you for providing another Mauboussin reference.
I have a very short list of financial and investment heroes. Michael Mauboussin is on that short list. I particularly admire his definition and interpretation of the luck/skill investment spectrum, and the clarity in his explanation of it.
Consequently, I take every opportunity to acknowledge and to tout his work. I consistently and enthusiastically endorse it. Even experienced and sophisticated investors will find some of his insights useful and actionable.
Professor Mauboussin’s writings and presentations are always rational and persuasive. As the Greek philosophers would say, his speeches are properly balanced with ethos, pathos, and logos. These elements make him a trustworthy, a friendly, and a knowledgeable advocate.
I too referenced Mauboussin in a post earlier this month titled “The Paradox of Skill”. On that post I provided a Link to a 28 minute video featuring Mauboussin that was conducted by Steve Forbes on his Intelligent Investing series. The interview was terrific. I’ll repeat the Link here for those who missed my earlier reference:
Please take advantage of this informative video. It will make each of us a better investor.
Once again, Mark, thank you for keeping Mauboussin’s works accessible to the MFO family.
Reply to @MJG: >> will make each of us a better investor.
How so? The chief takeaway from this 2-1/2-year-old interview, seems to me, for the group here (if I can generalize about such a thing) is to not change funds so damn much. When you have *substantiated* conviction about process and manager temperament, skill, maybe even luck, then do nothing. stay the course, stand there. There is a lot of talk in these discussions about swaps. This guarantees subpar results over time. I saw little else new. Not that there should be new thinking in these fundamental areas. Hire the person who plays blackjack properly and has judgment and leave him or her alone for a decade and more.
Thank you for both accessing my post and viewing the Forbes/Mauboussin interview.
Michael Mauboussin occupies several demanding chairs, both in the academic community and in the financial world. His time commitments must be a constant challenge. Therefore, I would not expect him to do innovative research projects himself.
He doesn’t disappoint in that regard. For the most part he nicely summarizes and makes the financial findings of others readily available to the general investing public. I believe that to be a noble (and profitable) enterprise. His lectures contain no eureka moments for experienced investors. They are more grounded in commonsense stories much in the tradition of John Bogle.
But Mauboussin departs from the pure Bogle strategy in that for those investors willing to invest learning time and to accept added risk, he recommends some fraction of their portfolio be committed to actively managed mutual funds. For those individuals he cautions that the historical record of the active manager, his behavioral biases, and the organizational structure of his firm all be part of the selection process. All investors should follow this overarching general advice.
More definitively, he endorses a regression-to-the-mean investment philosophy. Since the markets have generated sub-par returns in the past decade, he is optimistic about the upcoming decade in terms of a regression argument. Likewise, he recommends patience with a manager who is currently having a bad year. Most investors would benefit from such mentoring.
Mauboussin likes sports analogies; so do I. Experts suffer bad days, but recover more quickly than most folks do. Ted Williams is a superior example. You can be sure that a pitcher, who struck Williams out on an earlier plate appearance, would still fear his skills in an upcoming encounter.
Additionally, Ted Williams is a true American war hero. He served as a fighter plane pilot in both World War II and the Korean conflict. He was an Air Force Ace in both engagements. I do not envy those enemy pilots who had to compete against a man with his visual and hand-eye coordination skills. Those who did were overmatched and paid the price.
As Mauboussin observed, a return-to-the-mean for experts does not necessarily equate to the same performance level as the general population. These are all sensible lessons that the investing pubic could profit from if persistently followed.
Also, thank you for your many fine and informative contributions to the MFO forum. These “will make each of us a better investor.”
Reply to @MJG: Good summary, thanks. The content seemed mostly to go without saying, since it was with Forbes, not so much for the 'general investing public'. I'm no hardcore Boglehead, as you can tell from my mentioning Joel 'Ted Williams' Tillinghast so often. I assume that most here do some sort of dd with fund managers along those lines, and aspire to being patient. As a nonnative Bostonian for many decades and longtime reader of SJ Gould, I have keen appreciation for the Williams phenomenon and the reasons behind it.
Comments
Worth remembering.
Thank you for providing another Mauboussin reference.
I have a very short list of financial and investment heroes. Michael Mauboussin is on that short list. I particularly admire his definition and interpretation of the luck/skill investment spectrum, and the clarity in his explanation of it.
Consequently, I take every opportunity to acknowledge and to tout his work. I consistently and enthusiastically endorse it. Even experienced and sophisticated investors will find some of his insights useful and actionable.
Professor Mauboussin’s writings and presentations are always rational and persuasive. As the Greek philosophers would say, his speeches are properly balanced with ethos, pathos, and logos. These elements make him a trustworthy, a friendly, and a knowledgeable advocate.
I too referenced Mauboussin in a post earlier this month titled “The Paradox of Skill”. On that post I provided a Link to a 28 minute video featuring Mauboussin that was conducted by Steve Forbes on his Intelligent Investing series. The interview was terrific. I’ll repeat the Link here for those who missed my earlier reference:
Please take advantage of this informative video. It will make each of us a better investor.
Once again, Mark, thank you for keeping Mauboussin’s works accessible to the MFO family.
Best Wishes.
>> will make each of us a better investor.
How so? The chief takeaway from this 2-1/2-year-old interview, seems to me, for the group here (if I can generalize about such a thing) is to not change funds so damn much. When you have *substantiated* conviction about process and manager temperament, skill, maybe even luck, then do nothing. stay the course, stand there. There is a lot of talk in these discussions about swaps. This guarantees subpar results over time. I saw little else new. Not that there should be new thinking in these fundamental areas. Hire the person who plays blackjack properly and has judgment and leave him or her alone for a decade and more.
Hi David,
Thank you for both accessing my post and viewing the Forbes/Mauboussin interview.
Michael Mauboussin occupies several demanding chairs, both in the academic community and in the financial world. His time commitments must be a constant challenge. Therefore, I would not expect him to do innovative research projects himself.
He doesn’t disappoint in that regard. For the most part he nicely summarizes and makes the financial findings of others readily available to the general investing public. I believe that to be a noble (and profitable) enterprise. His lectures contain no eureka moments for experienced investors. They are more grounded in commonsense stories much in the tradition of John Bogle.
But Mauboussin departs from the pure Bogle strategy in that for those investors willing to invest learning time and to accept added risk, he recommends some fraction of their portfolio be committed to actively managed mutual funds. For those individuals he cautions that the historical record of the active manager, his behavioral biases, and the organizational structure of his firm all be part of the selection process. All investors should follow this overarching general advice.
More definitively, he endorses a regression-to-the-mean investment philosophy. Since the markets have generated sub-par returns in the past decade, he is optimistic about the upcoming decade in terms of a regression argument. Likewise, he recommends patience with a manager who is currently having a bad year. Most investors would benefit from such mentoring.
Mauboussin likes sports analogies; so do I. Experts suffer bad days, but recover more quickly than most folks do. Ted Williams is a superior example. You can be sure that a pitcher, who struck Williams out on an earlier plate appearance, would still fear his skills in an upcoming encounter.
Additionally, Ted Williams is a true American war hero. He served as a fighter plane pilot in both World War II and the Korean conflict. He was an Air Force Ace in both engagements. I do not envy those enemy pilots who had to compete against a man with his visual and hand-eye coordination skills. Those who did were overmatched and paid the price.
As Mauboussin observed, a return-to-the-mean for experts does not necessarily equate to the same performance level as the general population. These are all sensible lessons that the investing pubic could profit from if persistently followed.
Also, thank you for your many fine and informative contributions to the MFO forum. These “will make each of us a better investor.”
Best Wishes.