Mauboussin: Investment Committees Should Always Use Independent Ballots for Decisions
Michael Mauboussin · Michael Mauboussin – Who's on the Other Side (Capital Allocators, EP.99) · May 13, 2019 · at 20:10
Michael Mauboussin explains best practices for structured decision-making processes and voting within investment teams to avoid social and political anchoring.
0:00 / 0:22exact quote · 22.9s
720p mp4 · rendered on demand · StarZero watermark
“And once again, for example, a simple rule, if you're ever voting on something, it always should be independent ballots. What is not uncommon is for people just to go around the room and say, hey, Ted, what do you think? So, you know, Ted, you're a really important smart guy, and so what you say will deeply influence what I think or how I answer, because I'll say, A, I'd rather align myself with Ted the smart guy, and B, it may be politically thoughtful to do that as well.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Michael Mauboussin
Mauboussin: Public equity returns exhibit the same power law as venture capital
“We associate power laws with venture, but if you let it play out in public markets, it's also the exact same power law. It's a power of compounding is the key insight.”
Mauboussin: Mega-Cap Economics Have Defied Classical Theory Since 2000
“Since 2000, roughly speaking, it feels like the economics of the biggest companies have been almost economic law defying by that. I mean, two things. One is they've grown faster than what we would expect big companies to do. And they've sustained very high ret…”
Mauboussin: Magnificent Seven Economic Profit Exceeds Market Cap Share
“When you take a look at the economic profit, so return on capital, less cost capital spread times invested capital, the economic profit Of the Magnificent Seven, it's actually larger than their market cap representation.”
Mauboussin: Companies Ignore Cost of Capital and Rely on a 15% Hurdle Rate
“So it turns out it's really interesting that companies, they calculate their cost of capital. They know it, but they don't use it. For almost everything they do, they use a hurdle rate, and that hurdle rate's roughly 15%. So whether the cost of capital goes to…”
Mauboussin: Portfolio managers underperform by ignoring their own position sizing rules
“Even there's some evidence if you ask portfolio managers to write down Ex ante, what rules they should follow to size their positions. A, they don't follow those rules, and B, there's evidence that they did follow their own rules, they would do better than the…”