Gustavo Ballvé on November 30th, 2012
Corporate Strategy, Food for thought, Home, Mental models, Portfolio Management

Reading a few texts recently about luck and skills made me highlight two things: 1) the subject of behavioral traps is very popular nowadays, yet still very interesting; 2) there’s a distinct air of déjà vu that could lead us to think that we’re better off skipping the next text… and while we must definitely prioritize our investment analysis time, and while this attitude of always questioning one’s certainty is more of a “born this way” attribute than it is a trainable skill, periodically reminding ourselves of these building blocks and mental models also serves a huge purpose. Anyway, this is Michael Mauboussin’s interview at Wired about his new book The Success Equation: Untangling Skill and Luck in Business, Sport and Investing. It’s better than usual because the interviewer is the writer of the recent book The Half-Life of Facts. Yet since readers probably also read some of the sources I read, we probably feel we’ve read this before in some shape or form (Taleb? Kahneman?). And yes, we’ve read it in 2010 in the form of a 42-page paper by… Mauboussin himself. If you haven’t been reading much in this arena, the interview is a good place to start, but read the paper as well. The main highlight (from the article) for me was a comment on the article: “When luck (in investing) starts being misinterpreted as skills, returns start diminishing pretty quickly.”

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