#659: Michael Mauboussin — How Great Investors Make Decisions, Harnessing The Wisdom (vs. Madness) of Crowds, Lessons from Race Horses, and More

Brought to you by Athletic Greens’s AG1 all-in-one nutritional supplement, House of Macadamias delicious and nutritious nuts, and Shopify global commerce platform providing tools to start, grow, market, and manage a retail business.  Michael Mauboussin (@mjmauboussin) is Head of Consilient Research on Counterpoint Global at Morgan Stanley Investment Management. Prior to joining Counterpoint Global, Michael was Director of Research at BlueMountain Capital, Head of Global Financial Strategies at Credit Suisse, and Chief Investment Strategist at Legg Mason Capital Management. Michael originally joined Credit Suisse in 1992 as a packaged food industry analyst and was named Chief U.S. Investment Strategist in 1999. Michael is the author of The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing, Think Twice: Harnessing the Power of Counterintuition, and More Than You Know: Finding Financial Wisdom in Unconventional Places. More Than You Know was named one of "The 100 Best Business Books of All Time" by 800-CEO-READ, one of the best business books by BusinessWeek (2006), and best economics book by Strategy+Business (2006). Michael is also co-author, with Alfred Rappaport, of Expectations Investing: Reading Stock Prices for Better Returns.  Michael has been an adjunct professor of finance at Columbia Business School since 1993 and is on the faculty of the Heilbrunn Center for Graham and Dodd Investing. He received the Dean's Award for Teaching Excellence in 2009 and 2016 and the Graham & Dodd, Murray, Greenwald Prize for Value Investing in 2021. Michael earned an A.B. from Georgetown University. He is chairman emeritus of the board of trustees of the Santa Fe Institute, a leading center for multidisciplinary research in complex systems theory. Please enjoy! This episode is brought to you by Shopify! Shopify is one of my favorite platforms and one of my favorite companies. Shopify is designed for anyone to sell anywhere, giving entrepreneurs the resources once reserved for big business. In no time flat, you can have a great-looking online store that brings your ideas to life, and you can have the tools to manage your day-to-day and drive sales. No coding or design experience required. Go to shopify.com/Tim to sign up for a one-dollar-per-month trial period. It’s a great deal for a great service, so I encourage you to check it out. Take your business to the next level today by visiting shopify.com/Tim. * This episode is also brought to you by House of Macadamias delicious and nutritious nuts! I love macadamia nuts and have been enjoying them often since keto expert Dr. Dominic D’Agostino recommended them on the podcast in 2015. They taste great, and with more healthy, monounsaturated fat than both olive oil and avocados, 27% fewer carbs than almonds, and more than 50% fewer carbs than cashews, they’re the perfect low-carb, keto-friendly, nutty snack. In fact, I just ate a handful of lightly white-chocolate-covered macadamias about an hour ago to keep me going through the afternoon until dinner. And I will say this: ​House of Macadamias produces the best-tasting macadamia nuts I’ve ever eaten… by far. Listeners of The Tim Ferriss Show can use code TIM20 to get 20% off all orders, plus, for a limited time, a free, premium, extra-virgin, cold-pressed macadamia oil with any order, valued at $20. Visit HouseOfMacadamias.com/Tim to discover some of the most delicious and nutritious nuts on the planet. * This episode is also brought to you by Athletic Greens. I get asked all the time, “If you could use only one supplement, what would it be?” My answer is usually AG1 by Athletic Greens, my all-in-one nutritional insurance. I recommended it in The 4-Hour Body in 2010 and did not get paid to do so. I do my best with nutrient-dense meals, of course, but AG further covers my bases with vitamins, minerals, and whole-food-sourced micronutrients that support gut health and the immune system.  Right now, Athletic Greens is offering you their Vitamin D Liquid Formula free with your first subscription purchase—a vital nutrient for a strong immune system and strong bones. Visit AthleticGreens.com/Tim to claim this special offer today and receive the free Vitamin D Liquid Formula (and 5 free travel packs) with your first subscription purchase! That’s up to a one-year supply of Vitamin D as added value when you try their delicious and comprehensive all-in-one daily greens product. * [07:12] Latin roots. [09:14] No business education? No problem! [12:15] The best food industry analyst. [15:36] Consilience. [19:58] Complex adaptive systems. [23:26] Diversity. [26:23] The wisdom of crowds. [32:42] The minimum effective dose of cognitive diversity. [36:02] Designing experiments. [43:49] Against the Gods and Complexity. [49:56] Value investing and the Santa Fe Institute. [53:57] A brief 21st-century asset class tour. [57:47] Base rates and horses. [1:06:16] Good vs. great investors. [1:13:22] Expanding options when making decisions. [1:18:56] Favorite failures. [1:20:35] Counteracting overreliance on experts. [1:24:34] Intuition. [1:34:15] Time management tenets. [1:40:59] Parental resources. [1:43:42] Perspectives gained by learning about complex adaptive systems. [1:46:12] Recommended reading. [1:47:32] Michael's billboard. [1:50:33] Parting thoughts. * For show notes and past guests on The Tim Ferriss Show, please visit tim.blog/podcast. For deals from sponsors of The Tim Ferriss Show, please visit tim.blog/podcast-sponsors Sign up for Tim’s email newsletter (5-Bullet Friday) at tim.blog/friday. For transcripts of episodes, go to tim.blog/transcripts. Discover Tim’s books: tim.blog/books. Follow Tim: Twitter: twitter.com/tferriss  Instagram: instagram.com/timferriss YouTube: youtube.com/timferriss Facebook: facebook.com/timferriss  LinkedIn: linkedin.com/in/timferriss Past guests on The Tim Ferriss Show include Jerry Seinfeld, Hugh Jackman, Dr. Jane Goodall, LeBron James, Kevin Hart, Doris Kearns Goodwin, Jamie Foxx, Matthew McConaughey, Esther Perel, Elizabeth Gilbert, Terry Crews, Sia, Yuval Noah Harari, Malcolm Gladwell, Madeleine Albright, Cheryl Strayed, Jim Collins, Mary Karr, Maria Popova, Sam Harris, Michael Phelps, Bob Iger, Edward Norton, Arnold Schwarzenegger, Neil Strauss, Ken Burns, Maria Sharapova, Marc Andreessen, Neil Gaiman, Neil de Grasse Tyson, Jocko Willink, Daniel Ek, Kelly Slater, Dr. Peter Attia, Seth Godin, Howard Marks, Dr. Brené Brown, Eric Schmidt, Michael Lewis, Joe Gebbia, Michael Pollan, Dr. Jordan Peterson, Vince Vaughn, Brian Koppelman, Ramit Sethi, Dax Shepard, Tony Robbins, Jim Dethmer, Dan Harris, Ray Dalio, Naval Ravikant, Vitalik Buterin, Elizabeth Lesser, Amanda Palmer, Katie Haun, Sir Richard Branson, Chuck Palahniuk, Arianna Huffington, Reid Hoffman, Bill Burr, Whitney Cummings, Rick Rubin, Dr. Vivek Murthy, Darren Aronofsky, Margaret Atwood, Mark Zuckerberg, Peter Thiel, Dr. Gabor Maté, Anne Lamott, Sarah Silverman, Dr. Andrew Huberman, and many more. 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