Listen to This Podcast Episode Here

by Patrick O’Shaughnessy

My guest this week for the third time is Michael Mauboussin.
If there is a major question about markets and investing, Michael has usually
written one of the best pieces of research on that topic. Today’s conversation
is a mix of several of his research pieces, but focuses on the sources of

The framing of the conversation is the brilliant question “who is on the other
side” of a given trade. If you are buying, who is selling, and why? Knowing the
answer to this question is one key to understanding where excess return comes
from. As is usual with Michael, we also explore tons of other interesting ideas
that will serve as food for thought. Please enjoy.

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Show Notes

1:23 – (First Question) – An outline of the syllabus for the
course he teaches

4:02 – What are smart people missing when it comes to
decision making

5:33 – Why Michael went down the path of defining major
investing concepts

            7:41 – On the
impossibility of informational inefficient markets

9:14 – Beware behavioral finance

12:03 – What are the behavioral errors that people can take
advantage of in a trade

15:14 – Timing opportunities

            17:25 – Modest Proposal Podcast Episode

17:47 – Where the analytical edge comes from

21:16 – Is there an advantage to exhibit time arbitrage

23:53 – Technical arbitrage

29:34 – What impact do flows into ETFs play on the market

32:25 – Informational edge and how you source that edge

36:39 – Biggest changes that he has seen on the buy side

43:18 –  How would
Michael apply this as a sports GM

48:35 – His views on stock buybacks

            51:02 – The
Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for

52:55 – EBIT to EBITDA paper

            54:43 – What
Does a PE Multiple Mean?

59:28 – The concept of benign myths

1:02:06 – What the future holds of Michael

            1:04:17 – The
Myth of Capitalism: Monopolies and the Death of Competition

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