Ep. 77: Michael Mauboussin Interview with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
Michael Covel
4.6 • 732 Ratings
🗓️ 7 November 2012
⏱️ 48 minutes
🧾️ Download transcript
Summary
My guest today is Michael Mauboussin, an author ("More Than You Know", "Think Twice: Harnessing the Power of Counterintuition"), investment strategist in the financial services industry, professor at the Columbia Graduate School of Business, and board of trustees at the Santa Fe Institute (an independent, nonprofit theoretical research institute).
The topic is his book The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing.
In this episode of Trend Following Radio we discuss:
- Luck and skill, how they cross over and play off each other, and how both of those factors have played a part in both Covel and Mauboussin's careers
- How Mauboussin came to start working on "The Success Equation"
- How losing on purpose can define skill
- How sports can provide great examples of what Mauboussin contends regarding skill and luck
- The human desire and emotional need to tell stories, and how that plays into peoples' difficulty untangling skill and luck
- Stephen Jay Gould's notion of the .400 hitter in baseball and the paradox of skill
- Physical limits and improvement in skill over time
- Sample size issues
- Process vs. outcome
- What to do when you're the underdog and how complicating the situation can help when you're in that position
- Improving your guesswork on where you are in the luck-skill continuum
- Persistence and predictive value
- Building skill
Jump in!
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I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.
To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/
You can watch a free video here: https://www.trendfollowing.com/video/
Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast
My social media platforms:
Twitter: @covel
Facebook: @trendfollowing
LinkedIn: @covel
Instagram: @mikecovel
Hope you enjoy my never-ending podcast conversation!
Transcript
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| 0:00.0 | This is Trend Following Radio, where great thinking comes alive. |
| 0:10.9 | Nobel Prize winners, legendary traders, bestselling authors, and the pros that know what drive us irrational human beings. |
| 0:21.2 | I am your host, Michael Covel, not filtered, raw, honest. |
| 0:27.3 | That's my passion. |
| 0:33.2 | So today is the show I have Michael Mobeson, |
| 0:35.7 | and Michael has been an investment strategist, financial services industry for 25 plus years. |
| 0:42.2 | He's taught at Columbia Graduate School of Business since 1993, and he's on the board of trustees at the Santa Fe Institute. |
| 0:48.8 | One of his prior books, which I loved, was called More Than You Know, and the newest book that I'm looking at is called The Success Equation, Untangling |
| 0:55.8 | Skill and Luck in Business, Sports, and Investing. |
| 0:59.0 | Michael, thank you for joining me today. |
| 1:01.0 | It's great to be with you, Michael. |
| 1:03.0 | So let me add, you know, we met for the first time, I believe, in the fall of 2004. |
| 1:08.0 | Your work played a really instrumental role in some of the things that I did |
| 1:12.4 | in my first book, Trend Following in 2004. And I have to relate a story, then I'll let you run with this, |
| 1:17.6 | because you have an interesting story about how your career got started and the luck component of it. |
| 1:23.8 | I think the audience really enjoy that. But the way that I met you, I was in an event |
| 1:28.3 | at Leg Mason for a lunch and with a bunch of guys. And the lunch was over and they said, hey, |
| 1:33.9 | well, let's take you over here. And I'm like just walking out the door. I don't know where I'm |
| 1:36.9 | going. And they take me to this door and they opened the door. And I see you. We had not even met. And it was a room, it was like a classroom, like, I don't know, 75 or 100 people. And you were sitting there. You motioned for me to sit down. And I recognized the speaker speaking at the moment. It was Bill Miller. And so I sat down. And a few seconds later, Bill looked at me and goes, well, we'd like to welcome our special guest speaker today, Michael Covel. And I was, |
| 2:01.5 | I was literally just sitting there at lunch two seconds earlier, did not know I was going to be speaking. |
| 2:06.0 | But that was actually my first public speaking in the investment industry, was actually that little |
| 2:12.3 | event with you and Bill. And both of you sat on either side of the room and peppered me with |
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