In domains mixing skill and luck, assess results over many trials rather than single events. Apply this when reviewing personal or team achievements.

Wall Street Investment Strategist, Bestselling Author, Columbia Finance Professor

Michael Mauboussin

Distinguish skill from luck in outcomes to properly evaluate performance

Even experts face amplified luck variance, so top performers experience more extreme outcomes. Use this in career planning by expecting volatility despite competence.

As skill improves in mixed domains, luck's role paradoxically grows more significant

Start with statistical averages from comparable situations. Apply before major commitments, such as budgeting a home remodel by checking industry overrun data first.

Adopt the outside view to anchor predictions in base rates from similar cases

Change your mind without ego when new information arises. Practice in daily life by revisiting assumptions weekly.

Update beliefs quickly when new facts contradict your current views

Override fast, automatic reactions with deliberate analysis. Use before high-stakes choices by listing pros/cons methodically.

Slow down and engage System 2 thinking for complex decisions

Gather a team to list potential failure reasons, surfacing hidden risks and biases. Ideal for projects or strategies.

Conduct a premortem by imagining why your plan will fail before proceeding

Assemble groups with different backgrounds for superior problem-solving. Apply in teams or personal advice networks.

Harness cognitive diversity by seeking varied mental models and perspectives

Solve problems using knowledge from diverse fields. When stuck, pull from biology, psychology, or sports for analogies.

Build consilience by drawing insights from multiple disciplines

Mauboussin uses this test to differentiate skill-based activities from luck-dominated ones in analyzing performance in investing, sports, and business.

There’s a quick and easy way to test whether an activity involves skill: ask whether you can lose on purpose.

In discussing how to improve outcomes, Mauboussin contrasts practice strategies for skill-heavy domains versus luck-influenced ones.

Deliberate practice works when skill dominates, while a focus on process and probability is appropriate when luck is the greater force.

Mauboussin emphasizes focusing on repeatable processes in investing rather than unpredictable results influenced by luck.

We have no control over outcomes, but we can control the process.

Mauboussin critiques survivorship bias, advising analysis of consistent strategies over cherry-picked winners in fields like venture capital.

When luck plays a part in determining the consequences of your actions, you don’t want to study success to learn what strategy was used but rather study strategy to see whether it consistently led to success.

Explaining risk asymmetry, he notes that pursuing high-upside opportunities inherently involves downside exposure.

The main issue is that putting yourself in a position to enjoy good luck also puts you in a position to lose.

Mauboussin explores why narratives trump data in human decision-making, drawing from psychology.

Statistics don’t appeal to our need to understand cause and effect, which is why they are so frequently ignored or misinterpreted. Stories, on the other hand, are a rich means to communicate precisely because they emphasize cause and effect.

Michael Mauboussin earned a B.A. in government from Georgetown University, providing a foundational liberal arts education before entering finance.

Graduation from Georgetown University

Mauboussin began his career at Drexel Burnham Lambert through a 'random stroke of good luck' that led to the job offer.

Random Luck Securing Drexel Burnham Lambert Job

Starting as a packaged food industry analyst at Credit Suisse First Boston in 1992, Mauboussin rose to managing director and chief U.S. investment strategist by 1999.

Promotion to Chief U.S. Investment Strategist at Credit Suisse

Co-authored Expectations Investing: Reading Stock Prices for Better Returns with Alfred Rappaport, introducing a novel valuation framework.

Publishing Expectations Investing

Named one of 'the most influential people on Wall Street' in SmartMoney magazine's Power Thirty and repeatedly to Institutional Investor's All-America Research Team.

Recognition as Wall Street Power Player

Published More Than You Know: Finding Financial Wisdom in Unconventional Places, compiling essays on psychology, complexity theory, and strategy.

Authoring More Than You Know

This talk distills Mauboussin's seminal book The Success Equation, masterfully separating skill vs. luck in investing and decision-making.

The Success Equation: Untangling Skill and Luck | Talks at Google

Mauboussin reveals his writing process—inspired by investing paradoxes like skill/luck and the curse of knowledge.

Write Like Wall Street's Best — Michael Mauboussin

Mauboussin breaks down pattern recognition in markets—when it succeeds or fails—backed by research.

Michael Mauboussin - Pattern Recognition and Public Markets (EP...)

Delivered as a trustee of the Santa Fe Institute, this presentation exemplifies Mauboussin's interdisciplinary approach to finance.

More than You Know: Finding Financial Wisdom in Unconventional Places | Michael Mauboussin

Exploration of pattern recognition and wealth creation in public markets.

Pattern Recognition and Public Markets

Discussion on pattern recognition and the changing nature of public markets.

Discussion on investment concepts and decision-making.

Michael Mauboussin Interview

Insights on value creation in public equity markets and the 'Birth, Death, and Wealth Creation' report.

Talk on expectations investing, reflexivity, competitive moats, intangibles, and share buybacks.

Conversation with Bill Gurley and Michael Mauboussin.

Episode 370

Talk on corporate survival and wealth creation.

Quality-Growth Investor Conference

Exploration of skill and luck in business, sports, and investing.

The Success Equation

Discussion on expectations investing and competitive moats.

Expectations Investing w/ Michael Mauboussin

Conversation on investment strategy and theory with Bill Gurley.

Episode 370: Bill Gurley & Michael Mauboussin

Discussion on investment strategy, skill vs. luck, and decision-making.

Presentation on 'The Success Equation: Untangling Skill and Luck.'

Exploration of base rates, reference classes, and decision journals.

Episode 001: Base Rates and Bees with Michael Mauboussin

Discussion on increasing returns to scale and AI with Bill Gurley.

Putting Theory into Practice

Discussion on investment concepts backed by academic research.

Conversation on moats, skill vs. luck, decision-making, expectations investing, and valuations.

Discussion on decision-making, luck vs. skill, and work-life balance.

Episode 28: Michael Mauboussin: A Decision Making Jedi

Exploration of investment philosophy and the 'More Than You Know' book.

Insights into financial wisdom and unconventional thinking.

Interview with Michael Mauboussin

Finance strategist who analyzes market behavior and decision-making in bestselling investment research.

Business

Personal Development

Borrowed from game theory and applied to business rivalries, like startups vs. incumbents.

When competing one-on-one, follow two simple rules: If you are the favorite, simplify the game. If you are the underdog, make it more complicated.

Describing network effects and tipping points in product adoption.

Once an innovation reaches a certain level of popularity, its success is virtually assured. By the same token, great innovations can fail because the domino effect doesn’t kick in.

Discussing confirmation bias and hindsight in investment decisions.

Our minds have an amazing ability to create a narrative that explains the world around us, an ability that works particularly well when we already know the answer.

Using Homer's Odyssey as a metaphor for resisting short-term trading impulses in volatile markets.

Ulysses had the crew bind him to the mast of his ship to protect him from the call of the Sirens. Money managers, especially when feeling a loss of predictability and control, are drawn to short-term activity. Like Ulysses, money managers should take the steps necessary to focus on the long term if they are to optimize long-term fund performance.

Left Credit Suisse to become chief investment strategist at Legg Mason Capital Management, expanding his influence until 2013.

Move to Legg Mason Capital Management

Rejoined Credit Suisse after Legg Mason to lead global financial strategies, advising on valuation, strategy, and decision-making.

Return to Credit Suisse as Head of Global Financial Strategies

Became Head of Consilient Research at Morgan Stanley Investment Management's Counterpoint Global after roles at BlueMountain Capital.

Joining Morgan Stanley Counterpoint Global

Served as adjunct professor of finance at Columbia Business School since 1993, earning Dean's Award for Teaching Excellence (2009, 2016).

Long-Term Adjunct Teaching at Columbia

Joined board of trustees at Santa Fe Institute, becoming chairman emeritus, applying complex systems theory to investing.

Leadership at Santa Fe Institute

In this in-depth discussion on Tim Ferriss's mega-influential podcast, Mauboussin unpacks his career from Credit Suisse to Morgan Stanley, The Success Equation, and skill-luck dynamics.

The Tim Ferriss Podcast - Michael Mauboussin

Mauboussin reveals the 'single biggest mistake' in valuations, his base rates approach, and macro lessons from booms/busts.

Michael Mauboussin: The Single Biggest Mistake Investors Make In Valuations

Mauboussin defines equity investing's core—behavioral biases, intangibles, and skill vs. luck.

Michael Mauboussin: The One Job of an Equity Investor

Mauboussin teaches 'expectations investing,' base rates, and the paradox of skill.

The Most Powerful Investing Tool You Aren't Using

Expanded with new chapters on investment philosophy, psychology, strategy, and science; translated into eight languages; named best business book by BusinessWeek and best economics book by Strategy+Business.

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded)

Analyzes the roles of skill and luck in outcomes across domains, providing a formula and insights for better performance evaluation.

The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing

Revised version reflecting changes in accounting, business landscape, with new case studies on reading stock prices for better returns.

Expectations Investing: Reading Stock Prices for Better Returns, Revised and Updated

Explores common mental errors in decision-making through stories from business, sports, and science, offering tools to avoid decision traps.

Think Twice: Harnessing the Power of Counterintuition

A collection of essays drawing from diverse fields like psychology, biology, and gambling to inform investment philosophy and decision-making.

More Than You Know: Finding Financial Wisdom in Unconventional Places

Co-authored with Alfred Rappaport, this book provides a framework for valuing stocks by reverse-engineering market expectations from prices.

Expectations Investing: Reading Stock Prices for Better Returns

Michael J. Mauboussin is Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management. He is a bestselling author and adjunct p...

Michael J. Mauboussin is Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management. He is a bestselling author and adjunct professor of finance at Columbia Business School.

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