The Tim Ferriss Show transcript: Michael Mauboussin (2023)

Their wordsSo I just want to say one thing, just to be super clear, that there are many tasks where having a smart person is better than having a crowd.

Their wordsNow, I’ll just say that broadly speaking, I think understanding the history of ideas is incredibly valuable in pedagogy, generally speaking, right?

Their wordsI think the modern manifestation of value investing is simply buying something for less than what it’s worth, so it seems like all investing should be value investing if it’s done intelligently.

Their wordsThe first is overconfidence. We tend to think we understand the future better than we actually do.

Their wordsAnd the second one I think is even more difficult, which is confirmation bias. Which is once we’ve made up our minds about something, we tend to seek information that confirms our point of view, and dismiss, discount, disavow information that does not.

Their wordsAnd I guess the other thing I’d just say overall, I already mentioned it, Tim, but I’ll just emphasize it again, is that almost all the great investors I know are just incredibly intellectually curious. And they want to understand how things work and they’re willing to listen and read and learn.

Their wordsWhereas, really, a true expert has a predictive model that works. I’m increasingly skeptical about experts and I think the pressure on experts is coming from two different directions.

Their wordsSo yeah, I think once you have that framework in your mind — and by the way, for me, just professionally, this is, I think, the best way to think about markets specifically and why, again, markets are hard to beat, which they are, but why they periodically go haywire, which they do.