Michael Mauboussin Research Papers – Full? Collection

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Michael Mauboussin Research Papers From Credit Suisse – Full? Collection H/T a reader last updated 12/28/2017

Also see Michael Mauboussin: Some Influential Books

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Michael Mauboussin - Assessing the Magnitude & Sustainability of ...

What exactly is sustainable value creation? We can think of it in two dimensions. First is the magnitude of returns in excess of the cost of capital that a company does, or will, generate. Magnitude considers not only the return on investment but also how much a company can invest at a rate above the cost of capital.

We extend our analysis of capital allocation beyond the United States to other major world regions, including Japan, Europe, Asia/Pacific excluding Japan (APEJ), and Global Emerging Markets (GEM).

10/05/2016 Michael Mauboussin - The Base Rate Book

08/04/2016 Michael Mauboussin: Reflections on the Ten Attributes of Great Investors

Attention: Pay Now Or Pay Later

06/14/2016 Operating Leverage – A Framework For Anticipating Changes In Earnings by Michael Mauboussin


10/20/15 What’s Going On in Your Brain? Common Investor Biases and Where They Come From

We examine four situations where individuals make poor choices and review the research to show where the brain makes those decisions. In each case, we present some ideas about how to overcome the potentially suboptimal choice.


9/28/15 Sharpening Your Forecasting Skills: Foresight Is a Measurable Skill That You Can Cultivate

A forecasting tournament identified “superforecasters,” people who consistently make superior predictions. How they think is key: they are actively open-minded, intellectually humble, numerate, thoughtful updaters, and hard working.


9/1/15 Total Addressable Market: Methods to Estimate a Company's Potential Sales

We use the process of triangulation to estimate total addressable market, a vital indicator of a company’s potential. Methods discussed include an assessment of the population, product, and conversion, a diffusion model, and appropriate base rates.


7/28/15 2015 Thought Leader Forum Proceedings—Attention: Pay Now or Pay Later

We review the 2015 theme, “Attention: Pay Now or Pay Later,” and include transcripts. A key theme is how limited our attention is. The speakers offer concrete steps to address this in one’s own life and to take advantage of it in business.


7/22/15 Understanding Skill: A Paradox Plus Qualitative and Quantitative Approaches

The paradox of skill explains why it’s challenging to find differential skill among managers. It’s due to a surfeit, not a dearth, of skill. Making money is about proficiency and finding easy games. Use statistics that are persistent and predictive.


6/4/15 Triple Crown Teachings: Three Takeaways from the Quest for the Elusive Feat

The quest for the Triple Crown of horse racing offers three important lessons for an investment organization: Pay attention to the results of the past, recognize the value of diversity, and value = probability x price.


6/2/15 Capital Allocation – Updated: Evidence, Analytical Methods, and Assessment Guidance

We update a report from August 2014. Capital allocation is one of management’s top responsibilities, yet few are well-trained at it. We discuss uses of capital, show how to analyze them, review academic findings, and describe how to assess managers.


5/12/15 IQ versus RQ: Differentiating Smarts from Decision-Making Skills

Intelligence quotient (IQ) is like the horsepower of an engine and rationality quotient (RQ) is like the output. We offer tips for improving rationality and we profile top forecasters. We also describe a calibration test that shows overconfidence.


5/4/15 The Base Rate Book – Sales Growth: Integrating the Past to Better Anticipate the Future

Optimism and overconfidence can creep into our forecasts. Considering the results for an appropriate reference class can enhance the quality of forecasts. We provide the base rates for sales growth rates for a large sample of companies.


3/17/15 Min(d)ing the Opportunity: Excess Returns Require the Chance to Apply Skill

The fundamental law of active management reminds us success requires skill and opportunity. We examine three ways investors express skill: market timing, security selection, and portfolio construction. Measures of opportunity show 2014 was very hard.


02/10/15 Animating Mr. Market: Adopting a Proper Psychological Attitude

We capture the Mr. Market metaphor, which is a powerful way to think about markets. To be an active investor, you must believe in market inefficiency to get opportunities and in market efficiency for those opportunities to turn into profits.


01/15/15 Managing the Man Overboard Moment: Making an Informed Decision After a Large Price Drop

This report provides guidance if one of your stocks falls 10 percent or more in one day. Such drops often cause strong emotional reactions and make sound decision-making hard. We provide a checklist to help you decide whether to buy, hold, or sell.


01/06/15 Capital Allocation Outside the U.S.: Evidence, Analytical Methods, and Assessment Guidance

Capital allocation is a management team's most fundamental responsibility. We examine the sources and uses of capital for Japan, Europe, Asia/Pacific excluding Japan, and Global Emerging Markets. This extends our analysis beyond the United States.


11/18/14 A Long Look at Short-Termism: Questioning the Premise

Short-termism is widely viewed as a major problem in the investment industry, but its existence is hard to prove. Many of the perceived symptoms of short-termism don’t hold up to scrutiny, and there are some good reasons for shorter time horizons.


11/12/14 2014 Thought Leader Forum Proceedings: The Art and Science of Prediction

We review the 2014 theme, “The Art and Science of Prediction,” and include transcripts. The theme weds three ideas: how to blend the ability of humans and computers, when to rely on instincts or statistics, and how to train to make better decisions.


9/10/14 Lessons from Freestyle Chess: Merging Fundamental and Quantitative Analysis

We relate freestyle chess to investing, where fundamental analysts are “man” and quantitative analysts are “machine.” A proper melding of fundamental and quantitative methods may well yield better results than either by itself.


8/5/14 Capital Allocation: Evidence, Analytical Methods, and Assessment Guidance

Capital allocation is one of a management team's top responsibilities, yet few are well-trained at it. We discuss seven uses of capital, show how to analyze each use, review academic findings, and describe how to assess capital allocation practices.


6/4/14 Calculating Return on Invested Capital: How to Determine ROIC and Address Common Issues

We describe how to properly calculate return on invested capital (ROIC), an important measure of how a company allocates capital. We link ROIC to the $1 test and to competitive strategy analysis and explain how to handle issues such as excess cash.


5/6/14 Disbursing Cash to Shareholders: Frequently Asked Questions about Buybacks and Dividends

With corporate cash balances building, the issue of how to disburse that cash is a crucial and timely issue in determining shareholder value. We answer frequently asked questions about share buybacks and dividends, two primary methods to return cash.


4/16/14 Why Corporate Longevity Matters: What Index Turnover Tells Us about Corporate Results

Corporate longevity is an important consideration for investors as they assess valuation, position sizing, and the sustainability of competitive advantage. Turnover in the S&P 500 Index, a proxy for longevity, correlates well to M&A activity.


2/24/14 Methods to Improve Decisions: Five Common Mistakes and How to Address Them

This report describes five common mistakes that investment firms make and offers practical guidance on how to manage each of them. The solutions rely not on getting smarter but rather on fending off poor practices that you can fix.


1/29/14 What Does a Price-Earnings Multiple Mean? An Analytical Bridge between P/Es and Solid Economics

The price-earnings multiple is the primary method analysts use to value stocks. Yet, most don't have a clear sense of what a specific multiple implies about a company's future financial performance and don't understand how multiples change over time.


1/8/14 Building an Effective Team: How to Manage a Team to Make Good Decisions

Many organizations use teams and promote diversity. But without proper processes, teams may fare poorly. There are three types of diversity: social category, cognitive, and value. The best teams have high cognitive diversity and low value diversity.


12/6/13 Economic Returns, Reversion to the Mean, and Total Shareholder Returns: Anticipating Change Is Hard but Profitable

Simply buying the best or worst businesses does not ensure excess shareholder returns. The market rewards improvement and punishes decline in economic returns. Focus on returns on capital first and growth second.


10/15/13 Outcome Bias and the Interpreter: How Our Minds Confuse Skill and Luck

Outcome bias occurs when people judge outcomes without considering the quality of the decision. "The interpreter" in the brain creates a cause to explain any effect. Estimate how much luck determines a result and focus on process when luck is ample.


10/8/13 Estimating the Cost of Capital: A Practical Guide to Assessing Opportunity Cost

This report is a guide to estimating the weighted average cost of capital, with the goal of deriving a figure that is sensible from a business and economic standpoint.


9/17/13 How to Model Reversion to the Mean: Determining How Fast, and to What Mean, Results Revert

Most investors know about reversion to the mean and think they take it into account as they model corporate performance, but in reality few deal with it properly. You can use the correlation coefficient to estimate the rate of reversion to the mean.


7/22/13 Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation

Sustainable value creation is of interest to investors who seek to anticipate expectations revisions. This report offers a framework to determine the size of a company's moat. We cover industry analysis, firm-specific analysis, and firm interaction.


7/15/13 Alpha and the Paradox of Skill: Results Reflect Your Skill and the Game You Are Playing

Successful investors develop proficiency and choose games with a wide dispersion in skill so as to benefit at the expense of the less skillful. The paradox of skill means that luck is often more important in shaping outcomes even as skill improves.


5/7/13 Cultivating Your Judgment Skills: A Framework for Improving the Quality of Decisions

This report provides tools and guidance to improve decisions. Good judgment requires understanding causality, effectively incorporating information from past events to understand present prospects, and updating probabilities based on new information.


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