Michael Mauboussin – Active Asset Management

**Patrick O'Shaughnessy** (0:04)
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_2** (0:24)
Patrick O'Shaughnessy is a principal and portfolio manager at O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:46)
My guest today is Michael Mauboussin, whose research on all aspects of investing is a treasure trove.
Michael is a managing director and head of global financial strategies at Credit Suisse. In this wide-ranging interview, we discuss the current state of the asset management business, explore all stages of the investment process, and consider what edges may still exist for those trying to beat the market. Please enjoy.
Thank you, Michael, so much for being here with me today. I have to start by saying when I started in this business as an active manager, my first role was to learn about investing and I was a philosophy major, so I didn't know much at all. So I went to the bookstore and bought a bunch of books and the first two that I read, one was by David Dreeman called Contrarian Investment Strategies, which I still love to this day. And the second book was a book that you wrote with your mentor called Expectations Investing. And so we're going to get into that book today for sure, but I thought an interesting connection, so it's a pleasure now to be here talking about the industry with you.

**Michael Mauboussin** (1:46)
Thanks Patrick and thanks for buying the book.

**Patrick O'Shaughnessy** (1:48)
So before we get too deep into some of the interesting ground we're going to cover today, and we'll talk about the investment industry, about active investing very broadly, and kind of what the future may look like, I'd like to start by establishing sort of your personal system. So obviously you're a prolific, I guess I would call you researcher above all else, but writer, teacher, reader.
So I'd love to understand kind of what you think the key things are that you do, maybe not every day, but most days or at least weekly. What are the kind of habits that you have that have led to the various accomplishments through your career?

**Michael Mauboussin** (2:23)
I don't know about the accomplishments, but I think a lot of it is the foundational stuff that you probably hear a lot of people talk about. So for me, a few things were really essential.
And the first big one is sleep. By the way, it sounds silly, but it wasn't until I was well into my career that I sort of figured out that sleeping an appropriate amount for me was an extraordinarily important thing for my productivity.
So I always used to think cheating on sleep would let you pick up some productivity, but I found actually that was not the case at all. So that's a big one. Exercise is another huge one for me personally and things like diet. And the other thing is always been dedicated from fairly early on to allocating time to reading.
And people often say to me like, gee, it seems like you read a lot. And what's not always obvious is it's a trade-off. I'm not doing a lot of other things. So if you ask me about popular TV programs or whatever it is, I know nothing about them, right? So those are choices, and I'm not sure there are all the choices that everybody would want to make. But for me, those have been some of the really key things. And then, of course, just quality time with family and other things that sort of keep a balance. So those are sort of, I think, the big structures. And again, it's hard to say that everybody should be doing those things. But I think the sleep, diet, exercise trio is so central to success probably no matter what you're doing.

**Patrick O'Shaughnessy** (3:40)
So a couple of questions about reading, and this is a popular topic these days. We seem to be in some sort of reading renaissance, everyone really recognizing the value of reading very broadly and often.
Are there ways that you look for the next thing to read?

**Michael Mauboussin** (3:53)
For me, it's a mess, actually. So if you go into any of my offices, there are piles of books everywhere. And I'm not sure that I've got a very good method to the madness.