Michael Mauboussin currently is the Director of Research at BlueMountain Capital, a multi-billion dollar hedge fund and asset manager.  He spent the majority of his professional career thinking and writing about decision making, behavior and complex systems, with long stints at Credit Suisse and nearly a decade alongside Bill Miller at Legg Mason.  Michael has been an Adjust Professor at Columbia Business School for 24 years. Our conversation covers Michael’s early career, the paradox of skill, academic research more favorable to active management, decision-making, optimal size and composition of teams, unsettling features in the market, data analysis in sports, career risk, the Santa Fe Institute, and Michael’s new research on the horizon. Every time I speak to Michael I come away thinking better and feeling smarter, and this time was no exception. For more episodes go to CapitalAllocatorsPodcast.com/Podcast Write a review on iTunes Follow Ted on twitter at @tseides Join Ted’s mailing list at CapitalAllocatorsPodcast.com   Show Notes 1:48 - What was Michael like as a kid 2:26 – How Michael found his way to Wall Street 6:18 – His start as an analyst in consumer and packaged goods 7:52 – Why there are no .400 hitters in active management and the paradox of skill             8:15 – Full House: The Spread of Excellence from Plato to Darwin 14:26 – Why have there been massive flows into index funds over the last 3-4 years 15:44 – Academic research supporting active management             16:09 – Mutual Fund Flows and Performance in Rational Markets             16:25 - On the Impossibility of Informationally Efficient Markets             22:52 - Indexing and Active Fund Management: International Evidence 23:12 – Do these trends also apply in global markets             24:01 - The Mutual Fund Industry Worldwide: Explicit and Closet Indexing, Fees, and Performance 25:22 – What has Michael discovered in his new role at Blue Mountain through his new credit lens             27:49 – Amazon, the world’s most remarkable firm, is just getting started 30:02 – What are some of the lenses that Michael uses when dealing with allocators 35:02 – How does Michael go about interviewing for a team while taking into account their biases             36:19 – The Rationality Quotient: Toward a Test of Rational Thinking 36:37 – Biggest risks in the markets today             37:31 – Banks to Funds: Have Some Leverage With That Deal 39:45 – Liquidity in the markets 41:26 – What’s most interesting to Michael about the merging of data and sports             41:34 – The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing             43:42 – Big Data Baseball: Math, Miracles, and the End of a 20-Year Losing Streak             44:32 – Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won 45:57 – Psychological bias in sports  46:16 - Malcom Gladwell Podcast: The Big Man Can't Shoot 47:23 – Psychological bias in investment management             47:40 – Scott Malpass on Capital Allocators 48:44 – Michael’s work with the Santa Fe institute             53:08 – Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies 54:40 – Next big piece of research Michael is working on             57:53 – The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction 57:59 – Should Michael be using his skills elsewhere in the context of a world where so many advocate for just indexing             1:01:36 – Charley Ellis on Capital Allocators 1:02:31 – CLOSING QUESTIONS

I’ve received several emails over the last bunch of months asking for my take on the investing world and the topics we cover on the show. Fortunately, I’ve had a chance to appear as a guest on a few other podcasts, and thought I would share some of those conversations from time to time. About a year and a half ago, Patrick O’Shaughnessy interviewed me to discuss the book I wrote on his amazing podcast, Invest Like the Best. The discussion quickly turned to a deep dive on hedge funds - past, present and future. We subsequently recorded two other conversations.  For the first, I asked him to interview me about the Buffett Bet. You can find that conversation on Episode 5. In the second, Patrick interviewed me alongside our friend and star micro private equity investor, Brent Beshore. You can find that entertaining conversation at Invest Like the Best, Episode 30. For more episodes, go to capitalallocatorspodcast.com/podcast Follow Ted on twitter at @tseides