market folly

Michael Mauboussin and Credit Suisse have put out a piece entitled "Reflections on the Ten Attributes of Great Investors."  It's basically a clinic on being an investor, it's fantastic.

There are so many quotable passages that you really should just read the whole document.  Each underlying attribute has multiple paragraphs of rationale behind it.  But here's a quick summary:

Mauboussin's 10 Attributes of Great Investors

1.  Be numerate (and understand accounting).

2.  Understand value (the present value of free cash flow).

3.  Properly assess strategy (or how a business makes money).

4.  Compare effectively (expectations versus fundamentals).

5.  Think probabilistically (there are few sure things).

6.  Update your views effectively (beliefs are hypotheses to be tested, not treasures to be protected).

7.  Beware of behavioral biases (minimizing constraints to good thinking).

8.  Know the difference between information and influence.

9.  Position sizing (maximizing the payoff from edge).

10.  Read (and keep an open mind).     


Embedded below is Mauboussin's 10 Attributes of Great Investors:





Mauboussin is an excellent resource for investors looking to refine their approach and process.  We highly recommend his books such as, The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing as well as Think Twice: Harnessing the Power of Countertuition.