Human Nature #12: Sensemaking

In 2003, when Saddam Hussein was captured, Bloomberg News released the following headline: TREASURIES RISE; HUSSEIN CAPTURE MAY NOT CURB TERRORISM. About 30 minutes later, they released another: TREASURIES FALL; HUSSEIN CAPTURE BOOSTS ALLURE OF RISKY ASSETS.

This contradiction was made famous by Nassim Taleb in his book The Black Swan. Obviously, two opposite consequences can’t be explained by the same thing but that doesn’t stop a good story. As such, many similar paradoxical headlines are littered across the financial news landscape. In The Black Swan, Taleb argues:

Continue reading “Human Nature #12: Sensemaking”


Investment Theory #7: Michael Mauboussin

Michael J. Mauboussin is managing director and head of Global Financial Strategies at Credit Suisse, where he advises clients on valuation and portfolio positioning, capital markets theory, competitive strategy analysis, and decision-making. He is also an adjunct professor of finance at the Columbia Business School and chairman of the Board of Trustees at Santa Fe Institute.

Mauboussin started his career at Drexel Burnham Lambert of Michael Milken fame. He was trained to be a financial advisor and in his own words was an abject failure. Armed with the knowledge of what he wasn’t good at, he set out to find a job in equity research. He eventually landed a job as a packaged food analyst at First Boston, which later merged with Credit Suisse. He has been there ever since.

Continue reading “Investment Theory #7: Michael Mauboussin”