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bootman's review
5.0
Excellent book about the luck/skill spectrum and what we can do about it in our own lives. Personally, I love learning about this stuff because I work really hard, and it helps me not beat myself up so much over bad outcomes.
ashrafulla's review
4.0
There are quite a few books that try to describe the nature of randomness in human outcomes. This is a decent one in that the key concepts (mixture models, regression testing, hypothesis testing) are accessible. I thought it was a bit standard but that is largely due to my many-year exposure to statistics. So when Mauboussin talks about having a special equation to deal with variance, I can immediately say "ANOVA." Most people can't; for them this is a good quick read.
I also like that the lessons are more or less actionable. For example, if you're the underdog, add randomness. That's easily actionable, by taking more risks and standing out more. Another lesson is that you can tease out skill by looking at correlation over time (for the modelers out there, fit an autoregressive model). That's easily actionable and shuts up many of these so-called analysts.
So while for the statistically exposed this book is less interesting, I still consider it a good book to read for those who want the concepts of variance & mixture modeling in an accessible way. It also should be complemented with other books as part of a whole statistics-is-important program (with ANOVA & H0/H1 testing being the bullets filled by this book).
I also like that the lessons are more or less actionable. For example, if you're the underdog, add randomness. That's easily actionable, by taking more risks and standing out more. Another lesson is that you can tease out skill by looking at correlation over time (for the modelers out there, fit an autoregressive model). That's easily actionable and shuts up many of these so-called analysts.
So while for the statistically exposed this book is less interesting, I still consider it a good book to read for those who want the concepts of variance & mixture modeling in an accessible way. It also should be complemented with other books as part of a whole statistics-is-important program (with ANOVA & H0/H1 testing being the bullets filled by this book).
chinney's review
challenging
informative
slow-paced
4.25
Shallow dive into great lists of subjects and sources. Like a codex of deeper works.
rick2's review
4.0
Not a book I’d usually read. Campy title sets itself up to over promise and under deliver. But the author was recommended by Phillip Tetlock who’s Superforcasting I really liked.
Super happy I ignored the cover and picked it up. One of the best books on the interaction of luck and randomness in life. Backed with research I approve of. Written in an accessable tone.
Couple of my notes:
Environmental success. Punters vs. Receivers. Take a hard look at success and it's environmental factors. Punters can operate independent of the team to a large extent. Receivers are much more subject to the quality of their team. Really feeling this while working from home currently, I have been getting extremely in my own head and need to find people to bounce ideas off of.
Importance of sample size. With uncertainty, small sample size is extremely detrimental. Errors can be magnified and noexistant correlations can be found in any data set by torturing it enough. Errors are to be expected by using improperly sized data sets for the sample size. Seems simple and common sense, but really feeling the difficulty in practice. Think bigger. Zoom out more. What are we trying to accomplish? Is this representative of the population?
Deliberate practice helps only in linear activities. As we add complexity, deliberate practice can actually become detrimental as we will find connections that don't exist.
Reversion to the mean should be your base assumption. Not sure I fully understand this. More investigation would be helpful. In higher skill events reversion to mean will be less prelevant.
Investing edge
Need to assess real fundamentals. Such as supply and demand, economic profit, and sustainable competitive advantage. If there is a price difference. need to assess why market has priced in that discrepancy. Margin of safety.
Portfolio construction
Weight portfolio based upon the attractiveness of the opportunity. Commonly stated but difficult to follow. A good reminder.
Overall a wonderful read.
Super happy I ignored the cover and picked it up. One of the best books on the interaction of luck and randomness in life. Backed with research I approve of. Written in an accessable tone.
Couple of my notes:
Environmental success. Punters vs. Receivers. Take a hard look at success and it's environmental factors. Punters can operate independent of the team to a large extent. Receivers are much more subject to the quality of their team. Really feeling this while working from home currently, I have been getting extremely in my own head and need to find people to bounce ideas off of.
Importance of sample size. With uncertainty, small sample size is extremely detrimental. Errors can be magnified and noexistant correlations can be found in any data set by torturing it enough. Errors are to be expected by using improperly sized data sets for the sample size. Seems simple and common sense, but really feeling the difficulty in practice. Think bigger. Zoom out more. What are we trying to accomplish? Is this representative of the population?
Deliberate practice helps only in linear activities. As we add complexity, deliberate practice can actually become detrimental as we will find connections that don't exist.
Reversion to the mean should be your base assumption. Not sure I fully understand this. More investigation would be helpful. In higher skill events reversion to mean will be less prelevant.
Investing edge
Need to assess real fundamentals. Such as supply and demand, economic profit, and sustainable competitive advantage. If there is a price difference. need to assess why market has priced in that discrepancy. Margin of safety.
Portfolio construction
Weight portfolio based upon the attractiveness of the opportunity. Commonly stated but difficult to follow. A good reminder.
Overall a wonderful read.
joshmaher's review
5.0
What a great book - there is a lot that investors of all types can learn from this book. Whether you are a money manager, invest your own account, invest in real estate... or more importantly invest in early stage companies - there is a lot that could be learned from understanding where skill and where luck come into play when looking at success. Refining the process of investing is incredibly undervalued for any investor as well as for operators, engineers, and most professions. If you want to have a head start - implement these tools.
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