★★★☆☆
“I defined variant perception as holding a well-founded view that was meaningfully different from market consensus…Understanding market expectation was at least as important as, and often different from, the fundamental knowledge.” – Michael Steinhardt
“The issue is not which horse in the race is the most likely winner, but which horse or horse are offering odds that exceed their actual chances of victory…This may sound elementary, and many players may think that they are following this principles, but few actually do. Under this mindset, everything but the odds fades from view. There is no such thing as “liking” a horse to win a race, only an attractive discrepancy between his chances and his price.” – Steven Crist
Review
I think Mauboussin’s works are a great way to dissociate value from both expected value and price. His approach is always multidisciplinary and makes for a refreshing read. This book tackles: human cognition, management assessment, game theory, role of intuition, and market mood swings. Mauboussin forces you to think in expected-value terms. Unfortunately, a good portion of this book just states the obvious and focuses more on mental models.
This was pre-kindle for me, so I have jotted down brief notes from the book (instead of kindle highlights).