I very much enjoyed Michael Mauboussin's book The Success Equation a few months ago, so when a reader recommended another of his books, More Than You Know, I was happy to give it a try.
The book is aimed at investors, but the methods of illustration are rather multi-disciplinarian. I quite enjoyed that aspect of the book, as Mauboussin readily takes to heart Charlie Munger's concept of mental models. Mauboussin uses a number of real-life examples, from nature to philosophy, to describe business and market phenomena which are not well understood.
The reader will be armed with some multi-disciplinarian mental models that may help him become a better investor. One of my favourite such examples is Mauboussin's take on the distribution of returns. I've always thought of market returns as being distributed normally, but with some fat tails due to fear and/or exuberance. This is what I've been taught and accepted, though I was never too comfortable with it. Mauboussin describes returns as having a fractal distribution, which is another type of distribution (like the normal) which is common in nature. Making assumptions of a normal distribution (which is in effect what efficient market theory does) when it is indeed fractal could cause (and likely has, if history is any indication) detrimental results.
Happy reading!
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