Michael Mauboussin: The Math of Value and Growth

Johnny HopkinsMichael Mauboussin1 Comment

Michael Mauboussin recently wrote a paper titled – The Math of Value and Growth in which he discusses how valuations change as assumptions about growth, return on incremental invested capital, and the discount rate vary. These changes are discussed in terms of P/E multiples and discounted cash flow models which … Read More

Michael Mauboussin: The Five Principles of Good Capital Allocation

Johnny HopkinsMichael MauboussinLeave a Comment

We’ve just been re-reading Michael Mauboussin’s great paper on capital allocation titled – Capital Allocation Evidence, Analytical Methods, and Assessment Guidance. At the end of the document Mauboussin provides his five principles of good capital allocation and his conclusions. Here’s an excerpt from the paper: Five Principles of Capital Allocation. … Read More

Michael Mauboussin: ‘Procyclicality’- How It Drives Market Cycles To Extremes

Johnny HopkinsInvesting Research, Michael MauboussinLeave a Comment

Michael Mauboussin recently released a great paper called – Procyclicality And Its Extremes in which he discusses ‘Procyclicality’ and how it drives market cycles to extremes. He also provides indicators of procyclicality and methods for coping with, and profiting from it. Here is an excerpt from that paper: In economics, procyclical … Read More

Michael Mauboussin: The Babe Ruth Effect Generates More Successful Returns

Johnny HopkinsInvesting Strategy, Michael Mauboussin1 Comment

Here’s a great lesson from Michael Mauboussin’s book – More Than You Know. Mauboussin highlights the point that when it comes to successful investing it’s not about the frequency of correctness that matters in stock picking, it’s the magnitude of correctness that matters. This is called the Babe Ruth Effect. Here’s an excerpt from … Read More