Live from New York, it’s the Investment Management Consultants Association’s New York Consultants Conference. The event brought great minds to the stage to discuss the challenges facing investment managers today.
Steven Lamb was on the scene and covering it live.
11:30: And that’s about it for the Investment Management Consultants Association’s New York Consultants Conference. I hope you’ve all enjoyed this coverage as much as I’ve enjoyed attending. I want to give a great big “Thank You” to IMCA’s staff for all of their assistance.
Now I have a plane to catch.
Michael Mauboussin (Legg Mason Capital Management) on How to Avoid Investment Mistakes.
11:24: “There are places for technical analysis, but the way most people use it is rubbish.” While he works for an active management firm, he thinks for most people, finding a good active manager is too hard and most people are well-served by passive strategies.
Q: Where do you stand on technical vs. fundamental analysis, and active vs. passive?
11:19: How do you train your intuition? Keep a journal of decisions and how you arrived at them. Create a checklist of how you arrived at the better decisions. Conduct a “pre-mortem” to examine a worst case scenario before you make your decision…it will help you discover risks that you might otherwise overlook.
11:17: You have two systems at work in your mind: one analytical and the other is intuition. When does intuition work? Condition 1: must be a stable system. Condition 2: must be a linear system.
11:15: Newsflash: Spinach has about the same amount of iron as other green vegetables. The myth that its so high in iron came from am 19th century transcription error. The decimal was off by one place. Lesson? Even when you research your sources, they might have been wrong. Do your own research.
11:08: Experts are being squeezed by algorithms on one side, and wise crowds on the other.
11:06: Despite better forecasting ability among “wise crowds”, corporate management still relies on “experts”.
11:03: We all like to think we are rational, independent and fact based thinkers, but we are all influenced by our surroundings. We all need to heighten our awareness of these factors. Team leaders need to create the best possible environment to elicit the best possible decisions. Stress, for example, can diminish decision makingg ability.
10:57: When students were asked what the last 4 digits of their phone number were, then asked how many doctors were in Manhattan, those with high phone numbers estimated higher number of doctors, those with lower numbers estimated lower number of doctors.
10:54: One study found that people would choose a 30% effectiveness rate for a health treatment if paired with a positive anecdote, over a 90% effective treatment with no anecdote. The lesson for investors is that they will be inclined to seek out investments that have a story they can relate to.
10:52: Post 9/11, people avoided flying. They drove further distances, thinking they had control. In the ensuing months, traffic fatalities spiked.
10:51: We tend to fall for three specific illusions: the illusion of superiority, the illusion of optimism and the illusion of control. We think we’re better than we really are; having brighter futures than average; and think we can control chance events.
10:47: The inside vs. outside view. From the inside, we gather our information and form our opinion. The outside view looks at the decision in the framework of a reference class…what is the statistical likelihood of something happening.
10:40: Smart people make bad decisions. You need to prepare yourself and literally think twice before acting. Your gut reaction will often be wrrong.
Click through (below) to the next page for coverage of David Walker (former Comptroller General of the U.S.) on Turning the Country Around and Restoring Fiscal Responsibility.