Michael Mauboussin – The Four Sources of Alpha - [Invest Like the Best, EP.126]

The podcast explores the sources of alpha in markets, framing the conversation around the question of who is on the other side of a given trade. Michael Mauboussin, a returning guest, shares insights from his course, which covers capital markets, valuation, competitive strategy, and decision-making. He emphasizes the importance of understanding market inefficiencies and organizing oneself to think probabilistically. The discussion covers behavioral, analytical, informational, and technical edges, highlighting the difficulty of exploiting behavioral biases due to their emotional pull. Mauboussin suggests that a significant portion of investor error is behavioral, and he touches on the concept of time arbitrage, where a longer-term perspective can be advantageous. The conversation also delves into the role of ETFs, buybacks, and the use of EBITDA as a valuation measure.