YouSaid · the spoken record

Michael Mauboussin

lines on the record: 114
first: 2021-12-17
most recent: 2021-12-17
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Pretty sure it was you. Pretty sure it was you. Pretty sure it was you. Dude, just take credit for him. All right. I'll definitely, I definitely.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hey, dude, I think you're Exactly. So, anyway, I appreciate that because you actually did it in a way that was tactful and respectful and provocative.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it did change. I think it did change my mind because you end up being sort of the front end of what ended up being the correct.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah, maybe, but at least that's not the way you came across. You came across saying, like, hey, I think you got this thing wrong. Here's some other stuff that you may want to consider when you think about this topic going forward. And I was like, you know what? I'm down with that. That's good. Right, it was maybe it was shockingly diplomatic, but that's the way to do it. So it wasn't about you. You took it immediately away from being about me and immediately about there might be other ways to change your mind?”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll say Barry, I don't know exactly when we met, but I remember one early, it was an early instance where I wrote something and then you wrote me back and you said, hey, man, you wrote this thing and it's not right. And you got this basically thing wrong. I think it was like weapons of mass destruction prediction market or something like that. What was it? It was something like a weapons of mass. I wrote something about weapons of mass destruction and, you know, Iraq or something. You go, this is not right. And I thought to myself, first of all, so of course someone's telling you you're not right, but the way you did it was really interesting. And I thought really constructive. So it was not like, dude, you're an idiot. It was not like that.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“and those profiles tend to be a key part of what makes them effective at what they do. And there are lots of aspects of it, but only one that I'll mention that's really important, which is this idea of being actively open-minded, active, open-mindedness is the key, right? And that means that you're not only you're willing to contemplate points of view that are different than yours, but you're actually willing to seek them out. And I'll just say that, you know, we all like to think that we do this. The answer is, no, not really, right? Once you've made up your mind about something, the path lease resistance is just like look for stuff that confirms it and just keep on moving, right? Because if you're confronted, if you have to change your mind, there are two things. One, you have to change your mind, which is self-as a pain. And then you may have to change what you do, right? Which is actually another pain, right? So most of us would rather not be bothered with that. So that would be the one thing I would just say. Investment management is.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think that the, I mean, I don't think that I didn't know this, but I think I underappreciate it, which is just the central importance of people for all this stuff. And, you know, one of the pieces that's in one of our queues, so something we're going to write on, I've already fully outlined in this report, is a report about feedback. So one of the really difficult things in our world is to get feedback, especially in investing. So if you're buying and selling stocks, ultimately it's about the stocks performing well. But there's very little quality intermediate feedback. But I start the piece off by talking about riffing off of work by Phil Tetlock at the University of Pennsylvania on the Super Forecasters. And what they were able to sort of figure out is that these super forecasters have certain profiles.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's tricky to do when you're young, but the key is as soon as you can is to find an organization where you feel comfortable and can contribute. And just the culture of the organization where you work is such a big deal. I guess the thing that maybe is what people are asking for more overtly is it would go back to this thing on easy games. So if you're saying like where are things exciting? The answer is try not to do what everybody else is doing. Are there pockets or areas where you can do something that's a little bit different and a little bit maybe more niche for now or something that might grow or evolve?”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, by the way, in many ways, it's a very exciting time. I mean, we talked about these intangibles. And, you know, from the point of view of understanding how those work and so forth, it'd be pretty exciting. But the key for me is always to, there's sort of two things, and it's probably a little bit hokey, but the first thing is you really have to set out to try to learn as much as you can. And so a lot of that is reading and studying on your own. Whenever my kids graduate from college, you know, sort of give them a hug and say congratulations and then say, recognize tomorrow morning you wake up and your education begins, right? So it's an ongoing process. And then the second thing is.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And probably I would say my favorite book this year was a book by Fred Lajival on a biography of JFK. So he's embarked on a two-part series on JFK. So this was the first one from the time he was born to 1917 to when he wins the Senate in the 1950s. And then the second piece will be obviously sort of packed in the last roughly eight or ten years of his life. I obviously knew the basics profile of Kennedy, but I learned just a ton about him. I learned a ton about his family, which I found to be, and it's just beautifully written. So you learn a lot about world history along the way and so on and so forth. So those would be some ones I would mention.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is you mentioned, you keep saying concilient head of consilient research. And I assume every time everybody hears that, they go, I don't know what the heck he's talking about. So that's where let's connect that. We'll close that and we'll close that loop right there. And so I really enjoy that book. I'm also reading a book now by Paige Harden called The Genetic Lottery. So this is really about genetics and what we've learned about genetics and equality. A couple other books I really enjoy this year, Steven Pinker's book on rationality has been wonderful. I don't know if you read that or know it. I was familiar with many of the ideas in there, so it wasn't like it was brand new stuff, but he presents ideas in a very clear and compelling way, in ways actually would help me even pedagogically as a teacher to explain it to other people.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“People, but you've been through this, what is your third or fourth appearance? Yeah. Me, just have him wing it. I know. That's bad. So, well, what I'm reading right now is actually two books simultaneously. Richard Rhodes has a new biography of E.O. Wilson, the very famous biologist. And Richard Rhodes, a very famous, talented biographer, and it's just a beautiful book. And I was familiar with E.O. Wilson. By the way, E.O. Wilson wrote a book called Cincilience.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting as I was thinking about what to do next and just sat down with Dennis, and he had been an early reader of a lot of stuff we'd done and again creates an incredible environment for work. Every day is super exciting for me to get going. I can't wait to get going every single day. And as usual, I have a longer list of things to do than the things I can get done. It's like one of these really fun sensations. So those are people I would mention.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that will ensure that sort of the complexity science is on the scene for a long time to come, which was really extraordinary. But it's not just, I mean, I think Bill is another one of these guys that has an insatiable intellectual curiosity, has good taste for ideas, and just a very thoughtful guy. The two that come to mind, this is going to sound a little bit odd. One is a guy named Brady Dugan, who was the former CEO of Credit Suisse, now has his own firm. But Brady, when I was growing up at equities at Credit Suisse back in the day, was always a big supporter. And when I went back to Credit Suisse in 2013, it was because he was there and he offered me a really exciting opportunity to do that. And probably the last guy I would mention is Dennis Lynch. I think Dennis.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“A number of them that come to mind, many of them are great. Well, I'll wrap a port, we've already talked about that. I mean, he would be sort of first and foremost. And not just as someone who was a mentor and a teacher to me, but also a collaborator. And, you know, so that. That's the whole package. Bill Miller has to be up there. Bill introduced me, for example, to the Santa Fe Institute. And I don't know if you saw this, but Bill recently made a big dump.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I'm fans of all those guys, but I usually go if there's someone who pops up who I find to be an interesting guest. That's usually what motivates me to do that. So that's mostly what I do. And then I have to say that it's been an odd thing. I'm a fairly big sports fan, so I do enjoy watching sports. So I have to say that in 2021, for example, even the NFL, I've enjoyed it probably more this year than I in a very long time just for whatever reason. But you missed it the previous year? You know, because they played the games, but it was a very different environment. It just feels like it's a little bit back to normal, and I've really enjoyed that.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Patrick O'Shaughnessy's invest like the best, and I think he's done a really nice job. But I'm also a big fan of Tyler Cowan's conversations with Tyler.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“My confession is, which you probably know, I don't watch a lot of TV. I know. And so I don't have any good answers on that. I do enjoy podcasts. And, you know, probably the one I listen to the most frequently is.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And ended up doing it on his own, but that's an interesting, but I think, like you said, between the Thailer thing and spending time with Connem and himself, I think that that sort of made it clear to Michael Lewis, who's just, by the way, an insanely love that podcast you did with him too. He's just an insanely talented guy. And anyway, he's...”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Jason, I think spent a long time with him on it. But the other one was Michael Lewis, interestingly. Oh, really? And so I think he actually spent a fair bit of time with Michael back when he was thinking about this. And I think obviously he went to ultimately, and by the way, Danny's a beautiful writer. So I think he's a very talented writer.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting, my understanding is that Danny in writing thinking fast and slow, which came out about a decade ago, talked to a number of other writers to potentially collaborate with him on that. One was Jason's Wag, and I think Jason's benefit.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“For teams to actually embrace. And the question is, why don't teams do it much faster? So this is an interesting one where we know that it works in quotes. We know. And yet the answer is it's not part of the conventional wisdom and it's not part of the coaching guild. It's not what you learn as a player when you've grown up. And so it takes almost a generation or two for these things to get woven in. Now if you watch the NFL going forward on fourth down, for the most part, it's not for, well, not if it's for the most part, but it's happening much more frequently much more frequently. So people have gotten the memo on these things, especially the younger coaches and so forth.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“By way of the inspiration for that piece was actually a presentation that Dick Thaler gave at the MIT Sloan Sports Analytics Conference. So this is going to seem a little bit weird that a behavioral economist talking at a sports conference. But Dick's point was something like this, which is there are certain things that we know work analytically in sports. You know, the three point shot going forward on fourth down, stuff like that.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ago March of April, four specifically COVID-19, March of April of 2020. In other words, it was ready to go like almost right away, which is astounding. There's one other thing I'll just add, Barry, that, you know, and we wrote a piece that was...”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's amazing. RD. Like you said, 20 years of RD sort of ready all dressed up with no place to go just yet. And then when it became time to go, it went. And by the way, that thing, I mean, my understanding is that these guys had that thing ready to go probably.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. That's the basic principle there's more uniformity in the skill levels it becomes. Now, look, the answer is for many famous business breakthroughs and clearly this is very true, for example, drug development That almost seems like it's, I mean, I don't know if we would call them luck, but we'd say that.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In corporate strategy setting. And interestingly, there was an academic that took this luck side, an academic took the skill side, and the answer, of course, is somewhere in between those two. I think your question you're asking is a slightly more subtle one, which is has it changed over time? And I think that the answer is that, again,”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yeah, I mean, I think for sure. It's actually funny because I participated in an academic seminar. I'm like a non-academic, but an academic seminar, and it was literally about this exact topic, which is, what is the role of skill and luck?”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, A, they don't last, but B, if they do last, they tend not to be super scalable. So, in other words, it's often you can't make. Billions and billions and billions of dollars in an easy game because people figure it out. So they usually tend to be smaller and nichier and so forth. I mean, I remember I was talking to a quant firm based in London and they said that they had some little strategy that was dealing with Chinese retail investors. And they said, this thing is like a little money machine. Like every day we make money on this thing. But the keyword is little. It just can't, we just can't do it in bigger size, but it's such a nice little thing. We just let it keep going. But he's like.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“He's like going in, he's like, so people start putting up, you know, bids and offers for things. He's like, you start figuring out he could put, he could put on like these costless spreads at a guaranteed profit. And he's like, this doesn't make any sense. It's not going to last very long. But my HP-12C works and I'm just taking advantage of it while I get it. So part of the answer, I think the response, the careful response would be something like, don't say like these people are automatically just lucky people. The question is, are they playing in an easy game where they bring something to the table that others don't have?”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And then those eventually get tightened up, right? So the people that are not the losers end up losing money and then they leave the table for whatever reason. And then those seats get filled by more skillful players and so on and so forth. So eventually that gets sorted out. But there's a long history of markets, even as we've evolved toward more efficient, broadly speaking, where there are these easy games have popped up. And even like I was talking to a buddy of mine who was an early options trader and he's like, you know, they was like in the 80s. Yeah, this is like the 80s. Yeah, the 1980s. And he's like, oh, they introduced options on certain commodities, right? And they hadn't traded them before in this particular exchange.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Games where your skill tends to be the highest. Instead of playing with a high stakes table, maybe you play at the next stakes down where your profit per hour is higher because your skill differential is higher. So you may be making less money, but your higher skill differential. And so that might be that this is the interesting sort of almost comeback to that idea that when there are new markets that open up, it can be the case that lots of people are sitting at the table if you wanted to continue with this poker analogy, lots of different people with varied skills or sitting at the table, some of who know what's going on, others who don't. And those can be actually easy games.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, part of the answer, if you're trying to avoid getting consumed by the paradox of skill, in other words, the answer is to look for easy games, right? So if you think you're a skillful person, you don't want to compete with other super skillful people. You want to find...”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, exactly. And so now it turns out that you can buy pretty much any How that's changed over time. So I think, yeah, in terms of if you want to apply to businesses, best practices and businesses tend to be embraced. And so automobile manufacturing might be one example of that. Managerial best practices tend to find their ways into people's minds. training through school, business schools, and so on and so forth. So yeah, I think broadly speaking, this is a universal concept.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But the second dimension is really the key one for the paradox of skill, which is relative skill. And the key to the whole paradox is it says something like what has happened over time is the difference between the very best and the average shrinks over time. So everyone becomes a little bit closer to one another. The standard deviation of performance shrinks over time. And so, because Barry, you're a car guy, right? So you might appreciate this. But my understanding, because I read one or two papers about this, but the differential in the quality of car finishes in the 1960s and 70s, I guess, was very high. So, you know, you bought a Mercedes-Benz. It really was a better put together. It was a bank fault.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“As skill improves, luck becomes a more important determinant of the outcome. That doesn't seem to make any sense. And so the key is to think about skill in two different dimensions. The first dimension is absolute skill. And I think we'd all agree, and that was really our comment about market efficiency. We look around the world. I mean, just look at the technology at our fingertips, the best practices, the training for athletes and so on and so forth. I mean, I think we'd all agree without a doubt that it's as good as it's ever been in terms of how we have absolute levels of skill. And we can document that when we measure things versus a clock. So for example, running and so on and so forth.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I think it works across all these domains. And just to, and I'll just restate what you just said, the paradox of skill says in activities where both skill and luck contribute to outcomes, most things.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Best bull market. Right. So 1982 is a really important date because if you're thinking about returning capital to shareholders and you're thinking about the complete dividend plus buyback picks, nothing before there's no comparability before and after 82. So the safe harbor is important. So even if companies have asymmetric information, the safe harbor assures that if they execute their trades in a certain way with particular volumes and upticks and all that. Hence the legal...”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and by the way, the other thing I'll just mention is that just to be clear that buybacks were, I mean, there are histories like Teledyne's very famous for having bought back stock in the 1970s and so forth, but buybacks were the Wild West in the 1970s, right? Because you could be charged with stock price manipulation. So the SEC put in a safe harbor provision in 1982. So there's no real discussion. And by the way, people don't, you know, right?”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So they're pretty good. So when they're retiring equity, yes, that's an interesting. And by the way, that. The reason I bring that up and why that's important is that when we talk about alpha, for example, alpha is a measure of excess returns. And of course it nets to zero by definition within a closed group of the problem is markets are not closed, right? They're actually open and they're open. There are other entities interacting. And the biggest other entity interacting is actually corporations. So if companies are selling expensive and buying cheap, that means there's companies that are gathering some of the alpha. It's funny you say that because”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but if you do the numbers, the aggregate numbers are actually pretty good. And by the way, this is now a very big macro comment, which is companies are pretty good at selling stock when it's high and buying it when it's cheap. That's quantitatively.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that that's an empirical question which has been answered for decades. So the answer is that is yes. And by the way, people have this perception companies buy back stock when they're high and they don't buy it when it's low. That's actually not true.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I agree with that 100%. So I would just say that the stock-based compensation discussion, and by the way, some SBC programs are great and others are not as good and so forth. So there's no one size fits all. But that's a separate discussion from the buyback discussion. So I would just say that those two things should not be intermingled with one another. And I think your observation is exactly correct. They're sometimes brought together in a way that may not be productive.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, shareholder value. That's a good one. So, the last thing, lest I come across as totally favorable buybacks, let me just say, and you alluded to Dell, I mean, there are companies that buyback stock for the wrong reasons, right? And so the wrong reason would be something like to increase earnings per share or to offset dilution from stock-based competition programs and so on and so forth. Those net aren't necessarily bad, but those are not the proper motivations.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, that one I checked that because that was true. That was true back in the 1990s. That is not really true. In the United States, most programs get executed. But that was a true thing. And it's more true internationally than it is in the United States. Interesting. Yeah, yeah. So to me, and by the way, this is a whole nother thing going back to how to think about markets. I mean, I actually think one of the very quantitative guys do this, but one of the very simplistic ways to think about markets is simply take the S&P 500, for instance, take the dividend yield plus the buyback yield in quotation marks, and then that yield ends up being your return. Now, the last thing I'll say before, I don't want to, by the way,”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“As a consequence, by the way, if you look at a long term series of dividends versus other capital allocation things like M&A or CapEx or whatever, dividends are a really stable series and they do go down in recessions and so forth, but it's a super smooth series, right? Because companies are really reticent to cut them. And they're pretty conservative about growing them. By contrast, buybacks are deemed to be sort of this residual, right? Yeah, we paid all our bills. We made all the investments.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, to me, okay, and then the last thing I'll say about buybacks versus dividends, which is really interesting. And I think this is a very real thing, which is it's a completely different psychological thing, for executives. So when they pay a dividend, they deem that to be a quasi-contract, and they are loath to cut dividends, they want to raise the dividend, and the dividend is a sacred thing that we want to preserve at all costs”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, now what we talk about in the book is this thing called the Golden Rule of Buybacks, which basically says you should buy back a stock only when it's below fair value, and basically all other operational initiatives have been met, right? And again, Barry, I'll just let you put on your sort of owner of a business hat as well. You probably think to yourself, all right, we've got financials. What I want to do is invest in all the ways in the business that I think would add value to our organization. And then if something left over after all that, then we'll think about what to do with that money, right? But your first inclination is let's invest back into ways to build value for our long-term value for our franchise, right?”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So they're benefiting and the ongoing shoulders are suffering, right? So they're getting their per share value just went down. And we can demonstrate, and we actually do it in the book, we can demonstrate that mathematically. Scenario two is a buyback undervalued stock, right? So what's happening now is the sellers are getting less than what they're supposed to be getting. So they're in a sense getting ripped off. And what's left is the per share value goes up, the intrinsic value goes up for the ongoing shareholders, right? So one of the points I always make to money managers, as I say to them, I presume you own stocks because you believe that they're undervalued. Is that a fair assessment? If the answer to that is yes, then you always want companies to buy back stock because the presumption is somebody selling for too low a price and your per sure value is going to go up. Now, a dividend, of course, just goes to everybody leaving aside tax effects. Everyone gets treated completely equally.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Period, right? Again, doesn't matter what they do with the $200, it's going to go from $1,000 to $800. Okay, so now let's walk through three scenarios. One scenario is the stock is overvalued, right? Let's pretend that was the GE situation. The stock is overvalued. So they buy back overvalued stock. Well, the value of the firm, we just established goes from $1,000 to $800. That doesn't change. What does change is the relative positioning of the selling shoulders versus the ongoing shoulders. In this case, the selling shoulders are getting in quotes more than they should.”
2021-12-17 · Masters in Business · Michael Mauboussin on How to Read Stock Prices (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source