Casinos Quote by Michael Mauboussin
“A thoughtful investment process contemplates both probability and payoffs and carefully considers where the consensus - as revealed by a price - may be wrong. Even though there are also some important features that make investing different than, say, a casino or the track, the basic idea is the same: you want the positive expected value on your side”
About This Quote
Source Book: The Success Equation, Michael Mauboussin, 2019
Investors should weigh both odds and outcomes, questioning market consensus to find mispricings.
In simple terms: Consider odds and payoffs, doubt consensus.
Key Takeaway
Seek undervalued opportunities.
Themes
investing
probability
payoffs
consensus
valuation
decision making
Mood
strategic
analytical
Type
financial
philosophical
When to use this quote
- stock selection
- venture capital
- portfolio construction
- market analysis
Key Concepts
expected value
behavioral finance
risk assessment
Questions to Reflect On
- When might consensus be reliable?
- How do you quantify payoff uncertainty?
A Different Perspective
Consensus can be wrong but also reflects collective information.
![“At the core of an analytical edge is an ability to systematically distinguish between fundamentals and expectations. Fundamentals are a well thought out distribution of outcomes, and expectations are what's priced into an asset. A power metaphor is the [pari-mutuel] racetrack. The fundamentals are…” quote by Michael Mauboussin](https://sms4smile.com/quotes/img-quotes/a6c/michael-mauboussin-45403_ability_at-the-core-of-an-analytical-edge-is-an_2861636.jpg)
