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MICHAEL J MAUBOUSSIN (1964) was Chief Investment Strategist at Legg Mason Capital Management and is Managing Director and Head of Global Financial Strategies at Credit Suisse. He is also adjunct Professor in Finance and Economics at Columbia Business School.

More Than You Know
by Michael J. Mauboussin
Columbia Business School Publishing, 2013

The subtitle of this book by Michael J. Mauboussin is 'Finding financial wisdom in unconventional places'. This begs the question, why a book about finances is being reviewed by whatislife.com? Well for one because Mauboussin himself relies on 'places' like biological systems. Almost immediately, the subtitle could for me easily read 'Finding EVOLUTIONARY wisdom in unconventional places'. Replace 'evolutionary' with 'educational' and you get a second unexpected insight from this book; how today's higher education has become a business with short tem goals priced over long term success, the original intent of a rigorous yet broad intellectual imprimatur, the core 'business' of academia.

What do financial markets, higher education and evolution have in common? They are all complex systems that change over time, and where the change follows certain patterns, few of which are predictive, when judged by specific outcomes (stock price, learning outcomes, speciation). But all three can be judged and understood by a proper description of process, where outcomes are probabilistic, and the value of the outcome is NOT equally distributed, i.e. rare events with large changes determine the long term outcome (mass extinction, punctuated equilibrium), despite the more frequent and thus likely changes (up or down) with much lower value added.

What Mauboussin does so impressively is describe the difference between process and outcome, as well as profession and business. Understanding and relying on the former of each pair is always a better strategy for long term success. Unfortunately, the modern financial and higher education systems (a high paying job within 3 month of graduation) are focusing on the latter, i.e., specific outcomes, which often disappoint, and are incorrectly blamed as a failure of the system, even though success was not defined based on process, but as as specific outcome (stocks go up, a college degree translates into a higher paying job).