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- Herausgeber: Business Book Summaries
- Kategorie: Lebensstil
- Sprache: Englisch
The must-read summary of Michael Mauboussin's book: "Think Twice: Harnessing the Power of Counterintuition".
This complete summary of the ideas from Michael Mauboussin's book "Think Twice" reveals the reasons why people sometimes make bad decisions. In his book, the author explains that this comes down to the mental software that is hardwired into the human brain. Most of us would rather do whatever comes to mind first rather than properly calibrating the evidence which lies at hand and applying that to our decision making. This summary demonstrates why you should try and think twice when making decisions in order to reduce the number of mistakes you make.
Added-value of this summary:
• Save time
• Understand key concepts
• Expand your knowledge
To learn more, read "Think Twice" and find out how to make better decisions in your personal and professional life.
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Seitenzahl: 36
Veröffentlichungsjahr: 2014
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Book Presentation: Think Twiceby Michael Mauboussin
Book Abstract
About the Author
Important Note About This Ebook
Summary of Think Twice(Michael Mauboussin)
The eight most common decision mistakes – and how to offset them
Book Presentation: Think Twiceby Michael Mauboussin
Book Abstract
Main Idea
Why do smart people sometimes make appalling bad decisions, especially when the stakes are high? It really comes down to the mental software hardwired into the human brain. We genuinely are not well equipped to deal with many of today’s most pressing problems. We see the world we want to see rather than letting the facts speak for themselves. We also have no problems harboring false beliefs, even if irrational. And most of us would rather do whatever comes to mind first rather than properly calibrating the evidence which lies at hand and applying that to our decision making.
To reduce the number of mistakes you make, try and think twice about your choices. To do that, three steps are involved:
About the Author
MICHAEL MAUBOUSSIN is chief investment strategist at Legg Mason Capital Management. He has been adjunct professor of finance at Columbia Business School since 1993. Mr. Mauboussin has served as managing director of Credit Suisse and is the former president of the Consumer Analyst Group of New York. Mr. Mauboussin is the author of More Than You Know and the coauthor of Expectations Investing. He is a graduate of Georgetown University.
Mr. Mauboussin’s Web site is atwww.MichaelMauboussin.com.
Important Note About This Ebook
This is a summary and not a critique or a review of the book. It does not offer judgment or opinion on the content of the book. This summary may not be organized chapter-wise but is an overview of the main ideas, viewpoints and arguments from the book as a whole. This means that the organization of this summary is not a representation of the book.
Summary of Think Twice(Michael Mauboussin)
The eight most common decision mistakes – and how to offset them
Part 1
Corporate mergers and acquisitions are a multi-trillion-dollar industry year after year. It’s not at all unusual for large corporations to spend millions identifying potential targets, carrying out acquisitions and then working to integrate those new companies into their operations. All of these acquisitions are made with the best of intentions but the reality is most transactions do not create value for the shareholders of the acquiring company.
Most executives acknowledge their chances of success in creating value by making an acquisition are not good, but they believe they can beat the odds. This is a prime example of making decisions using an inside perspective alone. Executives believe the synergies which will be created by combining the companies will more than compensate for the premium the acquiring company has to pay. There is the unstated belief the acquiring company is getting more than it is paying for because the executives know what they’re doing. Unfortunately for investors, this usually turns out not to be the case at all.
To avoid falling into the trap of making decisions from an inside perspective alone, the three-step process is:
Prepare – look at how other companies have fared in making acquisitions work for them rather than against them.Recognize – that you may be trying to move ahead on the basis of unwarranted optimism.Apply -come up with a framework you can use to make better decisions which incorporates all the available facts. Look for comparable situations which can provide a statistical basis for making a decision rather than viewing your problem as unique. It rarely is.So how do you incorporate an outside view into your decisions? The specific steps involved are:
Select your reference data sample – a big enough group to be significant but narrow enough to be useful. It’s helpful if your reference group is stable over time and not in an industry which is undergoing large-scale changes.Analyze and assess outcomes – figure out under which conditions success is more likely. For example, in the case of acquisitions, you may find when an acquisition is made using an all cash transaction and the premium paid is 5 percent or less, then the deal is more likely than not to generate synergies which add value. Look for patterns.Make a forecast
