Write Like Wall Street’s Best | Michael Mauboussin | How I Write Podcast
Key takeaways from Michael Mauboussins podcast with David Perell
Hi.
Reading time: About 9 minutes
Michael Mauboussin is a personality I have been trying to a deep dive on. I am reading a lot of his writings and seeing all of the podcasts that are out there. He has a lot of podcasts on business, investing and his papers. But I found this podcast very interesting. He spoke about his writing and the process. After all he has written a lot. There is a lot to learn from the podcast I suggest you either read through the highlighted transcript or listen to it on Youtube.
Disclaimer: Any error made in this post is mine and mine only and all the credit is attributed to David Perell and Michael Mauboussin.
You can find the video here.
You can find the highlighted transcript here.
Key Takeaways:
To be a great writer you have to be a great learner.
There will always be something to write about a lot of what has to be said is already said but the world is always changing and things become more relevant.
Understanding the foundations of the formulas are the most important.
There is a curse of knowledge; a lot of smart people know a lot but cannot articulate the idea well.
The aggregate knowledge of the crowd is better than an average individual.
Not every great writer will appeal to you. Everyone likes to read different styles. You have to find your own writer.
To find an edge as a writer you have to do something which is interesting and communicate it well.
No substitute for getting after it.
Synthesizing ideas from different disciplines gives you a lot of ideas.
Writing needs to be done in silence and after blocking timeout only for writing.
A great writer will always use personal stories to connect with the reader. (more important now with AI)
Highlights/Quotable quotes:
Difference between verbal teaching and writing:
"Verbal communication tends to be a little bit different because I can sit here and look at you, and if you don't know what I'm talking about or puzzled or disagree, I can read that cue from you. Writing is very different, of course, because I'm just handing it over and don't know your reactions to that." - Michael Mauboussin
Importance of learning:
"It's about learning and then communicating. Learning and then writing, for instance, or learning and then teaching.So, it's an input and an output, and both of those things are really important"-Michael Mauboussin
"Like I think most effective is this constant flow of input, which is basically learning, and then output, which is basically teaching our communication. So output would include teaching a course, giving a talk, but very, very, very big part of that is writing. So it's input, output. And by the way, if I'm doing a lot of output, non-input, I feel out of balance. If I'm doing a lot of input and I'm not outputting, so I'm not synthesizing for myself, I feel out of teaching" -Michael Mauboussin
Understanding the core concept:
"So don't worry about the formulas, the technical things, understand the concepts. And to me, this is very much what animates as I try to write is to say, what is the important underlying idea?
To your point, if you can distill it and make it straightforward and make it accessible to people, that's really what we're after when we're trying to communicate and write."- Michael Mauboussin
"I'll just say in the investment world as an example, lots of people use things like multiples of earnings or multiples of cashflow to value things, but they don't necessarily understand the foundations of those multiples because they're shorthand, right? So to me, this is what communication's all about is making sure that you understand the foundational principles upon which this is built"- Michael Mauboussin
Why Smart People are bad writers:
"What makes smart people bad writers is this curse of knowledge. You have a lot of stuff going on in your head. Maybe that's the stuff underneath the iceberg and you're not communicating it in a way that's effective or efficient for the reader. So the key is to make sure, and by the way, making things accessible, acronyms, right? People like to use jargon.Could a high schooler read what we're writing? Maybe not understand every single nuance, but basically get the ideas of what we're doing. Everywhere from that to a finance professor, right?"-Michael Mauboussin
Wisdom of Crowds:
"The wisdom of crowds is this really wild idea that just a bunch of people getting together, trying to guess something, and by the way, they have incentives and different amounts of money and so forth. Just the aggregation of that, and often leads to a better answer than the individual. We know that it's better than the individuals on average. You're like, wait, wait, wait, what is this?So that alone was fascinating. And then the other thing that he added on was it's under certain conditions. It's conditional. What are those three again? So it's diversity. So heterogeneity of the agents, right? Second is aggregation, some way to bring the information together. And the third is incentives, which is rewards for being right and penalties for being wrong. So you might think about, I mean, these things apply, the wisdom of crowds applies to the neurons in your brain, the cells in your immune system, people walking around the city of New York, all these things, right?"-Michael Mauboussin
"And by the way, the conditions tell us when the wisdom of crowds flips to the madness of crowds. And we know that both of those things exist in the real world."-Michael Mauboussin
Efficient Markets (in writing and investing):
"Because as long as there is a cost, there has to be some sort of business, that's an inefficiency in the market that someone's going to be able to be compensated for their efforts."-Michael Mauboussin
"I can't tell you how many people I speak with who say, either I have nothing to share or everything that's worthy of saying has already been said. So David, there's nothing to write about. I would argue that that very paper proves that wrong, that in the same way that there's a cost to gathering, you can do the same thing." - David Perell
"And I would bet that Bezos says, your margin is my opportunity. I always say, your ignorance is my opportunity as a writer." - David Perell
Story of Paul Krugman:
"He's like, oh, international trade. And he's like, dude, that's done. We figured all that stuff out. And he's like, no, I don't really think so. And see, he actually took a couple of little ideas. He called them gadgets and reorganized it, observed how the world was working and apply these frameworks and came up with some fascinating insights about international trade and the concept of increasing returns, right? Super cool. That's a perfect example where someone literally said this topic is done. Exactly your point, like everyone's done it. And this guy had not only revived it, added huge amounts of incremental intellectual capital and won the Nobel prize for it"- Michael Mauboussin
Find your own writer
"Look, when I think about trying to be an effective writer, so much of it is about reading and knowing what you like to read, knowing what's effective as a reader, reading other authors and what works and what doesn't work for you"- Michael Mauboussin
His research process
He finds things which he feels like he needs to do more research on and needs to know more than he already does. That is the rabbit hole he gets in. Success equation was a spin off from Think Twice because he did not do justice to one chapter.
"But the thing I find time and again, is that answering a question in depth opens up new questions. And my favorite description of this comes from Nassim Taleb. He says that all my books were born out of the ribs of my previous book." - David Perell
Finding an edge as a writer
"One is to do work that is interesting, right? To whether it's research or have an observation or an insight that's interesting. And look, it is true that a lot of things have been said before, but it is also true that there are a lot of interesting ways to apply ideas. So having something interesting to say is the prerequisite for all this stuff.
And then the second is trying to communicate it in an effective fashion, right? So write it well. And there are plenty of people that have great ideas that can't spit it out. There are people that have great ideas that have the curse of knowledge and do a poor job, but try to write it well."- Michael Mauboussin
"so there's no substitute for getting after it."- Michael Mauboussin
What made Cormac Mccarthy great
"To be a great writer seems to me, you have to be a great reader and you have to be probably a pretty prolific reader. And he certainly was all those things.But I think that, and he didn't like to talk about, at least to me, maybe he talked about it with others. He didn't like to talk much about his writing process. But I think that my sense very much was it was almost like to some degree, he worked very hard at it in the craft, but it was almost like a gift for him." - Michael Mauboussin
"So I said, one of the times I asked Cormac, like, when do you know when you're done?
And he says, when I pull the manuscript out of the drawer and I don't want to change a single word." -Michael Mauboussin
Synthesizing and connecting the dots (neurobiology and industry)
The number of neurons in your brain does not change much throughout your life. But the number of synaptic connections changes wildly. Basically when you are about three there is a huge upswing. Then there is a pruning process. Then a little bump. Then as an adult it levels off.
Stephen Klepper has done similar work in industry development. Companies follow the same pattern as the human brain in synaptic connections. Huge upswing in competition, gets to an apex and then it comes back down again.
Work environment while writing
"But I will say that writing for me to be effective at it, it does require blocks of time. Even when I was writing my first book, which I co authored, I had this sort of illusion that I could hack it out on a train or on a plane ride or like that. It just doesn't work. So I really need to be in the zone. I was actually talking about some folks earlier today. I used to also, from time to time, have music on. I now do none of that. So complete silence, by the way, when I work." - Michael Mauboussin
Books and Resources mentioned:
1. Steven Pinker - The Sense of Style: The Thinking Person's Guide to Writing in the 21st Century
2. William Strunk and EB White- The Elements of Style
3. Stiglitz paper on impossibility of informationally efficient markets
4. James Suroweicki- The Wisdom of Crowds
6. Laurence Gonzales – Deep Survival : Who lives, Who Dies, and Why
Any feedback is appreciated. Happy learning.
Thank you for reading,
Samvit.