A few weeks ago, I read The Success Equation by Michael J. Mauboussin. He said that checklists are an important part of improving your decision-making process for activities influenced by luck. He mentioned the different types of checklists and a book that dives deeper into them.

The references to checklists stuck with me and reminded me of what Charlie Munger said about checklists. (See the post I wrote about that here.) It also made me want to learn more about the reasons checklists are so powerful.

So I read Checklist Manifesto by Atul Gawande, the book Mauboussin referenced. It delves into why checklists are used in industries such as aviation and construction. And why they’re effective at improving outcomes (and preventing disaster). A central point of the book is that the world is becoming more complex. It’s hard to remember everything, especially in high-pressure situations. Simple checklists help improve outcomes in complex situations by reducing errors of omission—missing important steps—and errors of ineptitude—failing to apply knowledge we already know. Going through a checklist forces consistency in how you think and what you do, preventing critical items from being overlooked or forgotten and thereby improving outcomes.

The book also describes the two main types of checklists and when it’s appropriate to use each: do-confirm—you perform tasks from memory and then verify them—and read-do— you follow steps, line by line, in high-stakes or unfamiliar situations.

An interesting note: the author is also a surgeon, so the book details his experience in trying to get hospitals around the globe to adopt surgical checklists (spoiler . . . checklists significantly reduce patient complications and death rates!).

I also found his research on the aviation industry, specifically the origins of why the industry instituted and relies heavily on checklists before takeoff and during emergencies, to be eye-opening.

I first read Expectation Investing by Michael Mauboussin this past summer, and I ended up reading that book twice and starting to read all of Mauboussin’s other books. This post is about the fourth of his books that I’ve read in the last few months, and it didn’t disappoint.

The Success Equation is about understanding the impact that luck and skill have on your successes and failures. The book provides a framework for understanding, in advance, how much skill and luck will impact a decision or activity. Understanding how what you want to do is affected by skill and luck can alter your planning, expectations, learnings, and a host of other things.

This book is full of things I’ve found helpful, two of which I’ve written about already:

• Rationality quotient (RQ) matters more than intelligence quotient (IQ)
• How checklists tame luck

Another concept that stuck with me is what he called the “luck-skill continuum.” Mauboussin explained how to gauge the extent to which an activity is influenced by skill and luck by visualizing it on a continuum. He then explained why the sample size required to draw a reasonable conclusion about future expectations differs for activities heavily influenced by skill vs. luck. He also explained reversion to the mean and why it impacts activities of skill and luck differently. I have lots of notes and highlights in the chapter on the luck-skill continuum that I’ll revisit often.  

This book was a great read. Anyone interested in improving their chances of success by improving their decision-making should consider reading The Success Equation.

I shared earlier this week that I’m reading The Success Equation by Michael J. Mauboussin. It outlines a framework for assessing the influence of skill and luck on your decisions (many life outcomes are a combination of both) so you can increase the chances of getting a successful outcome. It’s a good book about improving your decision-making by understanding the impact of luck and skill on successful (and unsuccessful) outcomes.

As I’ve said many times, books are a great way to find other books. One of the key concepts Mauboussin discusses is that to improve your skill in activities where luck has a greater influence than skill, you must focus on the process used to make decisions. The idea is that good decisions can result in outcomes we don’t want because of the influence of luck. And vice versa: a bad decision can lead to a good outcome because you got lucky. Therefore, a decision can’t be judged by its outcome; it must be judged by the quality of the process and analysis used to make it. He goes into more detail, but that’s the gist. I agree with this.

One of the things he suggested using, because they’re effective tools to improve decision-making processes, is checklists. Charlie Munger said the same thing in Poor Charlie’s Almanack (see here). Mauboussin told the story of a doctor who used checklists to significantly reduce hospital infections and realized how powerful they are. He wrote a book about checklists and how to use them effectively called The Checklist Manifesto.

Munger and Mauboussin can’t both be wrong about checklists. I use them some already, and I want to embrace them for material decisions, especially those that involve luck. I’m going to get a copy of The Checklist Manifesto and give it a read so I can lean into what Munger and Mauboussin have both said.

A book I’ve heard mentioned several times by people I respect is The Wealth of Nations by Adam Smith. It was written in 1776, so almost 250 years ago. I struggle to understand the language in old books. It takes me a lot longer to read them, and I don’t always grasp the main points. So I shy away from really old books. But I’m curious about The Wealth of Nations, especially after learning that Warren Buffett recommended it highly.

I came across a work-around: a book called Warren Buffett’s 3 Favorite Books. It was highly rated and claimed to summarize the main points of Buffett’s three most recommended books, including The Wealth of Nations, The Intelligent Investor, and Security Analysis (the last two both by Benjamin Graham).

The book does more than that. It distills the core ideas from the three books and explains them using simple examples. It then explains how and why those core ideas became the principles that drive Buffett’s value-investing strategy. And all in a way that anyone can easily understand.

One thing I especially enjoyed was how he explained the importance of taking initiative and teaching yourself. I really like his explanation of Thayer’s method of learning, a self-teaching approach he learned while attending the U.S. Military Academy. The gist is that if you embrace this method, you can teach yourself almost anything in life, which makes the method an invaluable asset. I totally agree with this method but didn’t know there was a name for the method.

The other concepts I enjoyed were in the chapters on bond valuation and stock valuation. He demonstrated how and why the two are connected and why comparing their yields (mainly, for bonds, the risk-free treasury yield) is a key concept that underpins much of the investing world.

Overall, this is a good book that’s a quick read. Anyone looking to understand or brush up on the core concepts of investing should consider this book.

In 2024, I challenged myself to accelerate my learning by reading a book (usually a biography) a week. To date, I’ve done it for 85 consecutive weeks. I wanted to share what I was reading and also keep track for myself, which was difficult (see here), so I created a Library section on this site. I added to it all the books I’ve read since my book-a-week habit began in March 2024, and I’ve committed to adding my latest read to the Library every Sunday (see the latest here).

That left the books I’d read before 2024 unshared and untracked. I set a goal to add my old reading to the Library over time. It began with a Memorial Day Challenge to add five books (see here) and continued with by challenging myself to add two books every weekend until my backlog is gone. Last month (see here), I decided to up the pace so I can finish this project well before the holidays—and begin another one!

The backlog is finally gone. This past weekend was my twentieth and final weekend, and I added the last two books:

• Liar's Poker by Michael Lewis
• Business Adventures by John Brooks

That’s the latest and final update for this weekend project. I’m glad I took this project on. It forced me to revisit tons of books, which jogged my memory.  I hope that sharing these books will add value to others.

This past week, I reread Expectations Investing by Michael Mauboussin and Alfred Rappaport. The book is an advanced value-investing framework that investors can apply to public companies to understand price relative to expected value. I read the book this summer. The framework made sense at a high level, but it had many moving parts that left me less confident that I could actually apply it and understand the expectations implied in a public company’s stock price. I wanted to try using the framework right after reading the book, but I never got around to it.

So, I reread the book this month, focusing heavily on my highlights and notes from the first reading. I then spent time building a model for a public company I follow. After several days of part-time effort, I finally finished it. After finishing the model and reviewing the output, I have a new appreciation for this book and the expectations-investing framework. It’s definitely something I’ll use going forward.

One of my big takeaways was that although the framework seemed daunting at first, after working through it (and getting stuck several times), I better understood its component parts. Lots of intertwining formulas. Required data from external sources. And several other moving parts. More importantly, I was able to simplify some of the more complex calculations, such as the Perpetuity with Inflation method for estimating continuing value. Said differently, going through the steps of building a model and applying the framework helped me understand it deeply and figure out ways to simplify it.

I’m glad I reread this book and applied the framework. It deepened my learning and took my understanding of this framework to the next level.

In 2024, I challenged myself to accelerate my learning by reading a book (usually a biography) a week. To date, I’ve done it for 84 consecutive weeks. I wanted to share what I was reading and also keep track for myself, which was difficult (see here), so I created a Library section on this site. I added to it all the books I’ve read since my book-a-week habit began in March 2024, and I’ve committed to adding my latest read to the Library every Sunday (see the latest here).

That left the books I’d read before 2024 unshared and untracked. I set a goal to add my old reading to the Library over time. It began with a Memorial Day Challenge to add five books (see here) and continued by challenging myself to add two books every weekend until my backlog is gone. Last month (see here), I decided to up the pace so I can finish this project well before the holidays—and begin another one!

This past weekend was my nineteenth weekend, and I added five more books:

• The Buy Side by Turney Duff
• Black Edge by Sheelah Kolhatkar
• Barbarians at the Gate by Bryan Burrough and John Helyar
• The Luck Factor by Dr. Richard Wiseman
• Chaos Monkeys by Antonio Garcia Martinez

That’s the latest update on my weekend goal. I hope that sharing these books will be of value.

In 2024, I challenged myself to accelerate my learning by reading a book (usually a biography) a week. To date, I’ve done it for 82 consecutive weeks. I wanted to share what I was reading and also keep track for myself, which was difficult (see here), so I created a Library section on this site. I added to it all the books I’ve read since my book-a-week habit began in March 2024, and I’ve committed to adding my latest read to the Library every Sunday (see the latest here).

That left the books I’d read before 2024 unshared and untracked. I set a goal to add my old reading to the Library over time. It began with a Memorial Day Challenge to add five books (see here) and continued by challenging myself to add two books every weekend until my backlog is gone. This month (see here), I decided to up the pace so I can finish this project well before the holidays—and begin another one!

This past weekend was my eighteenth weekend, and I added five more books:

• Principles by Ray Dalio
• Den of Thieves by James B. Stewart
• When Genius Failed by Roger Lowenstein
• Margin of Safety by Seth A. Klarman
• King of Capital by David Carey and John E. Morris

That’s the latest update on my weekend goal. I hope that sharing these books will be of value.

Last week I shared the 22 timeless principles of marketing that I learned from Al Ries and Jack Trout’s book (see here). I enjoyed that book and wanted to learn more, especially about positioning (i.e., perception), so I read their book Positioning, which focuses on how to get noticed and be perceived in the way you’re trying to be perceived.

This book came out in 1981. Ries and Trout argued that positioning was a new way of communicating that works well for advertising, politics, and other areas. “Positioning is what you do to the mind of the prospect,” they said. “That is, you position the product in the mind of the prospect.” It’s a way for companies, products, or services to be heard and seen in a world full of ads.

My key takeaway is that positioning focuses on leveraging what’s already in someone’s mind (instead of trying to introduce a new idea). You begin by concentrating on people’s perceptions and work backward to figure out how to message in a way that aligns with what they already think (this is the opposite of how most people approach marketing). Positioning “manipulates what’s already up there in the mind, to retie the connections that already exist.” It leverages the fact that people are bombarded with so much information that they discard most of it unless it matches their existing knowledge or experience. Don’t try to jam something new into someone’s mind; reconfigure what’s already there.

The book went further, saying that oversimplifying is the key to being received and you should focus on being narrow and selective with your messaging.

The book has 23 chapters, each dedicated to a distinct aspect of the positioning strategy. Several case studies in each chapter support the concept being covered.

Marketing is foreign to me, but this book, combined with The 22 Immutable Laws of Marketing, was helpful. They lay out the principles and strategies of marketing, which I never understood. When I view certain marketing tactics through the lens of what’s in these books, things make a lot more sense.

If you want to learn how to get people to think about something in a certain way, consider reading Positioning.

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In 2024, I challenged myself to accelerate my learning by reading a book (usually a biography) a week. To date, I’ve done it for 81 consecutive weeks. I wanted to share what I was reading and also keep track for myself, which was difficult (see here), so I created a Library section on this site. I added to it all the books I’ve read since my book-a-week habit began in March 2024, and I’ve committed to adding my latest read to the Library every Sunday (see the latest here).

That left the books I’d read before 2024 unshared and untracked. I set a goal to add my old reading to the Library over time. It began with a Memorial Day Challenge to add five books (see here) and continued by challenging myself to add two books every weekend until my backlog is gone. This month (see here), I decided to up the pace so I can finish this project well before the holidays—and begin another one!

This past weekend was my seventeenth weekend, and I added four more books:

• The Big Short by Michael Lewis
• The Greatest Trade Ever by Gregory Zuckerman
• The Great Game of Business by Jack Stack and Bo Burlingham
• Declutter Your Mind by S.J. Scott and Barrie Davenport

That’s the latest update on my weekend goal. I hope that sharing these books will be of value.