Moneyball and automation: introducing "The Lab" | Justin Anderson | EP03
This episode features the investment insights of Justin Anderson, Canadian equity analyst and leader of Mawer’s zone of experimentation known as The Lab. The Lab focuses on two main areas:
- applying new technologies to garner an investment edge
- automating and streamlining the investment process
- the analogy of poker and the need to find the weakest table
- our views on the human plus machine model
- moneyball applied to investment decision-making
- the machine-driven ratings of Rotten Tomatoes
A transcript of this episode is available below, modified for a more enjoyable reading experience. For more posts exploring the ideas we talk about in the episode, check out our Related Reads links.
- Guest Speakers
1:17 - An introduction to The Lab; Ed Thorp as the founding inspiration—solutioning for an edge when the rules are always changing
4:32 - How the basic principles of poker make the perfect analogy for investing; Playing at the right “investment” table to find more opportunities
6:30 - Exploring the concept of tinkering and failing quickly; Tinkering to go to places no one has gone before or where no one has done it well; Encouraging an environment where failure is encouraged – without it, you won’t find success
8:07 - Fast failure to success – the AutoDCF
11:00 - Moneyball: applying a statistical lookback at our own funds to determine where we have added the most value
14:00 - The Lab’s two main areas of focus: 1) Moneyball – applying a systematic, scientific approach; 2) Automation – automating our existing process to do more with less
17:00 - The shift to the world of the centaurs: using the analogy of chess to explain the new world of humans plus machines
22:50 - Where humans still have the advantage over machines – nuance
25:48 - Tinkering with the automated analyses of Presidents’ letters; A practical example: Rotten Tomatoes
26:45 - De-biasing the process: A 5-year fast forward look at The Lab
29:26 - Rapid Fire Round:
- Hardest thing about poker
- Favourite job interview question
- Best memory from MIT
- Favourite aspect of playing linebacker
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