Moneyball and automation: introducing "The Lab" | Justin Anderson | EP03

April 4, 2018 Print

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:

  1. applying new technologies to garner an investment edge
  2. automating and streamlining the investment process

Highlights include:

  • 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

 



Your host

cam porthole3 Cameron Webster, CFA, MBA
Institutional Portfolio Manager

Cam likes to think and act long-term. He has broad experience in the capital markets over his 20+ years as an analyst, portfolio manager, and client service professional. When not thinking about markets and investing, Cam trains and participates in other “boring” and disciplined activities such as ultra-endurance races—marathon, triathlon, one-day 300+km bike rides.

Shownotes

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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