TIP775: WHY YOUR VALUATION METRICS MIGHT BE LYING TO YOU

W/ KYLE GRIEVE

TIP775: WHY YOUR VALUATION METRICS MIGHT BE LYING TO YOU W/ KYLE GRIEVE

06 December 2025

In today’s episode, Kyle Grieve discusses a series of fantastic articles by Michael Mauboussin covering ways to combat noise, why traditional accounting standards hide value in today’s markets, how to make adjustments to better value businesses that are rich in intangible assets, how to utilize the rule of 40 in your investing, why checklists and algorithms are powerful parts of an investing framework, the base rates of a public businesses survival, and much more!

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IN THIS EPISODE, YOU’LL LEARN:

  • How to use the BIN acronym to help you deal with forecasting error
  • Four myths is in investing (many of which I’ve fallen for)
  • Why you must take GAAP numbers on a case-by-case basis due to handicaps of the standard
  • How the rise in passive investing is making active investing is more challenging
  • Why GAAP losers outperform GAAP winners
  • Why you should understand the differences between pricing and valuing a business
  • Why using assorted multiples will help identify true undervaluations
  • How to utilize the rule of 40 in your investing regardless of whether you invest in tech or not
  • What to know about the base rates of a public business’s survival
  • Why most investments will fail and how to deal with the ones that succeed

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Kyle Grieve: Today’s episode is a deep dive into some of the most compelling insights from Michael Mauboussin’s work from writing the Consilient Observer. For those who might not be familiar, Mauboussinon is a highly respected mind in investing, known for his rigorous and innovative approach to decision making, forecasting, capital allocation, and many other essential investing concepts.

[00:00:21] Kyle Grieve: Today I’ll be breaking down key concepts from several of his Consilient Observer articles, focusing on how investors can improve their judgment. Reduce noise, improve their decision making challenge commonly held investing myths and a lot more. Some of the biggest key takeaways include things such as how to use the BIN framework to combat forecasting errors.

[00:00:41] Kyle Grieve: We’ll explore how bias, information, and noise to sort our thinking. And a few simple tools to strengthen your decision making. And just cut through the noise. We’ll look at how we can utilize checklists and algorithms to improve systemic decision making. We’ll examine why traditional valuation metrics like price to earnings metrics and EV to EBITDA ratios are not as helpful as they once were.

[00:01:03] Kyle Grieve: These evaluation metrics have been go-to tools for investors, but some key concepts need to be considered when comparing businesses. We’ll look at why short-termism, dividends, money losing businesses, and the rise of indexes might not exactly be what they seem. Mauboussin does a fantastic job explaining some of these market myths.

[00:01:20] Kyle Grieve: We’ll go over the rare nature of a business six’s success and how investors can position themselves accordingly. We’ll look at some of the enduring traits of long-term winners to hopefully help you spot them in the future. I’ll also examine how investors can avoid common pitfalls by focusing on capital efficiency moats, and the right qualitative and quantitative data points rather than just following surface level metrics.

[00:01:41] Kyle Grieve: If you’re serious about improving your investing game and want to improve your thinking process by limiting biases, you won’t want to miss this one. Now let’s jump right into this week’s episode.

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