Michael Mauboussin, head of global financial strategies at Credit Suisse and author of four books on investing, joined CNBC's Mike Santoli for an exclusive strategy session on how investors can outperform the market by spotting trading inefficiencies.
One of those inefficiencies includes finding overly bullish or overly bearish sentiment in a security, which often reflects herd mentality and causes investors to put down their guard.
"So everyone seems to be on the same side of a ship. They're all uniformly bullish. They're all uniformly bearish. And that becomes much more sort of a sociological or social psychological component," Mauboussin said.
In this extensive conversation, Mauboussin, who has taught at Columbia Business School since 1993, also discusses:
- The benefits of active management.
- How established money managers and institutions approach investing.
- Some of the common mistakes retail investors make and how to avoid them.
- His outlook for the hedge fund industry.
PRO subscribers can also read the entire transcript of the exclusive interview below.