PaulJohnson-2

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  • Episode 15: Riding with the Kelly Gang - This is how to attain your ultimate wealth goal safely

    Episode 15: Riding with the Kelly Gang - This is how to attain your ultimate wealth goal safely

    · Low Rates High Returns
    We discuss the Kelly Criterion and the psychology of maximising your long-term wealth…and how to approach your wealth goal safely.Some of the points we cover in this episode include: -The prince and the pauper: diminishing marginal utility-Why we should become more risk averse as we approach our wealth goal-Arithmetic versus logarithmic returns -Compounded returns: Buffett versus the S&P 500 1965-2019 -Exponential returns and why the rich get richer -Objective versus subjective approaches to Kelly investing -Betting what you’re emotionally comfortable with Books and research mentionedDaniel Bernoulli – expected utility hypothesis (diminishing marginal utility) Thanks for listening!Download a free chapter from our book ’Low Rates, High Returns’https://www.lowrateshighreturns.com/podcastPete Wargenthttps://www.petewargent.com/https://www.linkedin.com/in/pete-wargent-37228322/Stephen Moriartyhttps://twitter.com/SGM63

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  • Episode 14: Groupthink or Groupstink? Social physics, and the impacts of leverage

    Episode 14: Groupthink or Groupstink? Social physics, and the impacts of leverage

    · Low Rates High Returns
    We discuss social physics and the potential perils of groupthink.Some of the points we cover in this episode include:-What is groupthink and why does it exist?-Why we like to run with the bulls-Why we like to think we’re all different (but we really aren’t) -The critical role of leverage in market cycles-PLUs: people like usBooks mentionedThe Art of Contrary Thinking, Humphrey NeillCritical Mass, Philip BallForecast: What Physics, Meteorology, and Natural Sciences can teach us about Economics, Mark BuchananThanks for listening!Download a free chapter from our book ’Low Rates, High Returns’https://www.lowrateshighreturns.com/podcastPete Wargenthttps://www.petewargent.com/https://www.linkedin.com/in/pete-wargent-37228322/Stephen Moriartyhttps://twitter.com/SGM63

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  • Episode 13 – This is how to overcome the pitfalls of individual decision-making

    Episode 13 – This is how to overcome the pitfalls of individual decision-making

    · Low Rates High Returns
    If you want to manage your own money, you need to be able to think independently rather than being influenced by too many sources. We discuss what influences our decision-making, and the two different ways of making a decision.That is, individually, or as part of a group. Some of the points we cover in this episode include:-How we are influenced by the media and our social circle-How to disseminate information more carefully-Being wary of narrative economics -The Myers-Briggs test versus the Enneagram Assessment-How the brain creates emotions -Influence fads -Social physics: why we don’t always act as individuals in our own self-interest-Why this cycle has echoes of the dotcom bubble?Books referencedIrrational Exuberance, Robert ShillerHow Emotions are Made, Lisa Feldman BarrettDevil Take the Hindmost, Edward ChancellorExtraordinary Popular Delusions and the Madness of Crowds, Charles MackayMastering the Market Cycle: Howard MarksThanks for listening!Download a free chapter from our book ’Low Rates, High Returns’https://www.lowrateshighreturns.com/podcastPete Wargenthttps://www.petewargent.com/https://www.linkedin.com/in/pete-wargent-37228322/Stephen Moriartyhttps://twitter.com/SGM63

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  • Episode 12 – Super forecasters! You can’t predict, but you CAN prepare.

    Episode 12 – Super forecasters! You can’t predict, but you CAN prepare.

    · Low Rates High Returns
    If you want to be a successful investor, then naturally you need to take a position on future events. Yet making predictions is difficult, especially when they are about the future!Some of the points we cover in this episode include:-The history of some very wrong predictions-The problem with ‘expert predictions’ on the economy and markets-Prediction biases: recency bias and priming-How can you be a better predictor?-Can the crowd ever be wise? -The Superinvestors of Graham and DoddsvilleBooks mentioned:The Wisdom of Crowds, James SurowieckiSuperforecasting: The Art of Science of Prediction, Philip TetlockThinking Fast and Slow, Daniel KahnemanThe Base Rate Book: Integrating the Past to Better Anticipate the Future, Michael Mauboussin The Black Swan, Nassim Nicholas TalebThe Superinvestors or Graham and Doddsville, Warren Buffett, Hermes Magazine, Columbia Business SchoolThanks for listening!Download a free chapter from our book ’Low Rates, High Returns’https://www.lowrateshighreturns.com/podcastPete Wargenthttps://www.petewargent.com/https://www.linkedin.com/in/pete-wargent-37228322/Stephen Moriartyhttps://twitter.com/SGM63

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  • Episode 26: Industry cycles - This is how to invest in sectors

    Episode 26: Industry cycles - This is how to invest in sectors

    · Low Rates High Returns
    In this week’s episode we discuss:-industry cycles and why they repeat-industry CAPE ratios-why supply matters as well as demand-focussing on statistics over stories-a very simple method for investing in sector ETFs! Books mentioned:Geoffrey West – ScaleJonathan Tepper – The Myth of CapitalismJames O’Shaughnessy – What Works on Wall StreetEdward Chancellor – Capital Returns: Investing Through the Capital CycleJeremy Siegel – The Future for Investors: Why the Tried and the True Triumph over the Bold and the NewThanks for listening!Download a free chapter from our book ’Low Rates, High Returns’https://www.lowrateshighreturns.com/podcastPete Wargenthttps://www.petewargent.com/https://www.linkedin.com/in/pete-wargent-37228322/Stephen Moriartyhttps://twitter.com/SGM63

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  • Episode 11 - The Kelly Investor: Maximising Your Long-Term Wealth

    Episode 11 - The Kelly Investor: Maximising Your Long-Term Wealth

    · Low Rates High Returns
    In this episode, we discuss how we use the Kelly criterion in our own investing strategy.Investing is not a one-time event, and markets are not always efficient, as claimed by Harry Markowitz and his followers. Investing is instead a series of repeated similar bets, and markets are frequently inefficient.We can regularly find stock markets and sectors which have become cheaper than their long-run mean valuations. Given the above, why wouldn’t you look to place bets on high-probability events rather than risk losing your capital in expensive markets?Kelly developed a formula that showed how to invest fractionally and understand your edge.Kelly investing should lead you to the question: ‘What is your informational edge?’In this episode Stephen tells us about one informational edge he uses - the CAPE ratio - and how it can be yours too, given its high correlation with expected returns.We discuss why understanding the Kelly criterion, capital growth theory, and position sizing are crucial to maximising your long term wealth. There will always be great opportunities in the future, so you must make sure you are around to capitalise on them by waiting for the fat pitch. Some of the key points we discuss in this episode include:-What is the Kelly Criterion?-A proven system for maximising your long-term wealth -THIS is what your information edge can be -It’s a big world out there, and there are many markets to choose from. Why limit yourself?-When the odds are in your favour, bet more (and when they’re not, bet less...or not at all). Download a free chapter of our book:https://www.lowrateshighreturns.com/podcastThese are the books we mentioned in the episode. Check them out!Fooled by Randomness by Nassim Taleb:https://www.goodreads.com/book/show/38315.Fooled_by_RandomnessThe Warren Buffett Way by Robert G. Hagstromhttps://www.goodreads.com/book/show/18613679-the-warren-buffett-way-workbook

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  • Episode 9 - This Is How To Invest In Companies

    Episode 9 - This Is How To Invest In Companies

    · Low Rates High Returns
    The Kelly Criterion holds that we should look to buy companies when they are cheap or undervalued, to maximize our geometric returns. But remember the risk hierarchy: investing in individual companies can entail a risk of permanent loss of capital.Instead of looking for the next big thing, when investing in companies we look instead for market mispricing: finding opportunities to buy a dollar for 50 cents. The Lindy Principle tells us that when some companies and brands have been around for a very long time, then we should expect them to remain around for a very long time into the future - a key quality to look out for in potential company investments. We discuss how to find established, profitable, systemic companies, which will throw off powerful dividend or income streams for decades to come. OK, everybody look away now: Steve also tells us why tobacco has been one of the best performing sectors over the decades. We touch on the pros and cons of ethical investing (ESG) from a returns perspective, and how fund managers are now shifting their thinking towards investing in sustainable companies.Some of the key points we covered in this episode include:- What type of companies should you invest in?- How to avoid losing money in individual stocks- Looking for established, systemic companies- Which sectors to look for and which to avoid- The importance of the dividend component of your returnsThanks for listening!Download a free chapter from our book ’ Low Rates, High Returns’https://www.lowrateshighreturns.com/podcastPete Wargent https://www.petewargent.com/https://www.linkedin.com/in/pete-wargent-37228322/Stephen Moriartyhttps://twitter.com/SGM63

    Hosted on Acast. See acast.com/privacy for more information.