TIP701: Against The Gods w/ Kyle Grieve

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 23 February 2025

⏱️ 65 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In today's episode, Kyle Grieve discusses the book Against The Gods and how risk has evolved over history, why risk management was deeply routed in gambling, how the insurance industry was launched, revolutionary learnings on risk from brilliant historical figures, how regression was formulated and how it tricks investors, the two economists who upended utility theory, the powerful concept of prospect theory and how it showed how irrational humans are, and much more! IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 06:52 - Why a human “calculator” can’t win in the market, and the key skills that drive investing success. 08:54 - The two critical risk concepts Cardano introduced to beat the odds—still useful for investors today. 11:12 - How Pascal and Fermat cracked the ‘problem of points’ and laid the groundwork for market probability models. 15:09 - How Daniel Bernoulli connected intuition with measurement. 20:24 - How Bayes’ rule transformed probability theory. 25:55 - Why focusing on the downside matters most—especially when the market is euphoric. 26:33 - How regression to the mean distorts our view of performance—and tricks investors into bad decisions. 38:47 - Why diversification can sometimes increase risk. 43:49 - How prospect theory rewrote the rules of decision-making—explaining why investors act irrationally. 52:01 - Why investors cling to bad ideas—how biases and ego can sabotage returns. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Buy a copy of Against The Gods here. Follow Kyle on Twitter and LinkedIn. Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter. Check out our We Study Billionaires Starter Packs. Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: Hardblock SimpleMining Unchained Netsuite Found Fintool The Bitcoin Way Vanta PrizePicks Onramp TurboTax Fundrise HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:03.0	In this episode, we're exploring one of the most fascinating concepts in investing, which is risk.
0:08.0	We'll unpack how humanity's understanding of risk has evolved over centuries and why improving our knowledge of it is key to becoming a better investor.
0:17.0	We'll rewind to the earliest forms of gambling, dice games played with bones in ancient
0:22.8	Egypt, and we'll trace how humanity began quantifying uncertainty. We'll explore how thinkers like
0:29.2	Fibonacci, Pascal, and Fermat laid the groundwork for probability theory, helping us shift from
0:34.7	relying purely on luck to calculating odds.
0:41.0	You'll also learn how gamblers like Girolamo Cardano,
0:43.1	who learn the hard way about the dangers of chance,
0:46.2	helped shape ideas foundational to modern investing.
0:48.7	But investing isn't just about the quantitative.
0:50.4	It's about psychology, too.
0:55.2	We'll explore how risk is deeply intertwined with human behavior and psychology.
1:00.0	You'll hear how thinkers like Daniel Bernoulli taught us that managing risk requires understanding not just the odds, but human motivation, like how our perception of gains and
1:05.1	losses shift as our wealth changes. And of course, we're going to connect these ideas to
1:09.9	investing.
1:15.8	You'll hear why Charlie Munger believes most academic models fall short because they fail to capture the real-world complexities of the markets.
1:19.7	We'll learn about Munger's approach to risk and his appreciation of Pascal and for Matt's
1:23.5	work.
1:24.3	You'll also hear how probability theory applies directly to your investment decisions
1:27.9	from building bare, base, and bullcases to assessing the odds of different outcomes.
1:33.2	Plus, we'll explore how risk management changes over your investing lifetime.
	...

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