TIP710: Common Stocks and Common Sense w/ Kyle Grieve

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 30 March 2025

⏱️ 69 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Kyle Grieve explores how common stocks, paired with contrarian thinking and an understanding of cycles, can generate strong returns. We’ll cover lessons Ed shares from his journey—like allowing for imprecise valuations and learning from disappointing investments. We’ll also look at the value of investing alongside great investors and acting decisively during market panics. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 04:00 - Why common stocks offer more than just solid returns. 06:14 - One mindset shift to sharpen your contrarian investing edge. 07:43 - Three questions that clarify any tough investing decision. 12:54 - How averaging up became Ed’s unfair advantage. 16:14 - The shortcut Ed uses to spot great investments. 18:08 - Earnings, multiples, and perception: the formula behind significant returns. 24:35 - A turnaround playbook for deep value opportunities. 29:36 - Cyclicality decoded: spotting hidden patterns before the crowd. 49:23 - When bad investments still make you a better investor. 59:25 - Ed’s surprising win in a sector everyone hates. And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more here. Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Read Common Stocks and Common Sense here. Follow Kyle on X 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 CFI Education Netsuite Vanta Found The Bitcoin Way Shopify Fintool Unchained 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! Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm 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	Ed Wachenheim is an unknown investor with an impeccable track record.
0:07.3	From 1998 to 2017, his fund Greenhaven generated 19% returns before fees compared to the SMP
0:13.3	500's annual return of just 7%.
0:15.9	Now what drew me to his book is simplicity, or as Ed calls it, common sense.
0:20.3	You won't see any mention of complicated
0:22.1	formulas or academic jargon in his book. Instead of over-complicating investing, Ed focuses
0:27.1	on what really matters, using common sense to make quality investment decisions. Now,
0:32.2	one of Ed's first points in the book is just how good common stocks are. The historic returns are so
0:36.9	good that if we just
0:38.4	can avoid common emotional mistakes such as panic selling, we can accrue more wealth than we'll
0:43.7	ever need. Throughout this episode, we'll go over several mistakes that Ed has observed in his
0:48.5	decades in the market and made himself. Now, another hallmark of most great investors is the ability to just think differently.
0:56.6	We'll cover many companies that you're going to be familiar with, but most lack the glamour
1:00.0	that you'll see on the front pages of the news.
1:02.6	Ed made much of his returns looking at relatively boring businesses, often in low-growth industries.
1:07.6	We'll review his reasoning for his success in investing in companies that many would just avoid due to the stigma of low returns in mediocre industries. We'll review his reasoning for his success in investing in companies that many would just
1:11.5	avoid due to the stigma of low returns in mediocre industries. Now, this leads well into talking
1:17.6	about the circle of competence. There are several examples where Ed believed management and
1:21.8	even analysts' forecasts were incorrect. These are examples where he saw further upside because
1:27.2	of his knowledge of the industry.
1:29.8	Housing is one such industry that Ed knows like the back of his hand. So there have been times
	...

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