A practical framework for making better decisions, managing risk, and finding opportunity in unpredictable environments. We contrast these principles with the massive $2.9 trillion AI data center build-out by Big Tech, which is betting big on a single superintelligence future. Show Notes Inside the relentless race for AI capacity—The Financial Times Inside the AI race: can data centres ever truly be green?—The Financial Times The Kanye/Data Center Crossover by Paul … [Read more...]
533: How To Better Navigate Money, Time, Risk, and Uncertainty with Carl Richards
David converses with renowned illustrator and financial philosopher Carl Richards on the abstraction of money, attentional capital, distinguishing risk from uncertainty, and the importance of taking microactions. Show Notes Behavior Gap Your Money: Reimagining Wealth in 97 Simple Sketches by Carl Richards Episode Sponsors Asset Camp Money for the Rest of Us Plus Related Episodes 496: Are You Taking Enough Aspirational Risk? 394: How to Get Better at Risk … [Read more...]
496: Are You Taking Enough Aspirational Risk?
Why we need distinct risk buckets: balancing our natural loss aversion with the allure of opportunities that offer the potential for massive upside. Topics covered include: What is modern portfolio theory, and what are some of its flaws Why so many people have gotten wealthy by being undiversified How to balance personal risk, market risk, and aspirational risk How prospect theory explains our attraction to positively skewed opportunities Why most people won't get wealthy … [Read more...]
451: How Much Should You Invest in Stocks? The Art of Position Sizing in a Volatile Market
Our allocation to risky assets should vary based on the expected return, volatility, risk aversion, and how much we can earn risk-free. That means we should be taking less risk right now. Listen to learn why. Topics covered include: Why there are so few billionaires Why the hedge fund Long Term Capital Management imploded Why how much to invest is more important than where to invest How the Merton share formula can assist with determining what percent of our wealth to invest … [Read more...]
394: How to Get Better at Risk Taking
Five ways we can better take and manage risk. Topics covered include: How likely is it that China will invade Taiwan and the stock market will fall 80%Why experts tend to be humble and don't make specific predictionsWhat is the difference between risk and uncertainty, and between loss capacity and loss aversionWhat factors impact our degree of loss aversion and loss toleranceWhy the economy needs more risk takers rather than rentiers Show Notes Investor Risk Profiling: An … [Read more...]
349: Forward and Reverse Mortgages: When To Take Them Out and When to Pay Them Off
How to decide when to take out a home mortgage and whether to pay it off early. How reverse mortgages can be a helpful retirement tool. Topics covered include: Why it is more difficult to get a mortgage todayHow federal government mortgage guarantees lead to lower mortgage ratesHow to analyze whether to pay off your mortgage earlyThe differences between personal risk, market risk, and aspirational riskHow reverse mortgages work and how they can be useful as a retirement income toolWhat … [Read more...]
What Is Risk vs Uncertainty?
Risk is when the odds or probabilities of future events can be estimated. Uncertainty is when the list of possible future events is unknown, so their odds of occurring cannot be estimated. So how do we make decisions under risk versus uncertainty? ARTICLE TABLE OF CONTENTS (Skip to Section) Risk and InsuranceUncertainty DefinedRisk Versus UncertaintyMaking Decisions Under Risk Making Decisions Under UncertaintyConfusing Risk Versus UncertaintyHow To Make Better … [Read more...]
291: How To Survive the Coronavirus (COVID-19) Shutdown
How to avoid ruin and help others avoid ruin as the economy shuts down to slow the spread of the coronavirus. Topics covered include: What is the precautionary principle and how can it help us make important decisions with regards to the coronavirus pandemic.How many people could be infected with COVID-19 in the next 30 to 60 days at the current daily growth rate.Why investment managers are selling assets to reduce their market exposure.Should individual investors be increasing or … [Read more...]
268: How To Better Manage Risk
What are the three steps to better manage risk and get what you really want. In this episode you’ll learn: Why goods and services that lessen risk tend to cost more.What is the three-step process for assessing and managing risk.Why defining the risk-free option or asset is critical to managing risk.Why immediate annuities are the retirement risk-free option rather than a conservative investment portfolio.What are the two types of risk and how do we mitigate them.What is the … [Read more...]
Investing Rule One: Avoid Ruin
How reducing exposure to a catastrophic event, such as running out of money during retirement, is a better strategy than trying to accurately predict a catastrophic event. In this episode you’ll learn: How repeated exposures to low probability events can lead to ruin. How bonds have outperformed stocks over long stretches of time . How the success of retirement spending rules depend on the market environment and why a flexible approach to retirement spending makes the most … [Read more...]
