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The Importance of Skin in the Game in the Financial System
Naseem: Naseem Tlaib's new book is called Skin in the Game. In it, he talks about how managers of banks and hedge funds don't have so-called skin in the game. He says if that were the case, they wouldn't be taking all these crazy risks. Join over 30,000 other readers now at theinvestorspodcast.com slash We Study Markets.
On today’s episode, Clay chats with Scott Patterson about his new book - The Chaos Kings.
The Chaos Kings tells the story of the hedge fund that achieved average annual returns of over 105% from 2008 through 2019, and how Bill Ackman had a $27 million dollar bet that turned into over $2.6 billion.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro.
02:35 - Who the Chaos Kings are.
05:38 - The story of Nassim Taleb and Mark Spitznagel setting up a hedge fund that delivered average returns of 105% annually.
06:12 - How these hedge funds profit tremendously during times of calamity.
16:14 - What led Nassim Taleb to get interested in the markets.
24:55 - Why we should be mindful of just how uncertain the world and our global economy is today.
complexity theory - What complexity theory is.
28:51 - How investors can protect themselves from a black swan event.
45:02 - How Taleb and Spitznagel viewed the world differently than conventional wisdom.
53:12 -How predictable Black Swan events are.
57:41 - Looming Black Swans that Taleb sees in today’s world.
60:49 - What the precautionary principle is.
63:23 - Taleb and Spitznagels take on the systemic risks in the financial system today.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
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