We Study Billionaires - The Investor’s Podcast Network

TIP749: Unlocking Hidden Investing Secrets From Basic Science w/ Kyle Grieve

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Aug 31, 2025

Discover how principles from physics and biology can transform investment strategies. Learn how relativity allows for diverse perspectives on opportunities. Explore inertia's role in identifying which businesses thrive or struggle over time. Understand how momentum builds powerful business flywheels, while leverage can either accelerate growth or pose risks. Delve into niche market advantages and the critical importance of aligning incentives to mitigate investment risks.

01:03:22

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insights

INSIGHT

Perspective Explains Price Divergence

Relativity means observers with different backgrounds see the same investment differently.
Use this to understand why markets price businesses the way they do.

insights

INSIGHT

Stasis Dominates Corporate Outcomes

Inertia makes exceptional companies stay great and weak ones stay weak.
Expect limited mobility; stasis is the default across decades.

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ADVICE

Favor Fundamental Momentum Over Price Moves

Track momentum in fundamentals, not just price momentum.
Require multi-year EPS growth roughly matching your return hurdle before buying.

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Scientific Insights in Investing

01:32 • 16min

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Navigating the Risks of Momentum Investing

17:42 • 5min

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Harnessing Leverage and Ecosystems in Investing

23:08 • 19min

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Survival Strategies: From Microbes to Business Adaptation

42:33 • 4min

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Investing in Niche Markets

46:41 • 18min

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Understanding Management Incentives in Investment Analysis

01:05:08 • 3min

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In 'Margin of Safety', Seth Klarman discusses his views on value investing, drawing from the concepts of Benjamin Graham and David Dodd. The book critiques speculative investing and institutional investing practices, advocating for a disciplined and risk-averse approach. Klarman emphasizes the importance of understanding the intrinsic value of investments, avoiding false precision in valuations, and maintaining a margin of safety to mitigate potential losses. The book is divided into sections that cover the philosophy of value investing, the critique of institutional investing, and practical strategies for determining value and managing portfolios.

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In this book, Pulak Prasad offers a unique approach to investing by leveraging principles from evolutionary biology. He argues that the investment profession is in crisis, with most equity fund managers unable to beat the market over the long term. Prasad draws lessons from Darwinian concepts, using examples such as bumblebees' survival strategies, experiments in breeding tame foxes, and a small frog’s mimicry of a larger rival to illustrate investment principles. He outlines three key mantras for investing: avoid big risks, buy high quality at a fair price, and don’t be lazy—be very lazy. The book advocates for permanently owning high-quality businesses and provides practical insights into how evolutionary strategies can improve investment decisions.

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The Great Mental Models: General Thinking Concepts is the first book in The Great Mental Models series. It details nine fundamental thinking concepts that form the bedrock of clear reasoning and effective decision-making. Drawing on examples from history, business, art, and science, this book teaches how to avoid blind spots, find non-obvious solutions, anticipate and achieve desired outcomes, and play to your strengths while avoiding your weaknesses. The book covers mental models such as first principles thinking, Hanlon’s razor, inversion, and probabilistic thinking, among others, to help readers better understand the world, solve problems, and gain an advantage.

On today’s episode, Kyle Grieve discusses how mental models from physics, chemistry, and biology can give investors and business leaders sharper decision-making tools. He’ll explore how applying these frameworks helps to identify opportunities, avoid risks, and build lasting advantages.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro 02:06 - How relativity helps investors see opportunities from different perspectives. 07:33 - Why inertia reveals which businesses stay great or stuck over decades. 09:29 - How momentum creates powerful flywheels in business and investing. 23:22 - When leverage accelerates growth or dangerously magnifies risk. 29:13 - How catalysts can rapidly unlock an investing thesis. 35:50 - Why ecosystems multiply value from a single input change. 41:52 - How niche strategies create outsized business advantages. 52:50 - Why honest versus dishonest signals matter for investors. 01:00:19 - How misaligned incentives quietly increase investment risk.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Buy a copy of The Great Mental Models Part II: Physics, Chemistry and Biology here.
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