Taylor Pearson: Ergodicity All The Way Down

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Sep 16, 2022

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Taylor Pearson

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ANECDOTE

Modern Take On The Permanent Portfolio

Taylor describes the Cockroach strategy as a modernized Permanent Portfolio combining stocks, bonds, commodity trend buckets, and long-volatility in place of cash.
The long-volatility fund launched first because volatility protection is hardest for retail investors to access.

ANECDOTE

From Podcast Producer To Prolific Writer

Taylor began writing around 2012 after producing a podcast and found public writing valuable for connecting and learning with peers.
He took writing seriously from 2014–2015 and has remained consistent since.

INSIGHT

Why Ergodicity Changes Investing

Ergodicity distinguishes ensemble averages from time-series averages and matters because individuals experience one path through time.
For investors the path dependence of returns makes survival and drawdown management as important as long-run expected value.

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This week our guest is Taylor Pearson, Principal of Mutiny Fund, author of the book End of Jobs and the Interesting Times Newsletter. Our conversation is a summary of Taylor’s amazing blog posts such as: What is ergodicity, the Sand Pile Effect, Maginot Line, and Attractor Landscapes. He also tells us his investing journey and the origin story of the Cockroach Portfolio.

[0:00] Who is Taylor Pearson
[3:30] The Cockroach Portfolio
[6:00] Ray Dalio’s All Weather Portfolio
[11:00] Nassim Taleb’s Black Swan
[13:30] What is Ergodicity?
[18:00] The Ergodicity Problem in Economics
[21:00] Sand Pile Effect: Stability breeds Instability
[31:00] The White Moose Problem
[33:00] Maginot Line: Soldiers are Prepared to Fight the Last War
[43:00] The Beer Game
[47:00] Attractor Landscapes
[56:00] Driven by Compression Processing
[1:02:00] More from Taylor and Closing Questions

If you like what you heard, make sure to follow Taylor on Twitter @TaylorPearsonME

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