We Study Billionaires - The Investor’s Podcast Network

TIP304: Current Market Conditions w/ Preston and Stig (Business Podcast)

Jul 5, 2020

Stig and Preston dive into the current market landscape, sharing insights on evolving investment strategies since 2014. They discuss how 21st-century moats differ from earlier ones and tackle the nuances of economic conditions like currency debasement. With a critical look at investment opportunities, they highlight specific stock picks and emphasize the importance of harnessing data in a manipulated market. Listeners gain a fresh perspective on capitalism, inflation, and the necessity for diverse viewpoints in making sound investment choices.

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INSIGHT

Complex Valuations

Valuations are more complex today than in 2014, requiring consideration of various asset classes.
Macroeconomic factors like currency and private deals influence discount rates and opportunity costs.

question_answer

ANECDOTE

Stig's Painful Lessons

Stig Brodersen details painful investment lessons with National Oil Velvago and GameStop.
He now prioritizes quality over historical data and low valuations, adopting a more realistic approach to growth.

insights

INSIGHT

Data-Driven Advantage

Data-driven companies outperform others due to intelligent use of harvested information.
Traditional value investing struggles in manipulated markets where the "ruler" (money) changes rapidly.

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Navigating the Post-Crisis Market Landscape

06:01 • 13min

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Navigating Market Uncertainty

19:10 • 7min

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Capitalism, Democracy, and Investment Strategies

25:45 • 13min

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Currency Debasement and Investment Strategies

38:24 • 10min

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Navigating Market Trends and Diverse Perspectives

47:55 • 11min

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Mastering Investment Insights Through Critical Thinking

58:40 • 5min

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AI superpowers

China, Silicon Valley, and the New World Order

Kai-Fu Lee

In this book, Kai-Fu Lee argues that China is poised to become the next tech-innovation superpower due to its unique advantages in AI development, such as abundant data, fewer data protection regulations, and aggressive tech startup culture. Lee discusses the potential economic upheaval caused by AI, the impact on employment, and proposes a social contract to forge a new synergy between AI and human society. The book emphasizes the need for both the US and China to accept and embrace the responsibilities that come with significant technological power.

The Wealth of Nations

Adam Smith

Published in 1776, 'The Wealth of Nations' is Adam Smith's magnum opus that laid the groundwork for modern economics. The book critiques mercantilist economic theories and introduces the concept of the 'invisible hand,' which describes how individual self-interest leads to societal benefit. It emphasizes the division of labor, the accumulation of capital, and the importance of free markets. Smith argues that a nation's wealth is not measured by its gold and silver reserves but by the stream of goods and services it produces. The book also outlines the core functions of government, such as maintaining defense, enforcing civil law, and promoting education, while advocating for limited government intervention in market activities.

The Price of Tomorrow

Why Deflation is the Key to an Abundant Future

Jeff Booth

In 'The Price of Tomorrow,' Jeff Booth argues that technological progress is driving a natural deflationary force in the economy, which is being countered by government and central bank interventions through money printing and debt creation. Booth contends that our current economic systems, built on debt and inflation, are unsustainable and will lead to increased polarization and economic trouble if not adjusted. He advocates for embracing deflation and restructuring our economic frameworks to harness the abundance that technology can bring. The book covers a broad range of topics including the impact of technology on job markets, equality, and societal stability, and it concludes with a call to action for policymakers, business leaders, and entrepreneurs to adapt to these new economic realities.

In 'Capital and Ideology', Thomas Piketty explores the historical and contemporary justifications for inequality, arguing that it is fundamentally rooted in ideology and politics rather than economics and technology. The book spans global history, critiquing various political systems and their roles in sustaining inequality. Piketty proposes progressive taxation and participatory socialism as means to reduce inequality, emphasizing that economic systems are historical constructs dependent on societal choices. The book is a detailed and data-driven examination of the material and ideological interactions that have shaped human societies, advocating for a reimagined economic system that prioritizes equality and education.

Superforecasting

The Art and Science of Prediction

Dan Gardner

Philip E. Tetlock

Santiago Foz (argentino)

In this book, Tetlock and Gardner present the results of the Good Judgment Project, a massive forecasting tournament that identified a small group of 'superforecasters' who are exceptionally good at predicting future events. The authors explain that good forecasting does not require powerful computers or arcane methods but involves gathering evidence from various sources, thinking probabilistically, working in teams, keeping score, and being willing to admit error and change course. The book uses stories of forecasting successes and failures, as well as interviews with high-level decision makers, to illustrate these principles and demonstrate how anyone can improve their forecasting abilities.

Stig and Preston talk about the current market conditions and what kind of investments they think will perform in such a challenging environment. They talk about two different specific stock picks that have good valuations and good momentum characteristics.

IN THIS EPISODE YOU’LL LEARN:

How Preston and Stig’s valuation process has changed since they started We Study Billionaires in 2014.
How moats in the 21st century are different than in the 20th century.
Why a gold standard is inflationary.
How to invest in without sound money.
Ask The Investors: How do you validate and find unbiased information?

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Subscribe to our newsletters about the current market conditions.
Preston and Stig’s interview with Lyn Alden about investing in chaotic times.
Preston and Stig’s interview with Jeff Booth about inflationary and deflationary forces.
Preston and Stig’s interview with Bill Nygren about Bank of America.

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