In this episode, Juan and Andy speak with Taylor Pearson, a fund manager with a particular interest in creating research-backed systems to make decisions in an uncertain world, thus making people more ‘antifragile’.

One of these systems included ergodicity which can be explained as a scenario where the average outcome of the group is the same as the average outcome of the individual over time. An example of an ergodic systems would be the outcomes of a coin toss (heads/tails). If 100 people flip a coin once or 1 person flips a coin 100 times, you get the same outcome. Taylor discusses how this theory can help people make decisions in uncertain environments.

Minutes:

01:10 Intro to Taylor

01:35 Notable days in history and their volatility

03:59 How do you define risk?

05:43 What is ergodicity?

08:23 Where is ergodicity relevant in our everyday life?

16:42 What is the best advice to give someone who may be succumbing to non-ergodic systems?

18:53 How does ergodicity apply in stock market scenarios?

23:53 How does diversification play a part?

26:25 Does diversification need to be oppositional?

29:52 How do you communicate probability in a way clients easily understand?

31:45 The Kelly Criterion: utilising a theory to size your decisions

34:36 An example of a bad decision

36:08 Book Recommendations – The Three Body Problem by Liu Cixin and The Origins of Political Order by Francis Fukuyama

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Ep 1155 Chris Powless, Casey Van Schoyk, Marcela Lawson