Podcast Summary
From Online Forum to Investing Podcast: Two friends bonded over Warren Buffett, evolved their investment philosophy, and grew a podcast from a simple recording to a popular investing platform, emphasizing collaboration, friendship, and staying true to one's investment philosophy.
Preston Pysh and Stig Brodersen, the co-hosts of The Investors Podcast (TIP), met in 2013 on an online forum about Warren Buffett. They shared a passion for value investing and began collaborating on their first book together in the early hours of the morning. Over the years, their investment philosophy has evolved, with Preston focusing more on Bitcoin and Stig maintaining a diversified portfolio. The duo discussed their past and the evolution of their podcast, which began as a simple recording between two friends and grew into a popular investing platform. Despite their busy schedules and different time zones, they decided to record a co-hosted episode for old time's sake. The conversation covered various topics, including their founding story, investment strategies, and the current state of the markets. The episode serves as a reminder of the value of collaboration, friendship, and the importance of staying true to one's investment philosophy.
A chance encounter at a Berkshire Hathaway annual meeting sparks the idea for a podcast about investing: Serendipitous encounters and shared passions can lead to the creation of meaningful projects, even with initial challenges like technical barriers and fear of public speaking.
The power of networking and serendipitous encounters can lead to the creation of something meaningful, such as a podcast. In this case, a conversation between two individuals at a Berkshire Hathaway annual meeting led to the idea of starting a podcast about investing. However, the technical aspects and fear of public speaking were initial barriers. Despite these challenges, they overcame their fears and started the podcast, recognizing that there was an audience for it. The conversation also highlighted the evolution of technology, with podcasting requiring more equipment and technical knowledge compared to today's ease of use. Ultimately, their shared passion for investing and the belief that anyone in the world could potentially listen, despite language barriers, drove them to pursue the project.
Experiences of early self-publishing days: Self-publishing involves uncertainty and hard work, profitability is not guaranteed, and understanding industry challenges is crucial.
The early days of self-publishing involved a lot of hard work and uncertainty. Josh McCallen shared his experience of writing a book about going to West Point and trying to get it published through traditional means, only to be met with rejection. He then turned to self-publishing, but even then, the profitability was not guaranteed. Trey Lockerbie added that book sales are not linear and the profitability drops significantly after the top 1,000 rankings on Amazon. Stig Brodersen recalled their early days of writing and editing a book together in the basement, excited about the prospect of publishing but not fully understanding the financial implications. Overall, the conversation underscores the determination and resilience required in the early stages of self-publishing, as well as the importance of understanding the industry's unique challenges.
Sharing a foundation of knowledge strengthens partnerships: Reading and discussing top-tier business books together can deepen understanding, improve communication, and build trust in long-term partnerships.
Having a shared foundation of knowledge and principles, gained through reading and learning from top-tier business books, can significantly strengthen and harmonize long-term partnerships, whether in business or personal relationships. This was the case for Stig and Trey, who met through their mutual interest in Warren Buffett and his investment strategies. Their dedication to reading and discussing these books allowed them to develop a strong understanding and perspective that enabled them to work effectively and trust each other. This shared knowledge base also made it easier for them to communicate and understand each other's viewpoints, leading to a successful and productive partnership. Overall, investing time and effort into learning from the experiences and insights of others can provide a valuable advantage in any long-term relationship.
Building meaningful relationships for easier learning and growth: Approaching relationships as a lifetime commitment can lead to easier learning, accelerated growth, and long-lasting connections in investing. Access to reliable resources can help investors stay informed and make informed decisions.
Building meaningful relationships, whether in business or personal life, can greatly simplify and enhance experiences. In the context of investing, being part of a community of like-minded individuals can lead to easier learning, accelerated growth, and long-lasting connections. This was the motivation behind launching the TIP Mastermind community. Similarly, having shared perspectives and principles in relationships can lead to a smoother journey and better outcomes. The idea of approaching relationships as if they're a lifetime commitment can help shape the types of relationships we build and the value we derive from them. Furthermore, having access to reliable resources, such as Yahoo Finance, can help investors stay informed and make informed decisions.
Battle between Bitcoin and US dollar as investment consideration: Invest in Bitcoin during dollar bear runs and retain dollars during bull runs for potential long-term outperformance against traditional investments due to central bank manipulation and debasement
The speaker believes the ongoing battle between Bitcoin and the US dollar is a significant investment consideration due to aggressive central bank manipulation of markets. He shares his personal investment strategy of retaining dollars during perceived dollar bull runs and converting new cash flows into Bitcoin when the dollar's bull run ends. The speaker encourages skeptics to visit strategy.com to see Bitcoin's outperformance against traditional investments over the long term, despite its volatility. He believes this long-term play is based on central banks' continued debasement. A personal anecdote of reevaluating Apple's performance in Bitcoin terms further solidified this perspective for him.
Understanding Bitcoin's Performance vs. Traditional Blue-Chip Companies: Despite Bitcoin's outperformance of traditional blue-chip companies in recent years, it's crucial to understand the reasons behind this trend before making investment decisions. Authenticity and understanding are essential in investing.
While traditional blue-chip companies in the S&P 500 have underperformed Bitcoin in the past five years, it's essential to understand the reasons behind this trend rather than dismissing it outright. Authenticity and understanding are crucial when making investment decisions. Preston Pysh and Stig Brodersen, hosts of the TIP podcast, emphasized the importance of being truthful and authentic in their investment approach. They split their podcast feed to create a Bitcoin-focused show due to their differing views on the asset. Pysh expressed a high level of conviction in Bitcoin, but it doesn't mean that it's the right investment for everyone. People should ensure they fully understand the investment before allocating significant resources to it. The conversation also highlighted the importance of not overextending one's understanding or position size in any investment.
A successful investor's journey with Bitcoin: Understand your competence and risk tolerance before investing in Bitcoin. It's a high-risk, high-reward asset with potential to replace gold as a store of value. Hold onto winners and consider tax implications.
Bitcoin, known for its extreme volatility, can yield significant returns but also carries a high risk. Stig Brodersen, a successful investor, shares his experience of being introduced to Bitcoin by Preston Pysh in 2017 and holding onto it since then, despite its volatility reaching up to 70% annually. He emphasizes the importance of understanding one's own competence and risk tolerance before investing in such assets. Bitcoin's potential to replace gold as a store of value is a common investment thesis, but for Stig, it's an asymmetric bet with limited downside due to its high volatility. He holds 16% of his portfolio in Bitcoin, but others might find that percentage too risky. Letting winners run and tax considerations also play a role in his decision to hold onto Bitcoin. Ultimately, Bitcoin is a high-risk, high-reward investment that requires thorough research and understanding before diving in.
Unpredictable government policies and changing monetary systems make Bitcoin an attractive hedge: Bitcoin serves as an asymmetric position or hedge against unstable government policies and monetary systems, potentially thriving in future changes. Individual financial goals and circumstances should guide buying, holding, or selling decisions.
The unpredictability of government policies and the ever-changing monetary systems make holding assets like Bitcoin an attractive hedge. Milton Friedman's quote, "Nothing is as permanent as a temporary government policy," highlights this idea. The current monetary system, which has been in place since 1971, is expected to change at some point, and Bitcoin could potentially thrive in the next monetary system. Preston also emphasized that Bitcoin should be seen as an asymmetric position or hedge, rather than an investment for monetary gains alone. He believes that if a large financial institution like BlackRock gains SEC approval to offer a Bitcoin spot ETF, it could significantly change the way people hold and view Bitcoin. Trey, on the other hand, argued that reaching a price of 500,000 for Bitcoin could be a reason to consider selling, as it would have proven the thesis about Bitcoin's value. Ultimately, financial goals and individual circumstances should guide the decision to buy, hold, or sell Bitcoin.
Considering Financial Goals and Bitcoin Sales: Gains, Losses, and Yields: When Bitcoin price hits $500,000, Preston Pysh would consider buying equities only if PE ratio is around 5 and yield is at least 20%, otherwise he'd keep Bitcoin.
When considering financial goals and the potential sale of a large amount of Bitcoin, it's essential to consider not only what you stand to gain but also what you could potentially lose, especially when factoring in any obligations you may have. Preston Pysh suggests that at a Bitcoin price of $500,000, he would consider buying equities only if the PE ratio is around 5 in Bitcoin terms and the company is giving him a yield of at least 20%. Otherwise, he would continue to hold onto his Bitcoin. This discussion highlights the importance of considering both potential gains and losses, as well as the role of yield and PE ratios when making financial decisions in a potential Bitcoin-standard economy.
The Debate Between Value Investing and Bitcoin: Some value investors, like Buffett and Munger, are skeptical of Bitcoin, but others, like Preston Pysh, see it as a complementary investment and an asymmetric bet.
The opinions of investing legends like Warren Buffett and Charlie Munger on Bitcoin have left a deep impact on some investors, turning them off from the cryptocurrency. However, not all value investors share this sentiment, and some see Bitcoin as a complementary investment to traditional value stocks. For Preston Pysh, who has built a career around studying Buffett, the acceptance and openness from the Bitcoin community have been surprising. Despite his past dedication to value investing, he now sees the potential in Bitcoin as an asymmetric bet. The age gap and differing perspectives in the investing world contribute to this divide, with younger investors more likely to embrace Bitcoin as a viable investment option. Ultimately, the ongoing debate between traditional value investing and Bitcoin investment highlights the importance of staying informed and open-minded in the ever-evolving world of finance.
Learning from Warren Buffett and Charlie Munger's Investment Approach: Calculate a business's intrinsic value through IRR, invest in quality businesses with competitive advantages, and have the courage to think independently.
Warren Buffett and Charlie Munger's investment approach, often referred to as the "Buffett Munger approach," is centered around calculating the intrinsic value of a business through Internal Rate of Return (IRR) calculations and investing in quality businesses with competitive advantages. They are known for their skepticism towards the Efficient Market Hypothesis and dismissal of CapM models. While their achievements are significant, their approach is not an obscure or unattainable one, as many of these concepts can be learned in business schools. However, what sets them apart is their courage to go against the herd mentality and think independently. Investors should learn from their principles but also remember that they are not infallible. Bill Miller, for instance, is another brilliant investor who defied their mantra and successfully invested in technology companies like Amazon. Ultimately, their message is to calculate a business's worth, identify competitive advantages, and have the courage to think for oneself.
Embrace diverse perspectives for new insights: Successful investors offer valuable lessons, but staying open-minded to different approaches and ideas can lead to profound discoveries
No matter how successful or knowledgeable an individual may seem, their perspectives and methods may not always align with our own. Even the most basic concepts can hold new insights when viewed from a different angle. Successful investors like Buffett and Munger have taught us valuable lessons, but it's essential to remember that there are various ways to outperform markets and that finding the approach that suits our personal style is crucial. Moreover, being exposed to diverse perspectives and ideas can broaden our horizons and challenge our assumptions. We may initially dismiss some concepts as simple or unconventional, but they can ultimately lead to profound discoveries. As we navigate the complex world of investing, it's vital to remain humble, open-minded, and willing to learn from a wide range of sources.
Learning from various investing styles and being open-minded are crucial for success: Bill Miller's success highlights the importance of process over outcome, while Malcolm Gladwell's 'Outliers' shows that skill and timing can lead to significant wealth, but the odds are low. Being open-minded and persistent, and willing to learn from various sources, can lead to success in different domains, including investing and technology.
Having the right process and being open to learning from various investing styles, as well as being aware of the role of luck, are crucial for success in the markets. Bill Miller, for instance, continues to learn and adapt, highlighting the importance of process over the outcome. Malcolm Gladwell's "Outliers" demonstrates that skill and timing can lead to significant financial rewards. However, the odds of achieving such wealth are extremely low, and multiple factors need to align. Regarding Bitcoin, Joe Carlasare expresses gratitude for the respectful community, allowing him to delve deep into the tech behind it, which is not possible with traditional financial markets due to their vast scope. Overall, being open-minded, persistent, and willing to learn from various sources can lead to success in different domains, including investing and technology.
Optimizing for listener happiness: Stig and Joe prioritize delivering quality content and optimizing for listener happiness, with no clear five-year plan but a commitment to their mission and community.
The hosts of the "This is Money" podcast, Stig Brodersen and Joe Carlasare, believe that focusing on quality content, community, and the listener's happiness is essential for their show's success. They have never aimed to grow for the sake of growth and instead prioritize delivering meaningful conversations that provide value to their audience. They also emphasize the importance of having fun and optimizing for happiness in their work. Despite the challenges and distractions of new opportunities, they remain committed to their mission and community. Stig shared that they short did silly things in the beginning and continued to do so, but one book that had a significant impact on him was "Delivering Happiness," which emphasizes the importance of optimizing for happiness in business. They may not have a clear five-year plan for the show, but they are certain that they want to continue focusing on delivering quality content and optimizing for their audience's happiness.
Prioritizing happiness can limit business growth: Focusing solely on happiness may not be sustainable for larger companies, but adding value to others and maintaining faith in the universe can lead to positive returns.
Optimizing for happiness, while a strong approach, can also limit growth in a business context. Stig Brodersen shared his experience of being approached to report to a bot for an hour every week. He felt that such an arrangement wouldn't allow for meaningful connections and would detract from his overall happiness. This notion of prioritizing happiness has been a cornerstone of TIP, but it may not be sustainable for a larger company. Brodersen also discussed the time in their early days when they were making little to no money, and he was even paying to work. Despite these challenges, he believed that by focusing on adding value to others and maintaining faith in the universe, good things would eventually come back to them. This philosophy is rooted in the idea that when we contribute positively to the world, the universe will find a way to return that energy in some form, whether monetary or otherwise. In essence, the most effective way to provide value and contribute to the system is through technology and its ability to reach and help many people in a short amount of time.
Staying informed and adaptable in finance: Unexpected markets like oil and energy prices can lead to inflation and treasury ramifications during economic downturns, emphasizing the importance of staying informed and adaptable in finance.
Key takeaway from this episode of the "We Study Billionaires" podcast is the importance of staying informed and adaptable in the world of finance. Stig Brodersen and Trey Lockerbie shared stories from their past experiences and current observations, highlighting the significance of keeping a close eye on unexpected markets, such as oil and energy prices. Despite the economic downturn, they suggested that these markets might not follow the traditional recession trends and could lead to unexpected consequences, including inflation and treasury ramifications. This episode underscores the importance of paying attention to seemingly unrelated topics and staying open to new perspectives in order to make informed investment decisions.
