Great Investors Avoid Catastrophic Loss

During his recent interview on The Acquirers Podcast with Tobias, William Green, author of Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life discussed Great Investors Avoid Catastrophic Loss. Here’s an excerpt from the interview:

Tobias: You’ve written a new book, Richer, Wiser, Happier, it’s just the cover there for folks who are watching the YouTube channel, How the World’s Greatest Investors Win in Markets and Life. I love this idea. The book is not about so much the markets, it’s about advice that they provide outside of their investing. Why do you think that they have some perspective with sharing outside of the markets?

William: Well, I think one of the things that’s so distinctive about the greatest investors is that they naturally think in terms of odds, and stacking the odds in their favor. I think once you start doing that in markets, you probably apply the same way of thinking in every area of life. I think they become this extraordinary filter for how to succeed professionally, personally, which is a counterintuitive idea, because we think about billionaires who’s having the world’s most dysfunctional lives, which is clearly true in many cases. This kind of elite group of worldly wise investors that I’ve been focused on, are actually remarkable thinkers about how to stack the odds in their favor, in not just markets, but in life.

If you think, for example, about someone like Charlie Munger, for example, who I interviewed in your neck of the woods in LA. He is someone, who’s massively, massively intelligent, and yet is utterly focused on simply reducing what he calls standard stupidities. That’s an extraordinarily powerful and robust idea that actually just applies to every area of life for, well, think of someone like Ed Thorp, who I describe as probably the greatest game player in the history of investing. He is someone who is obsessed with only playing games that he can win, with surviving catastrophe, making sure that you don’t blow yourself up and knock yourself out of the game. That’s something that applies just as well to a period like COVID, where you just want to survive and get through this intact as it does to investing. For me, there’s always this really fascinating intersection between how you survive and prosper amid the uncertainty and complexity of markets, and how you survive and prosper amid the uncertainty and complexity of life, but not that different.

Tobias: I think that you draw an interesting idea from both Munger and from Thorp in the sense that they are both focused on avoiding catastrophic loss, or avoiding stupidity, avoiding mistakes. Is that something that you found– Was that a theme that you found recurring throughout discussions with these folks?