TIP673: A Short History Of Financial Euphoria w/ Kyle Grieve

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 3 November 2024

⏱️ 77 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Kyle Grieve discusses the anatomy of a speculative event, why it’s so easy for people to take part in them, and why these events are unlikely to stop in the future; a few major euphoric episodes from history outlined in the book, three more recent bubbles that most listeners lived though, why the rise in IPOs are often the result of mini bubbles, six primary takeaways from the book to help protect yourself from investing in bubbles, and a whole lot more! IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 03:26 - The blueprint of a speculative event 04:10 - Why we fool ourselves into following people with money who don't deserve to be followed 10:04 - A contrast of risk tolerance between Benjamin Graham and Warren Buffet 15:13 - A detailed account of Tulipomania and the story of the $80,000 price tag for a Tulip 19:13 - How a convicted criminal helped mastermind one of the most giant bubbles in history 25:36 - The importance of due diligence in assisting investors to avoid bubbles 28:13 - How bubbles feed on themselves, opening pathways for other businesses to take advantage of the euphoria 34:56 - A few of the precipitating factors that caused the great depression and the damage it created 39:43 - Breaking down the "Dot-com" bubble, the Great Financial Crisis, and post Covid-19 euphoria 55:41 - Why investors should take responsibility for their wins and their losses And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. John Kenneth Galbraith's book, A Short History of Financial Euphoria. Follow Kyle on Twitter and LinkedIn. Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: River 7-Eleven Toyota Connect Invest Public TastyTrade Fundrise Shopify American Express The Bitcoin Way ReMarkable Sound Advisory Facet SimpleMining Bluehost HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:02.9	Building long-term wealth relies on the ability to compound wealth for decades to come.
0:08.7	It doesn't really matter if you're trying to track the index or outperform it.
0:12.6	If you want to generate wealth rather than destroy it, you must reach the finish line while also maintaining capital along the way.
0:19.5	If we use inversion to look at one of the most surefire ways to prevent ourselves from crossing the finish line,
0:25.8	I think avoiding bubbles will be near the top.
0:29.0	Now, this is why I've always been fascinated with John Kenneth Galbraith's excellent book,
0:33.4	A Short History of Financial Euphoria.
0:35.5	The book just focuses on a few very, very simple objectives.
0:39.5	Number one, it tells you what a euphoric episode looks like in quite a bit of detail.
0:44.2	Number two, it goes over several euphoric episodes in history using John Kenneth Galbra's own framework.
0:50.7	And number three, it just highlights many of the biases that are embedded in our own psychology
0:55.0	that basically guarantee the continuation of euphoric episodes into the future.
1:00.6	Now, while I was reviewing my takeaways from the book, the concept that I just couldn't
1:04.6	stop thinking about was risk.
1:06.9	Mainly, risk is always present.
1:09.7	And the market just fools us all into thinking that risk is absent
1:13.4	during these times of peak euphoria.
1:15.7	Now, this feature of open markets shows me that we must intentionally think about risk
1:21.0	at the exact time when we don't actually want to spend any time thinking about it.
1:25.1	Putting myself in the investor's shoes during events like Tulipomania,
1:29.1	the South Sea Company bubble, or the Bank Royale, I can't help but think about the difficulty
	...

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