We are very excited to welcome Ted Seides to The Value Perspective podcast for this episode. You many know Ted as the host of the Capital Allocators podcast and the author of So You Want to Start a Hedge Fund and Capital Allocators: How the world's elite money managers lead and invest. Previous to starting podcasting, Ted began his career working on external public equity managers, internal fixed income portfolio management and in an alternative investment firm that invested in and seeded small hedge funds.
In this episode, Ted sits down with Juan and Nick to discuss what Ted has learned through his podcast's 200+ episodes, a bet he made with Warren Buffet on hedge funds vs. S&P 500, and his views on analysing investment processes including probabilistic thinking, the importance of diversity and recognising biases.
02:10 Ted's background
05:49 What has Ted learned through his podcast?
07:30 Learning from other industries
10:52 A bet with Warren Buffet: good process, bad outcome
16:18 What was the rationale behind the bet?
18:58 Probabilistic thinking - can we take historical averages to help us make decisions?
22:33 Do the best capital allocators factor in 'pot stakes' into their process?
25:47 What's the importance of diversification?
28:51 Is there a value-add to meeting managers, capitol allocators, etc. face-to-face?
31:48 Why is confirmation bias the prevalent bias? Is it the riskiest?
37:17 Cognitive diversity: how to develop this in your team?
41:01 How does the origin of capital affect investment decisions?
45:10 Has 2020 changed the way institutional investors think of absolute and relative returns?
48:18 Is ESG making a significant impact?
50:24 A decision where the outcome was unwanted due to bad process.
- The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel
- So You Want to Start a Hedge Fund and Capital Allocators: How the world's elite money managers lead and invest by Ted Seides
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