Episode 275: William Bernstein

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The Madness of Crowds

What do financial bubbles and religious millenarianism have in common? They both involve collective delusion. When Charles Mackey wrote a book on the Madness of Crowds in the 19th century, he could not have imagined that religious and financial bubbles will continue to reappear, but as Willam Bernstein points out, the world has not gotten any saner.

William Bernstein is an investment manager and the author of a number of books including, The Delusions Of Crowds: Why People Go Mad in Groups and The Birth of Plenty: How the Prosperity of the Modern World was Created. And before his work in finance, he spent more than 30 years practicing medicine. 

William and Greg discuss the difference between intelligence and rationality, how human nature is rooted in imitation and mimicry, and the end of the world. 

*unSILOed Podcast is produced by University FM.*

Episode Quotes:

When it comes to pattern recognition, who are the right people to listen to?

47:23:  ​​When I'm listening to an analyst or a commentator, what I'm listening for is not how eloquent they are or how smart they sound, because it turns out that the most eloquent people tend to be people who can get away with a lot of analytical sloppiness. What I'm looking for is nuance. I'm looking for someone who can see both sides of an argument and argue something from both sides.

Who are the people you want to make decisions for you?

06:37: Rationality and intelligence are entirely orthogonal. There are people who really aren't all that brilliant but are eminently rational. Those are the kinds of people you want making decisions for you.

Are you a seller or consumer opinions?

40:18: In order to give useful policy advice, you have to get into all the details of different cases, and at some point, these big social science generalizations don't help you much to know what to do. Maybe the idea of getting into the corridor is useful and institutionalizing the power of civil society and how you deal with all the problems that are different. (40:48) All those details are going to be very important in figuring out what to do.

Show Links:
Recommended Resources:

• The Late Great Planet Earth

• William Miller

• Dual Process Theory 

• Daniel Kahneman

• Alex Jones

• Extraordinary Popular Delusions and the Madness of Crowds 

• Premillennialism 

• David Koresh

• Shiva 

• Dome of the Rock

• Dr. Strangelove

Guest Profile:

• William J. Bernstein

• Professional Profile on Literary Hub

• Professional Profile on CFA Institute

His Work:

• Articles on Financial Times

• The Delusions Of Crowds: Why People Go Mad in Groups

• The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk 

• The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

• The Four Pillars of Investing: Lessons for Building a Winning Portfolio 

• Rational Expectations: Asset Allocation for Investing Adults (Investing for Adults) 

• The Birth of Plenty: How the Prosperity of the Modern World was Created 

• A Splendid Exchange: How Trade Shaped the World

• https://a.co/d/1Db5SrC