48 minutes | Sep 2nd 2020

John Kay on Radical Uncertainty

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University of Oxford economist John Kay joins the podcast to discuss his recent book, "Radical Uncertainty" and its lessons for financial markets in the age of COVID-19. Content (Spotify users can skip to the segment by clicking on the timestamp): The premise for the book: Frank Knight, Milton Friedman and the pendelum of probabilistic reasoning (1:20); It is "almost impossible to overstate" the influence of efficient market reasoning on economic and financial market models (4:02); Radical uncertainty: There is a great deal of information that cannot be realistically thought about probabilistically. Enter COVID-19 (8:20); What's an investor to do with this information? (10:15); Financial modeling has conflated risk, uncertainty, and volatility. They aren't the same thing (12:53); Time horizons and the importance of imagination. Humans are natural story tellers. This is more important than pure maths (20:24); Where does real estate fit? (25:25); Background on the guest (30:28); What is the market getting wrong right now? (34:37); Short discussion of the U.S. election (41:04). More Information on the Guest Website: JohnKay.com Twitter: @ProfJohnKay Book: Radical Uncertainty: Decision-making for an unknowable future (also available on Amazon). Not intended as investment advice.
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