About this episode

James Weatherall discusses the intersection of physics and investing, emphasizing the importance of examining mathematical models used in finance.

In this week's Stansberry Investor Hour , Dan welcomes James Weatherall to the show. Unlike most of our guests, James does not come from a finance background. However, he has found interesting ways in which physics can change investing. You can check out his book The Physics of Wall Street here . James kicks things off by sharing his background in physics and philosophy. He's interested in mathematics and how it can be applied to the markets. He's a firm believer in using mathematical models to assist in investing but says that it's important to examine your models and check your assumptions that result from them. If one model is good for a particular use case, trying to use it in a different area or within a larger scope than it was originally intended can yield different results than expected. James discusses the models that Louis Bachelier and Edward Thorp (whom he writes about in his book The Physics of Wall Street ) created that would have a major impact on investing. (0:00) Next, James mentions extreme events similar to Black Monday and their probability of occurring. He notes that in the long term, investors with 401(k)s would be able to survive and even recover after…

People in this episode

Host: Dan

Guest: James Weatherall

Topics covered

• investing
• mathematics
• financial models
• risk management
• market events

Keywords

• Wall Street
• investing
• mathematical models
• risk
• Black Monday
• Kelly criterion
• financial philosophy

Mentioned in this episode

Books & works: The Physics of Wall Street

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