Episode Details

Ben Carlson joins Excess Returns to discuss his new book Risk and Reward and the biggest lessons investors can learn from market history. We cover how to think about risk, inflation, market timing, bear markets, lost decades, diversification, compounding and why surviving volatility is the key to building long-term wealth.

Ben's Book
https://amzn.to/4dFHsQz

Ben Carlson on X
https://x.com/awealthofcs

Ben's Blog
https://awealthofcommonsense.com/

Main topics covered:

• Why risk is hard to define and always involves trade-offs

• How vivid risks like sharks and headlines distort investor decision-making

• Why doing nothing can be one of the hardest parts of investing

• How inflation should be viewed through personal finance, human capital and long-term investing

• Why stocks can be an inflation hedge even if they struggle during inflation spikes

• Why waiting for the market coast to clear often fails

• What the world’s worst market timer teaches about saving and staying invested

• How loss aversion shapes investor behavior

• What the Great Depression, bear markets and 30-year returns teach about long-term investing

• Why there is no perfect portfolio and the best strategy is one you can actually stick with

Timestamps:

00:00 Ben Carlson on why risk and reward are attached

06:35 Doing nothing, action bias and better investing behavior

11:51 Inflation psychology and lessons from the 1970s

16:55 Why stocks can hedge inflation over the long run

21:07 Why waiting for the coast to clear is a market timing trap

26:30 Time horizons, loss aversion and portfolio behavior

31:49 Government rescue, left-tail risk and unintended consequences

35:54 Recessionary vs non-recessionary bear markets

42:09 Why the stock market and economy can diverge

47:24 Why compounding is about holding, not trading

51:37 Starting valuations, lost decades and future returns

55:40 Risk, reward and the biggest lesson for investors