TIP778: How My Thinking About Investing Evolved in 2025 w/ Kyle Grieve
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this reflective episode, Kyle Grieve shares nine critical investing lessons learned in 2025 through his extensive research on legendary investors and market analysis. (00:00) Kyle explores how psychological errors, rather than poor analysis, have been the source of his biggest investing mistakes, emphasizing that the greatest threat to any portfolio isn't external market forces but the investor themselves. (01:03) He introduces the concept of "flexible conviction" - maintaining strong beliefs while remaining adaptable when new information emerges. The episode covers practical frameworks for portfolio management, including conviction ranking systems, customer loyalty analysis, and the critical importance of intentional inactivity during market volatility. (03:01)
- Main themes include psychological discipline in investing, the balance between conviction and flexibility, company culture analysis, and downside risk protection strategies.
Speakers
Kyle Grieve
Kyle Grieve is the host of The Investor's Podcast and a dedicated student of legendary investors and business strategies. He has spent thousands of hours researching the world's greatest investors, companies, and investment frameworks, sharing these insights through over 180 million podcast downloads since 2014. Kyle manages his own investment portfolio and focuses on long-term compounding strategies inspired by investors like Warren Buffett, Charlie Munger, and Anthony Bolton.
Key Takeaways
Embrace Flexible Conviction Through Regular Testing
Kyle learned that strong convictions must be regularly reearned rather than held rigidly. (03:01) He developed a conviction ranking system where he evaluates his positions monthly using percentages to determine if new information strengthens or weakens his thesis. This approach helps separate emotional attachment from fundamental analysis, allowing him to be decisive yet not delusional. For example, when his conviction in one position dropped due to slower growth, he avoided adding capital despite price drops, while increasing positions in companies where conviction grew despite falling prices like Lumine and Topicus. (08:03)
Customer Loyalty as a Hidden Competitive Moat
Drawing from research on "Hidden Monopolies," Kyle emphasizes that customer loyalty often provides more durable competitive advantages than traditional moats like scale or cost leadership. (09:35) He cites Nokia's fall to Apple despite superior scale economics, showing how customer loyalty can overcome seemingly insurmountable advantages. This framework helps identify businesses where customers have little reason to switch, creating predictable revenue streams and reducing customer acquisition costs. Kyle now conducts annual customer loyalty audits on his holdings, analyzing factors like switching costs and relationship strength.
Focus on What Matters Most, Not Everything
Inspired by Anthony Bolton's investment philosophy, Kyle realized that depth doesn't equal clarity in investment analysis. (27:14) He learned to distinguish between material and immaterial information, focusing on key performance indicators rather than exhaustive industry knowledge. The question becomes: what edge do you gain from 40 hours of research versus 20 hours if you already know more than 99% of investors? This approach frees up time for better capital allocation decisions and prevents analysis paralysis.
Practice Intentional Inactivity During Market Stress
Kyle learned that the hardest part of investing isn't analysis but waiting, particularly during market volatility like the April 2025 tariff tantrum. (30:48) Drawing inspiration from Roman general Fabius, who appeared inactive while strategically building strength, Kyle recognizes that touching his portfolio less allows compounding to work more effectively. He sold zero stocks during April's market stress because his businesses were well-positioned for tariffs, demonstrating that inactivity isn't incompetence but strategic discipline. As Charlie Munger said, "never interrupt compounding unnecessarily." (33:54)
Incentive Structures Predict Long-term Business Success
Kyle discovered that studying company incentive structures provides crucial insights into management behavior and long-term alignment. (59:02) He highlights Constellation Software's exceptional system where managers receive cash bonuses that are automatically used to buy company shares held in escrow for 3-5 years, tied to return on capital thresholds rather than short-term metrics. This creates true owner-operator mentality and explains why these businesses consistently make disciplined capital allocation decisions. Misaligned incentives, as seen in the Wells Fargo scandal, can cause otherwise honest people to make destructive decisions due to incentive-caused bias.
Statistics & Facts
- Kyle's crypto investment lost 97% of its value during the 2017-2018 cryptocurrency crash, demonstrating the devastating impact of emotional decision-making and leverage on investment outcomes. (17:28)
- The podcast has generated over 180 million downloads since 2014, establishing Kyle's credibility as a student of legendary investors and successful business strategies. (02:04)
- Wells Fargo employees opened 3.5 million fake accounts due to misaligned incentive structures that rewarded account creation over customer service, illustrating how incentives can corrupt behavior even among honest people. (64:16)
