Tag: decision making

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Authors Business Living

The Terror of the Empty Chair

It is comforting to believe that when the world breaks—when housing markets collapse, when “unicorn” startups vaporize, or when seasoned scouts overlook generational talent—it is because of a miscalculation. We want to believe the math was wrong, the data was bad, or the algorithm was flawed. We want to believe it was a glitch in the intellect.

I heard a commentator recently mention that Michael Lewis, the chronicler of our most expensive delusions in his best selling books, has suggested something far more unsettling. In looking at the connective tissue between The Big Short, Moneyball, and Going Infinite, he identifies a different culprit. He notes that the “glue” holding these irrational systems together isn’t incompetence. It is FOMO: The Fear Of Missing Out.

“They are more afraid of being left behind than they are of being wrong.”

This observation completely reframes the narrative of catastrophic failure. It explains why high-IQ individuals—people paid millions to be rational—consistently make decisions that look insane in retrospect. The banker, the VC, and the scout aren’t necessarily blinded by greed, though greed is certainly a passenger in the car. They are blinded by the terror of the empty chair.

Lewis points out that for the social animal, the pain of being left behind is acute and immediate, whereas the pain of being wrong is often abstract and distant. If you sit out a bubble and the bubble keeps inflating, you look like a fool today. You are isolated. You are the cynic at the party who refuses to dance. If you join the bubble and it bursts, well, you have company. As the old financial adage goes, “It is better to fail conventionally than to succeed unconventionally.”

There is a profound, empathetic tragedy in this. It suggests that our systems don’t fail because we aren’t smart enough; they fail because we are too human. We are wired for the herd. The biological imperative to stay with the group—originally a survival mechanism against predators—has been warped into a financial suicide pact.

When we look at the irrational exuberance of a market, we aren’t seeing a mathematical error. We are seeing a materialized anxiety. We are seeing a collective hallucination held together not by logic, but by the sticky, desperate glue of not wanting to be the only one who didn’t buy the ticket.

The antidote, then, isn’t just better data or faster computers. It is the emotional discipline to be lonely. It is the willingness to stand apart from the warmth of the herd and accept the short-term social cost of being “out” for the long-term reward of being right.

Categories
AI AI: Large Language Models Investing

The Digital Devil’s Advocate

There is a seduction in the handwritten note. When I scribble down a company name in a notebook, it is purely additive. It represents potential upside, a future win, a brilliant insight caught in ink. The notebook is a safe harbor for optimism because it lacks a “Reply” button. It doesn’t argue back.

But optimism is an expensive luxury in investing.

After my initial experiment—using Gemini 3 Pro to transcribe my messy list into tickers—I felt a surge of productivity. But productivity is not the same as discernment or understanding. I had a list of stocks, but I didn’t have a thesis. I just had digitized hope.

So, I took the next step. I didn’t ask the AI for validation; I asked for a fight. I fed the tickers back into the model with a specific directive: “Act as a contrarian hedge fund analyst. Find the red flags. Kill my enthusiasm.”

“I didn’t ask the AI for validation; I asked for a fight.”

The results were immediate and sobering. The “promising tech play” I had noted? The AI highlighted a massive deceleration in user growth hidden in the footnotes of their latest 10-Q. The “stable dividend payer”? It flagged a payout ratio that was mathematically unsustainable.

In seconds, the warm glow of my handwritten discovery was doused with the cold water of 10-K realities. And it was fantastic.

We often view AI as a tool for creation—generating text, images, and code. But its highest leverage application might actually be destruction. By using it to stress-test our assumptions, we outsource the emotional labor of being the “bad cop.” It allows us to kill bad ideas quickly, cheapy, and privately, before we pay the market tuition for them.

My notebook is still where the dreams live. But the digital realm is now where they go to survive the interrogation.

Categories
Financial Planning Investing

The Mistake of Balance

We are culturally conditioned to hedge. We are taught the virtues of a balanced portfolio, a balanced diet, and a balanced life. We spread our chips across the table—a little bit of energy here, a little bit of time there—hoping that if we just cover enough bases, the aggregate sum of our efforts will amount to a meaningful existence. We find comfort in the average because it protects us from the zero.

But nature, and certainly the mechanics of outsized success, rarely operates on a bell curve. It operates on a Power Law.

Sam Altman, reflecting on the errors of intuition in investing, noted that his second biggest mistake was failing to internalize this mathematical reality. He said:

“The power law means that your single best investment will be worth more to you in return than the rest of your investments put together. Your second best will be better than three through infinity put together. This is like a deeply true thing that most investors find, and this is so counterintuitive that it means almost everyone invests the wrong way.”

The math is brutal in its clarity. It suggests that the drop-off from our primary point of leverage to everything else is not a gentle slope; it is a cliff.

When we apply this to capital, it makes sense. One Google or one Stripe returns the fund. But this is a “deeply true thing” that transcends venture capital. It applies to our attention, our relationships, and our creative output.

Consider the “investments” of your daily energy. Most of us spend our days in the “three through infinity” zone. We answer emails, we manage low-leverage maintenance tasks, we entertain lukewarm acquaintanceships. We busy ourselves with the long tail of distribution because the long tail is where safety lives. It feels productive to check fifty small boxes.

However, if Altman’s observation holds true for life as it does for equity, then that single, terrifyingly important project—the one you are likely procrastinating on because it feels too big—is worth more than the rest of your to-do list combined.

The “counterintuitive” pain point Altman mentions is that to align with the Power Law, you have to be willing to look irresponsible to the outside observer. You have to neglect the “three through infinity.” You have to let small fires burn so that you can pour all your fuel onto the one flame that actually matters.

We invest the wrong way because we are afraid of the volatility of focus. We dilute our potential because we are terrified that if we bet on the “single best,” and it fails, we are left with nothing. But the inverse is the quiet tragedy of the modern age: we succeed at a thousand things that don’t matter, missing the one thing that would have outweighed them all.

Categories
Aviation Weather

Salinas

Suddenly, I was enveloped in a thick, impenetrable fog. One moment, I had been cruising through clear skies; the next, I was relying solely on my instruments to make an instrument approach into Salinas. The transition was abrupt, and my heart raced as I scanned the gauges in front of me.

“Scan and scan again,” my flight instructor’s voice echoed in my mind, a mantra drilled into me during the long hours of instrument flight training. I forced my eyes to move, to keep scanning, but they kept drifting back to the directional gyro — suddenly its compass rose was spinning wildly, round and round, sort of hypnotizing me, capturing my focus. My gaze felt stuck, refusing to budge as the gyro whirled around and around, 360 degrees of chaos. I knew the airplane wasn’t actually turning but I was very confused.

“Focus, focus!” I yelled at myself. I wrenched my gaze away from that directional gyro, my heart pounding in my chest. That instrument had become a black hole, threatening to suck all my concentration into its dizzying vortex. I needed to maintain control, and not let things get away from me. I needed to stay “in front” of the airplane, not “fall behind”.

Pilots in the clouds must keep scanning across four primary flight instruments — or risk being seduced by their inner ears into believing they’re in a turn and need to correct. Instead, the correction puts the airplane into a turn, and a deadly spiral begins. I knew this, but the malfunctioning gyro made it hard to trust my instruments.

I forced my gaze to the attitude indicator, my eyes locking onto the horizon line. The wings were level — good. But I needed more confirmation. The altimeter showed a descending altitude flying the glide slope; the airspeed indicator reassured me I wasn’t descending abnormally. Finally, I checked the turn coordinator — no turn, the wings still level.

I resumed my scan, fighting the urge to glance back at the gyro. I pushed the throttle full in for maximum power, broke off the glideslope and began to climb. I knew there were clear blue skies above me. The altimeter, airspeed indicator, and attitude indicator became my anchors, each pass feeling like an eternity. My palms were sweaty, my breath coming in shallow, rapid bursts.

The cloud seemed endless, a suffocating blanket threatening to overwhelm me. The instruments became my only reality, their steady readings a tenuous grip on sanity. A voice in my headphones said “You’re not on the glide slope. State your intentions.” I quickly said “Cancelling the approach, equipment problem.” He gave me a new altitude to climb to and a vector away from the airport.

Then, I broke out above the fog layer and into the clear air above, the oppressive gray giving way to blue. The horizon reappeared, a welcome sight after the endless void of the clouds. Slowly, the tension in my muscles began to ease, though the threat of the spinning gyro loomed in the back of my mind. It continued to spin.

As I reflected on the incident later, I realized that my flight instructor’s relentless emphasis on scanning had not only guided me through that moment of crisis but also ingrained a deeper understanding of what it means to be a pilot. It’s not just about flying the plane; it’s about staying composed, making quick decisions, and always being ready for the unexpected. The sky can be very unforgiving, but with training and determination, a pilot can navigate even the most daunting challenges.

In that moment, I felt like I had dodged a bullet — I wasn’t just someone flying a plane, but had faced a serious challenge and been able to safely recover from it. I felt thankful to have escaped the failure, not fallen victim to its mechanical grasp.

The best flights always end with a smooth touchdown back home. I was relieved to taxi back to my parking spot and shut the engine down, looking forward to flying another day. With a new directional gyro installed!