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Blinded by Numbers: How Fixating on Metrics Can Lead to Bad Investments

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Not everything that can be counted counts, and not everything that counts can be counted.
—William Bruce Cameron

I was talking to a group of real estate investors at an investors meet-up. A few of them purchased buy and hold properties in the middle of the Great Recession. They focused on the numbers and closed a buy and hold deal with a potential 25 percent cash-on-cash return.

Things were going well for a time, but as soon as the market recovered, vacancies began to rise.

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Investors Therapy #13: Known knowns and unknown unknowns

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Hey investors!

Occasionally I’m asked, “Where do you think the real estate market is going?” No one knows with certainty. If we had absolute certainty there wouldn’t be such a thing as a risk because all investments would be correctly priced. That’s why my lunatic detector goes on high alert when I hear people talk with certainty. Written in our DNA is our need to feel secure and sadly that need compels us to listen to charlatans that claim to have all the answers. 

Once you become certain about investment ideas, you build a wall around your brain which prevents new information from reaching you resulting in knowledge entropy—the killer of wisdom, portfolios, and societies. There are very few things to be certain about in life, taxes might not be an issue anymore if you can escape to Mars and death might go to the wayside if bio science has anything to say about it. What I am certain of is our innate ability to trick ourselves into believing we aren’t susceptible to investment killing psychological traps, hence the name “Investors Therapy.” 😉

When it pertains to investing, I think about odds. What are the odds of my bet coming true?


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Interview with Anne Wojcicki - CEO of 23andme

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Hey Everyone,

Anne Wojcicki is the Co-Founder and CEO for 23andMe. Her company helps users learn about their ancestry, genealogy, and inherited traits via at-home genetics test kits and genetic mapping research. In 2007, 23andMe became the first company to offer autosomal DNA testing for ancestry, becoming a pioneer in the field, and developing technology that has lead the way for every other at-home genetic testing service to come after it. The saliva-based, direct-to-consumer genetic testing business was named “Invention of the Year” by Time magazine in 2008. Anne discusses the impact her family had on her vision to build 23andMe; challenges she faced building the company; why we should all take ownership of our health; how 23andMe can help researchers find medical cures, and more!

Anne Wojcicki’s talk covers the following topics:

  • Her relationship with Google (Anne’s story about Google burritos, Eric Schmidt, Steve Jobs, and the first iphone)
  • Anne’s approach to Healthcare
  • Beginning Stages of 23andMe and genetics
  • The struggle with the FDA and the drive to persevere
  • 23andMe’a current offerings and the potential expansion of offerings
  • Investment and the reality of the Drug Industry
  • Using data to increase development of 23andMe
  • Connecting people to resources for their health
  • How health is the sum of your actions everyday
  • Empowering people of their privacy and the freedom to compare
  • Genetic Information Nondiscrimination Act
  • Virtual Healthcare
  • Publication of genetic association of 23andMe discoveries
  • And much more!

 

If you liked this talk, and you don’t want to miss any other great talks, subscribe to my newsletter! You can find my other interviews with Ray Dalio, Tim Ferriss, Sebastian Junger, and many more here .

Interview with Annie Duke of World Series of Poker Tournament of Champions winner and author of Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts

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“Don’t get so down on yourself for your bad outcomes and don’t pat yourself on the back so hard for the good ones.” - Annie duke

Hey Everyone,

Annie Duke, World Series of Poker Tournament of Champions winner, joined us to talk about talk about her latest book Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts. We all know about her fantastic poker career, but few us (myself included) knew about her equally impressive academic background. Annie double-majored in English and psychology, then went on to pursue a doctorate in cognitive linguistics. Annie talks about the latest research in decision making and how she applied this research in poker and in business. Make sure to take notes for this one because it’s jammed packed with great information.

About the book: “Annie Duke, a former World Series of Poker champion turned business consultant, draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. For most people, it’s difficult to say “I’m not sure” in a world that values and, even, rewards the appearance of certainty. But professional poker players are comfortable with the fact that great decisions don’t always lead to great outcomes and bad decisions don’t always lead to bad outcomes.

By shifting your thinking from a need for certainty to a goal of accurately assessing what you know and what you don’t, you’ll be less vulnerable to reactive emotions, knee-jerk biases, and destructive habits in your decision making. You’ll become more confident, calm, compassionate and successful in the long run.”

 

Annie Duke’s talk covers the following topics:

  • How poker is a natural laboratory to study decision-making
  • Two factors that can affect a good decision making
  • The importance of motivated reasoning
  • Why decisions should be treated as bets
  • What is resulting and how is it hurting your decision making
  • Two things that determine how our lives turn out
  • Hidden information in luck
  • The importance of Ulysses pacts
  • And much more!

 

If you liked this talk, and you don’t want to miss any other great talks, subscribe to my newsletter! You can find my other interviews with Ray Dalio, Tim Ferriss, Sebastian Junger, Gad Saad, Ryan Holiday, and many more here .

Interview with Ray Dalio Founder of Bridgewater Associates and author of Principles: Life And Work

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Hey Everyone,

Recently I hosted Ray Dalio Founder of Bridgewater Associates, which is one of the largest hedge funds in the world with $160 Billion under management. Ray joined us to talk about his bestselling book Principles: Life And Work.
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From the Amazon description: “In Principles, Dalio shares what he’s learned over the course of his remarkable career. He argues that life, management, economics, and investing can all be systemized into rules and understood like machines. The book’s hundreds of practical lessons, which are built around his cornerstones of “radical truth” and “radical transparency,” include Dalio laying out the most effective ways for individuals and organizations to make decisions, approach challenges, and build strong teams. He also describes the innovative tools the firm uses to bring an idea meritocracy to life, such as creating “baseball cards” for all employees that distill their strengths and weaknesses, and employing computerized decision-making systems to make believability-weighted decisions. While the book brims with novel ideas for organizations and institutions, Principles also offers a clear, straightforward approach to decision-making that Dalio believes anyone can apply, no matter what they’re seeking to achieve.”

 

His talk covers the following topics:

  • Different stages of life
  • Radical truthfulness and Radical Transparency
  • 5 - Steps to success: Audacious Goals, Failure, Learning Principles, Improving and Achieving goals
  • Meritocracy
  • The Two “You’s” (thoughtfulness and emotional)
  • “Two Minute Rule” when you disagree
  • Key to success
  • Metamorphosis
  • How meditation connects the conscious mind with the subconscious mind
  • And so much more!

If you liked this talk, and you don’t want to miss any other great talks, you can find my other interviews with Tim Ferriss, Sebastian Junger, Gad Saad, Ryan Holiday, and many more here. and make sure to subscribe to my newsletter!

Interview with NPR reporter and author Celeste Headlee - We Need To Talk

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Hey Everyone,

Recently I hosted TED speaker, NPR host, and journalist Celeste Headlee to talk about her newest book We Need To Talk. Her book will teach you how to have better conversations.

About the book: In We Need to Talk, she outlines the strategies that have made her a better conversationalist - and offers simple tools that can improve anyone’s communication. Whether you’re struggling to communicate with your kid’s teachers at school, an employee at work, or the people you love the most - Headlee offers smart strategies that can help us all have conversations that matter. Celeste’s TED Talk sharing 10 ways to have a better conversation was listed as one of the most watched TED talks in 2016 (CNBC) and named the #1 must-watch TED talk for every recruiter and hiring manager (Glassdoor.)

If you would a free chapter of We Need To Talk, you can find it here.

Her talk covers the following topics:

  • The smarter you are, the harder it is to be good in conversation
  • How system one thinking is really useful
  • Modeling behavior is strong among humans and how it can affect others
  • The decline of empathy throughout the years and the impact on younger generations
  • Human skill versus technological skill
  • How we rate our conversational skills higher than they really are
  • And much more!

If you liked this talk, and you don’t want to miss any other great talks, you can find my other interviews with Tim Ferriss, Sebastian Junger, Gad Saad, Ryan Holiday, and many more here. and make sure to subscribe to my newsletter!