1/ Short Selling 101

With the markets continuing to rally, there has been more talk of “shorting” or “short selling” stocks.

But what does that mean and how does it work?

Here’s a quick educational primer: Short Selling 101

The most powerful paradoxes of life:

The Persuasion Paradox

Have you noticed that the most argumentative people rarely persuade anyone?

The most persuasive people don’t argue—they observe, listen, and ask questions.

Argue less, persuade more.

Persuasion is an art that requires a paintbrush, not a sledgehammer.

The Effort Paradox

You have to put in more effort to make something appear effortless.

Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.

Small things become big things. Simple is not simple.

The Wisdom Paradox

“The more I learn, the more I realize how much I don't know.” — Albert Einstein

The more you learn, the more you are exposed to the immense unknown.

This should be empowering, not frightening.

Embrace your own ignorance. Embrace lifelong learning.

The Growth Paradox

Growth takes a much longer time coming than you think, and then it happens much faster than you ever would have thought.

Growth happens gradually, then suddenly.

When you realize this, you start to do things differently.

Survivorship Bias 101

History is written by the victors. But if we exclusively focus on these successes, we allow survivorship bias to distort our understanding of the world.

But what is "survivorship bias" and how does it work?

Here's Survivorship Bias 101!

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1/ First, a few definitions.

Survivorship bias is the logical error of concentrating on survivors (successes) and ignoring casualties (failures).

When we do so, we miss the true "base rates" of survival (the actual probability of success) and arrive at flawed conclusions.

2/ When we completely ignore failures, we lose our ability to correctly identify the differences between successes and failures.

Put simply, exclusively focusing on successes may actually inhibit our ability to identify (and replicate) the actions that led to such success.

3/ Cicero wrote on the topic over 2,000 years ago.

An atheist named Diagoras is shown portraits of people who prayed and were saved from death at sea as proof of God's existence.

Diagoras replies, "I see those who were saved, but where are those painted who were shipwrecked?"

4/ Cicero cuts right to the point - we cannot conclude that prayer led to being saved from the sea if we ignore those who prayed and then drowned.

Survivorship bias can lead to a deeply-flawed understanding of cause-and-effect relationships.

Let's look at some examples.

10 common mental errors that derail decision-making:

Survivorship Bias

History is written by the victors.

But in studying and learning from "survivors”—and systematically ignoring "casualties”—we create material distortions in our conclusions.

We overestimate the odds of success because we only read about the successes!

Naïve Realism

Humans generally think very highly of themselves.

We tend to believe that we see the world with perfect objectivity.

We also assume that people who disagree with us must be ignorant, uninformed, or biased.

This error sits at the core of many societal problems.

The Dunning-Kruger Effect

Humans are notoriously incapable of objective evaluation of their own competency levels.

People with a low ability at a task are prone to systematically overestimate their ability at that task.

Example: Everyone is a genius in a bull market.

Loss Aversion

Humans tend to prefer avoiding losses vs. achieving gains—the pain of losing something is more powerful than the pleasure of winning it.

We will typically do more to avoid losses than we will to seek gains.

We systematically overvalue what we already have.

11 harsh truths that changed my life (and may change yours):

Harsh Truth: You'll only see your loved ones a few more times.

In May 2021, I had a conversation with a friend that changed my life.

I was talking about living in California—so far away from my parents in Boston—when my friend asked how often I saw them and how old they were...

I said I saw them about once per year, and that they were in their mid-60s.

He said, "Ok, so you'll see them 15 more times in your life."

Gut punch. It sounds insensitive—but it's just real.

Our time is finite, but we fail to recognize it until it's too late...

Later that month, we sold our house in California and moved to the East Coast to be closer to our parents.

It was the best decision I've ever made.

I'll never regret those tiny moments—of doing nothing in particular—that we'll get to spend together in the years ahead.

Harsh Truth: Most of your friends aren’t really your friends.

They’re just along for the ride when it’s fun, convenient, or valuable.

Your real friends are the ones who are there for you when it's none of those—when you have *nothing* to offer in return.

Cherish them.