Iatro: literally means “healer” in Greek.

Iatrogenesis: Harm caused by the healer.

The first rule I was taught when I began a career in investments was “Do No Harm.” It’s the same rule that applies to the medical profession. The benefit to the client (or patient) is uppermost.

Yet, how often do we see portfolios ruined by decisions that often amounted to nothing more than “naïve intervention” (Nassim Taleb, Anti-Fragile). Not “wrong” choices, pers se, but unnecessary choices. Choices that didn’t need to be made.

Why is that? No one purposefully decides to tank their investing plans (assuming they have a plan).

Each investor defines investing “success” in their own way: beating an index over long periods of time, generating xx% annualized rate of return (over long periods), becoming debt-free with sufficient sustainable income, achieving a specific goal (e.g., finding a Unicorn) or simply having X amount of $ by age YY.

However, because there are so many variables impacting investing “success”, it becomes next to impossible to know which are necessary and which are not. For example, deciding whether a market downturn is a correction or the start of a bear market could have large consequences on long-term investing success. A decision to go to cash can have large negative consequences.

How does an investor know what decisions are necessary or not? There is a simple solution. But first, we need to understand how unnecessary harm (iatrogenesis) occurs.

What causes unnecessary decisions to be made? Usually, one of two forms of Interventionism: naïve intervention and over-intervention. (I’ll cover “over-intervention” in the next article.)

Iatrogenic Interlopers

First, it needs to be stated that no one cares for your financial well-being as much as you. No one. So, know what is and isn’t your business. Second, very few will ever care for your financial well-being. If you find someone who does, hold onto them for dear life.

The reality is that most pundits (e.g., financial experts, asset managers, advisors, gurus, fin-fluencers, wunderkind, superheroes, etc.) in the investment world primarily care about gaining something for themselves; which usually, not always, means selling you something or gaining your support (e.g., Likes) to propel their focus on gaining more supporters (or clients) later.

There is nothing wrong with that. That is the “world” of investing in which many find themselves. But the truth is that pundits can become interlopers. When they do, they don’t belong in your investing domain.

Naïve intervention often occurs when interlopers trigger unnecessary decision-making.

Let me explain with an example.

Investment Iatrogenesis in Action

You have spent years building a portfolio that is well allocated and suitable to meet your long-term goals and financial situation. Great! You own Stock A in your portfolio and it has done pretty well. It satisfies a strategic place in a well diversified portfolio. Fantastic!

You read an article on a reputable investing blog by Mr. Super Legitimate. He is an “accomplished” investor, who had +xxx% returns in his portfolio after he made an incredible bet on the markets 10 years ago, and he used to run an established fund. He’s a player. This is someone worth paying attention to.

Except, in the article, Mr. Legitimate is suggesting Stock A is over-priced. Price-to-Earning ratios are way out of line. And he suspects their books aren’t squeaky clean. He shows some incredible charts (which are hard to decipher, but look impressive). Then he provides some statements from third parties which seem to corroborate his thesis.

Mr. Super Legitimate means no harm. He is just stating his proposition for why he thinks Stock A will crash and burn. (Oh, and he has shorted Stock A, which conveniently means if others agree with him it likely helps push the stock down. But let’s not confuse that with a “conflict of interest.”)

Now, you are left with a decision. Should you sell Stock A? (Cue the hand-wringing and nail-biting.)

Mr. Super Legitimate is well intentioned and is going about his business. He’s making a legitimate proposal that any investor could test.

So, what’s wrong his thesis? What harm could it do to your portfolio?

Everything! He is an investing interloper potentially practicing Investment Iatrogenesis (doing more harm than good).

Mr. Legitimate’s thesis is presumably intended for HIS portfolio, not yours. He knows NOTHING about your portfolio or why you hold Stock A. (He is indifferent about you!)

Pause and repeat that again: He knows NOTHING about you, your goals, your financial situation or your portfolio!

If this doesn’t ring true, try another example. If a doctor proposed that you take a pill that supposedly reduces the chance of heart problems in the future, and there was plenty of “buzz” about this pill; BUT, the doctor did not know you or your physical situation, would you follow his advice? Of course not. And, even if he did know your situation, is the pill necessary? Not necessarily!

With that said, I want to propose that financial pundits not only don’t care and will rarely, if ever, care for your financial wellbeing (apart from how it will benefit themselves), many, if not most, are doing you more harm than good.

It doesn’t matter that everyone is after their own wellbeing. We get that. They are responsible for themselves. You are responsible for you.

But, what does matter is when investing pundits are doing you more harm than good.

Who’s to Blame?

It is a common feature in our world to apply causes (reasons) to almost every claim or event. Naturally, when someone’s portfolio goes horribly bad, it’s time to find a cause.

Who is to blame for Investment Iatrogenesis? No one. And everyone. The “cause” of unnecessary harm can be just as much the interlopers (especially those whose business model is to routinely interfere with your investments), as it is the investors who actively seek out such information.

Ironically, the more “investment information” gathered, the more the risk of iatrogenesis occurring rises.

So, what does one do to avoid harm?

The natural tendency would be to create defenses against all potential interlopers. Maybe develop a black list of would-be iatrogenic pundits. Or, you could stop proactively seeking and ingesting “investment information.” And perhaps stopping making decisions altogether.

More likely, the answer is not in the decision making itself, but how we treat information.

The Iatrogenic Heuristic (Rule)

There is a simple solution that solves, or largely diminishes, the Iatrogenic dilemma.

When it comes to making decision about your portfolio, ask:

“In what way does this decision help me achieve my investment goal(s)?”

In other words, in what way does the decision make your portfolio healthier, based on how you define “success” (or investment health). If you cannot answer this question sufficiently and without bias, then the decision is most likely an act of naïve intervention. Unnecessary.

If you can sufficiently answer that question, then follow the answer. And live with your decision. That’s it.

Just for fun, let’s apply it to our previous example. Mr. Legitimate says Stock A is headed for a fall. Should you believe him and sell Stock A?

In what way does selling Stock A help you achieve your goals? Hmm. Let’s say your goals are long-term and you have decades remaining on them. How does selling Stock A, which Mr. Legit says is a dog, look 5 or 10 years from now? Will it be a dog 5 years later?

Wait! Mr. Legit didn’t comment on how this company would be doing in the distant future. That’s useful to consider.

But what if it goes down big in the short term? Do you have cash needs in the short-term? No? Could there be unrealized losses if Stock A tanks? Maybe, but it serves a strategic role in your portfolio. What about that?

Reset your perspective. What about the long-term? Do I believe in this company? Its management? Its products? Revenue? Profits? etc. If not, never mind what Mr. Legit says, you need to re-think holding Stock A.

But if you do believe, you can already begin to see that selling Stock A is not helping you achieve your long-term goals. (This doesn’t mean you will never sell it, just not now.)

Did you answer the question? Try it the next time you encounter pundits who claim they can “heal” your portfolio. Watch for interlopers. It doesn’t mean they are wrong or not well-meaning. Everybody is pitching something.

But it is your responsibility to own your decisions. And do no harm to yourself!

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

Space exploration and the “space economy” is a frontier story. So, tread with caution. But…this frontier story is unmatched. And it’s one where the seeds are already being planted. Space commerce is wide open (literally) and as such can seem overwhelming. But just a cursory view of the opportunities should get anyone to stop and look up.

I was utterly intrigued by a presentation from Aurelia Institute’s chief executive Ariel Ekblaw, in which she described how self-assembling magnetized structures could make orbiting research habitats a reality (in the not too distant future). And, what’s more, microgravity research shows the potential for unlocking scientific and medical breakthroughs that only the weightless environment of space can deliver.

While SpaceX is the first mega-spectacular entrant to public markets, there are multiple organizations continuing to lay the groundworks SpaceWorks for the interstellar economy.

Consider a few potential areas of development that the Space Economy presents:

New Medicines and Biotech Discoveries. Microgravity changes how cells, proteins, and tissues grow. Researchers have already found that protein crystals grown in orbit can be more uniform and detailed than those grown on Earth, potentially improving drug development. The potential benefits? Faster drug discovery, better cancer therapies, improved regenerative medicines, more realistic human tissue models for testing.

Scientific Discovery: Just looking back, should help us see forward. Exploration has generated unexpected technological breakthroughs. Past space programs contributed to innovations that eventually influenced medical imaging, materials science, computing, telecommunications and consumer electronics.

Planetary-Scale Internet Connectivity: Satellite constellations are already shrinking the digital divide bringing greater connectivity to rural areas, remote education, telemedicine, emergency communication as well as maritime and aviation communications.

Orbital Data Centers: Taking the compute infrastructure out of our backyards and sticking them into orbital centers. Advantages include continuous solar power, reduced strain on power grids, direct processing of satellite data (without the back and forth from earth to satellite).

SpaceX is not alone in this particular pursuit. Companies such as Orbital AI Factory and Starcloud are pursuing variants of this idea.

Material Manufacturing: Many industrial processes are affected by gravity-driven convection, sedimentation, and contamination. In microgravity, manufacturers may be able to create: ultra-pure semiconductor materials, high-performance crystals, precision optical components, advanced fiber optics.

Researchers have already demonstrated in-space manufacturing of optical lenses using microgravity fluid dynamics.

So, what about SpaceX?

Many commentators are building their narrative of the SpaceX listing around the valuation. And secondarily, a sub-narrative which tunes into (i.e., over-obsesses about) Musk becoming a trillionaire.

Be a smart investor. Think long-term. Consider whether taking a position in SpaceX is or isn’t your business. And mostly, ignore the noise and listen/look for the signal.

Observing the spectacle that is Elon Musk (admittedly, with his own gravitational pull) may cause some to refrain from buying SpaceX. But don’t be fooled by the flash and drama.

SpaceX could pop, drop and/or stabilize. And there will be others to join the public markets, such as, Blue Origin, Rocket Lab, Astral Materials and others.

But the Space Economy will take off. McKinsey & Co estimates $1.8 trillion by 2035. That sounds great. Whether or not we can rely on it…well, I’m not going to wait and see.

Because my thesis to own a bit of Space is this:

1. Ignore the IPO. My former boss always reminded investors that “IPO = It’s Probably Over-priced.” From an analytical perspective every IPO is mis-priced. It doesn’t matter because markets sort that out with ease. But I am not interested in the IPO. I am interested in the opportunity to buy into the Space market. Why?

2. Look for frontiers. Space is the “final” spatial frontier (it happens to be infinite from what we can tell).

3. Only a small stake is required. (Money that I can afford to lose if the frontier takes longer than expected to be subdued).

4. Think bigger and further out. All the analysis, predictions and forecasts in the world couldn’t convince me for or against investing in the Space Economy (i.e., I already have a conviction and its ultra long-term). So, why not start now?

5. Identify disrupters. Invest in disrupters, the more annoying the better; those who gravitate towards the volatility and the unbelievable. Those who are “anti-fragile.”

6. Buy signals. There are soooo many “observers” and “commentators” railing against making Musk a trillionaire or shouting about how 401Ks will be wiped out. This volume of noise is a clear buy signal.

7. Skin-in-the-Game. Most importantly (to me anyways), is that I can’t truly learn this new “Space Economy” without having skin in the game.

And, it should go without saying, but as the “Off-World” or “Orbital” economy gains momentum, it leads to an expanded “Exo-Economy” (Greek exo, “outside”). Both terrestrial and space activities become more intertwined. What happens up there directly impacts things down here.

This is not a recommendation nor should it be treated as advice (every investor’s situation and timeline is unique). This is merely a perspective on how I think about investing for the long run. There are huge risks involved in developing a Space Economy. Big leaps forwards, and big disappointments.

Yet, having stared up at the spectacle of Space for a long time, it is difficult not to envision the opportunity. I am grateful to be around to witness it.

So, reach for the stars (or not). Regardless, proceed with caution.

Let the countdown begin…

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

However, one of the things I learned, from one of the greatest investors I’ve known, is just how hard it is to repeat success (if by “success” we mean making a killing on some financial trade).

As soon as you lock down the perfect trade, it’s time to look for the next! That’s when bravado begins to give way to doubts.

So, how does an investor achieve stellar-like returns (outpacing “market” returns) without having to compile a series of big short-term bets?

Long-term investing.

I know, I know. Slow, methodical, boring and nerve-wracking. It lacks the obvious glamour, noise, dopamine hit and (potential) accolades to be found in trading. It relies on the power of long-range compounding rather than a compilation of short-term bets.

Honestly, compared to some trades we read about, even a 25% compounded annual growth rate (CAGR) does not feel that extraordinary.

That is, until you stop and look at what 25% can do over 10 or 20 years.

$1,000 compounding at 25% over 20 years becomes $86,000. That is an exceptional outcome.

And here is the uncomfortable truth: achieving such a result as a self-directed investor is not primarily a matter of financial brilliance. It requires temperament and psychological endurance under conditions that are specifically designed to break it.

Roughly speaking, only a small percentage of publicly traded stocks go on to deliver returns in this range over multi-decade periods (think, , ). That alone imposes a brutal constraint.

You are not searching for “good companies,” but extreme outliers. And, even if you identify one of these rare businesses, the probability that you will buy early enough, size it meaningfully, hold it through good times and bad, and primarily avoid selling prematurely is very low.

The true scarcity is not the stock. It is the behavior required to own it!

I reached a point (thankfully, early in my career) where I questioned whether I truly believed what I was telling clients. Did I have the sort of behavioral attributes needed to invest for the long-run?

Over the years of investing and helping others to remain invested, I began to experience a shift in my thinking. I slowly but eventually accepted a few things:

• I cannot control what markets do. (Duh. But yeah, I had to accept that long-term investing means going through bad markets without losing my cool.)

• I cannot control my ability to identify the next “extreme outlier” as much as I think I can. (Know you can always be wrong.)

• I can control (or at least, “manage”) my behavior or temperament around investing and money. (Despite what headlines are screaming.)

• And, my psychological and emotional restraint must be practical and pragmatic (not merely conceptual and idealistic). I have to believe in something. Have conviction. And with that conviction, act as an emotional non-participant.

Having worked in tech before moving to the investment industry, I was pretty certain about the category in which I would focus the core of my investments (while still incorporating a counter strategy within a portfolio).

I dabbled in tech stocks and funds. But I wasn’t faring too well with bottom-up stock-picking. (More on that another time.)

One day I was chatting with colleagues when an exuberant neighbor began sharing about his experience with trading leveraged ETFs (in his personal portfolio). Not only were they new to me, but our firm would never promote such high risk financial instruments.

I listened intently and then began to do my own analysis of how they work, their risk and effectiveness.

With money I could afford to lose and with a mindset solely focused on long-term growth, I made my move. I invested a “manageable” amount in a 3x leveraged Technology Bull ETF ( ).

Only, I decided to go against the grain. I decided to go long (ie., buy and hold) in a leveraged ETF.

Now, at the time of this publication, about 15 years later, the position is up over +15,000%*. And it still has room to run.

(*Note 1: Buying, much less holding, a leveraged product is NOT a recommendation, by me or anyone else familiar with this type of instrument. Both volatility and “volatility drift” are reasons to be cautious with leveraged products. They are intended for short-term trading and only by accredited investors. Please review the disclaimer below and here.

*Note 2: My purpose here is not to boast, tout, or to recommend investments; but to share my experiences in investing and to explore what’s behind investing “norms” that seem “obvious.”)

But here’s the real story beyond the actual trade itself:

1. I made one trade with funds I could afford to lose.

2. I waited a long time for the “payoff” (although I am not about to sell, I have rebalanced).

3. It was and is an excruciating test of endurance.

During that time, I experienced several bear markets, many more corrections and plenty of big swing days. All normal market activity.

Just in case you may have missed the point, this >25% CAGR includes bear markets!

Regardless, my approach seemed simple enough. Perhaps even naive. I anticipated strong, long-term gains in technology. Given that conviction, why wouldn’t I leverage?

The answer to that question is this:

leverage amplifies volatility; and volatility weakens, if not destroys, resolve.

(Why volatility does that to us is also a subject for another time.)

Obviously, I can’t manage volatility. However, knowing I can turn volatility into my advantage, I chose another strategy.

My primary task was (and is) building endurance by managing my resolve, restraint and patience, not the investment position, per se.

Over the years, there were huge periods of gains and crushing periods of reversals! Both ends of the pendulum required a consistent recalibration of expectations; dampen elation and hubris during upward swings; deflect and/or deflate rampant fear during downswings.

However, the benefits of withstanding both good and bad times far outweighed the struggle. Though not merely in financial terms.

Along the way I built emotion-management muscle. I acquired a true appreciation for how compounding works. I gained much greater clarity on what drives markets and how to avoid the noise.

Ironically, I hadn’t even considered the return on this or other positions in my portfolio. It became irrelevant because I wasn’t competing with anyone.

I spent a large portion of time teaching myself to restrain from “over-watching”, such that I organically learned the practice of “drama-avoidance” (which mostly entailed filtering “noise”). Instead, I consolidated and channeled my energy towards achieving restraint.

Restraint may seem like an exercise in applying large-scale control. Yes, there are periods of teeth-gritting; but, I discovered that restraint actually scales and endurance is produced in micro-doses.

Ultimately, restraint (and the endurance it helps to produce) has more to do with staying true to convictions. Meaning, as investors, we must know what our convictions are before we can exercise restraint.

Convictions and the resolve needed to see them through will change over time. In my case, what began as an experiment based on a belief in technology, evolved into a set of beliefs about how to invest with extraordinary endurance. A work still in progress.

And as strange is it may sound, compared to the monetary gains, the greater outcome of this experiment was learning to endure. It’s actually a larger payoff because endurance is applicable to so many areas of life.

And much like long-term investing, endurance has a way of compounding.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

Among those forward looking signals is the Leading Economic Index (LEI), published by The Conference Board. The LEI is a composite of ten forward-looking components that, taken together, provide a reliable sketch of the economic future.

One would think that at present the LEI would be flashing red. Instead it is gradually drifting downward. And that is precisely what makes it so difficult to interpret and so dangerous to ignore.

The Shape of the Present

The LEI today resembles a slow seepage. Month after month, small declines have accumulated.

If one were to plot it against history, the current profile would not resemble the dramatic plunges preceding the 2008 Financial Crisis or the sudden shock of the COVID-19 pandemic. It is among the more ambiguous episodes such as 1995, 2015, perhaps the early stages of 2006.

The economy, in other words, is not falling off a cliff. The present moment most closely resembles a pre-decision phase. The economy is still expanding and the labor market is holding. Yet underneath, forward momentum has thinned.

The Soft Landing Question

A “soft landing” occurs essentially when inflation subsides, growth slows but does not contract, unemployment rises only modestly, and financial markets continue their upward drift.

The LEI, historically, has occupied a paradoxical role in such moments. It often turns negative before the economy weakens meaningfully and long before markets react.

Consider three cases:

1. 1995–1996: The Classic Deceleration

The LEI flattened and dipped. Growth slowed. The Federal Reserve eased. No recession followed.

Outcome: Equities surged; the expansion resumed with vigor.

2. 2015–2016: The Industrial Scare

The LEI declined modestly, dragged by global weakness and manufacturing softness.

Outcome: A correction occurred, then recovery. No systemic break.

3. 2006–2007: The Deceptive Plateau

The LEI rolled over gradually. Nothing appeared urgent. Markets continued rising.

Outcome: A delayed but catastrophic repricing.

The same signal produced radically different futures.

Why the LEI Is So Often Overlooked

If the LEI is so useful, why is it so frequently ignored? You don’t really hear much about it from mainstream media.

First, the LEI lacks the immediacy of the snake-oil charm we read from a growing portion of financial and economic reporting. In other words, it lacks drama. It fails to command attention simply because its message is incremental. Slow and incremental usually equals boring.

But the LEI also conflicts with present data, such as employment data, earnings reports, etc. To listen to the LEI can feel like betting against the present reality. And that’s actually the beauty of it.

The probabilistic nature of the LEI means it doesn’t make declarations. It provides the odds by which investors and portfolio managers can perceive the future. For traders, it isn’t much help.

The LEI as a Portfolio Tool

For the investor willing to listen, the LEI provides a way of understanding the economic landscape in which returns are generated.

When the LEI is rising it signals that growth is broadening; a condition in which risk assets tend to perform well. When the LEI is falling (as now), forward returns become more dispersed.

Practical implication? The LEI is not necessarily signaling an exit from equities. But it suggests a moderation of exposure in favor of quality stocks and reduced leverage.

In late-cycle LEI regimes, leadership often shifts from cyclicals to defensives and from speculative growth to cash-generative firms (i.e., those with endurance).

The LEI rarely acts alone. Its warnings become more actionable when confirmed by rising unemployment, credit spreads widening and/or yield curve re-steepening after inversion.

Timing Expectations, Not Markets

Perhaps the most subtle use of the LEI is its ability to recalibrate expectations. This is highly significant for mitigating the psychological effects of investing.

In declining LEI environments, strong market returns are less reliable. There tends to be an increase in volatility. And, the narrative shifts increase in frequency. All of which requires measured posture by self-investors.

The LEI does not predict catastrophe. It suggests that the economy has entered a regime where outcomes are no longer tightly clustered. Where the range of plausible futures has widened.

A soft landing remains entirely possible. History offers several such precedents. But those same histories remind us that the path from slowdown to stability is narrow and easily disrupted.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information—not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

Oil markets, dramatic as they appear in the moment, tend to behave less like a permanent rupture and more like a theatrical performance. The chaotic loudness ultimately becomes temporary.

To see why, let’s step back from the headlines and examine how oil has behaved across decades.

Drama Patterns

Every oil spike arrives with the same implicit claim: this time is different.

When prices surged during the 1973 Oil Crisis, many believed the industrial world had entered a permanent age of scarcity. Gasoline lines stretched for blocks. Governments imposed rationing. Economists spoke of the “end of cheap energy.”

Yet the oil market is more like a rubber band stretched too far than a drained reservoir. Pull it hard enough and the tension feels unbearable. Ironically, the very forces creating that tension are what eventually snap it back.

Indeed, high prices triggered new drilling, conservation, and technological adaptation. Within a decade, the market was drowning in supply during the 1980s Oil Glut.

The same drama repeated itself a generation later. In 2008, oil climbed to nearly $150 a barrel in the months preceding the Global Financial Crisis. Analysts warned of structural shortages. Commentators predicted $200 oil.

Instead, prices collapsed within months.

The pattern has been remarkably persistent: crisis > panic > adaptation > normalization.

Hidden Stabilizers

Oil markets possess a self-correcting mechanism. When prices rise sharply, they unleash forces that eventually pull them back down.

The first is demand destruction.

Consumers respond quickly to higher fuel costs: driving less, choosing more efficient vehicles, or shifting spending away from energy-intensive goods. Airlines hedge or reduce routes. Manufacturers redesign processes.

The second is supply response.

High prices act as a powerful signal to producers. Capital flows into exploration. Marginal fields suddenly become profitable. Innovations appear. In the early 2010s, this dynamic helped trigger the American shale revolution, which ultimately contributed to the 2014 Oil Price Crash.

The third stabilizer is technological substitution. Over time, societies adapt via nuclear power, renewables, electrification, efficiency improvements. None of these shifts happen overnight, but collectively they erode oil’s dominance whenever its cost rises too far.

The result is a market that repeatedly overshoots upward and downward.

Numbers That Matter

Yet price alone tells only part of the story. What truly determines whether oil becomes dangerous for the global economy is how much of the world’s income must be spent to buy it.

Economists track this through a simple metric: Oil expenditure as a share of global GDP.

When oil prices rise but the economy is large and efficient, the burden remains manageable. But when the share climbs too high, energy begins to function like a massive tax on the entire system.

Recent commentary echoes this historical pattern. Analysts at Reuters Breakingviews and Vanguard have warned that sustained oil spikes eventually compress consumer demand and economic growth. Moody’s chief economist Mark Zandi has similarly noted that nearly every U.S. recession since World War II has followed a major oil shock.

The mechanism is simple: when energy absorbs too large a share of economic output, it begins to function like a tax on the entire economy.

Historically, a clear threshold has emerged. When global oil spending approaches 4 to 5 percent of GDP, recession risk rises sharply.

Even with oil around $100, the oil-GDP ratio today is generally estimated around ~3–3.5% of GDP. That is elevated but below the historical recession trigger.

However, if oil were to reach roughly $130–$150 and stay there for an extended period, the ratio would likely approach the danger zone (~4–5%). [WSJ, Paywall]

Why Crises Feel Larger Than They Are

Part of the reason oil shocks feel existential is psychological. Energy is the bloodstream of modern economies. When its price moves violently, the change ripples through transportation, agriculture, manufacturing, and household budgets.

But the speed of price changes often matters more than the level itself.

A sudden spike compresses economic adjustment into months rather than years. Businesses scramble to reprice goods. Central banks fear inflation. Political leaders warn of crisis.

Yet the market itself is already adjusting. The oil system is like an ocean tanker: slow to turn, immense in scale, but once momentum shifts, the change unfolds with surprising steadiness.

This lag between perception and adaptation is where much of the drama resides.

The Geopolitics of Oil Panic

Geopolitics amplifies the illusion. Conflicts involving energy-producing regions inevitably trigger fears of supply collapse.

Consider the Iraqi invasion of Kuwait, which led to the Gulf War. Oil prices doubled almost overnight. Many expected a prolonged disruption to global energy markets.

Instead, prices normalized within months once it became clear that other producers could compensate.

Even today, investors often overestimate how fragile the oil system truly is. Global production is geographically dispersed, strategic reserves exist across multiple countries, and market incentives quickly encourage alternative supply.

The system bends more easily than it breaks.

The Investor’s Dilemma

For investors, the problem is not the oil market itself but the narrative surrounding it.

Energy shocks generate stories that feel persuasive in the moment: the end of globalization, permanent inflation, structural scarcity.

These narratives often dominate financial commentary precisely when markets are closest to adjusting.

History offers a calmer perspective.

Over the past half-century, most oil spikes have lasted between one and five years. Markets adapt faster than expected. Supply reappears. Demand softens. Prices drift back toward equilibrium.

What appears catastrophic in the present often looks cyclical in hindsight.

The Value of Historical Distance

Investors who examine long-term patterns gain a useful form of emotional insulation.

They begin to recognize familiar rhythms: cheap oil leading to underinvestment, underinvestment leading to shortages, shortages triggering price spikes, and price spikes eventually producing new supply.

The cycle is not perfectly regular, but it is surprisingly persistent.

This perspective does not eliminate uncertainty. Dreaded wars still occur. Markets still overreact. Energy transitions still reshape the global economy.

But it does offer clarity. The oil market, despite its volatility, has rarely produced the permanent catastrophes that seemed inevitable in the moment.

Behind the Curtain

The deeper lesson may be that oil crises are not purely economic events. They are also psychological ones.

Because energy sits at the foundation of modern life, any disruption feels like a threat to the entire system. Headlines amplify the danger. Financial markets magnify the fear.

Yet when the curtain lifts, the machinery behind the spectacle becomes visible: supply incentives, technological adaptation, and the relentless ability of markets to rebalance.

Seen from that vantage point, the oil market begins to look like the volatile, dramatic, but ultimately self-correcting stage in the broader play of global economics.

And in markets, as in theatre, the loudest moment in the performance is rarely the end of the story.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information—not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

In the early weeks leading up to the recent strikes on Iran, a set of economic and logistical signals, sometimes overlooked by mainstream analysis, anticipated the escalation with uncanny clarity.

Dubbed “shadow indicators” by geopolitical analysts, these measures operate outside conventional economic reporting, providing early warning signs of wartime stress and potential disruption.

For investors and policymakers alike, understanding these signals offers both foresight and a lens through which the implications of conflict can be assessed.

The Most Critical Shadow Indicators

The three to four most critical shadow indicators during the Iran crisis are shipping insurance premiums, energy export flows, and logistics congestion & freight rates in strategic maritime corridors. Each offers a real-time glimpse into the operational risks and economic stresses building in the region.

1. Shipping Insurance Premiums: Maritime insurers reacted swiftly to rising tensions, expanding war-risk zones and sharply increasing premiums for vessels transiting the Persian Gulf. Before any public reports of military strikes, premiums had already multiplied severalfold, signaling the market’s anticipation of imminent conflict. These insurance movements are particularly revealing because insurers price risk with access to detailed intelligence and actuarial models, making them far less susceptible to political noise than conventional reporting.

2. Energy Export Flows: The Strait of Hormuz, through which roughly one-fifth of global oil supplies transit, saw early disruptions even before open hostilities. Tanker rerouting, delayed loading, and anticipatory congestion reflected the likelihood of supply interruption. Unlike official production or export statistics, which are often delayed or manipulated, these flows provide near real-time insight into the functional state of the energy market and, by extension, the war economy.

3. Logistics Congestion and Freight Rates: Vessel movement data (e.g., Clarkson’s Tanker Index, Freightos Baltic Index), including AIS tracking of tankers and commercial freighters, revealed hesitation and congestion in key corridors. Freight rates surged in anticipation of risk, reflecting not only the perceived probability of disruption but also the broader market’s adjustment to potential bottlenecks.

These indicators capture behavior that precedes formal news reports or government statements, providing a window into the early-stage activities of wartime economies.

Shadow Indicators vs. Traditional Economic Measures

There are two reasons to highlight these obscure indicators. First, to showcase how they can help manage portfolio risk; and second, to contrast them with more backward looking signals.

The reality is that traditional economic indicators such as sovereign bond yields, consumer price indices, and GDP data, are often slow to reflect the stresses of conflict (as shown in the diagram below).

Sovereign debt rates, for example, may rise only after markets have digested the political and fiscal implications of war. Similarly, official energy production reports or trade statistics lag weeks behind actual disruption, obscuring early warning signs.

Shadow indicators, by contrast, emerge directly from operational risk and supply chain behavior, allowing investors and analysts to detect shifts before official data or headline news confirms them.

Risk Tool

For investors, these shadow indicators serve as a potent risk signal and a tool for strategic positioning:

• Early recognition of supply shocks: Rising shipping premiums and blocked energy flows can point towards commodity price volatility, particularly in oil, LNG, and related derivatives.

• Maritime logistics disruption: Bottlenecks in strategic corridors signal potential ripple effects in global trade, which may impact shipping equities, port operators, and industrial commodities.

• Sovereign credit risk lag: While bond yields may eventually reflect the increased fiscal risk of wartime expenditure, shadow indicators provide a head start in assessing the economic resilience of the state and the likely trajectory of market stress.

Shadow indicators offer a uniquely predictive view of conflict dynamics, highlighting operational and financial stress points before traditional metrics.

For the Iran strike, shipping insurance premiums, energy flows, and maritime logistics patterns foreshadowed escalation weeks before headlines confirmed it.

Investors who incorporate these signals into their analysis gain a strategic advantage, navigating volatility with insight rather than hindsight. In a world where wartime dynamics can shift markets almost instantaneously, understanding the unseen currents of economic behavior becomes a risk management necessity.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

More often than not that lens is based on the screaming headline(s) of the day. Interest rates explain everything. Or artificial intelligence. Or inflation. Or geopolitics. Each explanation feels persuasive and authoritative.

The problem is not a lack of information, but the incompleteness of that information. It is what the comics scholar and educator Nick Sousanis calls “flatness.”

OK, so what can a comic scholar teach us about how to avoid being flattened?

The Problem With Flat Thinking

In his remarkable graphic book Unflattening (Harvard University Press), Sousanis explores how modern institutions often train us to perceive the world through a single dominant framework.

The condition he terms “flatness’ emerges when one method of analysis becomes the default, alternative viewpoints fade from view and complexity collapses into a single narrative. Flat thinking arises from overconfidence in one dimension of explanation.

We can see flatness appearing consistently in markets:

• “Rising rates will crush equities.”

• “Artificial intelligence will destroy software companies.”

• “China reopening will drive global growth.”

Each statement contains a kernel of truth. Yet markets are not single-variable systems. They are layered ecosystems where economics, sentiment, policy, technology, and narrative interact simultaneously.

When investors compress these layers into a single story, we flatten the world.

The Obvious Model of Investing

The “obvious” model of investing assumes something deceptively simple:

Markets respond to the most important variable.

Find the variable and you understand the market.

Which demonstrates the appeal behind explanations such as:

• “Stocks follow interest rates.”

• “Growth stocks follow liquidity.”

• “Energy prices follow geopolitics.”

This approach is seductive because it produces clarity. Analysts can draw straight lines between cause and effect. But as we all know, reality rarely moves in straight lines.

Markets are influenced not only by events, but by how investors interpret those events. Expectations, positioning, and narratives frequently matter as much as fundamentals themselves.

The result is that markets operate in multiple dimensions at once. Reducing them to one variable is the intellectual equivalent of viewing a three-dimensional object as a shadow on a wall.

Unflattening the Market

Sousanis uses the idea of “unflattening” to describe the act of integrating multiple vantage points simultaneously. Understanding improves not by choosing the correct model, but by expanding the number of perspectives we hold.

In investing, this might involve combining:

1. Fundamentals - revenue, margins, competitive dynamics

2. Macro forces - interest rates, liquidity, fiscal policy

3. Behavior - investor sentiment and positioning

4. Narrative - the story investors believe about the future

Each perspective reveals something different. More importantly, none reveals the entire system. When these layers intersect, the picture becomes far more informative. And occasionally, something interesting appears.

Where Great Investors Live

Many of the most successful investors instinctively operate in this multidimensional way, even if they never describe it in the language of “unflattening.” Consider a few well-known examples.

George Soros built his philosophy around reflexivity, the idea that investor beliefs influence economic outcomes. Markets do not simply reflect reality; they interact with it. Prices shape expectations, which shape behavior, which feeds back into prices.

Ray Dalio developed a framework of economic “machines” that integrates policy, debt cycles, politics, and monetary systems across multiple time horizons.

Stanley Druckenmiller has long emphasized the synthesis of forces. Liquidity, technological change, capital flows, and positioning are each influencing forces, as opposed to a single analytical model.

Howard Marks captured a similar idea with his concept of second-level thinking: the recognition that what matters is not merely whether something is good or bad, but whether the market already believes it is good or bad.

Finally, Charlie Munger famously urged investors to develop a “latticework of mental models,” borrowing insights from multiple disciplines rather than relying solely on financial theory.

Each of these approaches rejects flatness. Each seeks to view the market from more than one angle at once.

Where Opportunity Actually Appears

The most obvious market stories rarely produce the most attractive investments. By the time a narrative becomes dominant, it is usually already reflected in prices.

The real opportunity tends to appear somewhere else: at the intersection of perspectives. Where fundamentals diverge from investor expectations, narratives diverge from positioning, policy shifts collide with prevailing assumptions.

These intersections are often uncomfortable, primarily because they resist simple explanations. But they are also where markets occasionally misprice reality.

A Practical Exercise in Unflattening

OK, so how does this help? When evaluating any investment idea, it can be useful to pause and ask the questions that matter most. Examine the situation through four distinct lenses:

1. Economic Reality: What is actually happening in the business or economy?

2. Investor Belief: What does the market believe is happening?

3. Positioning: Who is already committed to that belief?

4. Feedback Loops: Could market expectations reinforce or destabilize reality?

If all four dimensions align, the opportunity may already be fully priced. But when they diverge, something more interesting may be unfolding.

In the end, investing rarely rewards the person who gathers the most information. It more often rewards the one who sees the same information from more than one direction.

Flat thinking searches for the single explanation. Unflattened thinking looks for the intersection where several explanations meet and occasionally contradict one another.

That intersection is rarely obvious. But it is often where the opportunity lives.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

The fact that markets tend not to fall far is a destabilizing one. Why? Because if markets routinely recover within weeks of geopolitical shocks, then the most common investor reaction is to reduce exposure once the conflict begins.

That reaction is often a bigger problem because it addresses the wrong moment.

The Event Everyone Watches

The outbreak of war feels like the decisive point. Each arrives with a sense that the world has just crossed a threshold. News anchors speak of escalation. Strategists warn of uncertainty. Investors feel the pressure to reposition.

The logic seems obvious: if war is bad for markets, the moment it begins should be the most dangerous moment to hold equities.

But market history does not behave that way.

What Actually Happens

Across many geopolitical shocks, a pattern appears. Markets do decline, both those declines tend to be modest.

More importantly, they tend to reverse far faster than most investors expect. Many recover within a few weeks. This is not because war is economically harmless. It is because markets rarely collapse over events that are already visible.

Once the event occurs, a crucial variable—uncertainty—disappears.

As discussed in this publication previously, markets discount widely known information.

The Market’s Real Enemy

Markets struggle most when outcomes cannot be bounded. Before a conflict begins, investors imagine multiple catastrophic scenarios:

• Energy systems collapse.

• Supply chains fracture.

• Superpowers enter direct confrontation.

Those possibilities create fear. But once the conflict actually starts, something subtle changes. The range of plausible outcomes narrows. Even if the situation remains dangerous, investors now have information.

And markets price information far more easily.

The Misidentified Risk

If this pattern is well documented, why do investors continue to respond the same way?

Because the psychological sequence runs opposite to the market sequence. Investors feel the most fear after the event becomes visible. Markets often feel the most fear before.

This mismatch creates a familiar outcome: Investors reduce risk precisely when markets are beginning to stabilize.

Most investors believe the danger lies in being invested when the crisis begins. But historically, the greater danger has been something quieter. Reacting to the crisis after it begins. Selling after the initial shock. Waiting for “clarity.”

Clarity rarely arrives before prices move.

The Question That Matters

None of this means geopolitical events are irrelevant. Some do produce prolonged market damage. The worst pullbacks (pre-2000) often occurred when war coincided with a recession or energy crisis (e.g., 1941, 1990).

But those cases share a different feature. They coincide with deeper economic disruptions—energy shocks, recessions, structural financial stress.

War alone is rarely enough. The market is not reacting to the event itself. It is reacting to whether the event changes the economic system.

So when the next geopolitical crisis erupts, the most useful question is:

“In what way does this event fundamentally alter the structure of the global economy?”

If the answer is “it doesn’t”, the historical pattern is remarkably consistent. The shock of conflict fades faster than the fear.

Avoid Self-Sabotage

The common belief is that wars trigger prolonged market collapses. The historical record suggests something else. Markets struggle most with uncertainty, not with events.

And the outbreak of a conflict often resolves more uncertainty than it creates. The practical implication is uncomfortable. The moment that feels most dangerous to investors has often been the moment when the market’s worst fears were already behind it.

Not always. But often enough that reacting instinctively to geopolitical headlines has become one of the most reliable ways investors sabotage their own long-term outcomes.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

This reaction is understandable. And short-sighted. The fear displayed is myopic—emphasis on MY! “My world is coming to an end!”

Of course, “the world is ending” is hyperbole. What fear-mongers really mean is that the way things—as we knew them—are changing. But the world is always changing. Stability is the illusion; adaptation is the constant.

So when the software sector slips into bear-market territory as artificial intelligence disrupts once-untouchable growth assumptions, some investors flee for higher ground. The software sector as we knew it is finished. “It’s different this time!”

The Meltdown Narrative

The current story predicting the imminent demise of enterprise software—particularly subscription-based SaaS—runs something like this:

• Enterprise software flourished under a clean, elegant economic logic: high switching costs, recurring revenue, durable cash flows, enviable margins.

• AI systems now replicate large swaths of human work—research, drafting, coding, analysis, coordination—without needing to live inside proprietary applications.

• Customers will gradually abandon legacy platforms; pricing power erodes, cash flows weaken, margins compress.

In short: AI is framed as a dissolvent of traditional software moats. The golden age is over. For investors heavily allocated to software, this is not merely unsettling—it is existential.

But this narrative rests on a crucial assumption: that technological substitution automatically implies economic annihilation.

History suggests otherwise.

Collapse or Reallocation?

What if the software sector isn’t dying—but being re-priced around a different center of gravity?

Enterprise software spending today sits near $1.24 trillion globally. According to research from Goldman Sachs, the total addressable market for software could expand 20% to 45% by 2030, driven not by the disappearance of software, but by its evolution toward agentic systems—AI models embedded within workflows, APIs, data layers, and governance frameworks.

This is a picture of value migration rather than shrinkage.

AI does not abolish systems; it intensifies the demand for integration, orchestration, compliance, security, auditability, and domain-specific reliability. Models may be general, but enterprises are not.

The lesson from the early internet era is instructive. In the late 1990s, brick-and-mortar retail was pronounced dead. Middlemen were finished. Geography was irrelevant. Yet the ultimate winners were not disembodied websites, but integrated platforms—logistics, payments, data, supply chains—wrapped around the new technology.

The same pattern is unfolding again.

The “Real World” Friction Everyone Forgets

There is another assumption embedded in the “SaaSpocalypse” thesis: that AI adoption will be swift, seamless, and immediately accretive to productivity.

Evidence suggests the opposite.

Recent work highlighted by Harvard Business Review shows that AI frequently intensifies work rather than eliminating it—creating new layers of oversight, verification, coordination, and exception-handling. Meanwhile, engineers and knowledge workers are already reporting cognitive overload and diminishing returns as AI tools proliferate faster than organizations can absorb them.

A growing phenomenon called “AI fatigue” is resulting in productivity bottlenecks, trust gaps, and workflow fragmentation caused by too many semi-autonomous tools competing for attention rather than cooperating within a coherent system.

This matters because enterprises do not buy capabilities in isolation. They buy outcomes—and outcomes require stability, accountability, and integration. All of which slow adoption, complicate deployment, and favor incumbents who already sit inside the workflow.

AI will be transformative. It will also be messy, delayed, uneven, and politically constrained inside organizations.

What Actually Changes

The most likely outcome is not the extinction of software companies, but a reshuffling of where economic values accrue:

• Standalone point solutions face compression.

• Undifferentiated SaaS tools lose pricing power.

• Integrated platforms—those that own data gravity, workflows, compliance, and distribution—gain leverage.

• Software becomes less about screens and more about systems.

Adaptation will result in more normalized margins and valuations. Likely the “growth” narrative will go through maturation. That is what disruption looks like.

Smart investors adapt alongside these changes.

A Familiar Ending

Every technological revolution produces its own version of “It’s different this time.” Railroads. Electricity. The internet. Smartphones. Cloud computing.

Each time, pessimists mistake transition for termination. Change makes it feel like the end of the world, but it often becomes an engine for growth.

AI will change software profoundly. It will punish complacency and reward integration. It will expose weak moats and deepen strong ones. But the idea that enterprises will abandon structured systems in favor of free-floating intelligence misunderstands how organizations function—and how value is actually captured.

So yes, this time is different. Just not in the way many insist it must be.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

returns come from choosing the right investments.

We may phrase it more politely—“good companies,” “quality assets,” “long-term winners”—but the conviction is the same. The work of picking stocks feels active, intelligent, and earned.

And yet, for many self-directed investors, this belief quietly guarantees disappointment. Stock-picking is not bad in principle. However, it can distract investors from the only decision that actually governs outcomes.

The Hidden Instability

Here is the contradiction many investors live with, often without noticing:

They spend enormous energy selecting securities, while treating the allocation between stocks, bonds, and cash as a background assumption—something set once, often a rule of thumb, and adjusted only in moments of fear.

This is a structural error. Because the decision about what kind of world you are betting on dominates everything that follows.

Security selection merely expresses that choice.

Top-Down Investing: An “Over-story”

I love Malcolm Gladwell’s use of “over-story”, the uppermost layer of foliage in a forest, as a metaphor for a dominant narrative that shapes how everything beneath it develops. [Revenge of the Tipping Point, Malcom Gladwell]

A top-down investing approach is just that—a broad framework or narrative that shapes and informs the tactical everyday decisions.

Top-down investing begins with the over-story. The defining feature of top-down investing is hierarchy. It insists that some decisions matter more than others, and that getting the big one wrong overwhelms all smaller victories.

The central top-down decision—stocks, bonds, or cash—is the largest determinant of long-term results. Not because it is precise, but because it sets the landscape in which every other choice operates.

Pros

• Aligns portfolio behavior with economic reality.

• Prevents mismatch between risk and environment.

• Adapts to market drivers: economic, political and sentiment.

Cons

• Feels indirect and emotionally unsatisfying.

• Offers fewer narratives of cleverness.

• Demands patience when nothing “interesting” seems to be happening.

But here is the cost of avoiding it:

you can be right about dozens of companies and still lose, simply by being wrong about the world they inhabit.

Bottom-Up Investing: Where Confidence Goes to Die

Bottom-up investing promises something far more seductive: control.

If you choose carefully enough, analyze deeply enough, stay disciplined enough, returns will follow. The market becomes just a testing ground for intelligence.

This is why it remains so popular among self-directed investors. It flatters effort. It rewards activity. It offers the illusion that outcomes are proportional to diligence.

The data tell a harder story. Most individual investors:

• Trade too frequently.

• Concentrate too narrowly.

• Underestimate shifts.

• Overestimate their ability to detect advantage.

Analysis is not the issue. Bottom-up investing fails, more often than not, because selection errors compound inside an already-misaligned allocation. When the over-story is wrong, security selection becomes a useless exercise.

Pros

• Encourages engagement and learning.

• Works occasionally, spectacularly, for a minority.

• Produces compelling anecdotes.

Cons

• Systematically underperforms for the majority.

• Amplifies behavioral errors.

• Confuses effort with success.

Worst of all:

bottom-up investors often believe they are failing because they haven’t worked hard enough, when the real failure is structural.

The Consequence of Getting the Big Decision Wrong

When your top-down allocation is misaligned (or nonexistent):

• Volatility looks less like an opportunity.

• Drawdowns trigger improvisation.

• Long-term plans dissolve into short-term coping.

Losses erode coherence. The investor begins to chase, hedge, retreat, and re-enter; each move rationalized, but not cumulatively.

Getting the big decision wrong results in the slow conversion of investing from a disciplined process into a series of reactions.

What Matters Most

Top-down decisions create the conditions under which compounding can operate with consistency. Bottom-up choices then refine the journey, without bearing the full weight of the outcome.

When the over-story is clear, investing becomes a calmer exercise. You are no longer required to outguess the market security by security. You are required only to make the few decisions that truly matter.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

The greatest issue facing those who self-manage their investment portfolios is underperformance. It is a mocking menace that abuses investors, in both bull and bear markets, with the very thing we count on to grow our assets—Compounding.

The data is telling:

The annual DALBAR Quantitative Analysis of Investor Behavior (QAIB) report measures the “behavior gap” (the difference between what the market returns and what the actual investor earns).

• The 20-Year Gap: Over the 20 years ending in 2024, the S&P 500 averaged roughly 10.35% annually. During that same period, the average equity fund investor earned only 9.24%.

• The “Bad Year” Effect: In highly volatile years, the gap explodes. In 2024, despite a roaring bull market, the average equity investor underperformed the S&P 500 by a massive 8.48% (848 basis points). This was one of the largest gaps in the 40-year history of the study.

• The Long-Term Cost: A hypothetical $100,000 investment left untouched in the S&P 500 for 20 years would grow to over $717,000. The average self-investor would end up with roughly $345,000, effectively losing half their potential wealth.

Underperforming the market doesn’t put the self-investor “a little behind.” It puts you on a different trajectory altogether. After a decade, you have roughly half as much.

What Is Really Happening?

It may seem that underperformance is caused by not knowing enough or not doing enough. When in fact these aren’t the problems for most investors who have been at it for a while. This is not necessarily an intelligence problem.

1. Is this a behavioral problem? Yes, partly. Several factors contribute to the persistent underperformance:

• Market Timing (Panic & Greed): Investors tend to buy when they feel “safe” (when prices are high) and sell when they feel “scared” (when prices are low).

• The Disposition Effect: The tendency to sell “winners” too early to lock in a feeling of success, while holding onto “losers” for far too long in the hope they’ll “break even.”

• Overtrading: According to studies by Barber and Odean, the most active traders underperform the market by an average of 6.5% annually.

2. Is this a structural problem? Yes, partly. Lack of strategic diversification leaves investors exposed to vulnerable sectors or stocks. And, “chasing heat” (i.e., the latest hot stock or sector) is just a repeat of item 1 above.

Behavioral and structural hurdles explain a part of what happens to the average investor. But, these are symptoms of a problem further upstream.

The compounding effect explains the effects of underperformance mathematically. But not operationally. Using appropriate benchmarks, avoid over-trading and becoming more “disciplined” may address underperformance operationally, but not philosophically.

Underperformance is a problem that must first be addressed upstream at the source! Where our “beliefs” are formed.

A Matter of Identity

While reading a book by a well-known investor, I paused at a comment made about criticism he had received. Managing $500 Billion is no easy feat. Criticism is to be expected. Yet, about that criticism, he said: “That is not my business.”

Huh?! Really?! It struck me how literally he meant it.

His business is managing investment portfolios. Not managing criticism, his profile, status, followers, admirers, commentators, pundits or even his own clients, but investment portfolios. Nothing interferes with his work, but only because he knows what his business is about.

He has a clear conviction about what he does and how he does it. His obligations and actions are a result of his identity informed by his work. And as such, he has a clearly defined responsibility. He knows his business!

So, why shouldn’t this be any different for the self-investor?

Could the underperformance dilemma ultimately be a result of the self-investor not knowing or failing to define their business?

The furthest place upstream from the problem of underperformance seems to be one of perception: the identity of the self-investor in the investor’s own mind.

What do we self-investors believe about what we are doing?

Ask Yourself…

If you manage your own portfolio, ask yourself a simple question, and answer it without qualifying clauses or market caveats:

What decisions are you actually responsible for as a self-investor?

Not what you monitor, not what you have opinions on, not what you would act on “if conditions change.” Which decisions must be made; and, which ones are explicitly outside your remit?

Most people cannot answer this cleanly. They describe broad aims, preferences, trading techniques or asset classes, but not obligations. In the absence of a clearly defined set of responsibilities, every new market development quietly petitions for inclusion.

The problem is not that these petitions are unreasonable; it’s that, without a boundary, there is no principled way to refuse them.

Every serious enterprise, financial or otherwise, survives by knowing what it does (its “business”) and what it refuses to do. Airlines do not chase restaurant margins. Cardiologists do not dabble in dermatology. Not because those activities lack merit, but because attention is finite and error is costly.

Self-managing capital is no different! Except that most individuals never grant themselves the right to refuse. Every persuasive chart, every all-time high, every newly respectable hedge is treated as a possible obligation.

A functioning investment discipline requires a line that can be spoken without defensiveness or apology: that is not my business. Not as a dismissal of market developments, but as a declaration of the investor’s role.

Create a Mandate

At the time of publishing, gold is pushing all-time highs. Headlines scream scarcity, portfolios show increasing allocations, newsletters frame it as “essential” insurance. A self-investor without a clearly defined business feels obligated to act: read reports, model scenarios, maybe take a position.

The mandate-less portfolio accumulates a shiny-object that erodes focus elsewhere.

By contrast, a self-manager who has defined their business mandate, for example, diversified equity allocation and income-producing assets, can look at the same charts and, with no hesitation, say:

That is not my business!

Gold may rise, it may fall, but neither outcome disturbs the decisions that actually matter. Saying the phrase aloud is not a refusal of opportunity; it is a refusal to dilute purpose.

Rules-Based Investing

To make this idea and your “business” mandate functional rather than rhetorical, it must be backed by rules. Begin by listing the decisions that must be made:

• portfolio modelling

• portfolio rebalancing

• risk calibration

• capital allocation to pre-defined categories and geographies

• and reviewing performance relative to stated objectives.

Then, explicitly catalogue what is off-limits:

• speculative themes

• hot sectors

• or assets outside the mandate.

Assign each forbidden category a default response: awareness without action, logging without allocation, and a disciplined refusal to engage.

Finally, build a simple exception protocol: only opportunities that meet pre-specified criteria for size, conviction, and alignment with your objectives can override the default.

With these guardrails, that is not my business becomes a tool, not a mantra. It is a daily decision filter that protects both attention and capital while preserving optionality where it truly belongs.

The Payoff for the Self-Investor

The payoff is not a single winning trade, nor the occasional thrill of having been “right.” The payoff is clarity.

By defining your business and refusing what falls outside it, attention is reclaimed, decisions compound rather than conflict, and conviction gains scale. Shiny objects no longer pull you sideways; each position earns its place on merit, not narrative.

In practice, this discipline transforms self-management from a reactive chase into a controlled operation, where capital, time, and judgment reinforce one another.

Saying that is not my business is not denial. It is permission: permission to focus, to act deliberately, and to let the portfolio reflect the intelligence you actually intend to deploy.

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

“Risk tolerance” (aka, “risk appetite”) is one of the most frequently invoked - and least understood - ideas in investing. Platforms reduce it to a questionnaire. Advisors formalize it into compliance artifacts. Regulators define it as a blend of willingness and ability, then quietly blur the two.

The result is a concept that feels precise but behaves like weather: fair in good markets, foul in bad ones, and unreliable when you need it most.

This article argues that self-assessed risk tolerance is a losing battle. Comfort is cyclical, memory is short, and incentives distort judgment. A more durable framework replaces “tolerance” with five concrete inputs:

1. Risk Aversion (the reality of loss, not your feelings about it)

2. Need to Bear Risk

3. Capacity to Bear Risk

4. Objectives

5. Time Horizon

Together, these form a risk strategy, not a mood.

How the Market Sells Risk Tolerance

Platforms, FinTech, and the Illusion of Precision

Most online platforms treat risk tolerance as a sorting mechanism. You answer a short survey: some combination of hypothetical losses, timeframes, and emotional prompts. And then you are slotted into a prebuilt allocation.

This approach is tidy, scalable, and deeply flawed. Why?

• It assumes stable preferences.

  Investors do not possess fixed risk personalities. They oscillate with markets, headlines, and recent experience.

• It substitutes behavior with intention.

  Saying “I can tolerate a 20% loss” is not the same as living through one.

• It ignores consequence.

  Losing 20% means very different things depending on where you are in life and what that capital is meant to do.

In short, platforms use risk tolerance as a label, not a constraint. It simplifies onboarding, not decision-making.

How RIAs Typically View Risk Tolerance

Compliance First, Client Second?

Registered Investment Advisors generally approach risk tolerance through a fiduciary and regulatory lens. FINRA’s guidance, defining it as “the investment risk you are willing and able to accept”, anchors the process.

In practice, this means:

• A formal risk questionnaire

• Documentation of “client comfort”

• Portfolio construction aligned to that stated tolerance

• Periodic reaffirmation (often perfunctory)

This framework exists primarily to demonstrate process, not insight. It answers the question: Did the advisor ask? rather than Was the portfolio appropriate?

To be fair, many advisors do more. They layer in experience, conversation, and judgment. But the core artifact - the tolerance score - remains the foundation for many RIAs.

The Core Problem: Tolerance Is Not Observable

Comfort Is a Trailing Indicator

Comfort with risk is not a fixed attribute; it is cyclical, reactive, and deeply influenced by recent experience.

FINRA’s definition collapses under inspection.

• How does one measure “ability” to take risk?

  Is it income? Net worth? Age? Liquidity? Psychological resilience? Some mixture of all five?

• When is an investor capable of unbiased self-assessment?

  In bull markets, confidence masquerades as courage. In drawdowns, fear dresses up as prudence.

Risk tolerance, as commonly assessed, is pro-cyclical. It expands at market peaks and contracts at precisely the wrong moment.

This makes it worse than useless; it becomes misleading.

Why Assessing Your Own Risk Tolerance Is a Losing Battle

Investors are asked to predict their future emotional state under stress; something at which humans are notoriously bad. It is near impossible to become unbiased about ourselves.

Three structural flaws doom the exercise:

1. Recency bias dominates perception

2. Hypotheticals lack consequence

3. Language is imprecise (“moderate,” “aggressive,” “comfortable”)

The industry keeps asking investors how they feel about risk when it should be asking how risk functions in their lives.

A Better Framework: From Tolerance to Strategy

Risk tolerance should not be inferred from emotion. It should be derived from circumstance.

1. Risk Aversion (The Reality of Risk)

Risk is not volatility! In plain terms, volatility measures how much and how quickly prices move, not whether those movements are good or bad.

• Volatility is direction-agnostic. Sharp gains and sharp losses both increase volatility.

• It is typically quantified statistically, most often as the standard deviation of returns over a given period.

• High volatility implies uncertainty and variability, not inevitability of loss.

• Low volatility implies stability, not safety.

Risk is the permanent impairment of capital relative to need. Losses matter because of what they prevent you from doing.

Put succinctly: Volatility is motion. Risk is consequence.

Acknowledging this reframes the conversation from charts to consequences.

2. Need to Bear Risk

How much return is required to meet your objectives? This is a measurable variable.

If your goals demand growth beyond what “safe assets” can deliver, you must bear risk - whether you like it or not. This is not a preference; it is arithmetic.

3. Capacity to Bear Risk

Capacity is objective and observable. It includes:

• Time until capital is needed

• Flexibility of spending

• Stability of income

• Size of surplus relative to goals

An investor with high capacity to bear risk can endure volatility without derailment. One without it cannot, regardless of stated tolerance.

4. Objectives

Capital without clearly defined purpose invites confusion and chaos.

Is the money meant to:

• Fund consumption?

• Preserve purchasing power?

• Transfer wealth?

• Buy optionality?

Different objectives demand different exposures.

Risk only exists in relation to purpose.

5. Time Horizon

Time is the great solvent of volatility - but only if it is real.

Stated horizons (“long-term”) often collapse under life events, policy changes, or fear. Effective risk strategy distinguishes between theoretical and usable time.

Furthermore, one’s “horizon” should not only be specific (e.g., 30 years), but take into account the horizon of those who may benefit from the funds (i.e., inheritors).

Debunking the Status Quo

The typical onboarding process treats risk tolerance as an input. In reality, it is an output - the emergent result of constraints, needs, and timelines.

When advisors anchor portfolios to questionnaires rather than circumstances, they outsource judgment to forms and call it fiduciary care.

True fiduciary alignment demands something harder:

• Explaining trade-offs

• Constraining choice

• Designing portfolios that investors can stick with, not merely agree to

Practical Takeaways

• Stop asking “How much risk am I comfortable with?”

• Start asking:

  • What must this capital accomplish?

  • What happens if it fails?

  • What risks are unavoidable and which are elective?

Risk tolerance is not a personality trait. It is a byproduct of design.

Markets are indifferent to our comfort. They respond only to exposure, timing, and endurance. The task of investing is not to feel at ease, but to remain solvent, flexible, and aligned long enough for time and discipline to do their work.

Design for that and tolerance will take care of itself.

Up Next:

“That’s Not My Business”

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

Desperation Capitalism describes a growing behavioral pattern, most visible among younger participants, in which capital markets are treated not as vehicles for long-term wealth formation, but as escape hatches from economic fragility.

With this new economic reality has emerged the Speculative Survivalist - those who are seeking to leapfrog their way into economic adulthood by deploying high-risk, high-leverage bets on markets few truly understand.

The path out of Desperation Capitalism cannot wait for wages to rise, or for lower entry-fees into economic adulthood. It will require a multi-pronged approach leveraging principles that have shown to be effective on Wall Street itself.

Desperate to Get Out

As described in my previous post, the data supports the idea of "Speculative Survivalism." Gen Z and Millennials are not mimicking Wall Street by accident; they are using Wall Street’s own tools - options, margin, and high-beta assets - to manufacture the growth that their salaries currently fail to provide.

These tools have been made readily available by an ever increasing number of actors (easy-access Fintech, Trading Platforms, etc.) each encouraging “participation.”

Where the entrance fee into a survivalist habit is incredibly cheap and easy, the path out is costly: a multi-pronged shift, requiring survivalists to make an extreme pivot from speculative habits to taking sovereignty over their investments:

• Expect more governance, controls and oversight

• Seek unbiased “counsel” & establish reserves

• Building investing skill & resilience

Learn to Love Speed-bumps

The regulatory and institutional response to “Desperation Capitalism” has moved beyond simple warnings to structural interventions. While some segments of the government are pursuing deregulation, financial watchdogs and firms are actively deploying “speed bumps” and automated safeguards to prevent a retail-led systemic collapse.

1. Regulatory “Speed Bumps” and Real-Time Oversight

FINRA (Financial Industry Regulatory Authority) has initiated a major overhaul of how risk is calculated for retail accounts, specifically targeting the intraday volatility that “survivalists” often exploit.

• The Intraday Margin Rule (Jan 2026): FINRA has filed a proposed rule change to replace outdated “day-trading” rules with a Modern Intraday Margin Standard. This requires firms to assess a customer’s risk exposure throughout the day rather than just at the market close.

• The “Speed Bump” Proposal (Reg Notice 26-02): Introduced in January 2026, this would allow firms to place a temporary hold on transactions if they suspect a retail investor (of any age) is being exploited or is acting under extreme emotional/financial duress - effectively a circuit breaker for individual accounts.

• Approval Rigor for Options: Following a sweep of retail platforms, FINRA and the SEC are mandating that firms use more robust due diligence before approving customers for Level 3 and 4 options trading (complex spreads). Firms must now prove that the investor has the actual “operating history” or capital to sustain the potential losses.

2. Targeting the “Finfluencer” Ecosystem

Recognizing that 61% of Gen Z investors turn to social media for advice, regulators are treating “Finfluencers” as unregistered advisors.

• Social Media-Influenced Investing Report (Dec 2025): FINRA released a comprehensive study detailing how “social sentiment” tools are being used by firms to drive trading volume. The report reminds firms that Rule 2210 (Communications with the Public) applies to social media: all claims must be balanced, and risks cannot be buried in footnotes.

• Enforcement Actions: In late 2025 and early 2026, the SEC and FINRA increased fines for broker-dealers who failed to supervise their social media influencer programs. Firms are now required to maintain records of all business-related social media communications for at least three years, regardless of the platform used.

3. Financial Firms: Defensive UX and Algorithmic Guardrails

Leading fintech firms are under pressure to remove “dark patterns” - design elements that encourage impulsive, high-risk betting.

• “Calm Design” Mandates: Many platforms have been forced to remove “celebratory” animations (like digital confetti) and “false urgency” alerts that trigger the “Desperation Reflex.”

• AI Oversight of AI: As firms deploy “Agentic AI” to assist traders, FINRA’s 2026 Annual Regulatory Oversight Report mandates that these autonomous agents must have human-in-the-loop monitoring. Firms must restrict these systems from autonomously executing trades that create “intraday margin deficits.”

• Education over Excitement: Major firms like Fidelity and Schwab have expanded their “Gen Z Hubs,” shifting the UX focus from “Trending Assets” to “Long-term Compounding Tools,” often rewarding users with lower fees for completing financial literacy modules.

4. The Death of the $25,000 "Pattern Day Trader" Rule:

FINRA’s new proposal (SR-FINRA-2025-017) seeks to eliminate the $25,000 fixed threshold.

• The New Minimum: While final approval is pending, early filings suggest the “hard floor” will drop to a much lower barrier, potentially as low as $2,000 for certain risk-limited accounts.

• The Trade-Off: In exchange for access, traders will no longer have a “static” buying power. Instead, their ability to trade will be calculated intraday based on the specific volatility and concentration of their positions.

Additional guardrails such as the GENIUS Act will combine to provide appropriate limits (speed bumps) that should serve better serve investors’ interests while curtailing exploitation.

Replace “Influence” with Counsel

To stop trading like a speculator, one must stop feeling and acting like one.

• Demand Credible Counseling: The best interest of the investor should always come first! Period! I personally find “advice” sounds too transitory. What most investors truly need is a counsellor - one who both guides and restrains.

• Seek Advice-Only Planners: Younger investors are often ignored by traditional firms with high minimums. Instead, look for the Advice-Only Network or the XY Planning Network. These advisors charge a flat fee for a plan and do not take commissions on your trades, ensuring their goals are legally and mathematically aligned with yours.

• The “Liquid Floor” Strategy: Before any speculative bet, ensure a 3-tier cash reserve. With Treasury yields holding steady above 4%, a simple “Treasury Ladder” or High-Yield Savings Account (HYSA) provides a guaranteed return that acts as an emotional stabilizer during market volatility.

The Ultimate Arbitrage: Skill over Speculation

To unlearn “speculation” as both a mindset and practice, replace it with progressive resistance - the same way we build muscle.

1. Position Size Discipline: Cap any single position at a level where a full loss does not change behavior. If losing forces “revenge trading”, size was probably too large to begin with. Learning to build a model portfolio can rectify that issue.

2. Time-Delayed Execution: Institute a mandatory 24-72 hour delay between an idea and the trade.

3. Design to Be Boring: Force a percentage of capital into assets that do nothing visibly (e.g., index funds). This not only trains tolerance for quiet compounding, but it begins the re-wiring of “speculative” neurons.

4. Write the Pre-Mortem: Before entering a trade, write how it fails. If you cannot articulate the loss path, you probably do not understand the risk or are refusing to admit it. Go one step further and set investment goals.

5. Track Decisions, Not Returns: Journal why you acted, not just what happened. Survivalists obsess over outcomes; professional investors audit process.

The Path Forward

The “Speculative Survivalist” mimics Wall Street’s 2000s-era risk because they feel they have nothing to lose. By building a floor, hiring a fiduciary, and shifting focus to skill development, young investors gain something Wall Street rarely displayed: resilience.

Note: This publication does not have any relationship with advisors or planners listed above.

Up Next:

What is Risk Appetite, Really?

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

Desperation Capitalism describes a growing behavioral pattern, most visible among younger participants, in which capital markets are treated not as vehicles for long-term wealth formation, but as escape hatches from economic fragility.

Faced with delayed adulthood, eroding purchasing power, and institutional mistrust, individuals adopt survivalist trading behaviors: concentrated bets, leverage, volatility-chasing, and speculative excess. What emerges is not mere recklessness, but a rational response to perceived immobility.

This phenomenon is not accidental. It is the product of converging economic pressures, cultural alienation, social-media dynamics, and the gamification of finance itself. When markets inevitably correct, the psychological and financial costs compound - exposing Desperation Capitalism not only as a market risk, but as a societal one.

A New Economic Reality

I first encountered the idea of “desperation capitalism” in research published in Telematics and Informatics (A Nani and K McBride), and subsequently from an article in The Guardian. In the article, Alexander Hurst shares his tale of fortune - turning $15,000 into $1.2m in less than a year - and failure. He lost it all practically overnight.

This was not new or surprising to me. I’ve seen it played out multiple times. It was the concept of desperation that resonated most, capturing the sentiment I witnessed when I see it played out.

The puzzle is not why people lose money. That is as old as markets themselves. The deeper question is why extreme risk-taking persists even after success; why even victory fails to satisfy the hunger for more risk. The answer, I suspect, has less to do with greed than with fear.

I remain ambivalent about the term desperation. Yet it gestures toward an economic condition too pervasive to dismiss. Something fundamental has shifted.

A new economic reality is emerging - the era of Desperation Capitalism - a system where, at least in part, the baseline cost of entering and sustaining middle-class life has decoupled so severely from traditional wages that economic survival now requires high-stakes risk.

“Speculative Survivalists”: a generation of workers who, seeing the traditional path to stability blocked, have turned to Speculative Survivalism to “leapfrog” their way into economic adulthood.

The Data of Despair: Why the Path Broke

The rise of Desperation Capitalism is not a mood or movement, pers se. It is a mathematical inevitability centered on the convergence of economic and sociological strains. Rather than a single “desperate” event, structural conditions exist that force individuals into “survivalist” economic behaviors.

Economic Fragility

• Dour Sentiment: Data from SSRS (2025) reveals that only 21% of Gen Z adults describe their financial situation as “good,” while 39% label it as “bad.”

• Rising Housing Costs: According to Harvard’s 2025 State of the Nation’s Housing report, the median home price in the U.S. hit $412,500, requiring an annual income of roughly $126,700 to afford comfortably.

• Wage Stagnation: As of Q3 2025/2026 data from the Bureau of Labor Statistics (BLS) and recent financial surveys, 25-34 yer olds have an estimated median annual income of $59,800. 70% of Gen Z report actively looking for or maintaining a side hustle in 2026.

• Emergency Fragility: Bank of America (2025) found that 55% of Gen Z do not have enough savings to cover even three months of basic expenses.

The “Desperation Gap” is further widened by the rising “Entry Fee” of adulthood, resulting in delayed milestones:

• Baby Bust: 71% of Gen Z and 62% of Millennials now report that it is “not a good time” to have a child, leading to a historic “Baby Bust” (JHU, 2026).

• Childcare Costs: In 2025, center-based childcare averaged $15,570 annually, consuming up to 40% of a median worker’s income.

Anti-Establishment Underpinnings

Growing discontent with established financial institutions and the power structures that reinforce those institutions has led to mistrust. The “gatekeepers” of capital markets are viewed as enemies.

Antagonism moved from the streets (e.g., Occupy Wall Street) to digital platforms (e.g., WallStreetBets), finding a countercultural (or subcultural) voice online, fueled by instantaneous access to market information and by social media. Trading in capital markets (including trading Meme stocks) represents a form of social organization.

The cultural bonds found online further supports “structured antagonism”, as witnessed in the GameStop “short squeeze.” Subsequently, herding occurs when individuals follow the actions of others whether or not the asset is considered “poor.”

Social media is essentially amplifying the herd effect, driving individuals into deeper levels of speculation.

The Emergence of the Speculative Survivalist

Faced with economic, social and psychological pressures, the Speculative Survivalist is a worker who treats capital markets not as a retirement vehicle, but as an escape hatch. Some are acting aggressively in a show of defiance against the mainstream; others adopt a nihilistic approach, while many are simply herded into participation.

• Mimicking Wall Street: Much like the institutional risk-taking of the early 2000s, survivalists utilize asymmetric risk. FINRA (2025) data shows that 43% of investors under 35 are now trading high-leverage options, compared to just 10% of those over 55.

• Leverage Usage: Gen Z and Millennials are 5.5x more likely to use margin accounts (borrowing from their broker to buy more stock) than Baby Boomers.

• Options Dominance: Nearly half of all active investors under 35 report trading options, a figure that has held steady despite increased market volatility in 2025.

• The Crypto Pivot: Gen Z is 170% more likely to hold cryptocurrency than Baby Boomers, viewing it as the only asset class capable of the “100x returns” needed to clear student debt or buy a home.

• Fintech Exploitation: Apps have capitalized on this by “gamifying” the gamble (or “gamblification”). Agentic AI co-pilots and frictionless “One-Click” options trades make the act of betting one’s rent money feel as casual as ordering a pizza.

• Source of Information: 61% of investors under 35 rely on social media influencers ("Finfluencers") for investment recommendations.

• Alternative Credit Usage: FINRA Foundation (2025) data shows that 50% of Gen Z and 46% of Millennials have used alternative financial services (payday loans, pawn shops, or auto-title loans) to manage cash flow - a high-risk behavior often used to keep speculative positions open during market dips.

• Financial Nihilism: A state of “nothing to lose” (or “YOLO”, You Only Live Once) leads to higher rates of bankruptcy. When the “moonshot” trade fails, the survivalist doesn’t just lose money; they lose their credit score and mental health, often moving back in with parents who are also feeling the squeeze (Bank of America, 2025).

Ironically, the parallels between Wall Street Bankers circa 2008 and the Speculative Survivalists of the 2020s is striking when viewed through the lens of risk-shifting and leverage. Survivalists are conforming to the very high-risk activities many sought to fight against.

Red Flags

The DTCC’s 2026 Systemic Risk Barometer now ranks “FinTech and AI overreliance” as a top-5 global risk. In other words, ease of entry into speculative investments is driving high-risk behaviors.

As of late 2025, total margin debt in the U.S. reached a nominal and real peak, topping $1.2 trillion.

Much of this debt is concentrated in retail hands. If the market experiences a sharp correction, speculative survivalists face a Margin Call Contagion, where they are forced to sell their assets to pay back the broker, potentially turning a standard dip into a 2008-style retail crash.

More concerning is that the perceptions of those seeking entry into economic adulthood act as a “leading indicator” of where markets and society are headed. (SSRS)

The Path Out

To navigate Desperation Capitalism without becoming its victim, individuals must shift their strategy from gambling for an “escape” to building resiliency. However, this is no easy endeavor.

Desperation Capitalism thrives on urgency. Resilience requires patience.

The ultimate “advantage” is not the 100x trade; it is the patience to build a floor that the system cannot pull out from under you.

“Resilience.” “Patient capital.” These words are “establishment” constructs. They are counter to what many speculative survivalists have learned and practiced.

Does the path out of speculative survivalism require a complete reframing of the language of capital itself? Likely not. But it might require a different sort of leverage.

More on that next time.

Up Next:

Thursday - The Path Out of Desperation Capitalism

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

For most of human history, work ended only when the body failed, the land was lost, or the household collapsed. Choice was a luxury afforded to almost no one.

Today, for the first time at scale, retirement can be intentional, not merely endured. Optionality is not just a financial outcome; it is a generational gift. One that can be squandered quietly, or received deliberately.

“Retire or get retired” should be viewed as an invitation: to recognize that we live in a narrow window of history where time, capital, and longevity can be aligned, if we act before momentum fades.

The Idea, Reconsidered

Retirement has long been framed as an ending. Less obvious is that retirement is a handoff → from necessity to discretion.

To “get retired” is not a failure of character. It is what has happened to nearly everyone who came before us. When strength faded, when clients moved on, when skills and relevance shifted, work simply stopped. Life adjusted seemingly downward.

What is new is the possibility of stepping aside while capacity remains, with health intact, curiosity alive, and choice abundant.

This is not about escape from work. It is about retaining authorship in a framework of intentional optionality.

Optionality as a Gift

When one considers optionality, it is often described clinically: liquidity, flexibility, diversification. But its true nature is more humane.

Retirement optionality is waking without urgency. It is saying no without apology. It is choosing patience in a world addicted to speed. It allows work to become expression rather than obligation.

This condition, where survival no longer dictates every decision, has appeared before only briefly, and only for elites. We now treat it as ordinary, even though it is anything but.

What Preserves the Gift

We’ve seen how starting early in planning for retirement and creating a retirement narrative serve as foundational building blocks to retiring (or Pre-tiring) on one’s own terms.

Ironically, the option to retire on one’s own terms survives less through brilliance, and more through restraint.

It is preserved when fixed costs are kept modest enough that life can bend without breaking. When ambition does not harden into permanence. When spending remains adjustable, and dignity is not driven by keeping up appearances.

It endures when income arrives quietly, without requiring performance or permission. When liquidity is held not as fear, but as time stored in a usable form.

Optionality strengthens when plans acknowledge volatility without trying to outsmart it; when early years are treated gently, and resilience is valued over precision.

And it deepens when skills are kept warm, not because they must be used, but because they could be. The knowledge that one can re-engage changes how risk feels.

Why This Moment Is Different

Intentional retirement and the optionality it affords comes with a growing list of never befores:

• Never before have people lived this long with this much accumulated surplus and this degree of personal autonomy.

• Never before has identity been so decoupled from station.

• Never before has learning been so accessible, nor work so modular.

• Never before has it been possible to step back without vanishing.

This is not just a financial shift. It is a civilizational anomaly. But anomalies close. Careers narrow. Bodies change. Systems optimize.

Options rarely disappear dramatically. They decay invisibly and by slow neglect. The tragedy is not losing choice. It is failing to notice that one had it.

A More Generous Ending

To retire intentionally is not to withdraw from life. It is to receive the gift fully.

It is to look at one’s circumstances - financial, physical, relational - and say: I will not wait until choice decays before placing a value on it.

It is to design life so that work can continue, but never at gunpoint. So that time can stretch, wander, or concentrate, at will. So that the later chapters are not merely longer, but lighter.

A Final Invitation

Do not ask whether you are ready to retire. Ask whether you are ready to protect the ability to choose.

1. Audit your fixed costs.

2. Measure your time “runway.”

3. Build liquidity before optimization.

4. Preserve and develop skills, not just assets.

5. Engineer flexibility, now, while no one is forcing you to.

If you live in this age - this strange, abundant sliver of history - then optionality is already within reach. Not guaranteed. Not permanent. But possible.

That alone makes this moment extraordinary. Treat it accordingly.

Up Next:

Sunday - The Plight of Desperation Capitalism

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

• Political opinions are not investment signals.

• Early presidential terms historically carry more volatility and policy risk.

• Late-term periods - especially year three - have been the most equity-friendly.

• Markets discount fear faster than voters do.

• The goal isn’t prediction; it’s probabilistic positioning.

When I began working for Ken Fisher, one lesson arrived early and stuck fast: politics and portfolios should never share the driver’s seat. I gradually learned to become politically agnostic (neutral) when it comes to politics and investing.

Not because politics are irrelevant, but because political attachment corrodes judgment. Once an investor starts rooting, booing, or moralizing, decision-making narrows. Inputs shrink. Risk rises.

Political conviction, when smuggled into investment choices, behaves like an analytic toxin. It crowds out economic data, sentiment, valuation, liquidity, and probability -the very ingredients markets actually digest.

A Recent Reminder

Take 2025. A meaningful cohort of investors dismissed U.S. equities outright due to the Trump factor. When tariff-heavy policies rattled global markets, they felt vindicated. Staying out felt prudent - righteous, even.

Until it didn’t.

As tariff shock morphed into tariff familiarity, markets did what they always do: adapt, discount, and move on. Economic data surprised to the upside. Stocks recovered. Those who’d exited for political reasons paid an opportunity cost that no ideology reimburses.

Personally, I find broad tariff strategies economically clumsy (and unnecessary). BUT, that opinion never touched my portfolio. Experience teaches you this discipline the hard way - often by watching others repeatedly fail to learn it.

Over the years, I saw clients liquidate portfolios because “their party” lost an election. The damage wasn’t philosophical; it was mathematical. Missing recoveries is far more lethal to long-term goals than enduring volatility.

Rather than fight politics, I prefer to use it.

That’s where the Presidential Term Cycle, often mislabeled an “anomaly,” enters the conversation.

The Presidential Term Cycle (Anomaly)

Ken Fisher outlines this pattern clearly in Debunkery and related research (including The Only Three Questions That Still Count). The idea is not mystical. It’s behavioral, institutional, and painfully human.

Presidents face incentives. Markets respond to incentives.

The historical rhythm:

1. Years 1–2: The Danger Zone

   Early terms are legislative heavy-lifting seasons. This is when administrations attempt the boldest redistributions - taxes, regulation, property rights, entitlement reshuffling.

   Even when laws fail, the threat of change injects uncertainty. Markets dislike uncertainty more than bad news. Historically, the ugliest drawdowns cluster here (see S&P 500 returns in the chart below).

2. Two Bad Years Rarely Travel Together

   While early-term volatility is common, back-to-back deeply negative years are uncommon. Fear tends to peak early and markets tend to exhaust pessimism faster than headlines do.

3. Years 3–4: The Sweet Spot

   As re-election looms, political incentives flip. Stimulus replaces austerity. Stability trumps disruption.

   Year three, in particular, has historically delivered the strongest equity returns of the four-year cycle.

This is not prophecy. It’s pattern recognition across decades of data.

Stocks don’t vote. They respond to policy risk and policy restraint.

How to Become Politically Agnostic as an Investor

Political neutrality doesn’t mean political ignorance. Taxes matter. Regulation matters. Fiscal posture matters. What doesn’t help is emotional allegiance.

Here’s how to operationalize detachment:

First: Separate awareness from attachment.

Stay informed, but audit your emotional temperature. If a policy headline makes you angry or gleeful, pause. Emotion is a signal—not an instruction.

Second: Exploit the system instead of protesting it.

If your preferred candidate loses, resist the urge to sulk in cash. Instead, recognize the cycle. Early-term anxiety often plants the seeds of later gains. Call it electoral arbitrage.

As Fisher likes to say: stocks don’t pick sides. Why should you?

Third: Practice subordination of belief.

This is the hardest step. Humans are narrative animals. Markets are probabilistic machines. The two rarely agree.

Fear - especially politically flavored fear—feels rational in the moment. It almost never is. (There’s ample research showing fear-driven decisions systematically degrade outcomes.)

Before acting on a politically charged impulse, ask yourself:

1. How does this move me closer to my actual financial goals?

2. If I’m wrong, what’s the cost - not emotionally, but numerically?

3. How can I use the Presidential Term Cycle instead of fighting it?

A Closing Thought

You are free to hold strong political views. You are not free from the consequences of letting them manage your money.

The politically agnostic investor doesn’t ignore elections - they monetize them. By subordinating ideology to evidence, and emotion to structure, you give yourself a durable edge.

In markets, neutrality isn’t passivity. It’s leverage.

Up Next:

Thursday - Retirement Series #5: Retire or Get Retired

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

• Most families agree retirement planning matters. Most families also avoid talking about it.

• Research consistently shows that parents rarely share meaningful details about their retirement plans with loved ones, leaving adult children guessing, assumptions hardening, and risks compounding quietly over time.

• This silence isn’t caused by apathy or ignorance. It’s driven by discomfort, uncertainty, and a persistent misunderstanding: that retirement is a private, financial milestone rather than a shared, relational transition.

• The good news? Engagement doesn’t require spreadsheets, sermons, or sudden transparency. It requires reframing the conversation and approaching it as a family system rather than a solo act.

• Below, we explore what the data reveals about the engagement gap, then offer ten practical, human ways to close it.

Building Legacy Thru Narrative

Over the decades I had numerous conversations with clients whose greatest aim was to “leave a legacy.” But more often than not, they spoke in terms of their account balance.

But, in the end, isn’t one’s bank balance just a marker?

I’ve often wondered whether one’s “legacy” is how they are known, and not what they have accomplished or accumulated.

Legacy should be defined by who you are, not by what you have (or end up with). Your possessions are not You.

And, if that is true, then the greatest legacy one can give is to engage one’s loved ones in a narrative that encompasses both one’s journey and the stewarding of that journey into future.

Unfortunately, there is a narrative gap when it comes to discussing retirement…and a missed opportunity to develop a legacy.

The Quiet Gap: What the Research Reveals

The data is remarkably consistent and quietly alarming.

Large national surveys show that more than 50% of Americans report their parents never discussed money with them at all, let alone retirement planning. Among families who do talk, the depth is often shallow: only a small minority of adult children describe those conversations as detailed or actionable.

Even more telling is the mismatch in perception. Parents frequently believe they’ve “covered the basics.” Adult children, meanwhile, report uncertainty around fundamentals:

• When retirement income begins

• Whether long-term care has been planned for

• Who steps in if cognition or health falters

• Whether financial support might someday be expected

In other words, silence isn’t neutral. It creates narrative gaps; and those gaps tend to fill themselves with anxiety.

Ironically, studies show that when parents did talk about finances while growing up, adult children were more likely to develop financial skills and think bout retirement planning.

This avoidance persists despite near-universal agreement that these conversations are important. Families know they should talk. They just don’t know how or fear what the conversation might surface.

Which brings us to the real problem.

The Obvious Mistake

Most families treat retirement as a personal financial achievement.

A finish line. A number. A private ledger.

That framing is tidy, but wrong.

Retirement is not merely a change in income. It’s a reordering of time, energy, dependency, geography, and expectations. It reshapes family roles long before money runs out or never does. Avoiding the conversation doesn’t preserve harmony; it simply postpones reckoning.

The other side of obvious?

Engagement works best when retirement is treated as a shared future endeavor, not an individual accounting exercise.

Ten Ways to Engage Family, Without Turning It Into a Trial

1. Start with stories, not statements

Ask how retirement was imagined decades ago or how it’s imagined now. Memory and imagination soften defenses in ways balance sheets never will.

2. Name the family system

Say out loud what everyone already knows but rarely articulates: retirement decisions ripple outward. Housing, caregiving, proximity, inheritance timing - it’s all connected.

3. Replace predictions with “what ifs”

Certainty intimidates. Scenarios invite participation. “What if health holds?” “What if it doesn’t?” “What if markets disappoint?” Planning becomes collaborative rather than confrontational.

4. Lead with humility

Admitting uncertainty isn’t weakness; it’s an invitation. Families engage when no one is posturing as a know-it-all.

5. Translate money into lived experience

Convert dollars into time, flexibility, and dignity. Those currencies resonate across generations and reflect true legacy.

6. Share frameworks, not instructions

Explain how you think, not what others should do. People resist prescriptions but adopt mental models.

7. Make it recurring and boring

One calm, annual check-in beats a single dramatic summit. Familiarity lowers emotional cost.

8. Separate values from mechanics

First align on what matters: independence, generosity, security. Only then discuss accounts and tactics.

9. Borrow neutral voices

Sometimes a third party - an advisor / planner, article, or podcast - carries messages families struggle to deliver themselves.

10. End with openness, not closure

The goal isn’t resolution. It’s continuity. Leave room for reflection and response.

Why This Matters More Than Ever

Longevity is stretching. Families are more geographically scattered. Medical complexity is rising. And yet many households are still navigating retirement planning as if it were a solitary endeavor.

The cost of avoidance isn’t just financial inefficiency. It’s misaligned expectations, last-minute decisions, and preventable stress during moments that already carry emotional weight.

Engagement, done early and gently, is a form of care.

Call to Action

If you’re waiting for the right moment to talk about retirement with your family, here’s the uncomfortable truth: it doesn’t arrive. It’s made.

So don’t start with numbers. Don’t start with solutions.

Start with one question, asked calmly, without agenda:

“How do you imagine the next chapter unfolding for all of us?”

Then listen.

Because the most important retirement asset isn’t a portfolio.

It’s alignment - earned slowly, through conversation, before urgency takes over.

Up Next:

Sunday - The Politically Agnostic Investor

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

America spends more on healthcare than any other nation (nearly 18% of GDP), yet delivers outcomes that trail most of its OECD peers. This is not because Americans receive radically more care. It is because they pay radically more for it.

Hospitals charge multiples for identical services, drug prices float untethered from international norms, and administrative complexity absorbs resources that never touch a patient.

Other modern nations take a different view. They treat healthcare less as a competitive marketplace and more as a public utility: coordinated, regulated, and designed to deliver “health per dollar,” not revenue per transaction. The contrast is stark. Where peer systems emphasize prevention, price discipline, and national planning, the U.S. relies on fragmented bargaining among insurers, hospital systems, and pharmaceutical firms, each rational within its silo, but collectively inefficient.

Crucially, there is something easily overlooked: the U.S. government already knows how to govern essential systems. It centrally negotiates prices for defense, regulates utilities, manages strategic resources, oversees transportation infrastructure, and even negotiates drug prices effectively for veterans and active-duty military. Healthcare alone was permitted to evolve as an exception, a hybrid of local monopolies, private insurers, and fragmented public payers.

The result is a system that is expensive by design, opaque by habit, and politically difficult to reform.

The Question Reformers Rarely Ask

If the problems are so obvious and the tools for coordination so well established, why does meaningful reform remain elusive?

The standard answer is political inertia. Lobbyists. Entrenched interests. Ideological stalemate. All true, as far as it goes.

But that explanation quietly assumes something else: that real change must originate inside the system itself; from legislators, regulators, or incumbent institutions deciding to behave differently.

History suggests otherwise.

Structural reform rarely begins with goodwill. It begins when the conditions that protect existing power structures erode. When complexity no longer conceals inefficiency. When justification no longer substitutes for explanation. When those bearing the costs finally understand where their money is going - and why.

That is where this discussion turns.

Enter AI: Not as Savior, but as Solvent

Artificial intelligence will not fix American healthcare by making people kinder or politicians braver. Its impact is subtler and far more destabilizing.

AI functions as a solvent on information asymmetry, the quiet force that has long sustained the healthcare status quo.

For decades, pricing opacity, clinical complexity, and administrative fog insulated institutions from scrutiny. Patients could not see alternatives, compare costs, or contest decisions in real time. Authority rested comfortably behind expertise and exhaustion.

AI potentially changes that equation.

It makes prices legible before care is delivered. It translates clinical guidance into plain language. It exposes variance in outcomes and cost that branding once disguised. It reveals which intermediaries add value and which merely extract it. Most importantly, it does so at scale, without asking permission.

In the following sections, we’ll examine how collapsing information asymmetry alters incentives across the healthcare landscape and why this, more than any election cycle or reform bill, may prove to be the mechanism that finally forces change.

When Information Stops Being Scarce

The dysfunction in U.S. Healthcare has endured for one simple reason: the people paying for it have never been allowed to see it clearly.

Prices arrive after services are rendered. Clinical decisions are framed as inevitabilities. Administrative complexity is treated as a divine act. Between the patient and the actual cost of care sit layers of intermediaries (insurers, PBMs, hospital billing departments, compliance vendors) each justified by “expertise” the public cannot easily interrogate.

This is not accidental. It is how the system protects itself.

Information asymmetry has long served as healthcare’s load-bearing wall. Patients lack pricing context. Employers lack outcome visibility. Regulators lack real-time data. Even boards and shareholders often rely on curated metrics rather than operational truth.

AI dissolves information asymmetry quietly. Not by regulation. Not by moral appeal. But by making once-proprietary knowledge cheap, fast, and unavoidable.

The Collapse Mechanism

AI provides a destabilizing feature that is currently absent. The power of comparison.

When large language models can ingest millions of claims, contracts, formularies, and outcomes (and present them coherently) the mystique of healthcare pricing erodes. A $7,000 MRI is no longer a mystery; it becomes an outlier. A denied claim is no longer final; it becomes contestable. A treatment pathway is no longer “standard of care” because someone says so; it is benchmarked against outcomes elsewhere.

This matters because healthcare power has always rested on three advantages:

1. Opacity – prices are unknowable until too late

2. Authority – expertise is difficult to challenge

3. Fragmentation – no single actor sees the whole picture

AI threatens to weaken all three simultaneously.

Patients gain intelligible explanations before consenting. Employers gain visibility into cost drivers across populations. Physicians gain second opinions at machine speed. Regulators gain pattern recognition that once took years of audits.

None of this requires systemic permission. It arrives through apps, advisors, copilots, and analytic overlays adjacent to the system, not embedded within it.

Which brings us to the uncomfortable part.

Who Becomes Exposed

AI does not equally expose healthcare inequalities. Some sectors become more valuable under radical transparency. Others will find their margins suddenly indefensible.

Primary care improves: triage, prevention, continuity, and patient education scale efficiently.

High-performing specialists benefit: outcomes become visible, not just reputations.

Efficient systems gain leverage: cost discipline finally counts.

But entire layers of the current ecosystem face existential pressure:

• Administrative middlemen whose value proposition depends on complexity rather than insight

• Price arbitrageurs who rely on differential ignorance across payers

• Local monopolies whose pricing only works in the absence of alternatives

• Opaque contracting structures that collapse once comparisons become trivial

When justification must be explained in plain language, when pricing must survive comparison, when inefficiency becomes observable, some institutions will discover they were never as essential as they believed.

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From Frustration to Pressure

Earlier, we asked whether rising healthcare costs produce something more than financial pain. Whether they generate political pressure, defiance, or revolt.

Historically, they have not. People grumble. They complain. They vote. But opacity dulls outrage, while confusion and complexity exhausts resistance.

AI alters the emotional economy.

When individuals can see clearly who benefits, why prices differ, and where value evaporates, anger becomes directional, pressure becomes focused and narrative coherence replaces generalized resentment.

This matters because political systems respond to organized clarity, not to “suffering” as many believe.

AI supplies that clarity without rallies or revolutions. It creates what might be called ambient accountability: persistent, data-backed visibility that boards, journalists, and voters can no longer ignore.

Why This Is Not Technological Optimism

This argument does not assume benevolent actors or enlightened markets. Bu that AI will accelerate pressure convergence. The point where institutions and politicians delay until pressure converges.

By collapsing information asymmetry, it removes the system’s most reliable shield. It does not mandate a healthcare-as-a-utility model, but it makes defending the current model increasingly expensive, publicly, reputationally, and politically.

In effect, AI shortens the distance to reform.

The Other Side of Obvious

The obvious story is that healthcare reform requires better laws, better leaders, or better intentions. The other side is quieter and more unsettling.

Systems rarely change because they are persuaded. They change because they are seen.

Healthcare has operated for decades behind a veil of complexity that protected inefficiency and punished scrutiny. AI thins that veil, relentlessly, until pretending becomes harder than explaining.

That may not fix everything. But it may finally make the current arrangement impossible to defend; and that, historically, is how reform actually begins.

🚀 Up Next:

Thursday - Retirement Series #4: Building a Lasting Legacy

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

• Retirement is a gradual process that starts now.

• The common myth is that we can “catch-up” on saving later in life, when incomes are higher.

• Adopting a “pre-tirement” mentality buys you the greatest gift → optionality.

• Retirement is less a “financial goal” and more of a dependency problem.

If you had the chance to read the past two articles in this series, you will see that my theory consists of a “pre-tirement” approach to investing for the long-term.

Originally, this edition in the series was going to focus on being aggressive when young. Instead, I felt it worth talking about starting early.

Most people think retirement is something you arrive at. A date. A number. An escape from endless meetings and muted microphones.

Pre-tirement quietly argues something else:

Retirement isn’t an event - it’s a slope. And the slope begins far earlier than anyone admits.

🦄 The Comfortable Myth

The common story goes like this: “I’ll focus on living now, and later I’ll get serious about investing.”

This sounds reasonable. But it happens to be catastrophically wrong. Not morally wrong. Mathematically wrong.

Because investing early isn’t about becoming wealthy sooner - it’s about becoming unconstrained sooner.

That’s the pre-tirement distinction.

📈 The Chart That Ruins the Illusion

Imagine three investors. Same discipline. Same annual contribution ($6,000). Same returns (7%, roughly long-run equity reality, after inflation but before taxes).

The only difference? When they begin.

• One starts in their mid-20s

• One waits until their mid-30s

• One postpones until their mid-40s

Fast forward to traditional retirement age.

The early starter ends with $1.3m - more than double the wealth of the second ($610k) - and nearly five times that of the third *($275k).

No genius required. No stock-picking magic. Just getting invested and allowing time do its quiet work of compounding.

Here’s the uncomfortable truth:

Most of the money is made in the final decade - but only because of what happened in the first one.

⚠️ The Cruel Paradox

The investor who starts earliest:

• Takes less annual risk

• Needs less return

• Can stop contributing earlier

• Has more margin for mistakes

The late starter must:

• Save more

• Take more risk

• Hope markets cooperate

• Behave perfectly

Time, not talent, carries the load. Time absorbs failures.

What’s more, for the late starter to “catch-up” to the early starter requires saving almost 5x the amount.

🔑 What a Pre-tirement Approach Actually Buys You

Early investing doesn’t purchase early retirement. It purchases optionality. The cornerstone of pre-tirement.

That shows up as:

• The ability to change jobs without panic

• The freedom to reduce hours without fear

• The courage to say no without needing permission

• The luxury of patience - financial and psychological

By your 40s, this optionality feels less like wealth and more like a breath of fresh air.

🔎 The Other Side of Obvious

We’re told retirement is a financial goal. It’s not.

I think it’s a dependency problem.

Pre-tirement is the gradual reduction of that dependency - on employers, markets, luck, or perfect timing.

The earlier the process begins, the gentler it becomes. Start late, and retirement feels like a cliff. Start early, and it becomes a long, almost unnoticeable descent.

👉 Practical (and Powerful) Takeaways

1. Your first dollars are the most important you’ll ever invest

   They compound longest and forgive you most.

2. Pre-tirement begins the moment investing becomes automatic

   Not large. Automatic.

3. Aim for optionality, not age-based milestones

   Freedom is cumulative, not calendar-bound.

4. If you’re late, don’t despair - but don’t romanticize delay

   Urgency isn’t panic. It’s clarity.

✨ Closing Thought

Retirement planning usually asks: “How much will I need?”

Pre-tirement asks a better question:

“How soon do I want my future self to stop being trapped by my past decisions?”

The answer, inconveniently, is almost always: Earlier than we started.

🚀 Up Next:

Sunday - The Impact of AI on U.S. Healthcare

Thursday - Retirement Series #4: Your Greatest Legacy

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.

• The U.S. spends far more on healthcare than any peer nation - nearly 18% of GDP - yet delivers mediocre outcomes by OECD standards.

• This is not primarily a problem of how much care Americans consume, but how much that care costs.

• Other modern nations treat healthcare as a utility; the U.S. treats it as a commercial bazaar.

• Ironically, the U.S. already centralizes and regulates pricing in many other critical sectors - just not civilian healthcare.

• The result is predictable: price inflation, fragmentation, and institutional inertia.

👓 A View from the Outside Looking In

I had the distinct privilege of living and working in Europe for the past six years. My time in Europe spanned both pre- and post-COVID. During that time, I experienced comprehensive, high-quality, low-cost healthcare - delivered without drama, surprise invoices, or financial brinkmanship.

What struck me most was not clinical quality, but philosophy.

In many countries, healthcare is viewed as a public utility: essential, systemically important, and too consequential to be left to uncoordinated commercial bargaining.

In the U.S., by contrast, healthcare evolved into a patchwork marketplace - an ecosystem of insurers, hospital systems, pharmaceutical firms, device makers, billing intermediaries, and administrators, each extracting “value” from the same patient encounter.

This is not a moral judgment. It is a structural observation.

The oh so obvious conclusion - U.S. healthcare is in trouble.

And, what’s more, I think a “solution” is right in front of us. More on that later.

💸 The Spending & Coverage Paradox

The U.S. devotes nearly 18% of GDP to healthcare. Most wealthy nations cluster between 9% and 12%. And yet, outcomes - life expectancy, chronic disease burden, maternal mortality - consistently lag those of peer nations in the OECD.

If money were the cure, America would be the healthiest country on earth.

It isn’t.

A common misunderstanding deserves quick disposal:

“Universal coverage” ≠ “single-payer.”

But both approaches dramatically reduce cost volatility.

Every peer nation ensures baseline coverage for all citizens. This reduces administrative churn, minimizes late-stage interventions, and prevents cost-shifting between payers.

The U.S. does the opposite.

Coverage is fragmented across employer plans, Medicare, Medicaid, ACA exchanges, and private individual markets - each with distinct rules, contracts, billing codes, and negotiated prices. Administrative overhead flourishes in this environment. So do inefficiencies.

Plenty of coverage - little coordination.

⚠️ Prevention vs. Intervention

Most peer nations emphasize primary care and prevention. The U.S. emphasizes specialty care and high-intensity intervention.

Think of it this way:

Other countries maintain the car. The U.S. replaces the engine - repeatedly.

This bias toward intervention is lucrative. It is also expensive, reactive, and poorly suited to managing chronic disease.

🩼 Outcomes Per Dollar: The Achilles Heel

Despite prodigious spending, U.S. outcomes routinely disappoint:

• Lower life expectancy

• Higher infant and maternal mortality

• More preventable hospitalizations

• Wider access disparities

Other nations deliver more health per dollar through coordination, pricing discipline, and national planning.

If American healthcare is a sprawling bazaar, peer systems operate more like well-run utilities - less chaotic, less costly, and often more effective.

🤑 Prices: The Real Culprit

Healthcare costs have risen steadily for decades, regardless of political cycle.

OECD analysis of a standardized “basket” of healthcare services reveals:

• The U.S. pays roughly 50% above the OECD average for the same bundle.

• Countries with stronger price regulation - France, Spain, Slovenia - often pay below the average.

👉 Takeaway: The U.S. cost gap is driven less by volume than by price.

Hospital Care: A Stark Contrast

Comparative studies of patients with complex chronic illness show:

• Average hospital spending of roughly $30,900 in the U.S.

• About $10,900 in England

That’s nearly three times the cost for broadly comparable care categories.

Prescription Drugs: A Familiar Story

Americans pay dramatically more for medications:

• Ozempic: roughly $936 in the U.S. vs ~$148 in Canada (recent data).

• Per-capita drug spending in the U.S. far exceeds OECD norms.

Why? Because the U.S. historically allowed manufacturers to set prices without national negotiation for most of the population. Many peer nations do not.

The Trajectory Gets Worse

Projections suggest:

• Healthcare spending growth of ~5.8% annually

• GDP growth of ~4.3%

Result: healthcare’s share of GDP rising from ~17.6% (2023) to ~20.3% by 2033.

The math is unforgiving.

Why This Matters

A rising healthcare share of GDP has broad implications:

• Public finances (government budgets and debt pressures).

• Employer costs and wage stagnation.

• Household budgets (premium and out-of-pocket spending).

• Innovation incentives and market structure.

Countries with centralized price negotiation and budgetary controls (many OECD peers) maintain healthcare proportions much lower — often ~9–12% of GDP — suggesting that systemic design matters deeply.

🎯 Let’s Get Real

“The U.S. Government needs to do more!” Perhaps. But realism matters.

The pharmaceutical, insurance, and healthcare lobbies are among the most powerful in Washington. Meaningful reform threatens entrenched revenue streams. Political will is thin where incentives are misaligned.

And yet - here’s the irony - the U.S. government already does centrally regulate and negotiate prices in many other critical sectors.

Where the U.S. Centralizes - and Why That Matters:

1. Defense Procurement

The Pentagon negotiates prices, caps profits, and enforces federal acquisition rules. No contractor simply “names their price.”

2. Energy & Utilities

Electricity and natural gas operate under regulated-return models. Rates are approved. Margins are constrained.

3. Transportation Infrastructure

Aviation, rail, and highways follow national standards with coordinated funding and oversight.

4. Pharmaceuticals for VA & DoD

The U.S. government negotiates drug prices aggressively - often 40–50% below commercial rates - for veterans and active military.

5. Agriculture

Price supports, subsidies, inspections, and strategic reserves stabilize markets deemed essential.

6. Communications Spectrum

Managed, auctioned, and regulated by the FCC - not a free-for-all.

7. Strategic Materials

Rare earths, petroleum reserves, and critical minerals are monitored, stockpiled, and governed under national-security logic.

8. Public Health Emergencies

COVID showed the U.S. can centrally negotiate, procure, and distribute healthcare resources when survival is at stake.

👉 The Pattern Is Hard to Miss

The U.S. centralizes what it deems strategic, systemically essential, or vulnerable to monopoly abuse.

Healthcare, astonishingly, was allowed to evolve outside this framework.

The result is a hybrid system of:

• Local hospital monopolies

• Private insurers with opaque contracts

• Fragmented public payers

Which explains why rare earth pricing is treated as a national-security issue - while an MRI can cost five to ten times more in California than in Spain.

⁉️ The Real Question

No one disputes that U.S. healthcare needs reform.

The harder question is how reform actually happens.

History suggests politicians rarely lead structural change. They respond to pressure -especially pressure originating outside the system.

So where does that pressure come from?

That question - and the role of AI as a potential catalyst - will be the subject of Part II.

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🚀 Up Next:

Thursday - Retirement Series #3: Be Aggressive When You Are Young

Sunday - The Impact of AI on U.S. Healthcare

This publication is for brains, not bets. The Other Side of Obvious shares ideas, stories, and general financial information - not personalized investment, tax, or legal advice. Investing comes with risk (including losing money). Talk to a pro before you act. Please take time to read these important disclosures before you get started.