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Investors Therapy #9: Sheep V Sheeple, Inflation Strikes Back, Hollowing-Out Of The California Dream


Investors Therapy

August 13 · Issue #9 · View online

Investors Therapy is a newsletter, from the Silicon Valley Investors Club (, that helps investors understand their psychology so they can make smarter investment decisions. If you're ready to take the next step in your investment journey, subscribe!

Hey Tribe,
I was listening to an interview with John Carreyrou, author of Bad Blood: Secrets and Lies in a Silicon Valley Startup. During the discussion, he talks about Walgreens failed partnership with Theranos. Walgreens management feared that if they didn’t sign an agreement with Theranos they would be left behind, and Theranos would partner with their rival CVS. Walgreens’ fear of missing out, drove them to neglect due diligence, which cost their shareholders millions of dollars.
It’s easy to sit on our high horse and think, “Wow, luckily I’ll never make the same mistakes.” Don’t fool yourself. In the right circumstances, we all could repeat the same mistakes. Written into our genetic code is our propensity to follow the herd. Our susceptibility to fear. And our drive to make decisions based on social signaling of others.
Don’t get me wrong, these three traits are the reason why we are the dominant species on the planet, but when it pertains to investing in these traits can take us out of the game.
So we tell ourselves, “don’t be a sheep,” but we are kidding ourselves because deep down we are sheep. The question is, will you be a sheep or sheeple?
The difference between sheep and sheeple:
Sheep: They unquestioningly follow the herd. Their investment decisions they are tied to social conventions. They assume others are making investment decisions based on sound research, but the sheep fail to question why the herd is making a particular decision. The sheep know what they want to hear and will find someone to tell them what they want to hear so when things go back the sheep have someone to blame.
What makes a Sheeple?
A Sheeple realizes we are hardcoded for Sheep thinking, but a Sheeple can occassionally check their Sheeple tendencies.
Sheeple: When a Sheeple hears about someone’s investment strategy, the Sheeple asks the person how they have reality tested their assumptions. A Sheeple realizes that before entering an investment, they must write down their plan for staying in and exiting the investment to prevent themselves from being tricked by the crowd. A Sheeple questions the absolute confidence in other investors and perks their Sheeple ears up when someone lacks doubt in their investment strategy.
The difference between Sheep and Sheeple can be seen in Type 1 and Type 2 thinking. Sheeple thinking takes a lot of cognitive effort while sheep thinking is done nearly by default. Maybe that’s why most of us don’t think like Sheeple on a regular basis? And therein lies why Sheeple thinking is valuable because most people aren’t doing because it’s so cognitive demanding.
So the next time you’re making an investing decision, remember these sage words, “baa ram ewe, baa ram ewe sheep be true, sheep be true, baa ram ewe

Leaked term sheet from the proposed Tesla acquisition
Leaked term sheet from the proposed Tesla acquisition
Investor Psychology
Mean Reversion & The Placebo Effect
This Favorite Warren Buffett Metric Tells Us a Stock Market Crash Could Be Coming
eBay Is Conducting a 'Mass Layoff' in the Bay Area | Fortune
Housing market has hit a ‘significant slowdown’ in recent weeks, Redfin CEO says - MarketWatch
Selling – AVC
August Economic Roundup — FreightWaves
California gains just 800 jobs in June; unemployment remains at record low
Real Estate
Housing market has hit a ‘significant slowdown’ in recent weeks, Redfin CEO says - MarketWatch
Home prices rise at the fastest pace in more than four years, defying expectations of a pullback - MarketWatch
Foreign Buyers Lessen Their Investments in U.S. Real Estate | Realtor Magazine
Mortgage lender HomeStreet shuts offices, lays off more than 100 full-timers | 2018-07-26 | HousingWire
1 in 3 millennial homeowners get money to buy from retirement funds
Trouble Ahead For The U.S. Housing Market | Seeking Alpha
Is The Housing Slowdown A Correction Or A Crisis? | Benzinga
Careers, Society, and Personal Development
The Hollowing-Out of the California Dream | City Journal
16 Tips Every College Graduate Needs To Hear In 2018
Dating Study: At What Age Are Men, Women Most Desirable? - The Atlantic
The Age That Women Have Babies: How a Gap Divides America - The New York Times
How Africa is Becoming China's China - YouTube
When To Trust Your Gut: Michael Mauboussin on Intuition, Technology, and Making Better Decisions [The Knowledge Project Ep. #1]
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