Market Factors: Some very bad advice from a venture capitalist

Globe and Mail

28-07-2025

In this edition of Market Factors we'll show some great guidance for markets and life from venture capitalist Morgan Housel. Then I move on to how one ethically challenged industry is becoming even more cutthroat. The diversion covers a disturbing new trend of AI-assisted madness and as always we'll look ahead to important data releases for the coming week.
There are few finance writers with better perspective than Collaborative Fund's Morgan Housel and he proved it again with the recent post called Very Bad Advice. Mr. Housel's goal is to underscore the complexity of success versus the simplicity of self-destruction.
The bulk of the piece is a very long list of beliefs that can undermine success in both investing and life. One example is 'Assume learning is complete upon your last day of school,' an obvious tongue-in-cheek warning to keep learning throughout life. There are a few points of bad advice that struck me as extremely important for investors.
The first is 'Forecast with precision, certainty, and confidence.' This is a reminder that any market-related predictions are just loose hypotheses and will almost certainly be wrong. All forecasts are to be held lightly and completely unrelated to an investor's ego. George Soros protégé Stan Druckenmiller once noted that Mr. Soros is the best trader alive because he knows when to abandon an investment thesis.
I am guilty of 'Believe that the past was golden, the present is crazy, and the future is destined for decline' to the point I'm considering buying defence stocks, which I describe as put options on human psychology. Things are crazier than usual where politics are concerned but investors should not fall victim to fatalism.
I also found 'View patience as laziness' as an important reminder for investors. Finance research shows conclusively that portfolio returns decline as the number of transactions increases. There are many times that the best thing to do in a portfolio is nothing.
'Adjust your willingness to believe something by how much you want and need it to be true' is another good one. I take this in a specific way that guards against a mistake I've made in the past, when I convinced myself an investment idea was great just because it was time to buy something.
Readers can judge for themselves but I find Mr. Housel one of the few finance writers who is truly wise and his bad advice in this column is helpful during market hours and beyond.
In what could be interpreted as a case of evil companies becoming even more evil, U.S. health insurers are implementing AI to streamline hospital operations and eventually cut jobs.
BofA Securities analyst Alec Stranahan reports that the U.S. health-care system is a jumble of administration for patients, insurers and hospitals that often requires manual input of data. The opportunity for efficiencies is widespread and some insurers and large hospital systems are already implementing AI applications to tackle them.
The stocks mentioned are new names for me. Doximity Inc. (DOCS-N), with AI applications to draft medical letters and appeals and communicate with patients, is one. Waystar Holding Inc (WAY-Q), with software to help simplify payment processing and claims denials, is another. Nashville-based hospital network HCA Holdings Inc. (HCA-N) is a leader in AI implementation in its own operations.
News that an unstable teen had been dragged into madness by an AI companion would be lamentable but not surprising. Futurism's description of venture capitalist Geoff Lewis' apparent AI-assisted descent into mental illness, however, is eyebrow raising.
Mr. Lewis was an investor in machine learning and AI expansion for a multi-billion dollar investment firm until a series of social media posts led to concerns about his health. The posts suggested that Mr. Lewis had used ChatGPT to uncover a shadowy organization that was negatively affecting 7,000 people and had killed more than ten people.
The story is the continuation of a trend of AI encouraging users' delusional thinking to extremes that are being blamed for involuntary stays at psychiatric facilities, homelessness and even suicide.
Mr. Lewis did not respond to requests for information for the story so we'll have to be careful in assuming AI's role in his difficulties. If it turns out that AI did play a significant role, it is alarming as Mr. Lewis has a clear idea of AI's inner workings.
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Norman Rothery hunts for the best measures of quality for both large and small Canadian stocks
Ian McGugan looks at the staggering amounts companies are spending on AI and what it may mean for investors. Meanwhile, Jamie McGeever asks, Is the U.S. stock rally near a 'Mag 7' turning point?
Tim Shufelt looks at how Canadians are learning the hard way that real estate is not a slam dunk when it comes to investment gains
The Bank of Canada decision on interest rates on Wednesday is the key economic event for the coming week despite economists expecting no change in the policy rate. Month-over-month GDP for May is out Thursday when economists expect a 0.1 per cent decline. On August 1st the S&P Global Canada manufacturing PMI for July is released.
There are lots of earnings so let's get right to it. On Tuesday we'll see George Weston Ltd. (C$3.352 per share expected) and Kinross Gold Corp. (US$0.318). On Wednesday there's CGI Inc. (C$2.083), Agnico Eagle Mines Ltd. (US$1.715), Canadian Pacific Kansas City Ltd. (C$1.13) and Toumaline Oil Corp. (C$1.031). On Thursday TC Energy Corp. (C$0.791), Cenovus Energy Inc. (C$0.157) and Cameco (C$0.469) report. Scheduled Friday are Fortis Inc. (C$0.702), Enbridge Inc. (C$0.579), Telus Corp. (C$0.232) and Suncor Energy (C$0.710).
In American economic news there's annualized GDP for the second quarter out on Wednesday (2.5 per cent expected) along with personal consumption. The Federal reserve decision on rates is the same day, no change is expected. On Thursday there's personal spending for June (a 0.4 per cent month-over-month rise is forecast), and the monthly change in the PCE price index (a rise of 0.3 per cent is expected).
The change in nonfarm payrolls is released Friday and 101,000 new jobs is expected. ISM manufacturing PMI is out the same day and economists predict a slightly contractionary 49.5 reading.
Widely followed corporate results start Tuesday with Procter & Gamble Co. ($1.422 per share expected), Corning Inc. ($0.572), Johnson Controls International ($1.021), Royal Caribbean Cruises Ltd. ($4.068), American Tower Corp. ($2.428) and Visa Inc. ($2.847). On Wednesday there's Ford Motor Co. ($0.328), Equinix Inc. ($6.742), Meta Platforms Inc. ($5.878) and Qualcomm ($2.711).
Thursday's profit reports include Mastercard ($4.022), Stryker Corp. ($3.071), Apple Inc. ($1.43) and Amazon.com ($1.323). On August fourth we gat Berkshire Hathaway Inc. ($7514.74) and Palantir Technologies Inc ($0.139).
See our full earnings and economic calendar here