Liz Hecht, April 2025

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On Tuesday, April 8, after watching my personal investment portfolio plummet for four days straight, I sought solace in the Wall Street Journal and found an article entitled “Here’s Why You Shouldn’t Check Your Portfolio Right Now.” The article concludes by advising investors to “Do Nothing” with a quote from financial adviser Martin Lowenthal: “I’ve got full faith in the American economy to ride this out.”

On April 13, after more market chaos, the Journal runs another article with a somewhat different message: “Will the Last Investor to Leave America Please Turn Out the Lights.” Columnist James Mackintosh documents how President Trump’s trade war is having a negative effect on stocks, bonds and the dollar—and even more concerning, causing a “loss of faith in America.” If all this carries on, concludes Mr. Mackintosh, “U.S. markets have a long way to fall as foreigners flee.”

I never sell on weakness, and so far I’ve resisted the urge to indulge my survivalist leanings (buying a gun, stockpiling food). But I do feel compelled to do something—anything to get a grip on my own rising sense of dread. Oh, I know what will help: Read a book! When the going gets tough, the tough read. And what better choice right now than The Art of Uncertainty.

In the book’s introduction, Professor Spiegelhalter writes, “Uncertainty is all about us, but, like the air we breathe, it tends to remain unexamined. This book will try to do something about that.” Here are three of many interesting things Professor Spiegelhalter’s book teaches readers about uncertainty:

Uncertainty is personal. “Tolerance of uncertainty can vary hugely between people—some might get a sense of excitement from unpredictability while others feel chronic anxiety.” As with almost all things in life, it’s not what’s happening to you that matters but what you think is happening to you. In other words: Uncertainty is an essential part of the human condition. Deal with it. And one way to deal with it is to quantify it.

Uncertainty is best expressed in numbers—not words. In 1961, the U.S. Joint Chiefs of Staff gave the Bay of Pigs invasion a 30% chance of success. The General writing a report to President Kennedy translated 30% as “a fair chance,” by which he meant “not too good.” President Kennedy interpreted “a fair chance” differently and gave his support to the invasion by 1,500 Cuban exiles. More than 100 were killed, most of the rest were captured and Cuba drew closer to Russia as a result.¹

This all happened long after probability theory began to take shape during the 16th century. And yet still today, it’s surprising how often people rely on words when numbers, even when expressing uncertainty, can provide greater precision. In sum, concludes Professor Spiegelhalter, “words alone are poor at communicating degrees of uncertainty, since their interpretation can vary hugely between people, languages and contexts.”

Uncertainty is best managed by foxes―not hedgehogs. “The fox knows many things but the hedgehog knows one big thing.”² Foxes are better at swiftly absorbing new information and being pragmatic while hedgehogs anchor on one unchanging worldview. Foxes excel at what Professor Spiegelhalter would call “being Bayesian” or revising expectations in response to new data.³ The Art of Uncertainty lauds “the humility to abandon initial assumptions and completely rethink our ideas” and counsels readers to “judge if anyone―whether a politician, journalist, scientist or some influencer expressing complete certainty in their bizarre beliefs―is being far more confident than they should be.”

I have lived and invested through Covid, the Great Financial Crisis and the tech bubble bursting. But the uncertainty born of the current tariff tantrum feels different somehow, scarier and less analyzable. How can one model the mind of Donald Trump? Who can handicap the impact of his next ill-considered, bizarre action?

As I write this, the Wall Street Journal continues to report on the numerous ways the U.S. economy is starting to stall with headlines such as “Trump’s Trade Offensive Threatens America’s Financial Primacy“ (April 20), “Dow Headed for Worst April Since 1932” (April 21) and “America Inc. Slashes Spending as Tariff Uncertainty Swirls” (April 28). This last article notes cuts in corporate travel, delayed construction projects, a slowdown in hiring and (this hits home) reduced spending on consultants.

The Art of Uncertainty covers centuries of evolution in how human beings have learned to manage the unknown. Acknowledging uncertainty, the author observes, “need not stop us from considering plausible futures, making decisions and getting on with our lives.” And so, trying to be more fox than hedgehog, I continue to Trump-proof my portfolio and think about all the innovative, resilient companies in the world that will survive long beyond the tenure of any one political regime.

1. Peter Wyden, Bay of Pigs: The Untold Story (Jonathan Cape, 1979). In the chapter, “Putting Uncertainty into Numbers,” Professor Spiegelhalter notes that the Bay of Pigs also has been used as a case study in groupthink.
2. For more on foxes versus hedgehogs, see the March 2021 issue of Excess Returns.
3. “Bayesian” originates from the Reverend Thomas Bayes, an 18th-century statistician and theologian. Bayes’ theorem provides a mathematical framework for updating probabilities based on new evidence.

Liz Hecht, January 2025

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“I’ve met hundreds, perhaps thousands of entrepreneurs, and I’m convinced the majority did not start companies because they could, but because they had no other options.”

―From The Algebra of Wealth

Once upon a time long ago, I was hunkered down at my desk generating some last-minute edits for the Wall Street trade publication I worked for when suddenly I detected a presence by my side: My boss. My boss was not there to say, “Hey Liz, good job for scooping the Wall Street Journal!” Oh no. He wanted to request that I dress more formally at the office. Having been on deadline without a break for close to 17 hours, I was in no mood for this. “Well gee,” I said. “I would like to dress more formally, too, but unfortunately I do not have enough money to pick up my dry cleaning this week. Maybe if this company paid me a living wage, I’d dress better.”

Thus an entrepreneur is born.

Early in Algebra, Professor Galloway notes that “this is not a typical personal finance book.” Happily, it’s not. The word “algebra” in the title promises the certainty of a formula applied to changing, often unknown quantities. And this book does indeed deliver a formula that pleasingly integrates quantitative and qualitative variables.

The quantitative part is simple:

ECONOMIC SECURITY = Passive income > Burn rate

“Economic security,” Professor Galloway writes, “is control. … It is knowing that you can plan for the future, commit your time as you see fit, and provide for those who depend on you.” Economic security means “acquiring sufficient assets—not income, but assets—such that the passive income they generate exceeds the level of spending you choose for yourself—your burn rate.”

The Algebra of Wealth proceeds to address in depth the qualitative ingredients—Stoicism, Focus and Time—that will help readers turn income into assets and labor into capital. A final section entitled Diversification offers a concise tutorial on the economy and the financial markets. Professor Galloway describes the financial markets as “the phone booth in which money changes into its superhero outfit to become capital” and advises which investments to emphasize (ETFs, a cost-effective way to achieve portfolio diversification via a single security) and what to avoid (day trading, “like gambling but with worse odds and no free drinks”).

Different readers will respond to this book in different ways. I personally am grateful for the following wealth-building life lessons:

Find Your Talent versus Follow Your Passion. “Passion careers suck,” the author observes. “Follow your passion” is Latin for “Prepare to be exploited.” This is good advice for most people, particularly as most people don’t necessarily start with a passion but find one through experience. Professor Galloway describes how he discovered a passion for writing through the discipline of writing a weekly newsletter: No Mercy/No Malice. “For most, the kind of passion that guides us, a lodestar-on-the-horizon kind of passion, is not a birthright. It’s something we find through work.” In an excellent chapter on the ROI of various professions (“be careful what wave you’re paddling into”), Algebra describes media (publishing, television, journalism), for example, as “a volatile business that can feel exploitative.”

Don’t Worry, Do Prepare. On the road to building income that becomes capital, the author recommends turning expense management into a “rational obsession.” “Maintain focused attention on your income, spending and investments, without letting yourself become emotionally engaged,” he counsels. “The trick is to keep it an intellectual exercise, to give yourself the feeling of control, not increase your anxiety.” He cites a survey of senior citizens finding that their biggest regret was worrying too much.¹

Remember Inflation. Inflation, writes Professor Galloway, is “a rodent gnawing at the pillars of wealth, the rot in your foundation, a rising tide that never ebbs.” I tend to think of compounding with respect to the power of long-term investing. But Algebra has intensified my focus on the reality that inflation, too, compounds and should be considered when making financial life choices such as how much cash to hold.

In an introductory chapter entitled “Two Jackets and a Glove,” readers learn that the author comes by his approach to money through a difficult financial situation as a child. This somehow makes the lessons learned from the book all the more affecting and indelible.

Professor Galloway dedicates The Algebra of Wealth to his sons: “For Alec and Nolan. Please read this book, and take care of your old man.” And while Algebra is a great read for anyone—old or young, already set financially or just trying to survive—the book is particularly relevant for young people just starting to define their path toward wealth.

1. “The Most Surprising Regret of the Very Old—and How You Can Avoid It,” Karl A. Pillemer, PhD, HuffPost, April 4, 2013.

Liz Hecht, October 2024

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“When you give people too much money, they tend to spend it.”

―From The Money Trap

The Money Trap is a page-turner that starts strong: “Someone wants me out of the way. Someone desperately wants me out of the way. I don’t know who and I don’t know why, but I am about to find out.”

Author Alok Sama left his position as president and CFO of SoftBank Group International after a frightening smear campaign involving protracted surveillance of him and his family. One part whodunit, one part autobiography and one part exposé of the fantasies and foibles of tech industry investing, The Money Trap explores several important themes in venture capital investing:

• The downside of startup companies receiving too much capital too soon
• The promise and perils of leverage, magnifying returns exponentially or compelling unwise decisions based on short(er)-term thinking
• Founders untethered from reality enabled by VCs and investment bankers fueled by fear of missing out

Aside from Sama himself, the central Money Trap character is Masayoshi Son, CEO of SoftBank Group and mastermind of SoftBank’s Vision Fund, one of the largest-ever technology venture funds. Sama writes that many of the fund’s individual investments were “bigger than the average technology fund.” Equally notable, however, was the speed of investment. “Capital was deployed with the frequency of politicians making promises, creating a self-fulfillingly euphoric environment.”

SoftBank Vision Fund can be credited with many of what Sama describes as “unimpeachable” and truly visionary investments in companies such as ByteDance, Nvidia and Arm. The fund also invested in companies that did not work out such as Wag, a dog-walking service, Zume, a company using robots to make pizza and WeWork, the inspiration for the Apple TV series WeCrashed. SoftBank’s CEO also was an early investor in Alibaba, turning a $20 million stake into more than $100 billion.

After less than 20 minutes,² Masayoshi Son promised $4.4 billion to Adam Neumann of WeWork, which likely prompted Sama’s description of Neumann’s tongue as “a weapon of mass seduction.” The Money Trap offers several cautionary examples of non-technology companies such as WeWork being valued as technology companies. Elevation Partners Founder Roger McNamee has observed that “every use case isn’t useful.³ In the same vein, every company using technology isn’t a technology company.

When in February of 2020 the Wall Street Journal ran a story about the alleged source of the “dark arts campaign of personal sabotage” against the author, Alok and his wife were able to share a joke about certain aspects of the story. And early in the book, Alok laughs out loud when thinking about “the mastermind who commissioned this stakeout being presented with pictures of my dog chasing squirrels.”

Every story has a moral and different readers will ascribe different morals to The Money Trap. A key takeaway for me is the importance of maintaining a sense of humor.

Read this book if you or someone you care about is considering or already engaged in investment banking. Read it if you want an inside look at the highs and lows of venture investing. And read it if you simply want a ripping good story. The book jacket says this is Mr. Sama’s first book. I hope he will write another one soon.

1. “Stock Market Today,” The Wall Street Journal, October 16, 2024.
2. “How Venture Capitalists Are Deforming Capitalism,” The New Yorker, by Charles Duhigg, November 23, 2020.
3. CNBC interview with Roger McNamee, October 14, 2024.

Liz Hecht, August 2024

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“AI is far deeper and more powerful than just another technology. The risk isn’t in overhyping it; it’s rather in missing the magnitude of the coming wave … We really are at a turning point in the history of humanity.”

―From The Coming Wave

The “21^st century’s greatest dilemma” in this book’s subtitle is how we humans can allow new technology such as AI to realize its vast potential for good while not being destroyed by its vast potential for evil. On the good side of the ledger, The Coming Wave notes new medical advances and clean energy breakthroughs, expedited drug discovery, faster and more accurate medical diagnoses, farm robots maximizing yield while minimizing waste, an enzyme that can break down ocean-clogging plastics, drones that allow countries like Ukraine to defend against an aggressor such as Russia and adaptive education systems building bespoke curricula for individual students. In sum, exponential improvements in human life.

On the evil side of the ledger, the book describes innumerable “tail risks on a deeply concerning scale.” Things like disinformation as a surgical strike, election tampering via deep fake videos, Russian bots designed to intensify pandemics, large numbers of people with populist leanings out of work and wars that “might be sparked accidentally for reasons that forever remain unclear.” Oh and one also might add: the potential for intellectual property theft on a grand scale,¹ the outsized energy requirements of AI² and the human cost of building AI systems.³

Mustafa Suleyman is the co-founder of two AI companies, DeepMind and Inflection, and now serves as the CEO of Microsoft AI. He knows the world of technology―its potential and its perils―from the inside out. And he is worried. He is worried about what he calls “pessimism aversion,” or “the tendency for people, particularly elites, to ignore, downplay, or reject narratives they see as overly negative.” Why “particularly elites”? Because elites―CEOs of companies, heads of state, leaders in their field―are used to being in control. But the coming wave is not easily susceptible to control. “Properly addressing this wave,” Suleyman writes, “containing technology, and ensuring that it always serves humanity means overcoming pessimism aversion. It means facing head-on the reality of what’s coming.”

As Suleyman sees it, to confront this 21^st century dilemma successfully requires navigating “a narrow path” between “techno-authoritarian dystopia on the one hand” and “openness-induced catastrophe on the other.” Think China’s hyper surveillance of all its citizens versus a misanthropic loner in his parents’ basement engineering a global cyberattack.

Lessons for Investment Marketing Professionals

The concept of investment marketing seems mundane in light of futuristic, existential concerns of this nature. The Coming Wave nonetheless inspired me to think about how investment marketers can excel in the complex world of AI. A few important lessons emerge:

Encourage the use of case studies and examples. Financial journalists and potential investors are increasingly pressing AI company executives and investment managers for specific examples of how AI works. I have listened to many interviews with CEOs of AI companies and come away with zero sense of what problem the company solves or even what they’re selling. The same is often true of companies supposedly using AI to enhance their product offerings. And advertisements for AI companies often are similarly opaque. Many companies unworthy of the acronym now boast about being “powered by AI” without bothering to define what this might mean. Marketers can help their companies stand out with a few specific examples (or “use cases,” in the lingo of this world). What exactly is the product being put in customers’ hands? How does it make people’s lives better? What is the AI component, precisely? Without such information, companies are vulnerable to accusations of “AI washing.”

Counter perceptions of AI washing. Technopedia offers an excellent and comprehensive definition of AI washing. Essentially, AI washing is similar to greenwashing―i.e., falsely claiming to invest for the public good so as to capitalize on investors’ social and environmental concerns. Technopedia provides guidance on how to avoid companies engaged in AI washing, including a short list of pointed questions designed to understand precisely how a company defines AI.

Get ready for challenging questions. In a market that is often skeptical yet hungry for knowledge, investment company professionals should be prepared to answer a number of defining questions about the role of AI in their own businesses and portfolios:

• What is your company’s AI investment strategy? Where do you see the greatest opportunities and risks?
• Please give specific examples of practical AI applications by one or two companies in your portfolio with focus on precisely how the technology works.
• How is your own company using AI to become a better, more efficient investor? To what extent have you used this new technology to test the long-term validity of your investment strategy?
• How is your company using AI to become more productive and efficient in serving clients?
• AI companies include NVIDIA as well as many start-ups that have yet to show a profit. Are you concerned that the current AI boom could become another dot-com-like bust?

All the acronyms (AI, AGI, LLMs). Million- and billion-dollar funding rounds. Trading performed mainly by algorithms … The world of AI is still complex and confusing to many asset allocators. Investment company professionals who help navigate the complexity likely will find favor with audiences starved for specificity and clarity.

1. “Generative AI Has an Intellectual Property Problem,” Harvard Business Review, April 7, 2023.
2. Today’s Last Look, Fareed Zakaria’s GPS (Global Public Square), July 28, 2024; “The Uneven Distribution of AI’s Environmental Impacts,” Harvard Business Review, July 15, 2024.
3. “AI Is a Lot of Work,” The Verge, June 20, 2023. This article documents the “vast underclass” called annotators who populate AI systems with data.