TIP855: Shopify (SHOP): The Big Winner of Agentic Commerce? w/ Shawn O'Malley & Daniel Mahncke

One of the hardest things in investing is to just soberly look back at the information you had available at the time of a decision, and then ask whether you actually made a mistake, like missing something important or valuing the company too low, which arguably has been the case.

As you said, since stocks are always being priced on new information, it's also possible that when we factor in a bull case, reality simply landed on an outlier outcome that was not the most likely to occur, but did nevertheless.

And We actually thought about the range of outcomes pretty well, and reality just landed on one of those less likely outcomes.

And that happens to us all the time.

We looked at about 100 companies, and I would say there's easily 10 of those that worked out that way.

And the first is pretty hard to judge without hindsight bias sort of creeping in and changing how you know back then thought about the company.

And the second is kind of hard to prove because there's only one version of reality.

And once something has actually happened, there is no way to go back and then measure how likely it really was.

Sounds a little abstract, but I think putting it through the lens of sports is maybe a helpful way to think about it.

If your favorite team is trailing late into the game, it would be mathematically reasonable to ask me, let's say, a 10% chance of them coming back to win, depending on how much time there is left and how far behind they are.

And you see some of the betting markets and stuff.

try and actually put a percentage of likelihood on things like that.

So if you decided to bet that they would lose, maybe as an emotional hedge, so that at least you make some money to offset the pain of your team losing, nine out of 10 times that would have hypothetically been the right decision.

And I'll just say, I don't do sports gambling, but I do use fantasy football to hedge the pain of my favorite team not being very good.

So anyways, if they do end up winning, The question is, what are you to make of that? And so for starters, you're probably so happy if you're like me that you don't care about having lost a bet because your favorite team won.

But the question is, were you wrong? And I don't think it's really something you have a black or white answer to because at that moment in time, it was overwhelmingly unlikely for your team to come back.

So making a bet that reflected those odds was a reasonable thing to do.

But of course, 10% of the time, a very logical bet like that can still work out to be wrong.

And we see that all the time in sports and in markets too.

And investing is even harder because there's no finite end to it as like with a sports game.

You can't just declare I've objectively was right about this stock in the same way that you could say I was objectively right about which team would win a game.

And investing is more of this continuous process, which makes the probabilities much, much harder, if not impossible to estimate.

And it can create this false illusion where you think, yeah, the bet hasn't worked out yet, but it could still technically, and you sort of cling to that.

I got to admit, during the World Cup, I made the now probably called situational awareness mistake.

I did bet money, which I usually don't do, but I did bet money on Germany winning.

One of the hardest things in investing is to just soberly look back at the information you had available at the time of a decision, and then ask whether you actually made a mistake, like missing something important or valuing the company too low, which arguably has been the case.

As you said, since stocks are always being priced on new information, it's also possible that when we factor in a bull case, reality simply landed on an outlier outcome that was not the most likely to occur, but did nevertheless.

And We actually thought about the range of outcomes pretty well, and reality just landed on one of those less likely outcomes.

And that happens to us all the time.

We looked at about 100 companies, and I would say there's easily 10 of those that worked out that way.

And the first is pretty hard to judge without hindsight bias sort of creeping in and changing how you know back then thought about the company.

And the second is kind of hard to prove because there's only one version of reality.

And once something has actually happened, there is no way to go back and then measure how likely it really was.

Sounds a little abstract, but I think putting it through the lens of sports is maybe a helpful way to think about it.

If your favorite team is trailing late into the game, it would be mathematically reasonable to ask me, let's say, a 10% chance of them coming back to win, depending on how much time there is left and how far behind they are.

And you see some of the betting markets and stuff.

try and actually put a percentage of likelihood on things like that.

So if you decided to bet that they would lose, maybe as an emotional hedge, so that at least you make some money to offset the pain of your team losing, nine out of 10 times that would have hypothetically been the right decision.

And I'll just say, I don't do sports gambling, but I do use fantasy football to hedge the pain of my favorite team not being very good.

So anyways, if they do end up winning, The question is, what are you to make of that? And so for starters, you're probably so happy if you're like me that you don't care about having lost a bet because your favorite team won.

But the question is, were you wrong? And I don't think it's really something you have a black or white answer to because at that moment in time, it was overwhelmingly unlikely for your team to come back.

So making a bet that reflected those odds was a reasonable thing to do.

But of course, 10% of the time, a very logical bet like that can still work out to be wrong.

And we see that all the time in sports and in markets too.

And investing is even harder because there's no finite end to it as like with a sports game.

You can't just declare I've objectively was right about this stock in the same way that you could say I was objectively right about which team would win a game.

And investing is more of this continuous process, which makes the probabilities much, much harder, if not impossible to estimate.

And it can create this false illusion where you think, yeah, the bet hasn't worked out yet, but it could still technically, and you sort of cling to that.

I got to admit, during the World Cup, I made the now probably called situational awareness mistake.

I did bet money, which I usually don't do, but I did bet money on Germany winning.