Markets, technologies, and companies change constantly. The one constant is the human operating system—our biases, emotions, and irrationality. The ability to systematically trade against predictable human behavior is an enduring source of alpha.

Startups in social impact or wellness often receive positive but misleading feedback from VCs. Investors are hesitant to reject these missions outright, so they offer praise while privately declining due to perceived weak business models and a lack of "cutthroat" founders. This creates a "Save the Whales trap" for idealistic entrepreneurs.

Post-mortems of bad investments reveal the cause is never a calculation error but always a psychological bias or emotional trap. Sequoia catalogs ~40 of these, including failing to separate the emotional 'thrill of the chase' from the clinical, objective assessment required for sound decision-making.

The only way ESG investing can effect change is by starving "bad" companies of capital, raising their cost of capital. For the market to clear, non-ESG investors must own those stocks and will only do so if compensated with a higher expected return. Therefore, the ESG portfolio must, by definition, have a lower expected return.

Investors who lose money in a sector develop an emotional aversion, causing them to irrationally pass on the next great company in that space. This 'learning from mistakes' becomes a liability, prioritizing avoiding small losses (commission) over capturing huge wins (omission).

While focusing on the impact of the next dollar seems rational, this approach systematically excludes hard-to-forecast downstream effects like scalability or influencing future funding. This causes a focus on achieving local maximums of impact instead of transformative, global ones.

It's easy for investors to write checks because they feel for a founder and want them to succeed. Gary Vaynerchuk calls this ineffective "charity work." A true investment must be detached from this "bleeding heart syndrome" and focus objectively on the operator's capabilities and the business thesis.

Contrary to popular belief, widely accepted corporate governance principles often lack supporting data. Research indicates these practices are destructive, while mission-driven alternatives consistently show superior performance across financial, loyalty, and other key metrics.

The 'effectiveness' in Effective Altruism creates a bias toward quantifiable problems like global health, while overlooking harder-to-measure but potentially higher-impact areas. For instance, preventing political dysfunction or misinformation among influencers could have a far greater downstream effect than many targeted donations, but it's not a typical EA cause because its impact is difficult to quantify in advance.