The efficient market hypothesis states a stock's price reflects all available information, including future expectations. Believing a company will succeed isn't an edge; it's already priced in. This explains why consistently beating the market is nearly impossible.

Companies naturally deviate from their core values due to an unconscious influence called "financial gravity." This force alters behavior as leaders imagine what might please investors, leading to compromised decisions long before any direct pressure is applied.

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.

Behavioral psychologist Emily Haisley calls 'tainted altruism' the 'saddest bias.' It's the flawed assumption that investments with positive social or environmental benefits cannot generate strong financial returns. This mindset prevents investors from recognizing valuable opportunities in areas like sustainability.

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.

Successful investing requires strong conviction. However, investors must avoid becoming so emotionally attached to their thesis or a company that they ignore or misinterpret clear negative signals. The key is to remain objective and data-driven, even when you believe strongly in an investment.

Moving from science to investing requires a critical mindset shift. Science seeks objective, repeatable truths, while investing involves making judgments about an unknowable future. Successful investors must use quantitative models as guides for judgment, not as sources of definitive answers.

An activist investor admits their level of agitation against poor corporate governance rises significantly only when a stock is underperforming. When performance is strong, even clear governance issues are often tolerated, revealing a pragmatic rather than purely principled approach to engagement.

An investor can be long a company while deeply distrusting the CEO's personal ethics. The bet is that the founder's aggressive, boundary-pushing nature, once tempered by regulatory reality checks, becomes a powerful business advantage.