M2_ After Covid - Revisited

7/5/20232 min read

It’s hard to cherry-pick your accurate predictions and ignore your huge misses without feeling like an imposter. My biggest hit was also my biggest miss:

“So, in conclusion, as counter intuitive as it seems, Coronavirus is going to be the best thing for residential real estate in decades; possibly in all of US history.

I suspect we will see massive government support for homeowners and renters. Conversely, this will be the worst event for commercial real Estate in US history. The already empty storefronts will have to find new purposes for there is no hope for their continued use as a retail space resembling their prior use if any. Clever rezoning must allow them to be used as housing if the use case cannot be made for any of the aforementioned industries.” – Memo 1 – After Covid, M D – 4/7/2020

“Show me the incentives and I’ll show you the outcome.” – Charlie Munger, Vice Chairman Berkshire Hathaway

So why did I chase commercial real estate into the ground instead of residential? I was a new father and, if I’m being honest, I thought that it looked like a reasonable leap from other large deals that I have done in the past. It looked like something that ‘I could do’. Plus, the concessions, or nudges, to join commercial brokerages were attractive at the time. For the first time in my career brokerages were publicly advertising a draw salary. At the time, interest rates were all over the place and my last residential sale took nearly 5 months to close.

“The reason that behavioral economics is interesting is that it drops the standard assumption in economics that everyone is rational and unemotional. Instead, it builds models of actual human behavior.” – Richard Thaler, Nobel Prize winning economist

If we all behaved rationally and without emotion, we could all agree that this world would be dull. Financial hubs buzzing with activity and culture are a biproduct of high volume, frequent diverse transactions, and their participants. Without this there is only equal opportunity boredom and misery.

“Advice is easier to give than to take it. You can always try again and learn from your experience…Is there anything else I can help you with?” – openAI chatGPT4

I’m a human and for now AI isn’t helping and moving forward, conventional ways of thinking won’t help either. In fact, they haven’t been helping most people for a while. Social media has made us all experts in the age of data and now artificial intelligence. Perhaps trying to think like a real unintelligent person as part of a first principles approach to decision making might be fundamental in maintaining the human touch, mankind’s unfair advantage that even the most powerful AI is modeled after.