Welcome to The Nightcrawler, a weekly collection of thought-provoking articles and analysis on technology, innovation, and long-term investing. The Nightcrawler is published every Friday evening by Eric Markowitz, a partner at Nightview Capital and the firm’s Director of Research. Follow him on X.
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In this evening’s email…
Quote of the week: “Tell me and I forget, teach me and I may remember, involve me and I learn.” – Benjamin Franklin
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Inside the ‘Ludic Fallacy’—the psychology of probabilities
Long-term investing isn’t about being right all the time. It’s about maximizing wins—and minimizing losses. Simple in theory; hard in practice.
Counterpoint Global’s latest report—authored by Michael Mauboussin and Dan Callahan—explores this idea through concepts like the Babe Ruth effect (embracing strikeouts for big wins), the hedgehog vs. fox mindset (updating views vs. clinging to one big idea), and behavioral psychology’s role in decision-making, including loss aversion and overconfidence. It also examines the ludic fallacy—the mistake of applying neat probabilities to a messy, uncertain world—highlighting how investors often misprice risk by treating markets like predictable games.
The key takeaway? Successful investing isn’t about perfect predictions. It’s about understanding expected value in an increasingly complex, unpredictable world.
- Key quote: “Price is the relatively easy part. Buying or selling securities incurs transaction costs, and the magnitude of those costs depends on factors such as the liquidity of the security. But price is transparent and investors can estimate market impact. Value is the hard part. This is because value is really ‘expected value,’ which represents a range of potential payoffs with associated probabilities. Investing is an inherently probabilistic activity. The concept of expected value raises lots of issues that we will explore.”
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The “existential crisis” of knowledge work
I’m in London this week for research and meetings, and a recurring theme keeps surfacing in my conversations: how is the nature of research evolving in a post-AI world?
What’s clear is that Deep Research functions on OpenAI and Grok 3 are now surpassing human capabilities in many ways. Even David Perell, known for his widely popular writing courses, recently announced he’s winding down his business—calling it an ‘existential crisis’—largely because AI is reshaping what it means to be a writer.
My view is evolving, but ultimately rather simple: the real value in research will accrue to those who prioritize in-person conversations, first-hand insights, and developing conviction—while leveraging AI for the heavy lifting of background work. As David writes: “The world of non-fiction writing has fundamentally changed, and many of the skills I’ve developed and built my career on are becoming increasingly irrelevant.”
- Key quote: “The amount of expertise required to out-do an LLM is rising fast. For example, the quality of a well-prompted, ChatGPT Deep Research report is already higher than what I can produce in a day’s worth of work on almost any subject. The question is: What kinds of non-fiction writing will continue to last? Here’s a heuristic: The more a piece of writing comes from personal experience, the less it’s likely to be overtaken by AI. Personal writing, like biographies and memoirs, aren’t going away anytime soon. That’s because people have data about their lives that LLMs don’t have.”
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P.S. – I toured the 336-year-old Lloyd’s of London this week, the world’s oldest insurance marketplace. It was founded in 1689 in a coffee shop. Here are a few anecdotes from my time there.
A few more links I enjoyed:
The Most Important Time in History Is Now – via Tomas Pueyo
- Key quote: “AI is progressing so fast that its researchers are freaking out. It is now routinely more intelligent than humans, and its speed of development is accelerating. New developments from the last few weeks have accelerated it even more. Now, it looks like AIs can be more intelligent than humans in 1-5 years, and intelligent like gods soon after. We’re at the precipice, and we’re about to jump off the cliff of AI superintelligence, whether we want to or not. When are we jumping? What’s at the bottom? Do we have a parachute?”
The age of pen and paper – via Frederik Gieschen
- Key quote: “When you meet pen and paper with undivided attention, curiosity, and courage, you find a gate to your underworld. Like Dante, you must journey through the world of shadows and face all aspects of your being. When you emerge and see the light again, you get a chance to re-write our story. You also get a shot at transcendence.”
Satya Nadella – Microsoft’s AGI Plan & Quantum Breakthrough – via Dwarkesh Patel
- Key quote: “Satya Nadella on: Why he doesn’t believe in AGI but does believe in 10% economic growth, Microsoft’s new topological qubit breakthrough and gaming world models, and whether Office commoditizes LLMs or the other way around.”
From the archives:
How People Get Rich Now – via Paul Graham (2021)
- Key quote: “IBM, founded in 1896, took 45 years to reach a billion 2020 dollars in revenue. Hewlett-Packard, founded in 1939, took 25 years. Microsoft, founded in 1975, took 13 years. Now the norm for fast-growing companies is 7 or 8 years. Fast growth has a double effect on the value of founders’ stock. The value of a company is a function of its revenue and its growth rate. So if a company grows faster, you not only get to a billion dollars in revenue sooner, but the company is more valuable when it reaches that point than it would be if it were growing slower.”
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