february 25, 2026
investing is a faith-driven activity. no one can predict the future, of course. even people that seem very confident about their ability to do so, are wrong most of the time. one (unnamed) legendary investor once said that their read about a given founder is right about 40% of the time. and this is coming from one of the best to ever do it.
people mostly make predictions based on historical data - here’s what happened in the past, and here’s why that pattern will repeat itself in this case we’re looking at. it makes sense, because history may not repeat itself but it rhymes. that being said, many investors have lost a lot of money making bets based off of lagging indicators, rather than leading ones.
making any kind of forward-looking prediction requires faith. this applies to all predictions, not just positive ones. even short-sellers, who may be really good at making pessimistic predictions about the future, are relying on faith. i think about the quote from life of pi, describing how atheists are similar to believers - "like me, they go as far as the legs of reason will carry them -and then they leap.”
i think of this because of the recent citrini article, which laid out a massive bear case for ai:
the logic seems to flow pretty well. ai replaces white-collar workers → people get laid off → consumer spending collapses → companies utilize ai more to cut costs → everything collapses (housing, credit, tax revenue, etc = full financial crisis). to many people, this seems like an unhappy but “realistic” scenario. eventually this could happen (timeline uncertain, but at some point it will).
but even bear arguments like this are faith-driven. so many things need to go wrong for this scenario to happen.
for example, you need to believe that “this time is different.” as previously mentioned, it requires faith to believe that what happened in the past, will not happen again. historically, every major technological shift / automation boom has created far more jobs than it has displaced (in the long-term). here, you need to craft a good argument for why ai will not follow this trend. contrary to the narrative that ai replaces software engineers, it turns out that software engineer job postings are actually up 11% this year. you also need to believe that compute scales infinitely, ai completely replaces humans (rather than enhances them, which has historically been the case), jevons paradox does not apply here (technology makes resources cheaper which increases demand rather than decreases it), etc. so even though citrini’s piece seems like a logical bear argument, that’s a lot of assumptions you need to have faith in.
investing is heavily influenced by whatever the current narrative is, and it takes courage to go against it. the citrini article alone may have temporarily wiped out ~$700b in value for payment companies, doordash, etc. the claude code security launch wiped out $50b (crowdstrike lost 18%, palo alto / cloudflare / okta fell 9%, etc). nvidia dropped 17% in a single day ($590b off its market cap) after the deepseek announcement. the point is how quickly the narrative can shift, and how deeply the narrative can impact the market, even if the narrative is wrong (which it totally is for all three of these cases mentioned). on the other side of the coin, moving from public markets to privates, in venture it’s taboo to bet against ai-enabled businesses (and instead focus on pure-play fintech / marketplaces / consumer / etc). it takes strength to counter the zeitgeist, but that’s where all the money is made. if you have good timing that’s great, as you may have the right thesis but poor timing. markets can remain irrational longer than you can remain solvent.
lots of great investments do take some time before they become obvious. ideally, you invest in companies a few days before they become obvious, but this is rarely the case. in the private markets, especially at the earliest stages, there are plenty of examples of companies that are great because they are “hard to build.” figma took a few years before shipping a product, which i’m sure had investors nervous, but once they did, it became one of the best design products of all time.
in that period of time where the product was being built, it’s easy to imagine investors writing the company off as a slow-growth business, or even a failure. especially because most of the time, investing involves people other other than you in the equation. working on a vc team, you can feel pressure from your colleagues (and bosses, if applicable) when your investments are taking longer than expected before taking off. during this period, you have to remain faithful to your conviction and instincts. it’s more fair to the entrepreneurs you backed, and you never know when this will pay off.
there are many examples of companies where vc firms completely wrote off an investment, or viewed it as a “logo buy” rather than a potential fund-returner. the investors lose faith. but then those investments go on to be great. and then after widespread success, the investor claims that they had faith the whole time. many narratives get invented in the aftermath of events.
i have spent time in the pre-seed investing space, which should primarily involve making bets on people. i’ve frequently heard the sentiment that investing in people is an easy, diligence-free activity (there may not be much of a product, or metrics, to analyze). i don’t agree with this. there are ways to be disciplined about investing in people, and while there is more analysis you can do at the later stages, investing at any stage (including pre-seed, seed, series a, and growth) involves rigorous analysis + from there, making a leap of faith.
rather than an absence of analysis, faith is what you deploy when analysis runs out.