InvestED: The Rule #1 Investing Podcast · Phil Town & Danielle Town

Bad Blood

·35 min·3 clips

A bank built a life sciences tower in the wrong part of San Diego—and Phil explains why that 40-year-old mistake matters today.

Phil and Danielle Towne host this episode of InvestED, exploring how seemingly unrelated knowledge can inform investing decisions. They discuss the importance of intellectual curiosity and avoiding cognitive traps when analyzing businesses. The hosts reference investor Bill Ackman hiring his fly-fishing guide, Oliver White, as an analyst based on White's deep expertise in a non-financial field. They examine a case where a bank's stock dropped 20-25% after negative press about its loans for a life sciences building in downtown San Diego. Phil Towne explains his 40-year familiarity with San Diego's life sciences real estate cluster being located north of downtown, not on the waterfront. The conversation shifts to the pitfalls of confirmation bias, using the example of Theranos and the investigative work by journalist John Carreyrou, who wrote "Bad Blood." Phil shares a personal anecdote about a friend who invested a seven-figure sum in a fraudulent "black box" water treatment technology. A key insight is that investors, unlike journalists, must ultimately form a definitive buy, sell, or "too hard" opinion on a business. The episode highlights how luminaries on the Theranos board were deceived, demonstrating that even experienced people can fall for a compelling narrative. Phil emphasizes the danger of venturing outside one's "circle of competence," where confirmation bias and hubris can take root. He admits to passing on an investment in BYD years ago because he felt he didn't understand China or electric vehicles enough, noting that Warren Buffett later invested. The tone is conversational and educational, blending personal stories with broader investment principles. Listeners interested in the mental models of investing and real-world case studies of business analysis would enjoy this episode. Those seeking specific stock picks or technical financial advice might find it too philosophical.

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