Early in my career, probably in the mid-80’s, I attended the first cellular telephone investment conference held in New Your City. At that time, a cell phone was literally the size of a brick, witness the fictional character, Gordan Gekko, in the film “Wall Street,” talking on the beach with his massive cell phone. Hilarious now, but mobile technology had just emerged and the Regional Bell Operating Companies (RBOC’s as they were called then) received in-market licenses for mobile spectrum and an additional license was granted to a competitor in the same market to create competition. RBOC’s had been formed upon the breakup of AT&T which had been completed at the beginning of 1984. One company, LIN Broadcasting, had aggressively bought up licenses in big markets such as New York, Los Angeles, Philadelphia, Dallas, and Houston. LIN was really the only public company that was a pure play on the growth of cellular technology that you could buy, and they had these big markets to develop. I thought it was a phenomenal asset, and my nascently developing intuition told me to recommend the stock. But I was a very young analyst and had not developed much credibility with the senior people at the firm I was working for at that time.
I anxiously returned from NYC and could not wait to recommend the company for inclusion in our portfolios. I diligently researched the company, had all of the facts, and presented the idea at a research meeting. I had a small amount of capital that I was managing at that time, but I wanted us to own LIN across all of our portfolios. The problem with recommending LIN was that it was a relatively new company and at that time there was a huge amount of skepticism regarding how fast, if ever, mobile technology would develop. In retrospect, this seems incredibly stupid, but such can be the ways of thinking with new technologies. I was laughed off the table by senior investment people, who of course, knew much better than me as I was a young and inexperienced investor. Despite their open laughter and derision, I bought LIN for the portfolio I was managing. The stock did very well, but I felt a lot of pressure from senior people that did not like it. I ended up selling it for a 40% gain. Great, right? NOT. Over the next 5 years the stock appreciated some 20X. It still bothers me today that I failed to listen to my intuition and let senior people influence me like that. But it was a great lesson on two fronts, one, that intuition is powerful and sometimes should be weighed more heavily, especially when new markets are developing. And second, I never forgot how blinded supposedly seasoned investment people can be when developing technologies they are unfamiliar which are emerging as a real product or business.
To this day, I remind myself to listen to young people, especially our Titan Capital Management students, that have new perspectives and ideas. The world is no longer a linear place, which is a key underpinning of this article. Linearity lends itself to nice and neat liner valuation models where of course the world just makes a ton of sense. The world we are entering, which is driven by non-linear compute curves and forms of intelligence we have never seen, does not lend itself to such obvious conclusions and thinking. Intuition will play a much more important role going forward for anyone that wants to succeed as an investor or for that matter in the new world of business that will be profoundly impacted by the world of AI.
While LIN still bothers me, it was supplanted by an even bigger mistake I made later in my career in 2008. I attended the annual Allen conference, held in Sun Valley, Idaho, and Jeff Bezos, CEO of Amazon, presented his case for Amazon Web Services, or AWS as it is known today. AWS felt to me like a natural fit given Amazon’s vast repository of consumer information and preferences and the rate at which information was growing after the emergence of the internet. There was just one problem. You could not model AWS and its impact on Amazon. Creating a model was a joke. It was anybody’s guess just how big AWS could be and if you were bullish, you were doing nothing but picking numbers and projections out of thin air that had absolutely zero credibility.
I returned to San Francisco and at one of our morning meetings, I reported on Bezos’ presentation and how AWS intrigued me. Understandably, it was hard for people to get their heads around it. We had become known in the large cap investing world as growth investors with a valuation and business model disciplines, which meant that we weighed valuation models and recurring revenue and cash flow streams equally in our assessment of the fundamental outlook for a company. This is why clients hired us. They liked that discipline. Buying Amazon at that time would have created many a furrowed eyebrow in our client base. We would have had to explain ad nauseum why we are buying Amazon. I had overruled my team before, but they had valid points as to how our clients would react to including Amazon in our portfolio.
Wow, what a monumental mistake! The split-adjusted share price of Amazon at that time was around $3.50 per share!! Over $250 today…All I had to justify the investment was a simple thought. And that was AWS was a game-change for Amazon. It was a natural fit given their already information and database intensive business. I had no model, no extensive research, just an intuitive thought—that I didn’t listen to!! True, this time was a bit different given our better-defined investment philosophy and process, but in this case, that constrained legacy philosophy and process was nothing but a detriment to a good decision.
As I mentioned, there were times when I overruled my team. Such was the case in May of 2003 when Genentech announced stunning Phase III clinical results for their cancer drug, Avastin. Avastin proved to be effective in shrinking malignant tumors by choking off the tumor’s blood supply. This time, though, we had some idea of what the TAM might be. On the day of the announcement, I huddled quickly with our healthcare analyst, and we discussed how big the TAM might be by looking at the total number of potential cancer patients that could benefit from Avastin. We felt the Street was underestimating the TAM by at least $1 billion. The immediate Street response was that the market could be as large at $1 billion, but we thought, with some degree of confidence, that $2 billion was more than possible given how stunning the Phase III trial results had been.
We decided to buy the stock immediately. We bought it up from its open of +15%. The stock finished up 45% that day, closing just shy of $55. Eventually, Genentech was taken over by Roche 6 years later at a price of $95, but split-adjusted, $190. By that time, it was our second largest holding.
I’ll never forget a couple of things about Genentech. First, we were horribly wrong on our assessment of the TAM. It turned out to be well over $7 billion, 7X Wall Street’s initial assessment of the TAM only proving to me what I have known for so long—“experts” can be so horrifically wrong at times. And second, I’ll never forget two of my colleagues, very, very skilled and smart investors, that walked into my office that day and excoriated me for making such a rash decision with no apparent facts to back it up. Of course, I felt we did have one significant fact, and that was that we felt strongly the TAM was going to be much larger than the Street was estimating. And to me, if that was true, then incremental revenue growth would fall to the bottom line at very high margins and earnings would be even higher than Wall Street was expecting.
I’ll never forget the visceral reaction of my two colleagues that came into my office that day. They were 100% convinced that I had made a terrible mistake and that what I was doing was a complete violation of our investment discipline. Good people that they are, they did later acknowledge that what we did was right for many of the right process reasons.
There’s a third observation here that is powerful. That day, only 2 of us on our team thought we had made a good decision (one of them being me). Everyone else was either shaking their heads in disagreement or at best neutral on the decision. As a team, we were so constrained by our tried-and-true investment process and philosophy. The lesson is this–group think can severely constrain good decisions from happening. The reason is that those in the group that are not as close to the fact pattern or intuitive nature of a decision simply do not have a good feel for it and they default to the all too comfortable place of “Do Nothing.” The “Do Nothing” default is very comfortable because you won’t be wrong. Of course, you won’t be right either, but it’s human nature to avoid being wrong so the “Do Nothing” default tends to be a safe place for many people to land.
There’s no denying that making decisions based on intuition can be tough. The reason it’s so hard is that you are getting a strong, intuitive feeling that exists within you and others simply don’t feel that. Why? Because they’re not you! They don’t have your experience, and they are not processing the information in front of you like you are. It’s unique to only you. And when you’re in a situation where you have that unique feeling, it’s very hard to articulate clearly to somebody else’s satisfaction that you have the correct read and decision.
Here’s a more recent example of intuition that occurred for me in my new state of being a retired private investor managing my own capital. I spend inordinate amounts of time researching AI. I believe AI is the biggest technology change I have ever seen in my lifetime. I’ve never seen companies ramp revenues so fast. Private companies such as OpenAI and Anthropic have revenue run rates of $40 billion+ and have only been in existence for a few years. I’ve never seen anything like this. Anthropic and OpenAI are pushing valuations well north of $500 billion, and some would say that is conservative. It’s certainly possible we are in a bubble, but you can’t deny how successful these businesses have become in a very short period of time.
In March of last year (2025), the Chinese company, DeepSeek, announced that they had decent success developing their own Large Language Model (LLM). This caused a panic on Wall Street with AI stocks. If Deep Seek could have this kind of success with their own LLM that didn’t require the compute power of Nvidia’s processors, would AI become commoditized quickly and were all the massive capital expenditures being spent on data centers and compute power really needed? AI stocks went down 50% almost overnight.
This made no sense to me at all. While Deep Seek had good technology according to the research I was able to corral, it didn’t mean at all to me that we would not need the massive compute power that all of the AI companies were ramping and investing in. I think one podcast I listen to mentioned that the amount of information we will create in the next 12 months will equate to the entire amount of information that has been created in the world’s existence. This creates a demand for compute that is insatiable. As AI silicon gets increasingly powerful and solves more and more complex problems, it made no sense to me that we could bootstrap the compute needed to create it. It may be true that some LLM’s are more efficient than others and require less compute, but the amount of compute needed for AI to progress is only going north in a very non-linear and exponential fashion.
Again, no models here, no concrete facts that would incontrovertibly prove out my thought or intuition. Just a feeling, but a feeling that needed to be acted on with AI stocks down 50% if you thought otherwise to the Deep Seek panic. I immediately developed a plan to average in. By the end of 2025, all of the stocks I had bought had almost doubled collectively.
This is our investing world go forward. How do you possibly model a company that goes from zero revenues to $50 billion within a couple of years? You don’t, and if you did, people would laugh at you…but it’s happening. Prospering in the new world is going to require a level of intuitive thought process that many investors and business people have never had to develop. It takes courage, conviction, and the ability to act without all of your ducks in a row. It’s not easy, but it’s necessary. If you summarize this section, there are some significant observations or takeaways:
- A strong intuitive thought is often not a comfortable place to be because it’s hard to demonstrate or prove it.
- Less intuitive people will challenge your conviction, and you’ll feel uncomfortable when they do.
- It’s almost shocking how little information you might have to make a decision but how stunning the results can be (LIN. Amazon, out of favor AI stocks, etc.).
- At the end of the day, trusting your intuition can be invaluable, and you have to learn to live with these decisions and accept the risk of being wrong.
I probably beat these examples to death, but I thought they might be helpful to you in writing this series of essays. I can honestly say that the best decisions I have made in investing as well as my life have been more intuition-dominated. Over the years, I’ve gotten better at listening to it.
In Part III, I’ll talk about how you can develop your intuition as your investing or business career develops.