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Language: en
Many people are going to lose money in
2026 because of a single mistake that
most people are already making right
now. The world is extremely unstable.
There's a major land war in Europe with
no credible off-ramp. The US is already
buckling under the weight of its debt
and politicians keep voting for more
free stuff, recklessly pushing deficits
even higher. The US and China are locked
in Thusidity's trap, causing Trump and
Xi to actively dismantle the global
economic system that powered the last 40
years. Unchecked immigration is causing
political turmoil all across the
developed world. Central banks are
cutting rates even though inflation is
still well above target. And it's not
because they want to. It's because the
debt load leaves them completely boxed
in. The Japanese yen carry trade that
has fueled the global economy for
decades is unwinding and looming large.
On top of all of this is artificial
intelligence which has already started
eliminating white collar jobs faster
than new skills can be realistically
absorbed. And none of that is slowing
down and it's all happening at once.
Moments like this don't just create
uncertainty they overwhelm the human
ability to decision make well.
Individually, any of these issues would
be manageable, but together they create
something that's far more dangerous
that's triggering a well-known
psychological principle that's causing
most people to make a massive, entirely
avoidable mistake. For anyone not paying
attention, this mistake is going to make
2026 a brutal year financially. And
that's what we're going to talk about
today. what's going on and what you can
do about it and how you win despite the
headwinds of uncertainty and the
fragility of a K-shaped economy built
almost entirely on an AI bubble that's
poised to burst. The year ahead promises
to be one of the most pivotal in our
lifetimes. Politicians are going to make
reckless decisions just to win the
midterms. AI will continue to change our
way of life. Europe has announced that
they're bracing for a war on the scale
of World War I and World War II. And the
US must refinance a shocking amount of
debt that has been building up since the
2008 great financial crisis and comes
due this year. The system is going to
get tested. And when a system gets
overwhelmed, people don't gradually make
worse decisions. They fall off a cliff.
It's a well doumented phenomenon that
isn't limited to markets and investing.
It happens all over the place. It
happens to pilots under extreme
workload. It happens to surgeons in high
pressure operating rooms. It happens to
parents under financial strain when a
kid gets sick and the bills start to get
overwhelming. And yes, it happens to
professional traders and the average
trader alike during volatility spikes.
In short, it happens to all of us at
some point. The reason for this is the
confluence of five psychological traits
that are unfortunately baked into the
architecture of the human mind. Taken
together, this bundle of converging
psychological problems causes people to
make horrible decisions. Here's how this
failure mode breaks down. It's born of
five well doumented psychological limits
of the human mind. All of which have
been studied independently for decades.
When they stack on top of each other,
decision-making rapidly degrades. One,
cognitive load theory by John Swweller.
The core insight is simple, albeit
brutal. Your working memory is limited,
and when a task complexity exceeds that
limit, learning and decision-m fail
abruptly. Sweller showed that when
people are forced to track too many
variables at once, especially in novel
highstakes situations, performance
collapses even when intelligence and
motivation remain high. Two, in a
continuation of the cognitive load
theory, we've got working memory
saturation, a concept formalized by Alan
Battley and Graham Hitch. Working memory
is the mental scratch pad that you use
to compare options, run scenarios, hold
goals in mind, suppress bad impulses. It
is shockingly small and once it's full,
you lose the ability to reason well
alltogether. This is why people under
overload stop weighing trade-offs and
start being emotionally reactive. They
literally cannot hold the full decision
space in mind anymore. You put these two
insights into working memory together
and you begin to understand why the
complexity that we're all facing right
now by default is going to kill
financial execution quality for so many
people. Markets are complex. The world
is complex. Rapid change is difficult to
navigate in the best of circumstances.
Social media makes it possible to see
all of the variables constantly. And
global markets force us to contend with
it all constantly because inflation
makes it impossible to ignore and just
get ahead by simply saving your shekels.
Three, executive function breakdown
under stress. The third pillar of
cognitive load collapse is what happens
to executive function under stress,
particularly in the prefrontal cortex.
This is where planning, inhibition, and
long-term reasoning live. Under high
cognitive load, control shifts away from
these systems and towards faster, more
primitive ones. This has been documented
extensively in aviation psychology,
surgical error research, military
command studies, and financial trading
behavior. A very famous and tragic
example of this in action comes from
2009 when Air France Flight 447
fell out of the sky over the Atlantic
Ocean, killing all 228 people on board.
The plane wasn't even damaged. The
pilots were experienced. The aircraft
was flyable all the way to the bitter
end. What failed was executive control
when the pilots got overloaded. While
flying at night through a storm, ice
crystals briefly blocked the plane's
airspeed sensors. This caused the
autopilot to disconnect. A known trained
for scenario. And at that moment, the
cockpit flooded with alarms. Multiple
warnings going off everywhere,
conflicting indicators. There was no
visual horizon. and they were at high
altitude and they only had seconds to
decide. Under all of that cognitive
load, the pilots did something that
ended up being catastrophic. They pulled
back on the stick repeatedly, putting
the aircraft into a stall. They held the
plane in a stall for more than three
minutes all the way until they crashed
into the ocean. despite stall warnings
sounding almost continuously, despite
the aircraft being perfectly capable of
recovery, despite having been trained on
this exact failure mode. So why did they
make this mistake? Because under extreme
cognitive load, executive function
collapses. The pilots fixated on one
mental model, were going too fast, and
they lost the ability to integrate
contradictory information and run
through alternate protocols for
decision-making. They stopped reasoning.
They stopped questioning their
assumptions. They stopped updating their
model of reality. And because of it,
everyone died. The official
investigation concluded the crash was
caused not by equipment failure, but by
the crew's inability to manage cognitive
load and recover executive control once
they were overwhelmed. This is exactly
what people need to look out for in 2026
as the world kicks off the long string
of warning signals that myself and many
others are expecting. Four, decision
fatigue and default bias. As decision
volume increases, people rely more
heavily on defaults, habits, and
emotional shortcuts. They stop choosing
optimally and start choosing what is
familiar. This is why people under
pressure sell instead of rebalancing,
quit instead of simply adjusting, freeze
instead of experimenting, and it is not
because they haven't thought about
things ahead of time. It's because
they've thought about things too much
and they don't know how to reset their
nervous system once they're flooded. The
fascinating thing about decision fatigue
is that it's not a hard physical limit.
People can train themselves to reset
their nervous system through things like
meditation and just getting plenty of
sleep. But when people are stressed,
their impulse is to fixate and just
grind harder. But if you don't manage
your biology, you are doomed. Your
option set will shrink to virtually
none. Five, threat, uncertainty, and
time horizon compression. Under
perceived threat, humans compress the
future and the effects are typically
terrible. Long-term planning collapses,
delayed rewards lose their pull, and the
desire for immediate relief from the
stress dominates. This is deeply rooted
in evolutionary psychology. When the
future feels unstable, the brain stops
optimizing for long-term outcomes and
starts optimizing for short-term safety.
This is where people panic sell and lock
in losses, chase certainty, which
doesn't actually exist, gamble to escape
discomfort, and attempt to win it all
back. I hope that sounds familiar. And
this last point is the thing that leads
us to the sixth and final pillar of
cognitive load collapse, Daniel
Conaman's loss domain. This is what
turns bad decisions into catastrophic
ones. The idea comes from Conorman's
work on prospect theory which won him
the Nobel Prize in economics. Conaman
discovered something deeply
uncomfortable about human behavior.
People don't treat gains and losses
symmetrically. Psychologically, losses
hurt roughly twice as much as equivalent
gains feel good, and the brain will do
almost anything to escape that pain.
This broken weighing mechanism is the
loss domain, and it makes people look
like they're acting crazy when you view
it dispassionately. When people believe
they're in the domain of gains, they
behave cautiously. But once people
believe they're in the domain of losses,
their behavior flips. They become risk
seeking. They fall into a double or
nothing mentality of trying to win
everything back in one big move. This is
why men go to war when they have no
economic prospects at home that are
likely to secure them a mate. The
evolutionary pressures acting on them
are such that they consider it more
rational to risk their very lives for at
least a small chance of success. This
same mental framework kicks in when
people are down bad in the markets.
We'll get back to the show in just a
second, but first let's talk about a
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actually control. Your phone number. You
protect your Bitcoin with a seed phrase.
You use two-factor authentication for
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a customer service call. Verizon can
move it if someone tells a convincing
story. T-Mobile has let attackers hijack
numbers thousands of times. Cape changes
that. When you sign up, you get a 24word
phrase that generates a private key tied
to your number. That phrase is the only
way to move your number to a new device
or carrier. No Cape employee can
transfer it without your phrase.
Complete ownership. Take control. Head
to cape.co/impact
and use code impact to get 33% off your
first 6 months with Cape. And now, let's
get back to the show. This is one of the
big reasons why in times of massive
uncertainty like we're living in right
now, everything becomes financialized
and you end up with billions of dollars
moving through companies like Poly
Market annually where people are allowed
to bet on every absurd thing you can
imagine. things like, and I'm not making
these up, Jesus Christ returning before
GTA 6 is released, whether Trump would
smoke weed on Joe Rogan's podcast, and
whether or not Elon Musk will tweet
while under the influence of drugs. Lest
you were unsure, this is not healthy
market behavior. This is people going
way the hell out on the risk curve
because money is cheap and people are
trying desperately to get ahead while
under extreme stress and while living in
an age where debt has turned the economy
into an abusive stepfather. Inside the
loss domain, people stop optimizing for
long-term outcomes and they start
gambling for emotional relief. People
start doubling down instead of cutting
risk. They start chasing returns instead
of protecting capital and they start
refusing to take small losses and end up
locking in massive losses. And this kind
of lunatic behavior is a hallmark of
cognitive load collapse. People get
overwhelmed. They become convinced
they're getting financially left behind
and they start taking insane risks to
get ahead. That's when markets stop
behaving like smart long-term investment
vehicles and they start behaving like
casinos. That's when people stop
thinking in probabilities and start
thinking in absolutes. And that is when
even smart people start making moves
that look insane in hindsight, but felt
necessary in the moment. And that's
what's going to wipe you out in 2026 if
you don't master your biology. So, let's
get into what you need to do right now
to make good on the opportunities that
will inevitably be present in 2026
rather than driving yourself deeper and
deeper into debt on reckless gambling.
If you look out at the world and all you
see is doom and gloom, you are already
in the effects of cognitive load
collapse. You are not accurately mapping
what's going on in the world. Look for
the opportunities. Figure out how to
stay calm. If 2026 is going to reward
anything, it's not going to be
prediction. It won't be conviction and
it's not going to be people that are in
panic mode. It's definitely not going to
be dopamine loops, adrenaline, and
gambling. 2026 is going to reward people
who can do three things when everyone
else is overloaded and cognitively
shutting down. One, they can control
their biology. Two, they can think from
first principles. And three, they use
all-weather huristics for investing.
Let's start with how to master your
biology because if you don't get this
one right, nothing else matters.
Cognitive load collapse is simply a
biological state, but it's driven by a
combination of physiology and
psychology. When stress stays elevated
for long periods and you're trying to
constantly track every variable
imaginable, your nervous system shifts
into perpetual threat mode. Cortisol
stays high, sleep quality drops,
attention narrows, impulse control
weakens, and your preffrontal cortex,
which controls all of your highlevel
thinking, just goes offline. Literally,
you can see it in an fMRI scanner. The
blood literally leaves your prefrontal
cortex when you go into fight orflight
mode. Once that happens, you are not
deciding anymore. You're just reacting
emotionally. So follow this intervention
protocol to stay effective. Get sleep.
Chronic sleep deprivation impairs
executive function as severely as
alcohol intoxication. If you are not
sleeping, you are cognitively
compromised. Full stop. I built a
billion-dollar business without
sacrificing my sleep. But you have to
make it a priority. We all have a
million reasons not to. I get it. But
the math doesn't work out. You might
have more hours in the day that you're
awake, but those waking hours become far
less effective. Work out to calm your
mind. Resistance training and cardio,
despite me hating them, are two of the
fastest ways to lower baseline anxiety
and improve stress resilience. Create
deliberate down reggulation practices.
Things like breath work, meditation, and
prayer, if that's your thing, work
wonders for learning to calm the mind on
command. Meditation is a physiological
process. It doesn't need to be thought
of as something spiritual. It's simply
about using your breathing to shift your
body out of fight or flight and into a
calm and creative mode. No one is bad at
meditating, per se. You're just
expecting it to be something it's not.
Your mind will wander. That's just how
it works. The whole point is just to
bring your mind back to your breath.
Every time it wanders, just bring it
back. Learn to relax your mind on
command. It will serve you incredibly
well. Increase your threshold for
stress.
People are going to think this advice is
ridiculous, but I'm telling you, it
worked wonders for me. Firsterson
shooter video games. It was a total game
changer for me. I found it hard to
practice maintaining psychological
flexibility under stress because the
only time I was actually under stress,
the stakes were so high, I was just in
survival mode. But by playing
first-person shooters, I was able to
constantly put myself in positions where
I was stressed out, but the real world
consequences were exactly zero. That
allowed me to practice forcing myself to
zoom out, slow my breathing, remain
calm, and consider my full suite of
options while under stress. It has
remained a shockingly effective strategy
for me. Two, think from first
principles. Once your biology is under
control, you still need a way to think
when the world gets loud. That's where
first principles comes in. First
principles thinking is about escaping
your frame of reference and ensuring you
see the full option set before you.
Cognitive load limits your ability to
think clearly specifically because it
narrows your intellectual field of view
like the pilots on the Air France flight
that crashed. It's like trying to play a
hand of poker with only two cards. You
are bound to lose by always falling back
on first principles thinking, which is
simply reasoning up from physics rather
than cycling through a predetermined,
artificially limited set of cognitive
and emotional shortcuts.
By doing that, you're able to see
options that others simply don't. First
principles strip the problem down to
what is provably true and helps you
escape inaccurate and limiting
assumptions. The mistake most people
make is to try and reason from inside
the chaos. They track every headline.
They react emotionally to every market
move and that causes them to lose sight
of long-term trends and historical
patterns and see only the panic. And in
so doing, they keep their working memory
permanently saturated and they park
inside of the lost domain and end up
making wildly irrational decisions. For
example, in the markets, you don't need
to know what the Fed will do next
quarter to know that leverage increases
fragility. You don't need to predict
which company wins the AI race to know
that betting on the sector as a whole
versus trying to back specific horses
mitigates your risk. You don't need to
forecast geopolitics perfectly to know
that diversifying your exposure to
economic forces beats concentration when
uncertainty is high. When everyone else
is drowning in narratives, first
principles are how you stay calm and
emotionally sober. Three, use
all-weather heristics for investing.
Huristics is just a fancy word for rules
of thumb. These are the decision-making
shortcuts we all fall back on when we're
overwhelmed. So, make sure that yours
will serve you well when your field of
view narrows in the moments that you
just can't stop it from happening. With
everything going on this year, at some
point, your thinking is almost certainly
going to degrade. So, here are the
heruristics that actually matter when
you're stuck in that chaos. Avoid
leverage. Leverage can and will quickly
turn volatility into permanent ruin. If
you are using debt, you can end up not
at zero, but wildly negative. Plus, in
debts saturated systems like the one
we're in now, the overlevered always die
first. If you lock in no other rules,
lock in the no leverage rule. Preserve
your optionality. Cash, liquidity, and
flexibility are going to keep you sane
in wild times. also just help you sleep.
While cash is constantly being devalued
by inflation, you still need to keep
enough on hand to weather even a
protracted storm. I'm so paranoid right
now. I keep three years of cash on hand.
Your minimum should be at least 6
months. I know that is hard. I get it.
But it is so important because otherwise
it's going to force you into making
panic decisions and that is the last
place you want to be. Next, diversify
across forces, not just specific assets.
Don't bet everything on one narrative
about the future. The future is too
uncertain for that. Spread your exposure
across assets that behave differently
under environments like inflation or
deflation, growth, and contraction. Play
the long games with survivable position
sizes. Read the book 1929 by Andrew Ross
Orcin. It's an incredible breakdown of
how exuberance, cheap money, going
allin, and a belief in the only up
phenomenon financially obliterated an
entire generation. You don't have to try
and win capitalism in 2026. You just
need to beat inflation and still be
standing in 2027.
These heruristics might not be sexy, but
they'll make sure that you stay in the
game long enough for compounding
interest to work its magic. That is the
real edge. A lot of people are going to
lose money this year, not because
they're dumb, but because they let
stress collapse their option set.
Overwhelm will literally take their
brains offline and they will default to
emotional reasoning. Don't let that be
you. The most valuable asset you own in
a chaotic year is your ability to stay
cognitively functional and emotionally
stable when other people can't. If you
can keep your head, you'll actually be
able to be greedy while others are
fearful. If you indulge in leverage and
get overrun by panic like virtually
everyone else, you'll end up being
another cautionary tale. The future is
uncertain. Plan accordingly.
All right, if you guys want to see me
explore ideas like this in real time, be
sure to join me live Mondays,
Wednesdays, and Fridays at 7:00 a.m.
Pacific time on YouTube, X, Twitch, or
Kick. You can jump into the debate or
just hang out with the community. Till
then, my friends, be legendary. Take
care. Peace. If you like this
conversation, check out this episode to
learn more. I've been an entrepreneur
for about 25 years, but the last year as
a game developer has taught me 26
critical lessons that are going to help
you make 2026 the best year of your
life.