Behavior Gap Radio 1422 | Can You Defend That Assumption?
Mar 26, 2026
They dig into why long-term projections demand more humility about assumptions. They warn against false precision from neat numbers and spreadsheets. They explore where assumptions hide in plans, forecasts, and capital decisions. They urge actively seeking evidence that would disprove your beliefs and having a clear, defensible philosophy for any assumptions you use.
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Longer Projections Demand More Humility
- The longer your projection horizon, the more humility you must hold about your assumptions.
- Carl Richards emphasizes that long run forecasts create false precision, so accept you'll be wrong and treat projections loosely.
False Precision From Fancy Spreadsheets
- Precision in spreadsheets creates a false sense of certainty, like 7.29% returns or 3.24% inflation over decades.
- Richards calls this 'physics envy' and urges holding two truths: make best guess but expect to be wrong.
Actively Look For Disconfirming Evidence
- After making assumptions, actively search for disconfirming evidence instead of seeking confirmation bias.
- Richards suggests adopting a posture with 'binoculars out' to notice signs reality diverges from your plan.