What are some of the cognitive
biases that we have, under this

idea of behavioral finance, that
impact us as syndicators as fund

managers, this is part two of a
six part series that we're doing

on behavioral finance. So this
part is broken into, there's

going to be three parts total.
So the first part was just that

first video to go through what
is behavioral finance? The

second part, which is going to
be comprised of three videos

itself is going to go through
what are the cognitive biases

that we have? And then that
third part is going to go over?

What are the remaining? What are
the remaining six different

kinds of emotional biases we
have, I know you're going to

like this series, this is part
two, we're going to start

talking about cognitive biases.

So we're talking about cognitive
biases. So these are biases that

are faulty decision making. So
it's a fault in our error in our

in our ability to make a
decision properly, it's an error

in the logic itself. So it's not
in anything that's emotional.

It's part of the rational part
of us that we're trying to use

to apply to make rational
decisions. But an error occurs.

So there's, there are total of
nine different of these biases.

And we're going to go through
three of them. So let's go to

the whiteboard. So these are
these are the nine different

biases that there are in the
cognitive space. So today, we're

going to talk just about these
first three. So we're going to

talk about conservatism. We're
going to talk about

confirmation, and we're going to
talk about control. We'll talk

about the other ones in the next
videos. So what is conservatism?

So conservatism is a cognitive
bias. It says that when we get

new info, that we ignore it.

So you get new info, and then we
choose we choose or for whatever

reason, it's ignored. Now, if
you know what the Bayesian

framework is, so Bayesian
framework is saying, well,

there's this many people in
group A, and that may end of

that. There are also this many
in Group B. And we know that

there's this likelihood of these
events occurring, it's actually

a very formal process where we
can actually figure out what any

statistic is based on the sets
that we're using. So it's, as a

new element gets added to that
as a new pool of resources as a

new statistic or something new,
something that should shift our

analysis. We're discord we're
discounting it. So it would be

to not pay attention and not
factor it in. So it's saying

that we're going to maintain
original analysis. And that's

what conservatism is. So it's
taking that idea of, okay, new

information is coming in. But
we've already made that

decision. So you're you're
discounting information only

because you've got, you've
already got the existing the one

in now similar, but different is
this idea of confirmation bias.

And you might have heard of what
confirmation bias. This is

certainly one that I think a lot
of syndicators have, I know that

it's something I have to watch
out for myself. So it's almost

all of us have it. It's very,
very prevalent. I certainly am

very guilty of it as well. But
it is part of something that I

actively try to stomp out and
myself because it is so readily

present there. It's just such a
natural tendency to do. So

confirmation bias says okay,
I've identified this thing as

this thing. Right. And when new
information comes in

let's actually go We'll use it.
So

as new information comes in,
we're getting this this line

here that saying we've got a
coming in. Okay, that's good.

Yep. See a, put that down on our
list. As another reason why.

Okay, we got this second one.
It's another vote for a. Let's

put that down as another reason
why, Oh, we got this thing in as

B. All right, get rid of that.
All right. Okay, another piece

of information is coming in.
It's a great, let's keep it

another piece of information
coming in. This one's B. It

that's an All right. So it's a.
So it's the confirming, right?

So it's taking in all the
information. Unlike

conservatism, it's taking in
that new information. But it's

only accepting that information
that confirms what our original

analysis set. So very, very
prevalent out there, right? I

mean, it's certainly something
that's there, it's really hard

to change our minds. I'm sure
that you see it in, not just in,

in an analysis of a building or
analysis of a, of an

opportunity, or some sort of
offer you're putting together,

but you certainly see it in
politics, or you certainly see

it and mediary certainly see it
and all sorts of things, that we

take this idea, and it doesn't
matter what other ideas are

coming in, we automatically
gravitate naturally, to confirm

our original idea. We don't want
to change, we all have it. When

it comes to putting doing a
syndication or a fund and an

asset management though, new
information is coming in all the

time. And Facts are facts,
right. So I can't ignore the

facts. But I do, right, because
if it's if even if it's, if it's

contradictory to what I already
want it to be, I'm gonna ignore

it nine times out of 10 If I'm
not careful. So that's the

confirmation bias. It's really,
really dangerous, and so

prevalent out there. So think
about that. And then I started

thinking for in your, in your
own life, where do you have

these issues about confirmation
bias? I bet you have them. This

third topic of a cognitive bias
is what we call control bias. So

this is the the the thought
that, that we have more control

over something than we actually
do. So what this is, is, say

you've got let's use real estate
for an example. And say, in this

town, you've got, you know,
you've got 1-234-567-8910 Let's

actually delete this one, and
move it over there. All right,

you've got it you've got 10
minutes you've got about nine

buildings. Here we go. Now 1010
domains, right. Now a new one

pops up this circle, we can see
which one it is. Let's do one

pops up. Well, you've got 10
other buildings, and they're all

surrounding this building. And
so surely you have you, you

know, the city council. Right,
you know, everybody there, you

know, all the tenants in the
area that are going to come you

it's the control is the the
misbelief that you have that you

have control over just this
area. That anything that happens

within here, you have some sort
of leg up on the competition.

Now what this does is it over
develops a concentration in this

area. So the control bias says
okay, it's this. So a lot of

people will will ask me what
what I syndicate when I

syndicate a pro or D or I do I
do a syndication? I'd make it

pretty clear. I don't actually
have an asset type that I stick

due, it's not part of my fit.
It's just not what I do I care

about good deals, right? I have
a whole laundry list of what

kind of fits in my in my fit and
a very clear explanation of it.

But one thing that is not there
is asset type. asset type is not

there. Why? Because of this
illusion of control. So, that's

one where I've left this idea of
control. And I use that as an

example. Because a lot of people
think the other way, they think,

Well, I am a master of mostly
what we see as multifamily. I've

been doing multifamily forever,
it's got I've got, you know, $15

trillion, under, under my
management, I know everything

about it, I've got control over
this, I'm gonna keep doing this,

I am the best there is at this.
And you may be you may have

absolutely some special skill.
But it also is an illusion of

control. Because it also may,
you may make assumptions that on

your risk profile because of
these other 10 buildings that

are here about what's going to
happen here. Because of you have

this belief that you have
control over.

So those are the first three of
our cognitive biases. So

conservatism, confirmation and
control. In the next video,

we're going to go through the
next three, which is

representativeness, framing, and
hindsight. So those are the next

three cognitive biases that
we're going to go through. My

name is Tilden Moschetti. I am a
syndication attorney with the

Moschetti Syndication Law Group.
coming to you with this six part

series also, because I'm an
active syndicator and fund

manager just like you. So I am a
lawyer, I put, we help people

put together 506(b) and 506(c)
offers, but I also put it

together my own deals. And so
with these behavioral

biases that we have, they're
certainly present in me as well.

And I thought it would be useful
to make sure that we conveyed

those to you as well, because
I'm sure you'll find them

useful. And ultimately, what
we're all after as the same

thing, get better returns to our
investors, so they keep

investing with us. We can make
the most amount of money that we

can, they can make the most
amount of money. Everybody's

happy. It's a win win.