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

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

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

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

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

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first video to go through what
is behavioral finance? The

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

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itself is going to go through
what are the cognitive biases

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

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What are the remaining? What are
the remaining six different

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

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

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talking about cognitive biases.

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

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

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

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

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

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

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

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

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the whiteboard. So these are
these are the nine different

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

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

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talk about conservatism. We're
going to talk about

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

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

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

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new info, that we ignore it.

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

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

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framework is, so Bayesian
framework is saying, well,

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

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

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

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

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

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

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new statistic or something new,
something that should shift our

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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this thing. Right. And when new
information comes in

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

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

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

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

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

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

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

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

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

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

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So it's taking in all the
information. Unlike

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

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only accepting that information
that confirms what our original

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

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

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

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

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

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

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

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

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coming in, we automatically
gravitate naturally, to confirm

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

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

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asset management though, new
information is coming in all the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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have control over just this
area. That anything that happens

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

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

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

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people will will ask me what
what I syndicate when I

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

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

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

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

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

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

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

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

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

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

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

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trillion, under, under my
management, I know everything

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

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

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

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

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your risk profile because of
these other 10 buildings that

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

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this belief that you have
control over.

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

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conservatism, confirmation and
control. In the next video,

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

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

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

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

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

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

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

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

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together my own deals. And so
with these behavioral

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

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

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

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

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

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

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

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happy. It's a win win.