System 1 operates swiftly, relying on intuition and emotions. It employs mental shortcuts (heuristics) and leans on readily available information to facilitate rapid decision-making.
System 2 functions at a slower pace, prioritising logic and deliberate thought. It demands effort and focused attention to thoroughly analyse information and engage in careful reasoning.
The investing implications of these systems include:
Biases originating from System 1 can result in suboptimal investment decisions. Kahneman highlights multiple cognitive biases, including overconfidence, framing effects, and loss aversion, that can distort our judgment. These biases may contribute to impulsive decision-making, the pursuit of past successes, and panicking amid market downturns.
Activate System 2 for improved results. Intentionally engaging System 2 can assist in mitigating these biases. Thoughtfully evaluating risk-reward scenarios, incorporating diverse perspectives, and leveraging long-term historical data can contribute to more rational and well-informed investment decisions.
Embracing humility within the financial sphere can yield tangible advantages for your finances. Kahneman outlines several ways in which adopting a humble approach can result in cost savings. Some of his famous quotes that underline some necessary investing lessons include:
“The best we can do is a compromise: Learn to recognise situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high.”
This statement encapsulates the essence of navigating life with an acknowledgment of both our cognitive strengths and limitations. Recognising that errors are an inherent part of the human experience marks a crucial initial stride toward becoming a more insightful and efficient individual.
Moreover, comprehending the vulnerabilities of our minds, such as overconfidence, anchoring, and loss aversion, empowers us to steer clear of succumbing to these pitfalls in critical situations. Additionally, the significance of context cannot be overlooked. Identifying circumstances characterised by stress, time constraints, or limited information serves as a signal for heightened awareness and a shift toward slower, more deliberate decision-making.
Drawing lessons from past missteps is equally essential. Reflecting on our previous errors and discerning the contributing factors provides us with valuable insights, enabling us to navigate similar situations more adeptly in the future.
“There is general agreement among researchers that nearly all stock pickers, whether they know it or not – and few of them do – are playing a game of chance.“
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Kahneman harbours skepticism regarding the consistent ability of individual investors to outperform the market. This skepticism is grounded in various pivotal factors.
Market efficiency, as proposed by the Efficient Markets Hypothesis, asserts that all relevant information is already incorporated into stock prices. This poses a formidable challenge to consistently forecast future price movements and to consistently outperform the market through attempts to ‘outsmart’ it. Over the last five decades, research overwhelmingly aligns with this hypothesis. Numerous studies indicate that a significant majority of active mutual funds exhibit underperformance when accounting for fees and expenses, implying that their endeavours in stock selection do not consistently contribute value.
Investors are prone to a range of cognitive biases such as overconfidence, loss aversion, and anchoring, which can result in irrational decisions and unfavourable investment outcomes. These biases have the potential to skew our evaluations of risk and reward, resulting in behaviours like chasing previous winners, prematurely selling successful investments, and persistently holding onto underperforming assets.
Seasoned investors equipped with superior information, resources, and analytical tools may hold an advantage over individual investors. This dynamic can establish an unequal playing field, amplifying the challenge of consistently outperforming the market.
“The research suggests a surprising conclusion: to maximize predictive accuracy, final decisions should be left to formulas, especially in low-validity environments.“
At the core of Kahneman’s doubtfulness regarding the consistent outperformance of individual investors in the market lies his characterisation of stock picking as a ‘low-validity environment’.
This feeling of unsurety arises because predicting future outcomes in low-validity environments is inherently challenging. The factors influencing stock prices are intricate and varied, often involving unpredictable news, market psychology, and external events. Identifying consistently profitable investment opportunities becomes a significant challenge under such circumstances.
Moreover, an inconsistent investing process in this environment further compounds the difficulty. Shifting between different strategies, pursuing hot tips, or making emotionally driven decisions based on short-term market fluctuations can intensify the inherent unpredictability and contribute to suboptimal performance.
In low-validity environments, investors should recognise the crucial role of consistency. Adhering to a clearly defined, objective investment process grounded in sound principles and long-term goals serves to mitigate the impact of emotions and biases. This entails aspects such as asset allocation, diversification, rebalancing, and adhering to disciplined entry and exit points. Through minimising impulsive decisions and responding to short-term fluctuations, consistency enhances the likelihood of navigating the inherent uncertainty of the market and attaining long-term success.
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“Success = talent + luck; Great Success = a little more talent + a lot of luck.“
This formula underscores the importance of luck in achieving success, especially in the context of investing. It emphasises the substantial influence of chance events on outcomes, even for individuals possessing considerable skill.
Acknowledging the role of luck can cultivate humility, promote caution, and foster realistic expectations for future performance. This awareness can ultimately enhance the prospects of sustainable long-term success by combining skillful decision-making with a prudent acknowledgment of the unpredictable nature of markets. Disregarding the role of chance may result in overconfidence, risky behaviour, and underestimating the potential impact of unforeseen events in the future.
Despite the substantial role luck plays, it remains crucial to cultivate skills. Foundational elements such as investing knowledge, disciplined behaviour, and sound strategies provide the basis for navigating market fluctuations and making informed decisions. It is essential to concentrate on what can be controlled. Instead of fixating on luck, investors should prioritise managing their emotions, controlling risk, and implementing thoroughly researched investment strategies.
The author’s viewpoint on luck serves as a valuable reminder for investors to uphold humility, manage expectations, and approach the market with a balanced understanding that incorporates both skill and the inherent element of chance.
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Although Kahneman’s book may not adhere to the conventional format of a typical investing guide with specific strategies or financial advice, it undeniably provides valuable insights for investors. Outperforming the market proves to be a formidable challenge, and the majority of investors find it beyond their capability. Nevertheless, delving into this book imparts investors with crucial perspectives on investing, addressing aspects such as risks, luck, and the essential talent required for successful wealth creation in the stock market.
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Jackson Walker represented Third Coast Bank, as administrative agent and lead arranger, in connection with a senior secured credit facility for AccessParks, a leading provider of broadband services to outdoor hospitality and manufactured housing communities across the United States.
The transaction involved a delayed draw term loan facility with total commitments of up to $25 million, including incremental capacity, and will support AccessParks’ continued growth, strategic acquisitions, and refinancing of existing indebtedness.
AccessParks is a portfolio company of M/C Partners, a private equity firm focused on digital infrastructure and technology‑enabled services. The company delivers broadband and managed Wi‑Fi solutions to national parks, RV parks, and manufactured housing communities nationwide
The Jackson Walker team was led by debt finance partner Sarah Christian and associates Brooke Yarborough and Chiara Natale. The Third Coast Bank team was led by Elizabeth Falco, Tyler Shelton, Shai Thakkar, and Donna Schwark.
Meet JW
Since 1887, Jackson Walker has represented some of the most influential companies and business leaders in the world. Today, we remain firmly rooted in Texas while serving clients around the globe. With more than 500 attorneys, we are the largest law firm in the state. Jackson Walker consistently ranks among leading firms in Chambers and Partners, Best Law Firms® by Best Lawyers, and the BTI Client Service A-Team. To explore Jackson Walker’s experience advising lenders, sponsors, and growth‑stage companies in commercial finance transactions supporting the development and expansion of fiber broadband and digital infrastructure networks, visit the Finance & Banking practice page.
The Eagle River/Chugiak Parks and Recreation offices on July 9, 2021 in Eagle River. (Loren Holmes / ADN)
Municipal inspectors looking into accounting practices at a popular recreation facility in Eagle River found “deficiencies in recordkeeping and numerous inconsistencies within their financial records” during recent years.
The Anchorage Police Department confirmed there is an investigation connected with the facility, but declined to provide further details, citing the ongoing nature of the case.
Anchorage’s Office of Internal Audit released its report on the Harry J. McDonald Memorial Center on Dec. 31, 2025.
The facility, often referred to as the Mac Center, is owned by the Municipality of Anchorage, but run by a nonprofit, the Fire Lake Arena Management Inc., under the terms of a contract. Originally built in 1983, the McDonald Center has an Olympic-size ice rink, indoor walking track and large turf field, as well as meeting rooms.
The municipality routinely audits various departments, offices and facilities as part of its oversight of public resources. A previous audit of the McDonald Center in 2017 reported instances of financial mismanagement and accounting errors. A 2023 audit of the same facility found that the contract between the municipality and the nonprofit tasked with running it had lapsed, and as such, investigators couldn’t determine whether or not its terms were being observed.
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Even before the latest audit began in 2025, Yoshiko Flanagan, the facility’s current general manager, said she alerted the city about “abuses” she spotted when she began working there as a part-time bookkeeper at the end of 2023.
“Honestly, when I first came in, it was a mess,” Flanagan said in an interview last week. “Lotta red flags.”
Upon raising the issue to Mike Braniff, then the head of the Department of Parks and Recreation, staff immediately took it seriously, Flanagan said.
When city inspectors looked into the facility’s financial records, they found a number of irregularities, shoddy practices and probable misconduct that have all made a comprehensive audit of recent fiscal years impossible, according to the report.
“When we started our review, we were provided the financial records in several file boxes,” wrote auditor Kevin Song in the final report. Files were mislabeled, missing or incomplete for a time period stretching from 2021 to 2025, he noted.
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There were other problematic findings. Auditors were told by current staff that the former head of the McDonald Center “had privately re-registered the accounting system under their personal account, preventing the current management access to records prior to 2024.”
“The Center’s management informed us of a pending investigation involving a former employee related to alleged misappropriation of resources. The allegations include irregularities in payroll, corporate card expenditures, misuse of funds from facility-hosted events, and reregistering the financial system under their own personal account to manipulate data. A police report was filed, and the investigation is ongoing,” Song wrote in the audit.
According to figures cited in the audit and submitted to police, “the total potential financial impact was estimated to be $18,822.64 when it was reported; however, the exact amount remains unconfirmed pending the outcome of the investigation.”
In response to questions about the investigation, APD spokesperson Gina Romero declined to name the former employee, given that charges have not been filed and the case is ongoing.
One section of the audit details bonuses being paid out to employees even as the McDonald Center was operating in the red.
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“In 2024, $8,600 in bonuses were paid to full-time employees despite reporting $90,025.41 over the salary/wage budget and ending the year at a loss of $67,687.87,” according to the audit. “In 2023, the total amount of bonuses was $10,100.”
Elsewhere, investigators found that expenses had been filed for things never approved by overseers on the Fire Lake Arena Management Inc. board in the center’s submitted budgets, including $5,893 one year for “vacation expenses for employees” and $7,000 in “moving expenses.”
“Our review found no justification provided for such expenses,” auditors wrote.
According to Flanagan, under her tenure as general manager at the facility, those sloppy accounting practices have since been replaced with standard industry measures bringing the facility into compliance with its contract terms.
“When I did come in, yes, it was very mom-and-pop, (revenue was) handled very irregularly,” she said.
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She attributes some of the issues to the COVID-19 pandemic: The McDonald Center was navigating closures, loss of institutional knowledge among longtime staff and eventually an expansion in services quickly outgrew the old ways of doing things, creating opportunities for misconduct and mismanagement.
“There’s been a big turnaround,” Flanagan said, noting that after in 2024, under the previous general manager, the center ended its year with a deficit around $66,000. Last year, during which she was in charge, the McDonald Center was solidly above its revenue target.
A separate 2021 audit reported a “culture of excess” in procurement and spending practices at the Eagle River/Chugiak Parks and Recreation Division, a distinct entity under the municipality’s larger Parks and Rec Department that technically has oversight over the McDonald Center.
OAKLAND, Calif., Feb. 23, 2026 /PRNewswire/ — Blue Shield of California today announced the appointment of Kevin Jacobsen, former Chief Financial Officer (CFO) of The Clorox Company, to the nonprofit health plan’s Board of Directors. Jacobsen brings more than three decades of financial and operational leadership experience across global organizations.
During his seven years as CFO at Clorox, he oversaw financial reporting and controls, enterprise risk management, tax, treasury, internal audit, investor relations, global business services, and mergers and acquisitions.
Blue Shield of California appoints veteran finance leader
Kevin Jacobsen to its Board of Directors
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“Kevin is a deeply respected financial leader with firsthand experience guiding organizations through major operational and digital transformation,” said Pamela DeCoste, Board Chair for Blue Shield of California. “His ability to navigate complexity while keeping a long‑term view will be invaluable to Blue Shield of California as we continue to modernize healthcare delivery and further strengthen our goal to create a healthcare system that’s worthy of our family and friends and sustainably affordable.”
As a member of Clorox’s executive team, Jacobsen was a coarchitect of the company’s multiyear IGNITE transformation strategy, focused on strengthening operations, advancing digital capabilities, evolving the portfolio and significantly expanding innovation. As part of this role, Kevin oversaw the implementation of Clorox’s global ERP financial reporting and controls and financial planning modules, enhancing enterprise-wide processes and operational efficiency. He also led the creation of a Global Business Services organization designed to deliver productivity savings while improving business outcomes through advanced technology.
Jacobsen brings extensive board and governance experience. In addition to Blue Shield of California’s Board of Directors, he serves on the board of Avista Corporation, where he is a member of the Audit, Operations and Technology Committees. He is a Qualified Financial Expert and has served in leadership roles including Chair of the Board of the Clorox Captive Insurance Company from 2021 to 2025. He was also a prior member of the Economic Advisory Council of the San Francisco Federal Reserve from 2022 through 2024.
“Blue Shield’s mission and values resonate deeply with me, particularly its commitment to affordability, transparency and improving the healthcare system for all Californians,” said Jacobsen. “I’m honored to join the Blue Shield of California Board of Directors, and I look forward to contributing my experience to support the nonprofit health plan’s mission to provide access to quality health care that’s sustainably affordable for everyone.”
Jacobsen holds an MBA from the University of Rochester, completed the Wharton Executive Education Program and earned a finance degree from the University of California, Riverside.
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About Blue Shield of California Blue Shield of California strives to create a healthcare system worthy of its family and friends that is sustainably affordable. The health plan is a taxpaying, nonprofit, independent member of the Blue Shield Association with 6 million members, over 6,500 employees and more than $27 billion in annual revenue. Founded in 1939 in San Francisco and now headquartered in Oakland, Blue Shield of California and its affiliates provide health, dental, vision, Medicaid and Medicare healthcare service plans in California. The company has contributed more than $60 million to the Blue Shield of California Foundation in the last three years to have an impact on California communities. For more news about Blue Shield of California, please visit news.blueshieldca.com. Or follow us on LinkedIn or Facebook.
For more news about Blue Shield of California, please visit news.blueshieldca.com. Or follow us on LinkedIn or Facebook.
