“That’s it?! I’m buying more.”
On borrowed conviction, the backfire effect, and a question you should probably ask yourself.
A colleague has been talking about a company called AST SpaceMobile for months.
Space-based cellular broadband. Direct-to-device. Governments involved. Verizon. 50+ mobile network operators. Nearly 3 billion potential subscribers. A monopolistic position in the making. 20-30x by 2030.
He speaks about it with the fluency of someone who has done serious work.
I recognize that fluency. I have had it myself, on other ideas, at other times.
The confidence that comes from absorbing a compelling thesis is almost indistinguishable from the confidence that comes from actually doing the work.
So I asked him four questions.
What is the current dilution tempo? What does the cash burn look like relative to the cash position? What is SBC as a percentage of revenue? And — specifically — why do the short sellers have it wrong?
Silence.
Not approximately. Not directionally. Not at all.
He had the destination. He did not have any of the map.
So I went and found the answers myself.
Around $37 billion market cap. $71 million in revenue. $342 million net loss in 2025. $363 million in operating cash burn in a single quarter. Multiple senior executives — President, CFO, COO, CTO — selling hundreds of thousands of shares in the months prior, with no meaningful insider buying on the other side.
And a race against SpaceX, which has more capital, more launches, and more satellites already in orbit.
The short thesis is not a bombshell. There is no fraud allegation, no regulatory smoking gun. It is simply: the valuation is enormous, the losses are real, the execution risk is significant, and the entire thesis requires a sequence of engineering milestones all going right simultaneously against a better-capitalised competitor.
I presented this to my colleague.
His response:
“That’s it?! I’m buying more.”
And I have been thinking about that response since.
Not as a judgment on him, but as a mirror.
Because… where do I show the same kind of behavior?
When contradicting evidence arrives and we respond by doubling down, something specific is happening. We are not evaluating information. Instead we are more likely to defend the story. The short sellers become confirmation of a squeeze opportunity, the losses become the price of a revolution, the insider selling becomes noise.
Every piece of contrary evidence gets reprocessed as support.
This is the backfire effect. Contradicting evidence does not update the model. It reinforces it.
And the reason it happens is not stupidity. It happens because we outsourced the work somewhere along the way, and absorbed a conclusion from someone we trust, without acquiring the reasoning that produced it. When that conclusion is challenged, we have nothing to defend it with except the conclusion itself.
We have all done this. The question is whether we notice it when we do.
I know my own version.
For a period, my portfolio looked different every week. I would spend days building conviction in a company. Reading the annual reports, running the numbers, convincing myself I understood the moat, and then sell it two weeks later because the price moved against me, or because I read something unsettling, or simply because doubt crept in overnight.
I bought companies I loved on a Tuesday and questioned on a Thursday. I called it being responsive. It was something else.
It was the same problem in a different costume. My colleague holds a narrative too tightly to update it. I held my own conclusions too loosely to trust them. Both of us, for the same underlying reason: we had not done enough of the real work to know, with genuine conviction, what we owned and why.
One person doubles down, the other keeps rotating. But they share a common origin: borrowed confidence. My colleague borrowed his from a few voices on X. I borrowed mine from the last thing I read that was more compelling than my own reasoning.
Real conviction is the kind that survives a bad week, a negative article, and a price drop. It does not come from a thesis you absorbed. It comes from work you cannot hand to someone else.
Which brings me back to the question I started with.
What my colleague has is not an investment thesis. It is a story with a price target attached.
And I do think the story is genuinely compelling.
Space connectivity is real. The technology works. The contracts are real. It may even be that the 20-30x call proves correct. I cannot rule that out, and I want to be honest about that.
But here is what I do know: he cannot tell you why the short sellers are wrong. He cannot tell you what happens to the thesis if the next launch fails. He cannot tell you at what cash burn rate the dilution becomes thesis-breaking rather than manageable.
So when the story hits turbulence (and all stories do) there will be no framework for evaluating whether the thesis is broken or merely delayed. The result will be a decision made on feeling, at exactly the moment when feeling is least reliable.
Buffett said it plainly: “Risk comes from not knowing what you’re doing.”
Not from volatility. Not from short sellers. Not from macro.
From not knowing.
The most dangerous form of not knowing is not knowing that you do not know. And the “that’s it?!” response is its signature, because someone who genuinely understood the risk would not dismiss the short thesis in four words. They would engage with it. Even if they ultimately disagreed.
I am not in ASTS. Not because I am certain it fails, but because I cannot get inside the circle of competence fast enough to evaluate whether the execution risk is adequately priced at this valuation. The framework I use says: when you cannot answer that question, the correct response is to pass.
There are businesses I can evaluate. There are businesses whose earnings in ten years I can describe with something approaching confidence. A pre-profit satellite constellation racing SpaceX to commercial scale is not one of them.
My colleague may make a lot of money. That outcome is genuinely possible. But a good outcome does not validate the process that produced it. The nut does not prove the squirrel could see.
The question I try to ask now, before committing capital to anything, including the ideas I am most excited about:
Can I explain, in my own words, why the bears are wrong? Not what the bulls say about the bears. What I think, having actually read the short thesis.
If I cannot do that, I am not really holding a position. I am holding someone else’s research and conviction.
That distinction is worth sitting with.
Especially on the ideas that feel most certain.
Great article!