Time v. Human Nature
February 2, 2026
This essay continues an examination of how capital behaves and misbehaves under long time horizons, and what that leaves behind.
In the previous essay, I explored why generational investing fails at the company level and why companies themselves cannot be the unit of generational investing. This essay moves one layer up the stack: even when capital is long-term by mandate, time often fails once capital is delegated.
So you can’t invest in generational companies because there are no generational companies. Long-term allocations require systems. But long-term allocators have systems. They have processes, smart individuals, investment committees. So where is the mismatch?
Nearly all long-term capital is deployed under delegation. Delegated capital must continually earn the authority it has been given, operating under evaluation cycles far shorter than the timelines required for many outcomes to resolve. This structural constraint supersedes conviction and competence.
Time is an asset. In most cases, it’s treated like one as well. But when capital is monitored continuously while outcomes materialize discontinuously, time behaves like a constraint. That mismatch lies at the crux of paradoxical investment behavior.
Thesis 1: Time breaks under delegation
Time is often described as the great advantage of long-term capital. The patient investor wins. The twitchy investor pays. That’s true in theory. In practice, time behaves very differently under delegation.
Most capital is not deployed by its owners. It is deployed by agents who do not control the clock that matters. They operate under evaluation cycles that are far shorter than the time required for investments deployed for long-term value to be properly evaluated.
Time is only an advantage if you’re allowed to wait. But delegated decision-makers face consequences long before investments resolve, despite institutional patience and conviction. Career risk arrives early. Benchmarks are observed constantly. Relative performance is visible immediately. Interim marks are treated as signals. Under these conditions, waiting is not neutral. Waiting becomes risky.
This mismatch is critical. A decision can be correct *and* indefensible for years. Under delegation, that’s often either impossible or fatal. For the allocators with the ability to practice true patience, that mismatch is where alpha lives. Not in the novelty of an idea, but the ability to execute it.
Take corporate short-termism for example. Corporate decay is usually explained as a failure of management. Bad strategy. Missed technology. Cultural erosion. A once-great company that stopped innovating and paid the price. These explanations are comforting because they preserve the idea that with better people or more foresight, the outcome could have been different. But they’re mostly wrong.
Corporate mortality is not primarily a failure of execution or imagination. It’s predicated on how capital within the organization is evaluated. The failure is structural. CEOs pay packages should incentivize at least medium-term growth, but companies still report quarterly. Large, long-dated investments, like today’s AI capex buildout, are punished well before their outcomes can be known.
Similarly, investment short-termism is usually framed as a failure of investor temperament. If only investors were more patient. If only boards were more enlightened. If only managers resisted the noise.
The problem is that time stops working once delegated capital is evaluated out of sync with that same capital’s expected outcomes. Short-termism is a rational response to incentive misalignment.
The central opportunity for long-term investors lies in the gap between idea and execution of “long-term” investors. Most capital lives under constant judgement, and the human need for action becomes particularly acute in periods of uncertainty.
There are two very different forms of accountability:
Outcome accountability evaluates decisions after uncertainty resolves. It tolerates volatility, delay, and temporary deviation. It requires loss tolerance and patience.
Justification accountability evaluates decisions continuously. It requires narrative coherence at all times. Temporary deviation is penalized. Looking wrong is treated as being wrong.
Most institutions claim the first but practice the second. The institutions that can practice the first will succeed more so because and exactly where the second fails. Where time breaks.
What distinguishes institutions that preserve outcome accountability from those that don’t is not insight, but how evaluation is structured. Institutions that succeed tend to separate decision-making from continuous justification. Continuous monitoring is often mistaken for discipline, but it can actively degrade judgment. Whether performance is observed daily or through rolling three-year windows, the effect is the same: evaluation never resolves. There is no moment when uncertainty collapses and accountability becomes final. Only perpetual defense.
Respect the bets that require silence, patience, and temporary incoherence. Know the underlying motions that drive your performance - the pipeline, clinical execution, technical progress. Investors will say they do this. That they truly understand their investments. They focus on process. And yet failure persists. Capital is for taking risk, but it cannot take indefensible risk.
Under those conditions, capital avoids positions that cannot be defended in real time, even when expected value is positive. Don’t punish convexity before it arrives.
Consider a biotech company funded through its next major readout. The science is sound. The data is trending positively. The next event is binary but well understood. Fundamentally, everything for a coherent thesis is tracking. But the stock bleeds.
When meaningful events are far out, shorts press and long investors step out. Investors sitting on the stock are forced to justify in real time. But justify what? The market isn’t saying that the company will fail. It’s just saying that waiting is expensive. And it knows it.
There are many examples of companies that have gone through this period. Look at Oruka Therapeutics. Started 2025 at $20.81. The next data read out wasn’t slated until September 2025. And yet, the stock plummeted. In April, it hit $5.49; down 74% with no new data. The first half of 2025 was a hard time for biotech writ large. But the XBI was only down 24% during that same period.
Many of the best biotech investors hesitate to engage a company during these periods for exactly this reason. The absolute best maintain discipline. When the stock is being punished and their positions are falling in value, they add.
Lo and behold, Oruka did report out in September 2025 with excellent results. The share price ended the year at $30.31. A company that was once down 74% on the year ended up 45% on the year, or up 552% from the April low.
This opportunity repeats everywhere incentives pervert action; particularly in the longest duration assets (as I’ve written about in The Quantum Market Test and Cathie’s Ark).
The distance between “long-term” investors and actual long-term investors is not in ideas or intellect. It is in the systems.
Incentives are fragile and easily break under delegation. And because nearly all capital is delegated capital, patience fails in predictable ways. That leaves a meaningful opportunity. Institutions that can survive delayed validation profit from short-termism and failed incentives. These institutions don’t just invest differently; they operate in a market with fewer competitors.
That’s where long-term advantage actually comes from.
