10 weeks to COVID19, 1 yr. later [#0]
New Decade, New Virus(es): 1st 70 days pre Covid19 going mainstream
[ Reminiscences of a risk operator - - - - 0.Jan21.21
.individual, non-corporate; not investment advice; may be long/short.
FADE IN: DAWN. CRASHING SURF.
The waves TOSS a BEARDED MAN onto wet sand. He lies there.
A CHILD’S SHOUT makes him LIFT his head to see: a LITTLE BLONDE BOY crouching, back towards us, watching the tide eat a SANDCASTLE. A LITTLE BLONDE GIRL joins the boy.
The Bearded Man tries to call them, but they RUN OFF, FACES UNSEEN. He COLLAPSES
[- - - -] INTRO: Dear kids, I mostly write these so when you reach high school you can have at your disposal a framework for risk, all kinds of +/- risks, with the hope that regardless of future career or mission you become proactively_comfortable with seeking disconfirming information, challenge your own points of view, and build up anti-fragile thinking.
Secondarily, perhaps others will find this useful in their own risk/reward journeys.
This first COVID-19 series is a chronology of the first 10 weeks of #Covid19, the critical 70 days from 1/1/20-3/11/20 when most in the western world, specially in poli-media, corporate ‘comms’, and executive circles doubted the relevance, criticality, speed, and parabolic nature of the biggest global risk event since the 1930s.
Re-formulation, re-writing, and narratives_mutation of history has begun and will accelerate with 1-year anniversary stories and documentaries getting published. Many will be muddied and sometimes fabricated records as we all (embarrassingly) failed to really comprehend its scope, and on this one many that were very ‘public’ or ‘senior’ got it wrong by a long shot. By writing it down I hope you can read in 2026 about what was going through our lives and the risk world in unadulterated form.
These were the pre-mainstream weeks of a global pandemic…
[- - - -] MAIN: In this prologue we begin with the book that had the most impact on me as to how to think through the potential vitality and impact of #Covid19: Narrative Economics by Robert Schiller, the famous Yale professor with deep behavioral economics, real estate, and financial crisis expertise. After a BOD member strongly recommended it, this book became my Christmas 2019 pick. Funny enough in the first 2020 meeting with my boss we realized we both separately read it but had no idea how to apply it - boss a few hours from Wuhan as a plane flies, me thousands of miles away. I found the 7 points interesting, the bitcoin discussion helpful, the famous newspaper beauty contest added to mental model library, but again did not think of an immediate application.
The form of the narrative varies through time and across tellings, but maintains a core contagious element, in the forms that are successful in spreading. Why an element is contagious, when it may even “go viral,” may be hard to understand, unless we reflect carefully on the reason people like to spread the narrative. Mutations in narratives spring up randomly, just as in organisms in evolutionary biology, and when they are contagious, the mutated_narratives_generate_seemingly_unpredictable changes in the economy.
Weeks later Schiller would start showing up all over TV, from Davos, etc. discussing how his research on virus-like narratives impact economics. I expect in 2026 the principles will still hold for you.
1.1.20 - 1.6.20: During the first week in January things were quiet at home having come back from New Year's vacation and school was beginning. I like some traditions to start a year and re-watched “The Future has Always Been Crazier” by Nassim Taleb at the Long Now Foundation in February of 2008, months before the GFC imploded markets. It’s always good to remember that Extremistan and mainstream bell-curve comfort seeking Mediocristan are always near, and while the Q&A goes places I don’t align on, I always chuckle at his mention of random tiny countries.
Just like in January 2008, we all had no idea how fat-tailed this year became (more on this and complexity theory later). Markets were chugging along wanting to go higher, world was paying attention to HK protests and Iran tensions, and many were ready to start a new decade mostly assured that the biggest event of the year would be the US elections. While the new year had stocks rallying, by Friday the VIX reached 16 intraday (+25%), BTC at $7,000 and equities were choppy with the Nasdaq closing at 9,020 and the Dow at 28,600. That first Sunday night of the new decade was an unusual for us "fancy party on the water" - the kind with an rsvp, caterers, and lots of people walking around talking up 2020. When some of us discussed "what the markets are pricing in" it was mostly Mr. Biden vs Mr. Trump. Even with some on-the-ground Asia folks in attendance, there was zero mention of the corona virus.
None.
That was the last week of normalcy.
[END/]
**Invite friends, archives, SUBSCRIBE = erraticnarratives.substack.com **
Pop Lesson:
What? "The concept of narrative. In today’s market, it often isn’t the actual story that matters, but rather the story that people tell about the story" [validea in appendix]
Example Narratives: “marathon running is bad for you” OR “everyone knows that everyone knows that rates are going higher in xyz year” OR "social media enables freedom of expression".
Where? Everywhere. Every channel on tv, media / billboard, every song music sings to us, what your high school newspaper will tell you in 2026 = everywhere.
When? Many argue that the narrative machine has been accelerating (mental time and space) as we have more and more connected devices/networks consuming more of our time. As contrast, one of your grandfathers grew up in a small village with extremely limited access to diverse/rapid narratives - only 1 newspaper was delivered in town, by him + brothers, once a day at dawn - no TV.
Why? Basically we all have told each other stories since the beginning of time and all depend on social circles and influences…this is not new, but they are now digitized, 24x7, in your pocket (in your lenses?) - it shows it on the map in the S-1 (IPO filing) for Facebook that sits on the shelf, right on page 2.
How? The sophistication -sometimes more blatant, sometimes more subtle- keeps growing. In due time you will see how curriculum boards or publishers transfer knowledge. Madison Ave in New York was a megaphone ears ago, similar to sidebar ads and airport posters you see now. These days sophistication requires NLP and other methods to decipher, but that’s for another day.
Now of course some remain stuck in 2000s constructs, but that’s amateur hour for moneyball times and we will revisit this multiple times…
[- - - -] Appendix/Background:
1.LINK} Narrative definition: https://blog.validea.com/five-questions-the-importance-of-narratives-with-ben-hunt/
2.VIDEO} Taleb at LongNow https://longnow.org/seminars/02008/feb/04/the-future-has-always-been-crazier-than-we-thought/
3.YouTube} The Future Has Always Been Crazier Than We Thought | Nassim Nicholas Taleb
4.Facebook S1} https://www.sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm
5.BOOK} Narrative Economics: “a groundbreaking account of how stories help drive economic events―and why financial panics can spread like epidemic viruses.” AMZN}: https://tinyurl.com/y46xn84n
6.VIDEO}: Schiller in home country Lithuania: Narrative Economics + Neuroeconomics with a wide-ranging Q&A including Universal Basic Income (UBI) harking back to lake-digging crews, Bitcoin, and much more
7.TEXT} Schiller January 2017 Presidential address to the NBER:
This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political-economic situation of today, are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future. https://www.nber.org/system/files/working_papers/w23075/w23075.pdf
Background for new readers: not based in Big-5 (SF, NY, London, Singapore, Shanghai) would normally mean being behind of mainstream curve on anything macro, but there were some areas that helped immensely:
Foreigner: born outside of USA means reading local papers/soc media for unblemished reactions
Protect downsides: once a trader, always an investor = everyone gets risk management drilled in early
Global friends: on a team with offices in each continent means sensors on 6 days a week. More importantly having just opened up a new office had high alertness to markets in China, was planning to return in the spring for 3rd time in 10 months, and most importantly had friends on the ground.
To repeat, the most important factor was friends truth-telling globally - on the ground in China, Australia, Brazil, NYC, Switzerland, Tokyo, etc…no one follows scripts on wechat, whatsapp, or signal…
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