Reminiscences of a risk operator: 4_2.26.2021 // 11am Singapore // 1,550 words, 6mins.
—SLOANE (48) stares at us contemptuously. Articulate, quick-witted and direct:
ELIZABETH: Lobbying is_about_foresight. About anticipating your opponent’s moves and devising countermeasures. The winner plots one step ahead of the opposition, and plays her trump card just after they play theirs.
Dr. Market: Risk management is_about_foresight. About anticipating market dislocations and devising countermeasures. The winners plot one step ahead of the opposition, and play their trump cards just after they play theirs
Money is about foresight. About anticipating value transfer …
Marketing is about foresight. About anticipating consumer wants…
Medicine is about foresight. About anticipating malady spread…
Independent thinking is about foresight. About anticipating contrary views…
Merchandising is about foresight. About anticipating value chain arbs…
Media is about foresight. About anticipating history (re?)creation…
Management is about foresight. About anticipating execution…
…and devising countermeasures. The winners plot one step ahead of the opposition, and play their trump cards just after they play theirs
][INTRO: Dear high-schoolers, systems are structures all around us. Parents trust schools, risk mangers trust models (?), traders trust exchanges, employees trust bosses, patients trust doctors...all basis systems. They are everywhere and without them you get into Venezuela/Nigeria environments or certain un-named US cities. We cannot fit in "thinking" and "systems" as it's too much so this one will just be on Systems. Have been revisiting Advanced Placement (AP) curriculums and will begin to formulate these letters into structure that will fit (and yes full-site is coming).
Instead of recommending what to do about each, will provide observations ex-solution:
Market systems - at no point since 70s (Nixon/gold?) have the monetary debates reached this level at the same time as market highs - the elephants of negative rate yields, money printing, crypto hedging, inflation fears are at an 11. JPow this week did not help (we got tools$!) and straight out of Seinfeld then fedwire/ach went down.
—Below is Uncle Warren’s annual letter the last time we were in “toppy markets”:
I would wager you a very significant sum that fewer than 10 of the 200 most profitable companies in 2000 will attain 15% annual growth in earnings-per-share over the next 20 years. TEXT} https://www.berkshirehathaway.com/2000ar/2000ar.pdf
Covid info system - what is the Covid19 system? Vaccines? Treatments? Saw something about “triple masks is where it’s at”? // now there are endless books but in spring ‘20 there were a few, non-doctor, knowledge detectives that went deep:
—Tomas Pueyo authored one of most clear series w/millions of readers and many translations: TEXT} https://tomaspueyo.medium.com/coronavirus-the-hammer-and-the-dance-be9337092b56
—Scott Warner, a SAAS CEO, writing clearly, also reached millions on medium.
Media systems - video, audio, print, comms, and text were completely upended by Covid19. What got us, and many more, on twitter, wechat, whatsapp, signal during the pandemic was the speed, diversity, global nature, contrary thinking (what college used to be) on that medium vs. legacy. What was it like? It was hyper-fast cycles with Local fighting Global (per our last letter - Wuhan explodes, Italy starts drowning, while SanFran is having a laugh).
There were plenty of dark media moments but some hopeful as well - linked the one that I remember most vividly from then of a Dad take with his kids:
The Great Realisation (Tomfoolery): YOUTUBE
Thinking systems: these are general, but certainly apply to covid/finance.
—The Great Mental Models: Much of the human social world is said to be fat-tailed rather than normally distributed. LINK} https://fs.blog/mental-models/
—But how you apply mental models, in the face of adult peer-pressure, matters.
][MAIN: Back in spring 2020, we got the following by a certain Patek P.:
Patek—You mean to tell me you don’t sit in your corner office anymore? What? A closed door will provide FOCUS and keep people (employees) away.
—Q: humm…we have heard of the 90s status/power systems emanating from physical separation, expensive watches, fax machines, fancy restaurants, etc — however since it’s 2_0_2_0 this does not compute. More importantly, immersing directly in the middle of a diverse open floor gives you a pulse that can never be replicated (which is_a problem during covid distributed workforce).
“Patek”—The reality is you all are not in China and YOU aren’t a doctor
—Q: humm…we have heard of the dilbert exec/power systems emanating from team silos, expensive consultants, corp comms machines, mass media followership, etc —however since it’s 2_0_2_0 this does not compute. More importantly, immersing directly in the middle of global markets/media gives you a pulse that can never be replicated (which is_a problem during covid distributed kool-aid).
Well Sir Patek, let’s also review headlines from doctors then:
1) Politico: Feb 4, 2020 WHO chief Tedros Adhanom Ghebreyesus said Tuesday that LINK} widespread travel bans and restrictions weren’t needed to stop the outbreak and could "have the effect of increasing fear and stigma, with little public health benefit.
2) USTODAY: Feb 17 2020, Dr. Fauci LINK} in the United States, there is absolutely no reason whatsoever to wear a mask”
And CONTRAST those to the deep, non-local, wonderful, skin-in-the-game world:
*Click to enlarge—>
In the intro there were six “M” and one “I”, for Independent thinking is rare.
The I = paying attention and sniffing divergences. These charts lay out what curious, divergence-seeking, free capitalists were publishing on screens:
1) Hunt for security fully-on: 10Yr UST % rate = DOWN (price UP)
2) Scared bidding up of Vol derived from 500-equity index: VIX = UP
3) Major cruise (levered to travel/disposable $ globally) crashing: Stock = DOWN
4) Tech-NASDAQ FAANGING into spring: Index = BLAH, BLAH
*Did not post UST30 year chart, but on Friday 2/21/20 it was crammed to 1.89%, a massive alarm bell ringing into levels never seen before, under 2%!
Now, this is all super basic McKinsey-Junior-EM 2x2 on free yahoo!finance slide, speaking VOLUMES. You know how loud?
There were sophisticated folks with - “I don’t know” stances stating —> something smells wrong:
In Feb of ‘20 any-and-all with free tools (by 2026 you will have more) could have said: Do I trust Politico? Wash DC? USA Today? Frankfurt? Stale corporate homepages?
What if people that are senior, more experienced, with biggie comp$ don’t agree?
Well Patek also had a friend w/a gem when the China travel bans were being debated:
In ‘18, US had 40K people die due to gunshot wounds (10x Deutschland, allowing for population differences). If so, then China should be issuing a warning to their citizens not to travel to the US. [ie ‘Chinese may die from US gunshot wounds’ - yikes!]
But wait, are we statisticians? doctors? logicians? travel consultants?
I’m not in China! I’m not a Doctor! WHO am I?
][WHO ARE YOU? The spencerferryheidricks say on average post-MBAs will move 3-4 firms by 10 year grad anniversary and many employees have some change every 1.5 years (role, geo, boss, team) —> it’s endless change with NO regard for titles or geo.
So as we prepare for Saturday’s once-a-year topping to accompany pancakes, ie the annual Berkshire Hathaway letter mic-drop, we ask:
Are Warren and Charlie: investors? traders? holdco execs? SNOWflakes, philosophers? risk adjusters? dairy queens? authors? speakers? bridge players? mid-american-energy barons? business doctors? oracles?
Last time we were in Omaha having a great steak and then walking into the arena at 7am Saturday, we shareholders were ALL hoping to hear a spectrum of views on a wide range of topics, basis relentless curiosity, way beyond “shareholder/ director meeting”.
So…if at any point in your bright future some gal/guy from a closed door office, with fancy time and title, tries to tell YOU your reality, sing it loud and clear:
WHO are you?
WHO, WHo, Who, who?
][WRAP-UP: Junior year we evacuated our huge (top 5 most attendees in country) high-school due to a bomb threat. Thousands walked across the street to sit under a blazing sun until “those in charge, closer to the scene” said: all clear come back. It hadn’t been_that_long, but all trudged back after baking while debating rage-against-the-machine and/or Tolstoy. But it hadn’t been_that_long, so how had they checked for threats so fast? Once back in class the teacher let me to go to the restroom and randomly, without pre-thinking, looked down into the courtyard to see multiple agents with dogs still sniffing behind columns and garbage cans.
Those dogs are present when looking at any chart, number$, 2x2s, and for sure into Jan/Feb. 2020. The markets were blinking; more importantly friends were blinking bright red:
Stuck in Tokyo, need flight back to LGA/Stuck in Bali, can’t get flights back to Shanghai/Wife no longer comfortable so we took kids and are headed back west asap.
Suggestion?
Nourish your own mental dogs.
//END = erraticnarratives.substack.com
WHO ARE YOU! Pick your tune: ‘79 London (love ‘79) OR Live8 ‘05—
][ @ErraticNars LINKS} #0 1 yr later [] #1 It was inevitable [] #2 JLo’sSuperShakiraBowl [] #3 My Word is My Bond
//Disclaim: Individual, non-corporate; not investment advice; may be long/short\\
][APPENDIX Curriculum: Erratic Nars are late-2020s AP Finance letters—
2x2 = 4 pictures I am ruminating on as of Feb ‘21…
*HFSP = have.fun.staying.poor
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