Only the Paranoid Survive” -Andy Grove

Perhaps in no other week will the name of this newsletter be more apt. I started following the coronavirus situation in January and mentioned it in this newsletter two weeks ago. I lead that newsletter with a line from Vladimir Lenin: “There are decades where nothing happens, and there are weeks where decades happen.”

As it turned out, I was at least two weeks early on that. This week had felt like a decade. It is the most volatile week in the stock market since 2008. The Dow Jones Index suffered its biggest single-day decline since 1987. Policy-makers seem to have finally started to get the message.

Let us hope that the figures in places of power act accordingly and appropriate measures around the world ramp up.

I can only describe my lived experience of this week as surreal.

Since 2013, I have been writing about antifragility. I have written about complex systems and how they can result in fat tails – large and unpredictable black swan events. I have written about the tradeoff between robustness and efficiency, and how many systems which look efficient are, in fact, hiding risk when they should worry about being more ergodic. I am that crazy guy at parties that has a bug out bag.

Two months ago I talked about a new antifragile investing strategy I was working on and a month ago I wrote about how to create a portfolio that could benefit from volatility. (I am planning to get launch the project in the next few weeks – if you are an investor interested in learning more about protecting your portfolio from tail risk and volatility like we’ve seen in the last few weeks, you can learn more about our strategy on how to create a robust portfolio here or just reply to this email and I can send you more info).

This is all to say that weeks like this one are something that I have spent a fair amount of time thinking about. By no means does that suggest I am any more emotionally nor psychologically prepared than anyone else. As I have learned, I am not. It has been as surreal for me as for everyone else.

I hope this doesn’t come across as too melodramatic and I do not mean to suggest that this is some world-ending event or that anyone should panic. This too shall pass.

However, there will be at least a sub-section in the history books for this. There is a real possibility of many people’s lives being hurt in a meaningful way. The health risk to the elderly and those with complicated conditions is real. The economic impact will be felt by many who don’t have the luxury of working from home or who just saw their retirements pushed out another five years or who depend on a now-fragmented complex, global supply chain for essential medications.

For those people still saying “this is overblown,” I urge you to consider the following:

• The consequence of being wrong is very bad
• The cost of insuring against the risk is relatively low (wash your hands, stop touching your face, social distancing, buy a couple of extra weeks of food and water to keep at home if you need to self-quarantine, work from home if possible).

I said this two weeks ago and nothing in the calculus has changed (or, if anything, the consequences of being wrong look equally bad and the probability more likely).

This does not mean panic is in order, but an appropriate response is.

If you’re trying to decide what is actually actionable, I compiled a list of best practices and resources at the bottom of my  Coronavirus Primer which hopefully gives a starting point.

TL;DR – The most important outcome is lowering the total number of people needing access to healthcare at any one time. If hospitals are not overwhelmed and can provide adequate care to all who need it, the situations will be much better for everyone. To protect yourself and others, avoid large events, work from home, practice social distancing (stay 10 ft/3 meters away from people) and practice good hygiene (wash your hands, use hand sanitizer, etc)

The decisions we make in the coming days, weeks, and months will have a real impact, positive or negative on ourselves, our families, and our communities. Please do what you can to take care of your families and communities, especially the elderly, infirmed, or economically disadvantaged that will be hit the hardest.

Last Updated on July 6, 2020 by Taylor Pearson