1 , 3 , 5 , 7 , 9 , 11 — What’s Missing ?
1 , 3 , 5 , 7 , 9 , 11 — What’s Missing ?
2020 has everything to do with this question. So think about it..
The Answer is # NOTHING.
It’s a bunch of odd numbers, nothing more nothing less. But your mind would have immediately thought of the missing even numbers. And that would have happened in a split second, in default mode, at super sonic speed — even before you could pause and think about it !!!
Welcome to being human !!! As Warren Buffet says “There seems to be some perverse human characteristic that likes to make easy things difficult.”
Thinking about 2020 would require you to watch out for this perverse human character at play. Let’s see what all went wrong, drastically wrong #
A lot of people lost their jobs, with their careers being thrown in a tailspin. It adversely impacted many at entry level or in jobs that could be automated / outsourced or cut till demand recovers. This lot comprises a huge chunk of working population globally.
COVID19 wrecked chaos with lockdowns being forced upon residents everywhere. 79.86 million cases reported globally and 1.75 million deaths. Just last week, I lost one of my uncles in Ahmedabad due to COVID and the sense of fear and anxiety is real and being felt by many, if not all yet.
The cases have kept increasing and a new strain of virus has been discovered in 8 European countries already, creating more fear and uncertainty for what lies ahead. Flights have been cancelled, movements are being restricted yet again, strict measures being taken and many companies and individuals are hanging by the thread, just surviving one day at a time.
Stocks, Bonds, Real Estate and even US Treasury (momentarily though) experienced a sequence of events not happened in a long time. US Stock Markets posted the fastest ever 30% drop ever i.e. 22 days in Q1. And when US sneezes, the whole world catches cold, which is exactly what happened this time around too.
Stocks across the world corrected significantly, High Yield Bonds or Emerging Market Bonds became illiquid with no Buyers, US treasuries also were illiquid for a brief moment in March, Real Estate market dried up completely (at least in Dubai where I am based, I saw our clients suffer very severely on their real estate deals).
It was scary, chaotic and a vertical drop was being anticipated by many in valuations of securities along with devaluation of US Dollar.
I wouldn’t have believed Oil Futures going to 0 and then negative territory , unless I was witnessing it myself. And I did. I still remember traders in US posting on Fintwit about their inability to square their Oil trades since the system wasn’t taking orders . Some traders lost millions in these and many were wiped out of their trading account cash balances.
Add to all this macro news, everyone has a personal update / event / experience that have shaken their confidence this year and added loads of anxiety for what lies ahead in their respective jobs, businesses, countries, opportunities, health and all domains they value the most.
Michael Batnick says, “some lessons have to be experienced before they can be understood.”
And one of the lessons that you can understand from what happened in 2020, is that it has happened before and it will happen again. No one knows , No One Can Know, what adverse scenario can hit you and derail your best laid out plans and ambitions. But a tail risk is always looming somewhere out in the future !!!
No one does a better job to explain tail risks better than Nassim Taleb in his book ‘Fooled by Randomness’
SURPRISE — That is coming, don’t know when or from where or how !! It’s happened before, it’s overwhelmed us all in 2020 and it will happen again in the future.
Let’s look at some interesting historical news clippings (this will certainly surprise you) #
On 1 November 1666 farm worker Abraham Morten gasped his final breath — the last of 260 people to die from bubonic plague in the remote Derbyshire village of Eyam. Their fate had been sealed four months earlier when the entire village made the remarkable decision to quarantine itself in an heroic attempt to halt the spread of the Great Plague. This is the story of the villagers who refused to run.
The same month, Elizabeth Hancock buried six of her children and her husband close to the family farm. They had all perished in the space of just eight days…It is said people from the nearby village of Stoney Middleton stood on the hill and watched her — too scared to help…
NYU professor Scott Galloway has a related idea that is so important to remember when judging success or failure — both your own and others’: “Nothing is as good or as bad as it seems.”
And as gory as it this may look in the past , it had positives too #
In June 1348, people in England began reporting mysterious symptoms. They started off as mild and vague: headaches, aches, and nausea. This was followed by painful black lumps, or buboes, growing in the armpits and groin, which gave the disease its name: bubonic plague. The last stage was a high fever, and then death….
The Black Death killed between a third and a half of the population of Europe and the Near East. This huge number of deaths was accompanied by general economic devastation. With a third of the workforce dead, the crops could not be harvested and communities fell apart. One in ten villages in England (and in Tuscany and other regions) were lost and never re-founded. Houses fell into the ground and were covered by grass and earth, leaving only the church behind. If you ever see a church or chapel all alone in a field, you are probably looking at the last remains of one of Europe’s lost villages…
Because another, less often remarked, consequence of the Black Death was the rise of wealthy entrepreneurs and business-government links. It goes without saying that not all developments in the years 1350–1500 can be attributed to the Black Death. But it was certainly one of many moving parts that led to the emergence of new forms of entrepreneurial behaviour. Although the Black Death caused short-term losses for Europe’s largest companies, in the long term, it played a part in the concentration of their assets, gain of a greater share of the market and influence with governments. — Jamie Catherwood in his Dec 6th Newsletter
Most of the evidence indicates that the economic effects of the 1918 influenza pandemic were short-term. Many businesses, especially those in the service and entertainment industries, suffered double-digit losses in revenue. Other businesses that specialized in health care products experienced an increase in revenues.
Some academic research suggests that the 1918 influenza pandemic caused a shortage of labor that resulted in higher wages (at least temporarily) for workers, though no reasonable argument can be made that this benefit outweighed the costs from the tremendous loss of life and overall economic activity. Research also suggests that the 1918 influenza caused reductions in human capital for those individuals in utero during the pandemic, therefore having implications for economic activity occurring decades after the pandemic. — https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf
The financial Crisis of 2008 was devastating for businesses, investors, employees and society as a whole. I remember one of our clients lost half of his entire life savings due to his investments in Capital Guarantee Notes from Lehman Brothers. Since Lehman went bankrupt, the capital guarantee promise was out of the window. The memory of him thinking of additional years to put in to his job to recover the lost money still haunts me.
But the positive outcome of the crisis was stricter banking regulations, a valuable lesson for many on evils of living on debt, inception of Silicon Valley game changers like Instagram, Whatsapp, Airbnb, Uber, Angellist, Square and many others .
It is debatable whether the economic and human costs of 2008 crisis or 1918 influenza or Black Death from 17th century or COVID19 outweigh the positive outcomes created from these events. Hence without comparing the two, if one looks at the positives from COVID19, there are plenty #
Zoom has made it easy to connect with family, friends, colleagues, mentors, tutors, students, business partners and strangers with shared goals or passions. A friend recently asked if Zoom could create personal bonds that proximity does ? My answer to that was “Not 100% but it still allows for a great relationships being built as you can see each other, feel the emotions, talk endlessly if needed, with frictionless user experience.” I have loved the increase in communication with others brought in to my life via Zoom.
Is this a scam? a fraud? hype? another narrative that could make people lose in billions ?
I agree to the fact that most do not understand the phenomenon of crypto currencies, even I would struggle to talk about this subject for more than 5 mins without sounding incoherent. But what I do get is that this field is attracting the best talent out there and it makes for a fascinating asset class in the making.
I have lost money in bitcoin and ethereum as my theory was correct but my timing went all haywire. I got in just before it tanked and I had to close positions just before it started rallying again 🤦🏼 But I have learnt a lot about why this asset class is attracting attention from the best in the I.T. and Private Equity space.
It is related to Deflation, US Dollar Devaluation, Supply Demand, need for Autonomy and many more macro and micro economic subjects at play here. There is more to Bitcoin than your eyes can see !!! I am still learning..
There are currently over 200 vaccine candidates being developed and tested at breakneck speed. However, one important aspect to note is that not all of the vaccine candidates that are being pre-sold will pass the testing stage.
The Oxford University vaccine is the most popular so far, with over 2.5 billion doses sold. The academic institution, together with AstraZeneca, is doling out 500 million vaccines each to India and the U.S., as well as 400 million to the European Union.
Novavax, the second highest seller of COVID-19 vaccines, has pre-sold 1.3 billion doses. So far, the early birds Pfizer-BioNTech and Moderna have pre-sold 10% and 6% of the total vaccine doses being manufactured respectively. — Visual Capitalist
2020 has brought, for the first time, scientists around the world getting together to create vaccines at a pace never seen before .. Add to this the role played by policy makers to facilitate and encourage this collaboration and bless it with final approvals , when the trials do indicate a reasonably good chance at dealing with the virus.
The FAANGM story isn’t about over-exuberance or over-optimism about the stocks markets. It is a lot about the changing nature of businesses and valuing them going ahead. Following themes have taken over the markets — Capital Light Businesses, Higher TAMs, Digitisation of Processes, Increased Sales Online, Stock Based Compensation, Capitalizing Expenditure, Goodwill Accounting, Pulling forth future business, Lower Discounting Rates, New class of investors added to the Investment community and so much more.
The rally cannot be caused by Robinhood Traders alone. The mechanics have changed and I see Value Investors struggling with the compounding seen by Growth stocks. At the same time, I see Momentum Investors becoming over confident about their strategy and going all in without much protection being created for future uncertainty or downturn.
It’s an interesting place to be but also calls for caution, while being bullish in your bets. As Warren Buffet says “In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.”
And to top it all, TESLA takes the pole position for being the most interesting of stories of 2020. It reminds me of the Superman Dialogue “Its, a bird, it’s a plane, it’s Superman”
I am a big time podcast consumer and I have heard almost all Short Sellers or Long Short Hedge Fund Managers being short on Tesla. Even many Long Only Investors have shunned this stock due to the narrative being “Tesla is a car company at it’s core with massive requirements for capital expenditures but it’s being valued as a Tech company with years of compounding in Revenue & Profits being built into it’s price and that doesn’t make sense”.
Inspite of this narrative being repeated again and again from so many Institutional Investors, Tesla’s share price has defied them all and has moved from USD 86 on Jan 2nd to USD 661 on Dec 25th. It’s current price doesn’t meet any valuation parameters when used conservatively i.e. Grahams Formulae, DCF, Dhandho Investor’s Margin of Safety or Expected Returns Model. And hence many analysts may have to work backwards to input data that makes sense of the current price.
All this points to one truth about Investing in today’s world — It is Bloody Hard to make sense of the data out there. You either get damn good with your Investing Sense or you will be regretting being a part of the industry where psychological edge matters way more than informational edge, the poster child for Successful Investing in days when Information was hard to come by.
“Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort. They are so similar that you can’t believe in one without equally respecting the other.” — Morgan Housel
This has been a long post and has taken me more than 10 hours to piece it together. What is the ultimate objective of sharing all these data points with you ? Kunal Shah, Founder at CRED explains this well , “Those who are greedy to understand the world get more money in life than those who are greedy to get more money.”
And hence, before you start making grand new years resolutions that would be Oscar Worthy for its scripting, editing and dialogue delivery, STOP !!! Before you start fantasizing about a phenomenal 2021 and share on your social media feeds, STOP !!! Before you indulge in the Khayali Pulao Period that precedes every Jan 1st, STOP !!!
Voltaire’s observation that “History never repeats itself; man always does” is so apt here. It applies so well to how we behave with money, with relationships , with opportunities, with health, with one’s own self development, with the deck of cards dished out to you…
So instead of looking at the very uncertain, unpredictable, crazy, chaotic future that’s being planned for you by the Gods up above. Rather look at the past and ask yourself the following questions in relation to 2020 #
What belief systems of mine affected me adversely ?
What habits of mine have weakened my position to deal with adversities ?
Which relationships of mine have I ignored and need investment of my time and energy, before it’s too late ?
What’s my relationship with Money & Success ?
Have I given more to others or have I expected more from others?
What kept you up at night with excitement this year? Was it worth it? Would you want to do more of it?
What 3 people are you the most grateful to in 2020 and why? How can you thank them? How can you find more people like this in your life?
What have you learnt about the way that you deal with uncertainty in 2020? If you had to teach one thing you learnt this year (that would improve one’s quality of life) what would that be?
When have you felt proud of yourself in 2020? what were you doing?
Questions 6–9 were taken from Ali Abdaal’s Newsletter.
It’s time you really think hard. Since you can’t control the future and can’t even plan with great amount of certainty, nor can you even comprehend what’s in store for you or your loved ones. This points to only one thing — You only have control over your attitude and your actions !!! So Why Not, focus all your energy into this one thing that matters the most — YOU !!!
<a href="https://medium.com/media/c35fd49b267b3877d5c1cbf0efe005d4/href">https://medium.com/media/c35fd49b267b3877d5c1cbf0efe005d4/href</a>
😁 Hope you don’t fall into the New Year’s trap like most will . Though it’ll be funny to remind your friends about their New Years Resolutions from Dec 31st 2019 and see what’s been the progress. Most will prove to you that they said things just for fun with no real thought to it. No Skin in the Game as Nassim Taleb would shout out loud ;)
Few Parting Quotes before we meet in 2021 again #
Though a straight line appears to be the shortest distance between two points, life has a way of confounding geometry. Often it is the dalliances and the detours that define us. There are no maps to guide our most important searches; we must rely on hope, chance, intuition, and a willingness to be surprised. — Too Soon Old, Too Late Smart
You read 100 books. 99 are meh, 1 changes your life.- You meet 100 people. 99 you never see again, 1 changes your life.- You try 100 things. 99 don’t work, 1 changes your life.Almost everything consequential in life is randomly determined. — Daniel Vasallo
I sincerely hope — You Live More, Love More, Give More, Do More, Risk More, Save More, Be More, Express More, Say Thank You More, Say I Love You More, Say NO More and Yes, Succeed More than you did in 2020 !!
Loads of Love and Luck 🤗
Manish