A few weeks ago, I wrote about something new to me called Doomer Optimism. I was intrigued by the part of it that focuses on self-sufficiency. I’ve done a little reading and I’ve made a Twitter list of people to follow to also try to absorb more.
While they talk a lot about resilience and as I usually say, preventing their own problems, the word doom or Doomer seems to weigh heavier on these folks and their daily lives than how I view things and the conclusions I’ve drawn for myself.
Many (most?) of the people I see/read in this space appear to be quite a bit younger than me and I think a little more life experience is helpful in the context of not believing that the grid will fail in a catastrophic fashion or that the food supply chain will break to the point of disrupting life as we know it. These things could happen, but I don’t think they are the most likely outcome.
I think there is an investing parallel here. However long you’ve been in markets there have been people like Marc Faber, Peter Schiff, David Rosenberg, Nouriel Roubini or David Tice who are always calling for the end of the world, always sound like they know what they’re talking about (maybe not Schiff) and articulately spell out the prevailing bear case very well.
These people are all certainly much smarter than me and it seems as though quite a few of the Doomer Optimists are obviously smarter (checkout Joe Norman @normonics for one) but that doesn’t mean they are drawing the correct conclusions in terms of order of magnitude. The stock market bears above are a case in point, the risk factors to higher equity prices are scary as hell but the market has gone up anyway. So it could be that threats to the grid and supply chains merely create nuisances and challenges not catastrophe.
So, while I love the idea of identifying potential problems and then preventing and hopefully solving them, I think I might be more of a Nuisance Optimist than a Doomer Optimist. A nuisance versus doom ties in with a quote from Sam King, CEO of Veracode who’s attributed as saying "I don't know how much good it does to imagine those worst case (cyber attack) scenarios, it takes the focus off the many smaller scale problems that everyone needs to be addressing.”
I’m not genuinely concerned the grid will have a permanent, catastrophic failure but don’t want to deal with the hassle of the antiquated piece of the grid that services Walker breaking and having to wait for an unreasonably long period of time for a part to come or as was the case a few years ago, snow so deep and heavy they couldn’t get to what needs fixing so we have solar backup with a couple of good sized storage batteries.
I have zero worry that the stock market will have a permanent, catastrophic failure but want to be ready for the nuisance that clients might have to face with some sort of bear market that unlike the last couple, has a longer stumble along the bottom so I use defensive products and when applicable try to be out in front of their expected income needs by a good bit.
I like to think about certain inputs making life easier. Every aspect of life becomes easier when…
That is how I think about almost everything. If you eat well (very few carbs) you’re very likely to avoid chronic maladies which means you’ll feel better, spend less time at the doctor and less money on medicine all of which should make life easier. If you do resistance training with weight and hike on trails you’re more likely to be able to lift the occasional heavy thing around your house that needs lifting, maintain a better sense of balance for longer and have more endurance for things you need to do and things you want to do all of which should make life easier.
At some point some loss or reduction is physical capacities and capabilities will happen, it is foreseeable. Your life will be easier and better when you take steps or adopt habits that push that outcome further down the road. If you’re going to lose the ability to pick something up that weighs 100 pounds, better it should happen at 80 or 90 than 60. This is an example of preventing, solving or maybe in this case delaying your problem.
Scare the hell out of them declines in the stock market will happen, it is foreseeable. Your life will be easier and better when you take steps or adopt habits that allow you to sleep easier during those events. This includes a proper asset allocation, cash set aside for sequence of return risk, the understanding that stock markets have normal cycles that include large drops or combo of the three. Preventing or solving this sort of problem means you won’t panic (bad things happen when you panic) and that you have a good chance of not having your income needs disrupted.
You could probably analogize just about every other aspect of your life too so I’ll close by saying the manner in which you handle a scare the hell out of them decline goes a long way to determining whether it is merely a nuisance or outright doom.