Excerpted from Artemis Capital Management letter to investors,
Risk cannot be destroyed, it can only be shifted through time and redistributed in form.
Vibrant life and rebirth comes from the acceptance of change and death in many complex systems:
The forest service has long understood that controlled burns are a more effective tool for fighting forest fires than total suppression. The act of subduing forest fires results in a dangerous build up in dry foliage that counterintuitively causes larger and larger fires. Mother Nature will initiate controlled burns naturally via lightning strikes and this is essential to the rebirth of the forest. The trees of the great sequoia forests will not release seeds without first sensing heat from a wildfire.
The art of avalanche prevention in backcountry snow terrain is based on a similar philosophy. Rangers use controlled blasts to reduce snow pressure rather than risk massive uncontrollable slides.
Marriage therapists observe that couples that do not fight are at the greatest risk of a divorce. The couples that fight actively bring core issues to the forefront instead of suppressing their problems. Apathy is worse than anger.
Treatment of cancer requires extensive chemotherapy to kill the cancerous agents from the body and allow healthy cells to multiply.
Treatment of addiction requires brutal recognition of the reality of the problem, personal responsibility, and immediate withdrawal from the source despite painful short-term effects.
The act of pruning a garden requires forcefully removing sick leaves to promote the vibrancy of the healthy plants.
In management science the ability to address problematic or below average employees is an essential value in the culture of many successful organizations.
The classic trading axiom of “cutting your losers and letting your winners ride” is an alternative form of the same idea.
All of the aforementioned natural and social phenomena have great positive exposure to change but at the expense of a short-term loss. In other words, they are long convexity.
The mainstream view that central banks have suppressed tail risk is absurd and runs counter to common sense.
Policy makers have done the opposite.
Central banks have taken asset returns from the future and brought them to the present…
they have taken tail risk from the present and shifted it into the future…
that have turned private risk into public risk.
The risk is not gone… do not fool yourself.
Central Banks steal your money just as surely as a python steals all it’s victims breath before it eats it.
As “they” keep on keeping on with the game, year after year.
I forget who said it, but this is the most frequently talked about and analyzed economic collapse in the history of the world….that hasn’t happened. Yet.
Privatize the assets, socialize the risk (and ultimately, the losses)?
Sounds familiar.
The part of this about wildfires is absolutely true. That’s why you never hear about wildfires in Mexico because they do controlled burns. Supposedly that’s not possible North of the border because people complain about the smoke. Duh.
@Westcoaster, also because we allow people to build homes, homes that now “must be saved,” and these homes are RIGHT in the MIDDLE of the forests. Just like continuing to pour population and building onto the coasts that take the brunt of the natural weather occurrences.
@Lysander, whom says the collapse isn’t happening?
I see the REAL economic numbers, the REAL loss of the middle class, the REAL increase in the cost to just survive, all as the very real symptoms of our ongoing and systematic collapse.
Just because the bimbos and bimbettes we call “journalists” don’t “see” it and run it at 6, doesn’t mean it isn’t happening all around us in real time.
The collapse you are waiting for, others are waiting for, HAS already started. Started a long time ago actually.
What we now await is the confirmation. I doubt we are ever going to get that. Just month after month of unicorn farts and myths until the day there is nobody left outside the Beltway/Wall Street with the ability to see it broadcast on tv.