Attack the Week (ATW)
November 20, 2023
I am travelling in Mexico at the moment. My first few days in Mexico City reminded me how a certain amount of chaos is healthy for our lives. This amazingly large city offers a vivid example of urban chaos. At first glance, its traffic and daily life appear as a maelstrom of disorder. Yet, within this seeming disarray lies a unique form of order. The city's residents navigate the chaos with an intuitive understanding of its rhythms, much like a complex ecosystem. This chaotic yet functional system underscores an essential truth that resilience often emerges not despite chaos but because of it.
I felt at immediate ease with the city’s rhythm and people. You have to adjust to the heartbeat. It is remarkably clean and green for one of the largest global cities. Sure, I didn’t venture into every single corner, as I was mostly exploring the city’s culinary centre, but what I saw was remarkable. On a morning coffee stroll, I sat in a small place where a violinist was serenading our morning coffee, something I had never encountered before (see picture below). It was mesmerizing. The guy was seriously talented. This is what will always keep me interested in travelling and experiencing new things. The little break-out of norms that we haven’t experienced yet. Some might see it as chaos, but I will always see it as a necessary ingredient to learn.
In financial markets and investing, chaos is omnipresent. Prices fluctuate, trends emerge and fade, and geopolitical events cause unexpected shifts. Investors who understand and embrace this chaos are often the ones who thrive. I often read professional market commentary where investors reduce risks due to increased uncertainty. This never made sense to me. You will want to reduce risk when there is too much certainty. I was writing about diversity breakdowns before. A concept where the distribution of investor opinions isn’t well spread out. This is usually when larger moves happen. We need to be adaptable to ever-changing dynamics and embrace chaos. What would you become if you’d avoid every adverse moment? Fragile, of course. Just as species in chaotic ecosystems evolve to survive, we as investors must adapt our strategies to changing market conditions. There is also the importance of deep understanding. Mexico City's residents navigate its chaos through an ingrained knowledge of its nuances, akin to how savvy investors must deeply understand market forces. In these environments, chaos drives a continuous adaptation, learning, and growth cycle. Embracing chaos is about surviving and leveraging it to build resilience and achieve long-term success.
Paper Alfa aims to provide tools to provide exactly that: resilience, be it through the lessons I learned throughout my career or educational content, which should help everyone understand the financial system. I have, therefore, added building resilience as a core pillar in Paper Alfa's principles. How will this be applied in future writings? I believe that most of my pieces already align with building resilience. Still, I will explore further methods and approaches to build investment resilience. My analysis will now also draw parallels and lessons from diverse areas. These interdisciplinary insights will hopefully enrich our understanding of resilience in a broader context. As always, I will also aim to equip you with the mindset and tools to build personal resilience. This means more content on risk management, diversification strategies, and maintaining a long-term vision amidst short-term chaos. Are you excited? I certainly am.
Let’s now attack this week and see what it has in store for us.