This letter is about ways to become resilient. However, before you do that, you need to think resiliently. Here’s an example of what this means.
Almost everyone has heard the Aesop Fable called “the Grasshopper and the Ant.”
Here’s a quick recap if you don’t remember it:
During the bountiful summer months, the Grasshopper goofs off while the ant works diligently to store food. When the harsh winter arrives, a starving Grasshopper asks the Ant for help, only to be rebuked (Aesop was a pretty harsh guy).
The lessons of this story is pretty simple: Work diligently. Save as much as you can while times are good. If you don’t, you will suffer.
This is also essentially the same story every financial adviser in the world tells their clients. Save as much money as you can. Invest in a variety of financial assets. Get ready for a rainy day.
Stop here. Ask yourself: what’s the error in this story?
Here’s what I found wrong with it.
Savings, and particularly financial savings and investments, aren’t a cure-all. They are particularly risky during times of turbulence.
The reason why? We are currently in an age of turbulence and crisis. An age when common assumptions are routinely overturned. An age when financial assets, companies and governments that we considered bastions of stability can simply evaporate overnight.
In this world, the diligent Ant that makes steady investments in financial assets may end up in the SAME place the Grasshopper during the bad times ahead. Destitute. A pauper.
So what’s the resilient solution to this problem?
To invest in local production. The ability to produce in good times and bad.
Investments in the ability to grow food, produce energy, harvest rain, and produce products are a start.
So, resiliently hedge your savings. Make investments to ensure you have the capacity to easily produce the basics, both at home or in your community.
Your helping you think sleep well in the future analyst,
PS: There are 725 fables attributed to Aesop. Wow.
PPS: I’m not a financial analyst. Why would I be?