Thread by @larissafernand

Extinction is the norm, Survival is the exception.

Nature is not cruel, only pitilessly indifferent
- Richard Dawkins.

Capitalism is not cruel, only pitilessly indifferent
- Sanjay Bakshi

@Sanjay__Bakshi at #MICIN draws parallels between evolutionary biology & investing.

Black Swan Events will occur & catch us by surprise. When they do, Capitalism shall be pitilessly indifferent.

-ve: Death. Destruction. Extinction.

+ve: New players. Adaptation. Cost cutting. If we resist this or fight it, we risk going extinct.

@Sanjay__Bakshi at #MICIN

*It's impossible to avoid the impact of a -ve black swan. No matter how diverse your portfolio, it will get hit.

*Like nature, the market is a Pari Mutuel game (behavior of other players changes the odds).

*To thrive in the long run, you have to suffer in the sh term.

#MICIN

How to deal with -ve Black Swans

1. Strong balance sheet (low levels of debt, cash on hand, no asset-liability mismatch)
2. Diversity (multiple, non-corelated streams of income)
3. Reduce dependencies (the more dependent on external factors, the more fragile you are)

#MICIN

How to capitalize on +ve Black Swans

1. Hold cash for opportunistic reasons.
2. Have a contrarian mindset.
3. Act with opportunity arises.

@Sanjay__Bakshi at #MICIN

"Understand that we don't know the future.
Investors do better where risk management is a conscious part of the process.
Survival is the only road to riches. Try to maximize return only if losses don't threaten your survival."

- Peter Bernstein
#MICIN