(Volume 1, Issue 5)
Topic of the week: Future scenarios
Martin Wolf, journalist for The Financial Times, provides a succinct video scenario analysis of the world after the pandemic. The idea of scenario analysis is useful to understand uncertainty and risks, what do know with certainty, what we know with some certainty, what we don't know at all (unknown unknowns), and the potential impacts. Mr. Wolf starts off by saying we don't know what the future will hold. The only thing we do know according to Mr. Wolf:
The thing we most definitely know is that we will emerge from this crisis with much more debt in the public sector, very large fiscal deficits, a lot more debt in the private sector as well, and almost certainly we will already have experienced a great many defaults, particularly in the private sector, and particularly in emerging economies.
Breakwater Associates recently published an interesting scenario analysis (see slides here).
The last time we experienced a debt cycle such as today's was before our lifetimes. Ray Dalio, Chief Investment Officer of Bridgewater Associates, has written extensively about what we can learn from how the world evolved following The Great Depression in Principles for Navigating Debt Crises.
Quote of the week
“I have approximate answers and possible beliefs and different degrees of certainty about different things, but I’m not absolutely sure of anything.” – Richard Feynman
Three recent articles
1. Howard Marks, Chief Investment Officer of Oaktree Capital Management, says in his recent memo that "we may not be able to predict the future, but that doesn't mean we're powerless to deal with it."
2. 17 Questions that Changed my Life, is a cheat-sheet of self-review questions written by Tim Ferriss, lifehacking guru. The right questions lead to the right answer.
3. Changing perspectives starts with your inner perspective. Small changes in language can change your inner perspective especially on negativity, writes Steven Handel.
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