Читать книгу Safe Haven - Mark Spitznagel - Страница 11

There is a monumental problem facing investors, the great dilemma of risk. If you take too much risk, it will likely cost you wealth over time. And at the same time, if you don't take enough risk, it will also likely cost you wealth over time. You are trapped in a “Catch‐22”: damned if you do and damned if you don't. Pick your poison. You can try calibrating between these two bad choices in hopes of finding a happy medium, but this still leaves you with a bad choice—it is still poison. Modern finance is really all about the quest for this theoretical happy medium, the supposed “Holy Grail of investing.” Despite this valiant quest and lofty name, the results have shown that this Holy Grail is a myth; the happy medium is not so happy, and it can even provide the worst of both worlds. And so, with this thinking, you are left with only one real choice: to make bold predictions and then roll the dice on them.

This great dilemma is the most important problem in all of investing; it is one that desperately needs solving. It is also the rationale for what I do as a hedge fund manager, and the reason for this book. Thanks to the sheer scale and scope of the problem, the stakes have never been higher. In particular, the broader problem is of liabilities exceeding assets, and this applies to mammoth pools of capital and even to individuals with small investment accounts. Just think of the massively underfunded public and private pension funds today, which must generate specific, high‐target rates of return over many years or else face insolvency as their liabilities consume their capital. They can't just hide away, idling in less risky assets in an impaired portfolio, or try to diversify away their risks; and yet investing in riskier assets brings, by definition, acute risks of unrecoverable loss. The standard approach to risk mitigation has really failed them—just as it has failed everyone. And the problem is only going to get worse. It is a looming, ticking time bomb.

The consequences of failing to solve the great dilemma of risk won't just appear as some abstract figures in the newspaper. They are all too real: people's savings wiped out, governments that must tax or inflate their economies to death—human tragedy with real economic consequences. This is not my opinion. It is just simple math.

This monumental problem is further complicated today by the massive distortions built up in global financial markets from years of hubristic monetary interventions by global central banks, enabling the reckless accumulation of debt and leverage. Though these distortions are on an unprecedented scale and are intricately related to the underfunding problem itself, they are nonetheless beside the point. They are both beyond the scope of this book (I have already written plenty about them elsewhere) and, most importantly, completely unnecessary to the book's message. I don't need to convince you of any ideological, Cassandra‐like premise that markets are risky so that you will accept my conclusions about safe havens. It will not matter to our methodology. We can and will remain agnostic, not roll the dice, and, most important, not predict.

To find a solution to this monumental problem, we need to reduce the costliness of risk—specifically the costliness of losses—and do so in a way that does not end up costing us even more. In other words, we need a cure that is not worse than the disease. Risk mitigation must be cost‐effective.

In this book, we will learn how finding that solution comes from recognizing that not all risks are created equal—because not all losses are created equal. They don't all add up cleanly in an accounting ledger. Therefore, we need to think about losses and our investment returns differently, through a different lens and a different framing.

As in all things, “the good God is in the details.” And in our case, these details, while not terribly complicated, often appear counterintuitive and paradoxical. As we will see, there are emergent dynamics at play here that make cost‐effective risk mitigation extremely challenging, perhaps more so than anything else in the realm of investing. We need to proceed cautiously.

The problem is that investing is approached by most professionals and academics (and even the reigning PhD quants of modern finance) in a highly reductionist way. But, as we will see throughout this book, in safe haven investing the whole is, indeed, not the same as the sum of its parts—and it is often much greater.

Cost‐effective safe haven investing will turn out to be an awesome variation on the theme from my first book, The Dao of Capital. It's an idea that has perhaps become my shibboleth: roundabout investing. That is, the indirect approach, seeming to go backwards in order to go forwards, as in Sun Tzu's and von Clausewitz's approaches to “lose the battle to win the war.” What will look like a bad idea for one roll of the dice strangely becomes the best idea over many.

But how is successful investing possible without predictions? It sounds too good to be true. That investing is about forecasting returns is a tenet of the industry. As such, most people think they need to look very far ahead in investing and risk mitigation—with a magic crystal ball; they think that they need to see around corners. Not only is that pretty much impossible, it is actually a misconception about investing. Investing really needn't be about making grandiose forecasts, any more than it is in, say, sports or other games like poker or backgammon—though one could easily make that mistaken assumption from the outside looking in. It isn't even necessarily about getting the probabilities right. You can get the probabilities right all day but still do very poorly. It's really about getting the payoffs right. Playing good defense that leads to good offense. So there's more room for error, more room for being right, more room to get it right after getting it wrong. This is cost‐effective risk mitigation. You look and feel like you can see around corners, even though, in actuality, you can't.

As an archer, you don't try to forecast or pinpoint exactly where your arrow will hit once it leaves your bow. That would be an unproductive way to approach it—leading to target panic. Once you shoot the arrow (and even as you shoot the arrow), it is out of your control and susceptible to endless perturbations. So, instead, as in Herrigel's Zen in the Art of Archery, you aim by deliberately not taking aim—you hone your process and structure (focusing “behind the line” rather than down range) with the intent to specifically tighten your shot grouping around your target. There is this ancient Stoic notion of a dichotomy of control that applies here to investing, as it does to archery: We need to control what we can control in a way that gets us closer to our target (of higher wealth)—and certainly not further from it.

This is cost‐effective risk mitigation. You look and feel like you can see around corners and can always hit the bullseye, even though, in actuality, of course, you can't.

You see, a cost‐effective safe haven doesn't just slash risk. It actually lets you simultaneously take more risk. If that twist gave you pause for a moment, then good. It should!