Adapting to change: anticipating the new steady state

Remember those portfolios that I had worked out? Well, I sold most of mine off. Portfolio shmortfolio. I am too active.

As I write this, gold and silver had just made fresh highs and are finally pulling back today, but I’m also watching retro up-scaled videos of Tokyo, New York and Paris (I finished buying into this minor pullback). Besides the simple life, that I had appreciated as recently as Seinfeld with minimal use of computers and cell phones, and of course unknown-to-them coming wars, the hats stand out. What happened to all of those hat styles? How did those hats go out of style? The bowler hat, the boater hat, and of course the top hat? Did American baseball overtake all of these hats with baseball hats? I currently sport the Panama hat personally – one of the few styles that has survived time.

But the traditional hat segmentation reminds me of when I was looking for sneakers in South Korea. I wanted a simple pair of sneakers (general use) so I visited various trendy sports stores like Nike, Adidas, etc. But after visiting the stores, the shoes were segmented into trainers, tennis, basketball, running, and more! This was very segmented. At the time, the only sport that I had been participating in was table tennis. So I went and purchased table tennis shoes… well, they were tennis shoes that I had settled with in order to excel at table tennis.

I wonder if I could bring these old hats back. I think that I could potentially wear all of these. I wonder what kind of comments that I would get if I wore a bowler hat with my suit to a job interview? This one would be my second choice to the Panama hat. I enjoy the thought of the top hat but I am already tall and it would be knocked off of my head repeatedly in Japan.

So I had sold off most of my All Weather Portfolio back a few months ago when the governments started closing borders and shutting down businesses. This took a toll on most assets. I ended up cutting losses and taking gains but holding onto gold and silver on the fundamental belief that these would run up, and were the scarce options for fundamentally undervalued assets. Bond prices (TLT) had gone up so I cashed in and also figured if interested rates are low and held low in the US, how much lower could they go (negative) and thus how much further could bond prices go up? I figured not that much compared to other opportunities.

The time for precious metals has come, or has at least started. I have made the mistake of selling early in these early stages of the gold and silver boom that really could be the opportunity of our lifetimes – cryptocurrencies have been and will likely join the party. I sold around 75% of my holdings when they broke a volatility metric, but, they kept going! Ahh!

So, I bought in again today, partially. If prices go down, I will buy more.

Unfortunately it is a kind of fear that is driving my conviction. Central banks are lawless and are never held to accountability. Currency creation (money printing) is endless and we are in unknown territory. This has never happened before. For example, the so-called COVID-19. We already knew about the Spanish Flu, but did we expect one to come this year? It was a distant historical event but now we are yearning for more information about it.

The U.S. national debt is over $26 trillion dollars!

Canada’s is over $800 billion dollars!!

Japan’s is $12 trillion dollars!!!

China’s is over $5 trillion dollars!!!!

Who can reasonably make sense of this? What can happen? These are record-breaking debt levels.

Nassim Taleb’s “optionality” appears easy to gauge at this point, doesn’t it? How much upside versus downside would you guess for the following:

Do you think stocks will be up or down this time next year?

Do you think gold and silver will be up or down this time next year?

Do you think crypto-coins will be up or down this time next year?

It comes down to these 2 choices: do you believe in the government to print our way to prosperity? Or do you believe that the government will fail in its efforts? This is why trading is so difficult. Fundamentally, all stocks should have already crashed, but governments are keeping them up. Disagree? Put your money where your mouth is.

With global virus cases and protests increasing (coincidence?), things don’t look positive, generally. I expect now is the time to shift. And my money is where my mouth is. I am betting on change.

In Japan, how many seconds after turning on the radio or TV do you hear the term “新型コロナウィルス” (novel coronavirus)? My longest record is 6 seconds.

That said, I had a baby. My baby is nocturnal and has narcoleptic tendencies. As parents, our primary request for the baby is to transition from a nocturnal to a diurnal livelihood. It is our desired family practice, above all else.

What surprised me about babies, you ask? I had always thought of the pregnant woman. A woman, who is pregnant. That’s it. She’s gets heavy and hungry, and then has a baby. But, there is a living, kicking and punching creature in there, letting you know it’s presence regularly for months. The fetus also gets hiccups that you can feel! And a rapid heartbeat that can be measured. Even, the inserted camera-type device taking images, caused the fetus to put it’s back to the wall and look into the camera for it’s first selfie. Later, a couple of what I called “taps on the glass,” that is to say taps on the pregnant stomach, were a tad too sudden and perhaps too strong caused the baby to jerk aside – we could see a protuberance shift aside right after tapping. The fetus is alive in there! Also, the baby didn’t open its eyes until about 12 hours after birth meaning hearing and feeling were and continue to be the primary senses.

Continued surprises were how happy everyone was about the baby. The news captured everyone’s attention. Family members were a bit disappointed to see the newborn child sleeping all day, and wanted to hear the child’s voice – even a cry! It is a joy.

I feel that if there was ever a time, now is the time to hunker down, save money where you can by cutting subscriptions and whatnot. But I feel that holding steady on the previous strategies will fail going forward (generally). Things have already started to change and seem that they will not return to the way they were. Borders have closed, protests have erupted, businesses have shuttered, major cities seem to be experiencing somewhat of an exodus. I believe that we had reached maximum globalization that peaked in January, and we are now reverting to global nationalism.

What does the future hold? It sparks wonder to imagine how things will be after we arrive at the new steady state. Will we distribute across our nations, outside of the cities, work partially or wholly remote? How will all of the infrastructure and businesses adapt: permanently employ social distancing in theaters, trains, buses, planes, restaurants, cafes, malls? The current business models will break. They have to adapt.

How about the Olympics? I had been so frustrated to miss on three ticket lotteries, especially the botched first lottery. The first lottery in Japan had so many late comers to the website, millions, right before the midnight deadline, that they extended the deadline by 12 hours!! How could the most punctual nation of Japan extend a deadline by 12 hours?! I truly believe that this unprecedented extension for the millions of procrastinators diluted my chances of getting any tickets. So they apologized, with a second lottery… and then had the regularly scheduled official second (actually third) lottery months later. I emailed complaints that probably went to spam. I complained to anyone that was willing to listen. I can only assume that the organizers were busy selling Tokyo 2020 merchandise on the same website.

Fast forward to today, in hindsight, I am truly grateful that I wasn’t able to get any tickets. We had a baby on what was supposed to be the opening weekend of the Tokyo 2020 Olympics. There is no way that we would have been able to attend. Now, I have heard anecdotally that there are no refunds. The day of week and times are likely to change if the Tokyo 2020 2021 Olympics go ahead. And, if social distancing is practiced, the whole seating of stadium and ticket economics will go bust. Maybe those 3 lotteries have already oversold the new drastically reduced seating capacities. Would they fill the stands will poster-board characters, or robots?

When I had first heard of the Tokyo 2020 Olympics postponement until 2021, my initial thought was: “What about all of the merchandise!?” “Tokyo 2020” is tattooed everywhere: the official merchandise store, Asahi beer, other sponsors, current broadcast television advertising, everywhere. Simply, “2020” had become a ubiquitous and ambiguous beta brand marketing technique. Just like the marketing terms “light” and “green.” Perhaps I could sell a product that was Light, Green, and 2020 – it could literally be anything, like a printed copy of this blog post.

To my surprise, they fairly quickly decided to stick with “Tokyo 2020,” likely saving at least millions of dollars. But I will refer to it as the “Tokyo 2020 2021 Olympics,” and I believe that this will be a great internet meme whenever or if ever the originally planned 2020 Olympics actually go ahead.

And how long and when exactly will we all have to wear masks post-crisis? I am guessing that facial recognition proponents will have to stir a mass removal of masks at some point, enforce transparent masks, or mandatory instant personal phone identification via GPS/Bluetooth or something else of that nature to enable sustain and promote live human tracking.

Even when everything appears to be dire and headed downwards, there are always opportunities out there if you can find them and adapt. In case you are holding out for things to go back to ‘normal,’ I believe that now is the time to part ways with that belief.

“Hope is not a strategy.”

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