Carlos Velásquez · Medium · 8 min read · Photo by An Unnamed Source on Pexels.com
FRAGILE – easily broken or destroyed; delicate, lacking in vigor
ANTI (prefix) – of the same kind but situated opposite, exerting energy in the opposite direction, or pursuing an opposite policy
ROBUST – strongly formed or constructed; having strength or vigorous health; capable of performing without failure
Unlike words that capture the opposite meaning of their root, like antiseptic or antithesis, no word readily captures the opposite meaning of fragile. Robust is often used as its antonym, yet robust only describes that which does not become fragile.
This definitional shortcoming is not unique to English. According to Nassim Taleb, none of the major languages have a word meaning “antifragile”.
At least not until the book Antifragile: Things That Gain From Disorder was published. It has coined a word describing the opposite quality, the anti-quality, of fragile in the world’s most influential language.
ANTIFRAGILE – “things (that) benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better” – Nassim Taleb, Antifragile (emphasis added)
Classifications On A Triad Spectrum
“Antifragility makes us understand fragility better. Just as we cannot improve health without reducing disease, or increase wealth without first decreasing losses, antifragility and fragility are degrees on a spectrum.” – Nassim Taleb, Antifragile
The book Antifragile creates a useful framework referred to as “the Triad”.
This framework gauges the degree of fragility existing in various domains, similar to the way a thermometer gauges the temperature in different climate zones.
By moving closer to the right of this continuum we situate ourselves to benefit from disorder.
Antifragility, however, is relative to a given domain. Let me explain.
Grandma v. The Boxer: Who Gets KO’d?
Consider the domain of physical condition.
A professional boxer is in superior condition to the typical adult. The typical adult is in better condition than the elderly grandmother.
On this continuum Grandma is the most fragile.
Now consider the domain of emotional strength.
The trials and tribulations experienced by the widowed Grandma may have made her emotionally antifragile relative to the typical adult and, especially, relative to an emotionally fragile boxer.
The newly crowned Heavyweight Champion of the World who has been dumped by his girlfriend could head into a downward spiral of substance abuse and despair.
Whereas Grandma could be a loving yet unwavering emotional pillar during dire situations.
Grandma is physically fragile but emotionally antifragile. The boxer, the opposite.
Same people. Different domains. Different ends on the Triad spectrum.
Let us now apply the Triad spectrum to several of life’s other domains.
El Curandero’s Literary Domain
FRAGILE: an E-reader. Its screen can shatter or warp. It requires electricity after prolong use. Likewise, laptops and hand-held devices can stop functioning for various reasons. If one’s desired reading material is strictly in the “cloud” these devices become practically useless without WIFI.
ROBUST: a book. It is readable regardless of WIFI connectivity or a source of electricity, barring damage or absent-minded misplacement.
ANTIFRAGILE: oral tradition. Consider the healing power of plants used by South American “curanderos” (shamans). Knowledge of these plants’ medicinal properties has endured orally through hundreds of generations. Curanderos use these “vegetable scalpels” to mend the brain — the least understood human organ. Western physicians are starting to better understand the medicinal benefits of these plants, like Ayahuasca (or Iowaska), to treat conditions such as addiction, anxiety, depression and PTSD. No gadgetry, no medical books, no WIFI and no electricity required. Just oral tradition; and patients who need to slow-dance with their inner demons to the psychedelic rhythms played in shamanic ceremonies that the U.S. FDA has been too offbeat to join.
Financial Dependence: COVID-Proof
FRAGILE: corporate employees. They need to remain politically correct, uphold a mission statement they may not agree with and report to superiors they might not respect. These employees are perennially a bad-quarter (or a poorly thought-out tweet) away from getting pink-slipped. Going into the 4th quarter of 2020 the Banking, Airline and Energy sectors have already laid-off thousands of employees due to the economic impacts of COVID-19.
ROBUST: America’s niche workers. Pre COVID-19 they drove for Uber or Lyft. Post COVID-19 they deliver food to households. Or they tutor kids that are now increasingly being homeschooled. Or perform a number of other odd jobs found on the internet. Never the well-paid type, niche workers nonetheless do the work many corporate-types are overqualified to perform or unwilling to do. Niche workers tend to stay employed in most parts of the economic cycle.
ANTIFRAGILE: artisans. The ones who really have talent, which in spite of COVID-19 continue selling their services via Zoom and plying their wares through sites like Etsy. Once COVID-19 is in the rearview mirror the Zoom and Etsy-type platforms could become permanent sources of revenue for these artisans. In some cases, the savvy social media types among them may decide to supplant or completely replace their former business model with their newly conceived and perhaps even more lucrative, “COVID-proof”, business model.
Love Trumps Hate In Your Portfolio
FRAGILE: a diversified portfolio of bonds, stocks, domestic and international index funds of various cap-sizes which tend to be correlated when market volatility increases. This type of portfolio is
equally prone to big gains, big losses, and investors’ behavioral missteps. Holders of this portfolio “hate mistakes”.
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ROBUST: a portfolio consisting of cash and cash-equivalents which experiences little volatility regardless of market condition. Its asset-mix preserves the value of the portfolio but its returns may not be much better than the rate of inflation. Holders of this portfolio are “indifferent to mistakes”.
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ANTIFRAGILE: a portfolio with a 10%-15% allocation in “moonshot” investments and the rest in cash or cash-equivalents. The moonshot portion consists of hundreds of small bets which can lead to small mistakes, but these moonshots also expose investors to asymmetric returns. This portfolio is positioned to capture the upside of companies whose markets, products, and (consequently) profit potential are misunderstood, mispriced, and undervalued. A small position in cryptocurrency and altcoins are a logical, perhaps even an optimal, addition to this portfolio. Holders of this portfolio “love mistakes”.
“Dumb” Rock Stars
“I’d rather be dumb and antifragile than extremely smart and fragile, any time.” – Nassim Taleb, Antifragile
We have established that fragility exists on a spectrum and that among the antifragile are some artisans.
Certain types of people, however, are even more antifragile than artisans. In Antifragile: Things That Gain From Disorder, Nassim Taleb draws on the analogy of a “rock star” to refer to such people.
“Rock stars” are the most antifragile because, like artisans, their reputation is not beholden to the professional Establishment, to a corporation’s bylaws, or to institutional investors’ whims. But unlike most artisans, “rock stars” often benefit from their careless (or perhaps semi-intentional) “dumb” mistakes.
Consider the rapper who becomes even more famous after going to jail. Or the heiress who records a sex tape and becomes more, not less, followed on Instagram. They are uniquely situated to benefit from chaos and disorder.
They are “dumb and antifragile”.
I would add that the Nassim Taleb-type is wise and antifragile.
Watch this video: Nassim Taleb and Robert Shiller “panel/debate”. Robert Shiller is a Nobel Prize-winning economist. Part of the academic Establishment. Very careful with his words and measured in his tone, Robert Shiller obviously has a reputation to uphold.
Despite himself being a part-time academic, Nassim Taleb talks down to the academic and economic Establishment, to Government institutions, and to Robert Shiller himself. In the video, Nassim Taleb states that “removing economists from the planet would improve the planet.”
Nassim Taleb’s combative streak could be off-putting (or funny), but it derives from an “ethical rule” he summaries as follows:
“If you see fraud and do not say fraud, you are a fraud.”
The more truth Nassim Taleb speaks to Power the more interviews he is asked to partake in, the more followers he gains on Twitter, the more books he sells on Amazon, and the more quoted he becomes worldwide – even by members of the Establishment which he insults.
Beholden to no one, Nassim Taleb is a “rock star”.
Most of us will never become rock stars or completely disassociated from our reputational integrity.
Luckily, we can still strive to situate ourselves to become less fragile in all of life’s domains.
Or we can just settle on staying plain dumb, but Antifragile.
Author also wrote: N. Taleb’s Minority Rule | Your Inner Voice | Bitcoin’s Volatility | Blockchain Stocks | 50 Investment Lessons | Flywheel Effect | Bitcoin: Mental Framework | Crypto Moonshots | 4 Crypto Stocks | Bitcoin: Insurance | Brief History: Money | Spontaneous Order | Ackman’s $2.6B Moonshot | Fragility Inducing Events | 1% Bitcoin: 99% Cash | COVID-19: Market
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Disclaimer: Topics covered herein are for informational purposes. Before acting on investment information consult with a financial professional. This article is intended for people who understand the pro/con impacts of “tail-risk,” “convexity” and asymmetric risk-reward in the context of an investment portfolio. Seek medical advice from a qualified professional before using psychedelics.
