Antifragile
“The fragile wants tranquility, the antifragile grows from disorder, and the robust doesn’t care too much.” — Nassim Taleb
Welcome to this week’s blog. In the last blog, I made a case that simple solutions stand better chance in dealing effectively with complex and dynamic situations. In this blog I contend that decisions that help us reduce or remove fragility from situations are better decisions. I end the blog with pointers on how to make such decisions.
As I write this article, it has been a good seven weeks since I did any running. I injured my right knee (MCL tissue damage) a few months back and ever since, I had been in and out of my running routine. As things seem to get better, I would go back to my running routine only for the injury to flare up again requiring me to take a break again. I let a fragile situation remain fragile by making suboptimal decisions.
Rather unfortunately, fragility is all too prevalent around us. Perhaps a little presumptuous of me in extrapolating here but I do believe that many of us lead fragile lives in many important dimensions of our lives — health, relationships, careers, finances and self esteem.
“This is the tragedy of modernity: as with neurotically overprotective parents, those trying to help are often hurting us the most.” — Nassim Taleb
High incidence of divorce in western societies and alarming increase of divorce rate in India, reflect the fragility of the institution of marriage. Periods of excessive hiring followed by waves of layoffs indicate fragility in job market. Most of us tend to follow hot trends in investing. When real estate is hot, everyone wants to buy real estate and many end up buying at inflated prices. Ditto with hot stocks (stocks of “Zoom” during Corona pandemic) and hot new assets such as Crypto. When these hot trends cool down with attendant fall in their values, it ends up upend financial situation of many.
Here is a rather simple definition of fragility continuum, from Taleb’s book — Antifragile:
Fragile things are those that lose from disorder whereas
Robust things are unaffected by disorder and
Antifragile things gain from disorder
Few everyday examples of fragility
A coalition government with just enough seats to be eligible to form the government, cannot make any real progress. Better off being in the opposition in such a situation.
Your career prospects taking a hit because your boss quit the firm. One of my previous bosses gave a very sage advice in this regard — your reputation should never be tied to one individual in a firm.
Stock Market crash (such as the ones during 2008 subprime lending crisis and 2020 Corona pandemic) requiring you to scale down your life’s financial goals like funding your child’s education or your retirement.
Job loss necessitating you to take loans from your friends/family/credit cards to run your house.
Having to take a personal loan to take your family on vacation or buy a household appliance such as a refrigerator.
Falling sick (eg., with Flu) every few months.
Constant injuries keeping you from consistently executing your exercise regimen.
“It is no secret that large corporations prefer people with a family; those with downside risk are easier to own, particularly when they are choking under a large mortgage.” — Nassim Taleb
Given the dynamic nature of our world, disorder is the norm and this means fragile aspects of our life are constantly at risk of falling apart. One of the malaises of modern era is our mental conditioning to maximize — higher career designations, higher personal financial worth, bigger houses, higher cost vacations etc. As such, there is nothing wrong with this except maximizing, many times, brings along fragility. Ambition is good — you just need to ensure that this does not come at the expense of making your life brittle.
If you are making a large ticket purchase such as buying a house, ensure that your financial situation allows you to put down a large portion (say, 40% or more) of the purchase price as down payment. If your household runs primarily on your salary income, ensure that you have sufficient life insurance cover and a few months (or a year’s) worth of expenses in your bank account. If you made your career by piggybacking on opportunities created by an alpha boss, be sure to network horizontally and vertically from your boss’s level.
Eat balanced, wholesome food in appropriate quantities regularly so that you may indulge on occasional cheat days. Sleep well most days so that you may occasionally stay up for watching a movie or have a night out with friends. Execute sustainable exercise routine (45 minute brisk walk suffices most purposes) most days of the week so that you may allow yourself an occasional rest. Don’t preschedule cheat days, determine them on the fly.
“Trial and error is freedom.” — Nassim Taleb
Fragility increases when we prefer comfort zones, when we resist change and volatility and when we try to control the uncontrollables. It follows that we can reduce fragility by venturing out of comfort zone every so often, expose ourselves to change and volatility once in a while and limit the impact from uncontrollables, instead of trying to control them. You limit impact from uncontrollables by creating layers (factors) of safety and limiting leverage.
Creating optionality is another way to reduce fragility. I incorporate solid buffers for all my appointments and use the buffer time to catch up on my reading or podcasts. Creating multiple income streams instead of relying on salary income alone, is a great way to reduce fragility but it’s my realization that this is not everyone’s cup of tea. What is, however, possible for most people is saving and investing a decent chunk of their salary (10% to 50% or more). Over time, these investments compound to serve as a credible alternative source of income.
Bottomline
“For my last job, I wrote my resignation letter before starting the new position, locked it up in a drawer, and felt free while I was there.” — Nassim Taleb
In a world where fragility is becoming increasingly common, an essential aspect of all “good” decisions is to help you become less fragile and more robust. Nicholas Nassim Taleb, in his seminal book “Antifragile”, describes in great detail, the continuum of Fragility->Robustness->Anti-fragility. In order to move rightwards on this continuum, “satisficing” should be consciously viewed as a critical milestone in any pursuit of “maximization”. This has potential to free you from the shackles of modern-life entanglements (slavery?) and let you pursue your real aspirations.
***************************
Thanks for taking time to read this. In this newsletter, I share my learnings that could help you improve your decisions and make meaningful progress on your goals and desires. I share stuff that I have personally experienced or experimented with. If you find this newsletter worthwhile, please do share it with others — of course, only if you do not mind it.
For more about me:
Rama on Linkedin (CV and Blogs)
