Q&A 061

Published on:
February 16, 2022

Dear Q&A friends,

As COVID starts to claim a less prominent role on the world stage, it seems other candidates are eager to take over. Stock market nosedives and looming military conflict are the candidates we look into this edition. Because of our holidays, we will be taking a break from publishing the next two weeks and look forward to serving you with our musings in 2nd week of March. Enjoy!

πŸ“‰ Crash?

With stock markets breaking the upward trend of the last 10+ years in January, there has been a lot of chatter whether this marks the beginning of a market turnaround and perhaps a crash. When you take a moment to take stock (pun intended), you may come to more nuanced views.

A short article in the Economist summarizes the current situation nicely and how it is different from previous years, such as 2008 and 2001, in which company valuations were high and speculations abundant.

"Today banks are less central to the financial system, better capitalised and hold fewer highly risky assets. More risk-taking is done by funds backed by shareholders or long-term savers who, on paper, are better equipped to absorb losses."

Since the previous crises, new regulations moved a lot of the risk-taking out of the banks. Though the endless stream of money-printing and low interest rates (which go hand-in-hand) have pushed company valuations through the roof, associated risks of big losses are mostly held by private investors. The financial system will most likely survive such a shock. The economy may still suffer of course.

Though the tone in the Economist article could easily make you feel depressed about the current situation, I tend to be more optimistic. Yes, there is a lot of speculation and room for big losses. However, this time, chances are much reduced the public will pay the price and be called to bail out banks, increasing moral hazard. That's a net gain.

Meanwhile, as has often been the smartest thing to do, keep vigilant, do the analysis and follow your gut.

🌈 Context

The Ukraine-saga continues. When we would just go by Western media, the first rockets could have been fired by Russia, while we send out this newsletter. Still, I feel very comfortable writing this snippet and preparing for a regular Wednesday.

When forming opinions and following others, it is important to understand the context. That requires work on your side. With so much information readily available to us, we may have gotten a bit lazy. Somebody else could already have figured it out. Add a little bit of confirmation bias to the mix and large groups of people will think alike.

Where to start understanding the context? International media covering all sides is usually a good start. Not always easy and reliable but at least it gives a sense of how people are 'educated' in the different parts of the world. Another source is finding out what the historical context is. Especially, in cases of territorial conflicts.

Regarding the Ukraine, I particularly liked Dan Snow's interview with A. D. Miller, a former Moscow correspondent for the Economist. Your view will become much more nuanced. While you're on it, please also check out his podcast on 'the troubles' in Northern Ireland (spoiler alert: the conflict is not about religion).

When are you done understanding the context? The easy answer is: probably never. Practicing what I call 'amphi-context', getting perspectives from different angles and multiple sources, may be a good start but can be time-consuming. To make it more practical, I believe it is a balance between analysing different sources and feeling comfortable with how 'grey' the situation is. Big issues hardly have a black-and-white pattern.

🌏 World

As the COVID pandemic seems to take a turn for the good, my household grabbed the tail-end and got infected a few days back after 2 years of staying out of the weeds. While my 8 year old son recovered within 24 hours, I seem to have a longer struggle fighting the virus, considering the frequent chills and notifications from my Apple Watch alarming me of high heart rate while being sedentary these past days.

What always strikes me when catching a virus of some sorts, is how it affects your view of the world around you. My world just shrinks, creating a tunnel-like vision of everything around me. It's your body's way of informing you to stop focusing on the outside world for a while. In 'No Mud, No Lotus', Thich Nhat Hanh wrote:

"When you cut your finger, you just wash it and your body knows how to heal. When a nonhuman animal living in the forest is injured, she knows what to do. She stops searching for something to eat or looking for a mate. She knows, through generations of ancestral knowledge, that it’s not good for her to do so. She finds a quiet place and just lies down, doing nothing. Nonhuman animals instinctively know that stopping is the best way to get healed."

While I fully understand this might not be a possibility in all situations, you might consider it a 'gold standard' to strive for, as I do. I know in the past I have struggled often with relinquishing responsibilities while ill, keeping a laptop next to me in bed, trying to keep the world turning. The 'badge of honor' we culturally assign to this behaviour might actually not be in all of our best interests. So, with that said, for now, I'll just stop.


That's it for this week! If you got forwarded this newsletter and like what you read, get your own. Or get an impression of everything else we shared in our renewed, searchable archive.

As always, we would love to hear your thoughts and tips. Just reply to this e-mail to get in touch with us.

Have a great week!

Quinten & Alphons