Investing through a crisis (part deux)
So, in the last note we covered the possibilities, or probabilities of an extreme outcome.
In this note, I wanted to talk a little about the 10%.
For those who didnt read “investing through a crisis”- we assigned odds or probabilities to certain major outcomes. In this piece, we are going to dig into the 10%, or put another way where in 9 out of 10 scenarios (90%) the world does not end in WW3.
So if we are saying there is a 90% chance of their NOT being WW3, what do we think that means?
This is hard right? I dont think anyone believes in moonbeams and fairies as the alternate reality.
So lets make it simple.
1/3 : a world in which the after effects of the Russian invasion fade within 12 months and we return to a focus on the post covid normalisation, and market cycles
1/3: a world in which we see Russia undergo a huge change, and open up — reflective after its invasion, and a move towards greater harmoney
1/3: A world in which the effects are ongoing, Russia maintains an aggressive stance, and China increasingly plays a role — with the gravitational centre moving east from DC and the world slowly moves towards a new mulitpolar axis.
You might say, well, I can see all of these things happening, or none, or bits of each. Thats fine, the process is the same.
So we have a 10% chance of WW3
a 30% chance of a return to ‘normal’
a 30% chance of a more positive outcome
a 30% chance of a more complicated outcome.
How on earth do you position for this?
Well in the next post we will break these down further, and discuss what normal might mean, and how you might invest.