surprises
Issue 126 - March 17th, 2023
The Silicon Valley Bank meltdown shocked the world, and the ripple effects will completely transform the way business is done in many ways. Time will tell how this plays out, but the high-level learnings from “Black Swan” events such as this one are always incredible and a great time to learn and reflect.
The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. - Wikipedia
Whenever “Black Swan” events happen, I remind myself of the following (simple) frameworks and philosophies that I have learned & studied over the last few years about “unexpected” events:
“Whenever we are surprised by something, even if we admit that we made a mistake, we say, ‘Oh I’ll never make that mistake again.’ But, in fact, what you should learn when you make a mistake because you did not anticipate something is that the world is difficult to anticipate. That’s the correct lesson to learn from surprises: that the world is surprising.” - Daniel Kahneman
“Things that have never happened before happen all the time.” - Scott Sagan, Stanford Professor
Rare Events Are Not That Rare: One reason we’re bad at assessing and preparing for risk and random events is that we are not good at learning from the past. We mistakenly believe that because something has never happened before, it can’t happen now. We then defend our lack of planning accordingly: “That had never happened before!” - Nassim Taleb
“RISK IS WHAT YOU DON’T SEE!”: The biggest economic risk is what no one is talking about, because if no one’s talking about it, no one’s prepared for it, and if no one’s prepared for it, its damage will be amplified when it arrives,” Housel said. “Think about risk the way California thinks about earthquakes,” Housel said. “If you live in California, you know there are going to be big earthquakes in your future but you don’t know when or where . . . but you have an expectation . . . you are always prepared for it.” - Morgan Housel
In addition to these mental frameworks, I love to study history instead of reading “future forecasts from experts”. History is a great way to learn how things happened and unfolded, and you will notice that no 2 events are ever the same. Humans tend to have a bias to try to predict future events from other recent events also known as “recency bias”.
For example, how many times do you see headlines with some sort of twist on the following…. “the next 2008 crisis is happening now” OR…. “this is going to be just like the DOT COM bust!”
Always prepare for the unexpected surprises that will happen 100% of the time at an uncertain time in the future!
2008 and the dot com bust were events unique to themselves and will probably never happen in the exact same fashion ever again; although future crises may have similarities, the future is completely unknown.
Focus on controlling what you can control and always build a margin of safety around your life and your business AND MOST IMPORTANTLY…always prepare for the unexpected surprises that will happen 100% of the time at an uncertain time in the future!
Newsworthy Links To Share
PODCAST Highlight: Chad Cook - Founder of Quadrant Investment Properties - Placemaking & Developing Urban Office Properties | The FORT #268
David Firestein Brought Starbucks to New York City 30 Years Ago. What’s Next?
StripMallGuy on the naked truths of retail investing: RETwit celeb talks cash cows, nightmare tenants and the perks of being anonymous
The Covid clamp-down: Pre-pandemic listings on AirBnB and VRBO grew to 663K across the 50 largest U.S. markets, according to data from AirDNA. During the pandemic, that figure dipped to a low of 418K listing in February 2021. This means landlords either converted to long-term leases or didn’t list them at all. Some of those listings also transitioned to medium-term rentals targeting traveling nurses. AirDNA reported that listings have once again hit 600K since. (CRE Daily)
ICON and BIG will scatter 3D-printed 'el cosmico' campsite across marfa desert
A Hedge Fund Trader Gained 119% Betting Against Malls. Now He’s Targeting Offices
A hedge fund manager who made a 119% return shorting debt linked to shopping malls is betting on fresh pain in the US commercial property market.
‘No Good Choices’: Owners Of Maturing CMBS Loans Scramble To Find New Debt: Close to $2B worth of securitized debt is scheduled to mature in DFW this year, second only to NYC in volume.
Timeline: The Shocking Collapse of Silicon Valley Bank
Silicon Valley Bank was shuttered by regulators becoming the largest bank to fail since the height of the Financial Crisis. What happened?
Walmart Helped Put Northwest Arkansas on the Map. Now Everybody Wants a Piece of It. (WSJ)
Cracks Emerging in U.S. Office Sector Lending, More Pain Ahead?
Builder confidence for single-family homes rose in March, with the National Association of Home Builders/Wells Fargo Housing Market Index rising two points to 44.
Crow Holdings Starts Mass Timber Office Building in Frisco
Crow Holdings is building a seven-story, 242,000-square-foot office building in Frisco, and it’s made from mass timber.