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  • Writer's pictureGerard Kavanagh

The tide is out and we are fully clothed

Today's Blog commentary will concentrate on Risk and its management.

Before we get there it's worth highlighting this article on DB's Jim Reid lates commentary which highlights the world we have long discussed - that of embedded inflation, low yields (coerced or not), and thus financial repression: Guess What Comes Next ( We'll leave the article (which is succinct) for readers to open and digest at their leisure. So back to Risk and the management thereof, and on that topic, we will defer to the master: Howard Marks: You Only Find Out Who The Good Investors Are During Bad Times ( "In his recent presentation to the Wharton School, Howard Marks explains why you only find out who the good investors are during bad times. Here’s an excerpt from the presentation: Marks: I also believe that risk is hidden and deceptive. This is really important. Loss is what happens when risk, the potential for loss, collides with negative events. You may have some risk in what you’re doing for example if you have a house and it has construction flaws it will stand unless there’s an earthquake. We lived in California a long time. We saw this in action. So the fact that a house stands in placid time doesn’t mean that it doesn’t have any construction flaws. Equally an investment can be risky and still not show losses as long as the environment remains salutary, and if you read Fooled By Randomness by Nassim Taleb, which I recommend, he compares investing with Russian roulette, if you know the game of Russian roulette. He says, rather than six chambers in the cylinder investing may have like a hundred chambers in the cylinder, there’s only one bullet, so it doesn’t come up very often, so you put the gun to your temple, which is what you do in Russian roulette, you pull the trigger. You do it about 30 times the bullet doesn’t shoot you in the head, so you conclude there’s no bullet, and that’s what investors do. When you go through placid times people conclude that bad things can’t happen, that makes them engage in risky behavior. But guess what, if you’ve pulled the trigger 20 times you have increased the probability that you get a bullet on the next pull, not decreased it, so this is important to think of. The riskiness of an investment becomes apparent only when the investment is tested in bad times, it’s survival of success in good times tells you relatively little. And this is why Buffett coined the phrase in early ’09 – that it’s only when the tide goes out that we find out who’s been swimming naked. It’s only in tough times that we find out which investments were risky and which were not. So when you look at a record for an investment, or an investor in good times, and it did well you have to realize that that’s only one side of the story because you don’t find out about the risk in the good times." This brings us to another excellent quote on that theme from the great Seth Klarmen, which is wholly pertinent to today's environment (the regime change): “The idea of persistently low rates, has wormed its way into everything: investor thinking, market forecasts, inflation expectations, valuation models, leverage ratios, debt ratings, affordability metrics, housing prices, and corporate behavior. Moreover, by truncating downside volatility, forestalling business failures, and postponing the day of reckoning, such policies have persuaded investors that risk has gone into hibernation or simply vanished.” Risk has woken up! In this world, a world we have called perfectly, we have a secular investment regime change (it will last one but likely 2 decades) - inflation, low yields, deglobalisation, and financial repression (capital and yield controls). There will be a slowdown, but not necessarily a deep recession because Govts NOT central banks, will take control of broad money growth (via govt guaranteed loans made by the banks). This will be directed to govt pet projects and forced CAPEX / supply chain reshoring. We will be going from free to command economies. So how do we manage that risk, how do we avoid the investments that served so well since the last crisis? The obvious retort is you become value NOT growth investors. The FIX00 token (and its forthcoming F-NFTs) are tailor-made for what is happening. And so as ever we will repeat the mantra: The FIX00 project has old dogs at the helm, and we have lived through investment regime changes before and thrived. Experience is hard-earned but invaluable. The FIX00 biz model IS consumer-facing. FIX00 token has a ruby valued at $290m gifted to it in perpetuity, who else in the crypto-verse made such a commitment or has that much skin in the game! FIX00 F-NFTs will offer ownership of such assets, at a very affordable price and heavily discounted - who else offers the fixed asset value, the ubiquity, and thus the potential utility in the crypto-verse? The answer is no one because this Emperor (HAS clothes The FIX00 project IS cash and asset rich, it can weather the storm. The FIX00 project is a FCF business model. The FIX00 products are digital/real-world stores of value - they are literal and figurative shelters from the storm. FIXOO products are portable and, as history has proved time and again, that has added merit in crisis. We're here for the long term, we herald true disruption to an extremely lucrative closed and antiquated business model, that is the upside. There is serious downside coverage given the products we are offering, they are not volatile but are REAL (and proven) stores of value. FIX00 is answering the call - protection, innovation, and deliverability

For a short overview of the FIX00 project 🙂 please use this link: The Start of something new

If you still have questions, we are happy to have you join us. We take great pride in our company and the revolutionary change it heralds. Please feel free to contact us if you need further information or have further questions:: Contact Us

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The future is filled with promises for us all. We're glad you're with us.

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