[Ed note: I had this as a draft before the whole SVB debacle, but only got around to publishing it afterwards. It wouldn’t have made a difference either way.]
There’s a famous soliloquy from Star Trek (The Original Series), where Captain Kirk is debating the rest of the crew about what action to take.. I actually don’t remember the context, but the line that stands out to me is this one:
Whether you like it or not, you’re probably a capital allocator. Whether it’s your own capital, investor capital, the bank’s money, or a combination, you’re actively choosing to put your money to work somewhere.
A big part of that allocation is risk; or as the GOAT reminds us:
Rule #1: Don’t lose money
Rule #2: See rule #1
That risk is everywhere around us. It requires us to strike a balance to be comfortable with the risk we cannot control (hyperinflation, nuclear war, revolution, alien invasion), while also being aware of the tail risks that maybe we should probably pay a little more attention to (bank runs, second order risks to our customers, galloping interest rates, major internet outages, capricious internet billionaires).
To wrap up the rambling, what unknown risks are out there, that if you thought about it enough, could be turned into a known risk?