Robot, Slash, Butterfly: How to Think and Act in a Pandemic-Caused Catastrophe

Seeing the lake for black swans as a positive optimist

COVID-19 Global Cases Dashboard by Johns Hopkins University

Why did the stock market crash?

According to the catastrophe theory by Mark Buchanan in his book “Ubiquity: Why Catastrophes Happen”,

  • Critical state: the US has had a bull market for 11 years, with frequent big jumps in value.
  • Tigger: the oil price war between Russia and Saudi Arabia; the fast-spreading pandemic.
S&P 500 ETF Vanguard (VOO) from barchart.com

How do we think and act in the coronavirus pandemic caused catastrophe?

There is no obvious cycles in stock market crashes. Spanish flu in 1918, Black Monday in 1987, the subprime crisis in 2008, and so on. From a data scientist’s perspective, I would have to confess that there is no obvious cycle in financial crises that would allow us to use any typical time series forecasting technologies to predict the next one.

1. Seeing the lake for black swans

A lake is not just for white swans. There can be black swans, maybe even green swans, purple swans, or red swans. There could be things beyond human cognition, and we should always be prepared for the unexpected:

  • Physically ready: Do workouts as a daily routine, take cold showers, try intermittent fasting, and so on. All these can increase your stress level, and by doing this you are training your body to handle high-pressure situations.
  • Mentally ready: Instead of being reacting to a crisis with panic, we can see it as a call to rise above our everyday existence. Life is not just about me. By reaching beyond anxiety about my own future, I can focus on what I can do for neighbors, coworkers, and people in the frontline.

2. Slash careers, slash revenues, slash planets

“Don’t put all your eggs in one basket.” Build a diversified mindset to lower risk:

  • ‘Slash revenues’ means a company having multiple sources of revenue streams. Offering products and services, providing online products and in-store products, slash markets, having customers in Europe and Asia, making a team of on-site employees and remote employees, and so on. The essence of business is to satisfy needs. A company should be flexible enough to adjust itself to feed the needs in special times. For example, Tesla or Boeing can build ventilators, while Louis Vuitton or Prada can produce masks.
  • ‘Slash planets’ means more than one planet for human beings. It is not something that any individual can achieve. However, at least we can see the value of Elon Musk’s ambition to get to Mars.

3. Robot, robot, and robot

As of March 20, 2020, at least 60 Italian priests have died in the coronavirus pandemic. This work of priests needs to be done in the room: besides the bed of the person who is dying. It cannot be done by robots, or even remotely. But how about other people who serve on the frontline?

4. Keeping the butterfly effect in mind

Jeff Bezos sold $1.8 billion worth of Amazon stock in early February 2020, a month before the stock market crash. Nobody can tell whether this sale is correlated to the coronavirus or not. Chess masters can calculate 30 moves ahead. At the early stage of this outbreak, a few people in the world already can foresee the crash in the stock market.

5. Be a rational optimist

photo by Author

What is the amplifier circuit in the catastrophe?

Confirmed cases line chart by Johns Hopkins University
photo by Author
  • Chris Clearfield and András Tilcsik, Meltdown: Why Our Systems Fail and What We Can Do About
  • Dennis Sherwood, Seeing the Forest for the Trees: A Manager’s Guide to Applying Systems Thinking
  • Matt Ridley, The Rational Optimist: How Prosperity Evolves

Data Scientist: Keep it simple.

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