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  1. #3211
    Hunting for Heuristic trends arc's Avatar
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    Quote Originally Posted by Absolute144 View Post
    Heres a good quote from Eric Holthaus

    "The Jurassic Park problem


    The hardest truth is realising that this crisis is going to get a lot worse before it gets better. Among friends, I’m referring to this as the Jurassic Park problem. In the movie, one of the main characters tries to switch off the power to an amusement park filled with dinosaurs,
    Watch a clip of the scene from Jurassic Park (1993).
    a system that was never meant to be powered down. When they switch it back on, chaos ensues, the dinosaurs escape, and we realise that when fragile systems break, they can break quickly. "
    Coronavirus and Chaos Theory


    Chaos theory is a branch of mathematics that examines dynamic systems and states. It defines how perturbations of initial conditions/states can unbalance and possibly destroy large and complex interlinked systems such as national infrastructure or even a nations economic stability. It includes/overlaps with portions of Complex Systems and Inter-dynamics.


    We presently have a lock-down situation designed to enable government applied "management/mitigation" of potential growth in this SARS-Cov-2, commonly known as covid19 virus [this one is highly contagious] within the community. The government is completely correct in this procedure. Any government would be forced to do the same or face very undesirable outcomes.


    Unfortunately the impact on many businesses is going to be catastrophic for those who were already economically on the brink. It will definitely have significant impact on those that were mainly/successfully operating in the black. The expanding sphere of influence [disruption] has already grown to include the food production shell [all systems have interdependencies and as such things/services exist inside multilayered shells, like an onion with other small onions inside it]. One example is the current shortage of workers to enable large scale food/crop harvesting. Another aspect lays in the now monopoly holding supermarket giants simply saying “NO” to specific providers that were traditionally marketed across diverse ranges of supermarkets plus small owner/operator outlets and speciality stores. This results in some farmers forced to plough mature crops back into the ground to enable planting for next seasons [different] crop. The 100% loss has almost driven some farmers economically to the wall. Retail business likes to deal in quarters for forecasting etc but food production is seasonally reliant, summer vegetables/fruits, winter vegetables/fruits.


    Both of these systems also rely upon other entities such as transportation so naturally transport is impacted as well as fuel and mechanical maintenance with frequency of pickups/deliveries declining we encounter trip-costs, break-even points and long-haul costs etc. Then storage, refrigeration, packing etc. A disrupted food production event ripples outward to impact all services/suppliers downstream, eventually to the box/container on the supermarket shelf holding the goods. We will see more of these kinds of events as people begin to realise that large complex nationwide distribution systems have now been “halted” and only singular extremely narrowly focused systems are remaining. [ you dont know what you have lost until it is gone/disrupted, a typical interrelated dynamics situation. One layer of the “onion” is disturbed with all subsequent layers receiving resultant impacts]


    Longer term outcomes include crops not being ready/available when markets are reopened and people flood back into town to go shopping and dining in the pubs, clubs, cafes.


    It may be easy to shut a nation down in time of emergency, starting it back up will take longer, and unfortunately a number of suppliers will not exist any more. The economy will have to rebalance and achieve/reach a new [ lower ] level of economic stability.


    Chaos theory is presently pointing towards dire consequences if the virus proves to be impossible to control/eradicate and more contagious than first thought or If the virus attains large scale community spread [87.6% certainty unless we stay in lock-down]. So far It appears government have done the right thing and lock-down will enable us to bypass the severity so painfully evident in other countries.


    Loosing money in investments will be only one of many outcomes that naturally combine to create a series of negative reinforcement waves. We have a situation that involves a complex series of feedback loops and combinatorial repetitions. A small change in one system impacts on another linked system and unbalances what was previously a naturally regulated and stable system. This pattern continues like ripples across a pond.




    Negative Outcomes Of Sudden Depopulation:


    I personally do not believe we will reach/deteriorate to this level due to the prompt government actions both in physical lock-down scenarios and economic aid packages for business.


    If the virus gains the upper-hand so to speak you can expect to see rolling interruptions to goods and services and many things that have become invisible because they traditionally have “been there” and therefore go unnoticed or questioned. To keep an intricately linked economy working you need a variety of skill-sets, combined with an abundance of people with those skills to meet the cyclical demands.


    What things could/will be impacted... small list follows


    National:


    • Petrol tanker drivers [severe shortage] few qualified [you cant just drive a fruit truck one day and an explosive fuels truck the next] drivers left to deliver petrol to your local petrol stations. [ Petrol rationing ]
    • Technicians to fix the natural gas pipes [ Natural Gas shortages ]
    • Technicians to fix/maintain the electricity generation systems. [ rolling blackouts]
    • Partial collapse of Internet services as staff shortages impact national carriers and the internet hosting companies ability to operate and maintain equipment.
    • Supermarket staff [ shortage ] queuing becomes a day long event [ combined with extreme food shortages due to farm/agriculture systems collapse]
    • Truck drivers [ severe shortage ] to transport food/goods to the supermarkets from the bulk warehouses and other collection/distribution centres. [ also increasing the food and goods shortages, “someone has to physically supply the markets” ]
    • Doctors and Nurses shortage [ 93.5% certainty, this is a critical event ]
    • Hospital functionality impacted by both staff and equipment shortages.
    • Agriculture/Horticulture ventures shrink in size and number [compounding food shortages]
    • Police [ shortage due to front-line staff contracting the virus ] [unfortunately this is also linked to another related shell enclosing the gangs/mobsters who will attempt to take-advantage of any and every decrease in law enforcement]

    International:
    • Worldwide distress as larger governments take precedence over smaller more vulnerable countries [winner takes all syndrome, or commonly known as “Me first”]
    • Shortages of critical medical supplies [we are seeing this already as the powerful/corrupt take opportunities to divert supplies]
    • Global food distribution impacted
    • Shortages of machinery [ all types from farm equipment to kitchen appliances] as shipping and distribution is impacted




    Weather:
    • Additional to the above human factors; unexpected weather events [winter storms] resulting in damage to infrastructure, roads, bridges, telephone cables, fiberoptics, cell phone towers, gas lines, sewerage pipes etc could easily exceed ability to effect repairs in a timely manner. Outages and loss of service would be expected.




    Chaos theory ultimately narrows in on an uncomfortable event... the potential for partial collapse of this intrincately linked industrialised society.


    The question for each of us is ...How far do you want to take this...


    STAY HOME
    Last edited by arc; Today at 11:51 AM.

  2. #3212
    Hunting for Heuristic trends arc's Avatar
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  3. #3213
    Legend Balance's Avatar
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    Quote Originally Posted by arc View Post
    Heartening to see case counts remaining low, and so far 1 death with 1 in critical condition.

    Stay Home & Save Lives!

  4. #3214
    ShareTrader Legend Beagle's Avatar
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    Today's number gives a glimmer of hope which is a useful thing as the lockdown drags on.
    No butts, hold no mutts, (unless they're the furry variety).

  5. #3215
    Legend Balance's Avatar
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    Quote Originally Posted by arc View Post
    Heartening to see case counts remaining low, and so far 1 death with 1 in critical condition.

    Stay Home & Save Lives!

  6. #3216
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    Yeah just 1 death so far is encouraging. 7626 other New Zealanders have died since the beginning of the year but the important thing is that they didn't die of the Covid. Job well done.

  7. #3217
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    I would struggle to call this one way or another based on the limited data currently available. We can only assume that MoH are happy with the progress given they have not scaled up the number of tests performed and slow growth rate in testing capacity. So we wait.

  8. #3218
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    Quote Originally Posted by ratkin View Post
    Surely that depends on the state of the market on DAY 1 If you had fully invested your portfolio in December it would be deep under water. Dollar cost averaging started in December would probably win over the next Ten years
    The article talked about generally markets spending more time going up than down. So our hapless investor who went fully into their sharemarket exposure in December 2019 might have expected to do better than the same investor who split their allocation into three, with the same dollar amount invested in December 2019, June 2020 and December 2020. History will most likely show that our 'all in' investor was 'unlucky' to pick a poor day 1 and go all in, and that they would have been better doing the DCA thing. But this was the result of picking a poor 'day 1'. Most of the time our investor wouldn't have picked a poor 'day 1' and would have been better off going all in.

    This is where statistics can smudge the real life picture. The fact that our hapless investor was unlucky in 'going all in' during December 2019 is no solace to our investor who has lost money and may see the consequences of this 'bad luck' dog them for years. Our particular investor has lost and lost big time. The fact that statistically they were unlucky is no solace. They would have been better going for DCA, even though their expected return was lower using this method, because it would avoid the chance of becoming an 'unlucky outlier'. DCA is a kind of insurance policy against wild swings in your capital. For that reason DCA could be considered superior to 'all in', even though the 'expected return' (a statistical term) of using DCA is less.

    SNOOPY
    Last edited by Snoopy; Today at 01:58 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  9. #3219
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    Quote Originally Posted by Snoopy View Post
    The article talked about generally markets spending more time going up than down. So our hapless investor who went fully into their sharemarket exposure in December might have expected to do better than the same investor who split their allocation into three, with the same dollar amount invested in December 2019, June 2020 and December 2020. History will most likely show that our 'all in' investor was 'unlucky' to pick a poor day 1 and go all in, and that they would have been better doing the DCA thing. But this was the result of picking a poor 'day 1'. Most of the time our investor wouldn't have picked a poor 'day 1' and would have been better off going all in.
    Yeah, yeah DCA returns are lower compared to just shoving the whole lot in for sure. This video at the The Compound, with Down Town Josh Brown, covers it nicely.

    https://www.youtube.com/watch?v=D9BZHi0Ohnk

    "having said that" (a Curb reference) I still dollar cost average, albeit aggressively. I did the sums over the weekend and see cash is now sitting at 23 per cent of my financial assets which is ridiculous. However, i can't bring myself to just dump the whole thing in the market because the "next leg down" "testing new lows" and other such versions of investing "here be dragons". So DCA is a way to get over this hurdle. I'll be back to where I want to be in six months or so.
    Last edited by Bobdn; Today at 01:59 PM.

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