Today I would like to talk to you all about a concept. Its not really related to finance exactly but can be applied in life at a greater scale. Especially given the times we are living in.
Anti-Fragile. Have you read this word anywhere previously? I bet most of you are wondering that this word doesn’t even exist in the English language! And I applaud you, you are 100% correct. But then what is Anti-fragile or what is the opposite of fragile? Anyone? …Okay google it if you don’t know.
The answer is Robust (according to Google)
But think deeply, you will soon realize that robust is more of a neutral word rather than total opposite. To make my point clearer, love’s total opposite is hate (total opposites) but not medium love (if that’s even a concept!?).
Meaning of fragile? Its easy, something that can be broken down easily. Then the total opposite should be being stronger instead being broken down. Okay, confused? Take an example of a vase of flower. You ordered a beauty product through LifyBox and the courier services mishandled the product. Now, that vase is ‘fragile’. Not ‘anti-fragile’ as it breaks down under pressure instead of strengthening under pressure.
The idea is how to make your life ‘anti-fragile’ so that you can take advantage of pressure or in this case extreme events so that you don’t come out of it as broke (both literally and metaphorically) instead of being rich.
I accept the idea is a little tricky to wrap around your head but it is a beautiful concept. Take two professions: a hedge fund manager (like a mutual fund manager but more prone to blowups) and a dentist. In case of extreme events, who in your view will come out better? (yes, in terms of career!) Think deeply, dentist of course. Why? Because he/she has a limited downside and limited upside whereas the former, will get blown away and hence will be ‘fragile’.
Wait, what? Okay, lets take a simpler example. Being anti-fragile is like you are exposed to a lot of uncertainty/volatility and you actually tend to gain from it rather than blowing up. OPTIONS, a financial derivative in financial markets exactly sounds like this. Buying an option is a position that ‘benefits’ from ‘increase’ in volatility with a ‘limited’ downside. All these elements are exactly what ‘antifragility’ is.
I find this concept fascinating and no not my idea but from a book called ‘Antifragile’ by Nassim Nicolas Taleb.
Try and reflect on the idea if you can, till then, see you next time!
