Sometimes Money Can't Save You

When mother nature has something to say, we ought to listen. Disaster after disaster strikes and we watch on with horror. I was shocked by the floods in North Carolina and Georgia after Hurricane Helene last year. We saw whole houses being picked up and swept away. How do you survive that, I asked my husband (definitely the man you want with you in a disaster)? I was shocked by the floods in Spain last year. There we saw people in traffic one minute and then the car was literally gone. How do you survive that, I asked my husband?

Now, today, we watch LA literally burned to the ground. It’s like an apocalypse. My brother-in-law lives there, in the Hollywood Hills. We have driven around the Palisades, admiring the spectacular houses and the beautiful tree lined streets.

And man, there are so many take aways from this.

I mean, firstly, when are we going to start taking climate change seriously? The irony of these fires breaking out less than two weeks before a climate change denier takes office, for the second time. It’s almost ridiculous.

I mean, another thing...if you think you know what unprecedented is, think again. The bar keeps being reset. Anything can happen, anytime. Things we could never imagine.

And another, sometimes money can’t save you. It can do a lot of things, but ultimately, if you have a natural disaster headed your way, mother nature simply does not care who you are or what you have. You are getting totalled.

Whenever I see things like this I think, how do we protect ourselves? My husband and I often have these weird conversations about, if the apocalypse comes, how do we survive? But the apocalypse can come, it might come. It came to LA. It came to communities in South Carolina and Spain and endless other places around the world.

Here in Cayman we face our own demon. Every year we spend months fearing the big one. Another hurricane Ivan. But I wonder if we are thinking big enough. Hurricane Ivan is not the limit. Limits are being pushed every year. Fires get stronger and beyond the scope of human containment. Floods get deadlier and more sudden. And the winds get stronger and stronger and stronger.

So here’s what we do. Here’s the way we can use our money to protect ourselves. We have to build ourselves to be anti-fragile and we need to have options.

Many of the famous actors and actresses that have lost their homes will be ok financially (that’s not to take away from the trauma and terror of it all). It’s utterly devastating and no one should ever see their home reduced to rubble. But their home in the Pacific Palisades will probably be a small amount of their net worth. They are antifragile and they have options – they most likely have other houses to live in. That of course won’t be the case for everyone who has lost a home. Many of these homes were not insured for fire and thousands of people truly have lost everything.

Nassim Taleb explains that unlike fragile items, which break when put under stress, antifragile items actually benefit from volatility and shock. To become antifragile we need to manage our risks so we can benefit from unpredictable events. We might not be wealthy enough to have four different houses across the world and a private jet to jump on when the disaster hits.

But we don’t need that.

We just need to have built a solid financial foundation – a low or modest amount of debt, insurance to cover as many scenarios as we can imagine and cash in the bank to buffer us when things go south. If we can throw in a community around us who rally and support each other, people we love to help us pick up the pieces, and the resilience to keep going, then we should be able to sleep at night.

Morgan Housel talks about having a barbelled personality; one that is optimistic about the future but also paranoid about all the unforeseen dangers that could lie ahead. That’s amazing advice for everyone, but when it comes to those of us living in the path of natural disasters, I can say with certainty, that one day, you will be very grateful to have taken that advice.

Georgie

georgie@libertywealth.ky