August 16, 2010
I am a mountain person. There’s something about peaks that just makes my heart sing; I’ll take fresh mountain air over beaches any day of the week. The really interesting thing about the mountains, though, is how unpredictable and unforgiving they can be. I was given a friendly reminder of that over the weekend.
Several friends and I spent the last few days hiking and climbing in the High Tatra mountains of southern Poland, just over the border from Slovakia. The views are inspiring, if not slightly imposing… but in this kind of place, I am completely in my element.
Yesterday my friends and I set out on a mountain trail called Morskie Oko. It’s supposed to be one of the most difficult trails in Poland and passes by a number of pristine mountain lakes. I think we clocked about 30km in distance and several thousand feet of ascent over about six-hours.
Here’s where the story gets interesting: after reaching the top of the trail, we were feeling rather pleased with ourselves… exhausted, but engaged in the normal self-congratulatory high-fiving and photo ops that you would expect for this sort of thing.
Suddenly, though, without warning, the clouds rolled in. All of the weather reports said that Zakopane would have perfect weather all day… and yet, within 10-minutes, the sky was covered with ominous dark clouds. Needless to say, we could sense our fortunes changing rather quickly and made a swift decision to start our journey home.
Almost immediately, the temperature dropped. Then the wind picked up. Then the rain. Then the lightening. Then the hail. For the next 13 kilometers or so, we sloshed through the mud, our clothes soaking wet from the cold rain, all while being viciously assaulted by angry pellets of hail.
I would definitely have to think back several years to my days in the military before I can remember experiencing something so unpleasant.
What struck me the most, though, is how quickly things changed– the entire morning was bright, clear, warm, and sunny. We were far more concerned about sun burns and dehydration than anything else, and we made our provisions accordingly. And yet, the exact opposite of what we planned is what actually happened… and as you know, this is not uncommon in life.
You and I could undoubtedly have an entire discussion about this, perhaps making reference to Murphy’s Law, or Clauswitz’s friction and fog of war.
I think Mike Tyson put it best, though, when he said ‘everyone has a plan until he gets punched in the face.’
I know a lot of people who obsess over planning… whether it’s for travel, business, or anything else. I’m sure you know some people like this, the ones who can’t leave the house without an itinerary. They plan to the point of missing out on the action, trying to predict and mitigate every possible risk from every possible angle.
This is impossible. In my opinion, there is a difference between overplanning and being prepared. For example, before heading up the mountain, we made basic, common-sense preparations. Check the weather. Pack some food and water. Money. Map.
Sure, we could have packed a lot more gear, planned the routes more precisely, or made direct contact with the weather service. Regardless, we would have ended up either loading ourselves down with too much equipment or missing the entire experience.
If you’ll indulge me an analogy, I’d like to draw a parallel to planting multiple flags. Planting multiple flags is a system to protect yourself against sovereign risk, which I believe to be the greatest risk we all face. There are some fairly clear indicators about what’s going to happen– higher taxes, capital controls, long-term inflation, erosion of personal liberty, rise of a police state, etc.
As such, there are some basic no-brainer preparations that we should make– establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, etc. Similarly, there were some basic, no-brainer preparations that we made before heading up the mountain– food, water, cash, and map.
Obviously, there are a lot of other things that could happen… things that we cannot see or predict at the moment. I see a lot of people getting wrapped up in these prognostications, though. They’re already trying to figure out how to protect their assets (or plan the hiking route) from every contingency.
For example, what if they open a bank account in Hong Kong, and then the US goes to war with China 10-years from now? What if they apply for an ancestry passport in Ireland, and then the EU falls apart in the next decade? What if they form a company in Singapore, and then Singapore gets taken over by a corrupt dictator at some point in the future?
These are not terrible questions to ask, but I think that by the time capital controls get implemented, these folks will still be sitting in a room ‘what ifing’ everything.
Overanalyzing leads to inaction and paralysis. You can try to plan every possible contingency and never accomplish anything, or you can make some basic preparations, sleep well at night, and make sure to stay on your toes in case things change.
There is no perfect situation or perfect solution, so planning for perfection is futile. Taking action now by making basic preparations is critical; in my opinion, this includes offshore bank accounts and foreign property for starters.