Economic Thoughts: Warren Buffett Upside Down

Warren Buffett is known for many sayings, having a worldwide following as the world’s most successful serial investor. One pays attention when Warren says “only when the tide goes out, do you discover who’s been swimming naked”. In other words, when times turn poor, and interest rates rise, we can see who in good times has not taken enough precaution against adversity, thus more easily becoming overwhelmed by it.


But these words can be recast, having a different outcome. The saying I have in mind also has an American origin, and is just as true in its application: “When the chips are down, you are given the chance to find the strength you never knew you had”. And there are many more variations along these lines, motivational in their inspiration. Indeed, our daily language is full of it. How about the everyday wisdom to “keep your chin up” because “If it doesn’t kill you, it can only make you stronger”.


Or the thought “if you fall, pick your self up, dust yourself off and be on your way” (of 1930s Depression origin). If you make a mistake, learn from it, and move on.


Our SA tide has certainly been running out for a long while, and now is the moment of truth for us to discover whether or not we have been swimming naked, potentially succumbing to adversity as it overwhelms us. But instead of nakedness and succumbing, however, the lessons surfacing to date are mostly of a totally different calibre.


One encounters a resilience & vibrancy not generally associated with hard times. Survival rules have long been operating, people have and are adjusting to things going against them, and are doing so with a quiet (and admittedly sometimes not so quiet) determination.


Instead of finding ourselves cast high & dry by a tide going out, we respond far more in line of the chips being down, and putting shoulder to the wheel, like in olden days having to physically get the wagon out of the mud.


The evidence of this is everywhere, inside businesses and families, where people change gears, adjust and move on, adjusting to the times as they change. We tend to emphasize the strength of our many high-quality institutions but performance under trying circumstances reflects as much the quality of many individual people meeting adversity headon. And not simply rolling over.


Very little skinny dipping as far as I can see, except among certain types of households traditionally hooked on debt and consumption, being poor savers. And of course certain mining houses that misread the global cycle terribly, mainly a China, frackers & geopolitical play.