"Living things are long volatility, equity is short volatility"

The core idea behind "Living things are long volatility, equity is short volatility" can be boiled down to a comparison between natural life and the stock market, specifically how they handle uncertainty and unpredictability. In simple terms, living beings, like humans and animals, are designed to thrive in chaotic, changing environments (long volatility). On the other hand, equity (stocks) typically benefits from stable, predictable conditions (short volatility).

Historically, this concept ties back to the principles laid out by Nassim Nicholas Taleb in his book "Antifragile." Taleb argues that some things gain from disorder and volatility (like living organisms), while others are fragile and suffer from it (like financial markets). Understanding this distinction helps us see why some entities (living things) can adapt and grow amidst chaos, whereas others (stocks) might crash and burn when faced with sudden changes.

Take for example a small business owner, let's call her Sarah. Sarah runs a local bakery. One day, a massive storm hits her town, causing power outages and disrupting supply chains. Sarah, who's used to dealing with unexpected situations, quickly adapts by using a generator, sourcing ingredients locally, and even coming up with new recipes using available materials. Her bakery not only survives but attracts more customers because of her innovation and resilience. Here, Sarah's business is 'long volatility'—she thrives in the face of unpredictability.

Now, think about a tech stock in the market. Let's say Company X has been enjoying steady growth. Suddenly, a global event causes market instability. Investors panic, and the stock value plummets. This stock is 'short volatility'—it suffers from the sudden change, reflecting its reliance on stable conditions to maintain value.

So, how do you apply this wisdom in a practical sense? Start by embracing uncertainty in your personal and professional life. Don't shy away from challenges or unpredictable situations. Instead, find ways to adapt and grow stronger from them. It could mean diversifying your skills, building a robust support system, or simply maintaining a flexible mindset. The goal is to become antifragile—benefiting from shocks instead of being harmed by them.

Imagine you're a student preparing for exams. Instead of sticking to a rigid study plan, you decide to mix things up. You study in different environments, tackle subjects out of order, and even test yourself with surprise quizzes from friends. This approach might feel chaotic, but it helps you become more adaptable and better prepared for the unexpected twists of the actual exam. By embracing this volatility in your study habits, you're bolstering your ability to handle stress and perform well under pressure.

Life, much like nature, is filled with unpredictability. The more we try to control and eliminate volatility, the more fragile we become. Instead, by recognizing and embracing the chaos, we can build resilience and ultimately thrive. So, next time life throws you a curveball, think of it as an opportunity to grow stronger. Embrace the uncertainty, adapt, and watch how you can turn volatility into your greatest asset.