Story of Our Times: Why we all need to become resilient investors

The Resilient Investor: A Plan for Your Life, Not Just Your Money presents a greatly expanded view of investing, and guides readers through the process of designing their own resilient investing plan. “Resilience” as a concept has been going viral of late, being referenced by a wide variety of academic disciplines, think tanks, government programs, journalists, and grass-roots endeavors.[1] As we discuss in the book, there is a risk that over-use and mis-use of the term could eventually dilute the impact and relevance of the term.[2] Nonetheless, in our search for an overarching framework that could help people navigate the future, resilience slowly but inevitably took root and refused to budge.

In this “bonus chapter” we want to give you a behind-the-scenes look at the creation of resilient investing. For while we kept the book clean and concise, moving people through a step-by-step process of creating their own resilient investing plan, we know that some readers will appreciate a deeper dive into the foundations that underlie the methods.

There are two major pillars that we’ll explore here: complexity and emergence. The first is generally used in a cautionary way, alerting us to unseen risks in a world that appears strong and stable. The second points us towards recognizing possibilities, showing us that life and humanity have a long track record of creating breakthrough solutions to seemingly intractable problems.


For those who follow the KISS approach to life (Keep It Simple Stupid), the word complexity can be a bit of a turn-off. Indeed, systems scientists have produced a vast trove of research and equations that inform various institutes and graduate programs. We don’t want to over-simplify complexity, but there is a growing body of accessible literature and online discussions that can help anyone gain a more complete understanding of the times we are living in.

As a starting place, we can easily see that as humans developed from clans to countries and corporations, and as we harnessed the earth’s abundant resources, we’ve created increasingly complex systems. To illustrate this, Robb Smith, a social entrepreneur and co-founder of Integral Life, traced the evolution of complexity in a TEDx talk.[3] Hunter-gatherer societies were comprised of groups of around 40 individuals. With the invention of the digging stick, horticultural societies grew to populations of 1,500. Cities in agrarian cultures reached 100,000, while the Industrial Age made it possible for mega-cities to exceed 10 million people. Now we are on the precipice of achieving a single, interconnected society of 7 billion. Mobile and smart phones are quickly penetrating global markets—in 2012 there were 4.5 billion mobile subscribers, with 73% of those in developing countries.[4]

As societies get larger, there is exponentially more potential to divide basic functions into ever greater specializations. A look at any of the structures of society reveals that complexity is everywhere. The financial system makes a fine illustration. Trading among nomadic tribes was limited and relatively straightforward. Today it is largely performed by ultra-high speed computers, and by some measurements, the market value of complex derivatives that sell and resell risk dwarfs the value of actual stocks in real companies, as well as the GDP of the world as a whole. [5]

Contemplating just how complex our civilization is can lead some to conclude that the whole house of cards could collapse at any moment. Many cite anthropologist Joseph Tainter as the one who opened their eyes to understanding why complexity may bring about some sort of societal breakdown. Tainter’s classic 1988 book , The Collapse of Complex Societies, pointed out that complexity often arises as a byproduct of our attempt to address challenges. He chronicles societies—the Roman Empire is a classic example—that were unable to maintain the complex society they created. Jared Diamond and Thomas Homer-Dixon have also written convincingly about how past civilizations collapsed, and point out that complexity poses risks to our own society.[6]

If you have difficulty imagining what this might look like in today’s seemingly invincible world, complexity scientist John Casti, in X-Events: The Collapse of Everything, provides frightening detail of eleven catastrophic scenarios based on the understanding that higher levels of complexity increases the susceptibility of systems to sudden, extreme events. His examples range from common worries such as the failure of the internet, the breakdown of the global food system or a global pandemic, all the way to more sci-fi scenarios like intelligent robots taking over the planet.

The potential for consequences severe enough to derail our civilization is perhaps reason enough that each of us should get familiar with the lessons of complexity. But as resilient investors, we are looking for actionable guidance; if we’re all doomed then we might as well just throw a big party, or head off into the woods (as some have done) waiting for the lights to go out.

Responding to complexity

Complexity science tells us that the one thing we can expect going forward is the unexpected. The folks who study this at the New England Complex Systems Institute help explain this:

The study of complex systems is about understanding indirect effects. Problems that are difficult to solve are often hard to understand because the causes and effects are not obviously related. Pushing on a complex system “here” often has effects “over there” because the parts are interdependent. This has become more and more apparent in our efforts to solve societal problems or avoid ecological disasters caused by our own actions.[7]

In our book, we pointed to the Department of Defense as an important entity that must grapple with how to be prepared in a complex world. Their concept of VUCA – volatile, uncertain, complex and ambiguous – is a concise summary of the challenges we face, both as individuals, and as a society. They realized that traditional tools based on a command-and-control worldview could not respond adequately to sudden disruptions that appear with ever-increasing regularity in our globally-intertwined, tightly-coupled web of systems.

Just as the military has had to revise its toolbox, investors are increasingly sensing that their traditional methods—iconic stalwarts like “modern portfolio theory” and “buy-and-hold”—were leaving them vulnerable to the risks of systemic change. Nassim Taleb’s book, The Black Swan: The Impact of the Highly Improbable brought this home in 2007, shortly before the financial collapse. Indeed, in just the time between when we turned in our manuscript and the printing of our book (late-2014) an enormous black swan swooped onto the scene, catching just about every financial forecaster with their pants down: oil prices collapsed by more than 50%! In the aftermath, discussions at the highest echelons have taken place considering whether this might portend a future in which economic growth fails to reach its previous expectations. And it’s no wonder, as a lack of long-term global growth would catalyze systemic change at a profound level.

So, given all that, how are we to make decisions that will serve us in this uncertain future? Obviously it’s important to remember that we can’t rely on anyone’s future forecasts and formulaic solutions (especially those pants-less pundits that the media loves to parade onscreen)– no one can make predictions with any reliability[8]. Rather, if you want to do what our book’s tagline suggests, to “thrive in turbulent times”, we suggest that you need to have a highly flexible strategy that prepares you to proactively respond to any possible future… in other words, you need to increase your resilience.

Emerging into the future

David Orr quotes a colorful friend’s definition of resilience as being “able to take a gut punch and come back swinging.” What he means by that is “the capacity to make ongoing adjustments to changing political, economic, and ecological conditions. Its hallmarks are redundancy, adaptation, and flexibility, as well as the foresight and good judgment to avoid the brawl in the first place.”[9]

But while our discussion thus far has emphasized the downside risks of complexity, it’s equally important to remember that it can also bring unexpected change in positive directions. Taleb’s 2012 book, Antifragile: Things That Gain from Disorder points out that “some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty.”

Indeed, complexity science finds that bringing together sufficiently diverse “raw materials” gives rise to emergent new and more complex structures; this dynamic is seen in simple chemistry, in the emergence of life, and even in the creation of complex social and economic systems. Increasing complexity creates opportunities for unexpected synergies, or symbiotic emergent properties,which in turn lead to unforeseen new structures. While periods of equilibrium may appear to represent “the way life is,” the underlying dynamics of complex systems continually stir the pot in inherently unpredictable and dynamic ways. As Stuart Kauffman says, “We have only begun to understand the awesome creative powers of nonequilibrium processes in the unfolding universe.” [10]

Margaret Wheatley and Deborah Frieze of The Berkana Institute believe that emergence—that process whereby something larger and more intricate arises out of the interactions of smaller, simpler entities[11]—is an essential principal that can be deployed by those who wish to scale-up innovation.[12] They point out that “change begins as local actions spring up simultaneously in many different areas … when they become connected, local actions can emerge as a powerful system with influence at a more global or comprehensive level.” [13]

This speaks to the reason why the Resilient Investing Map (RIM) has a 3rd column, one that we’ve called “evolutionary investing.” (Most investment books focus solely on the global economy; more recently a wave of interest has arisen in local investing. Our resiliency framework helps in these realms by identifying investments that enhance our own wellbeing, as well as the system’s.) Evolutionary investing represents a departure from the geographical targets of “close-to-home” and “sustainable global economy” investing. Evolutionary investing targets the future, and it highlights the complex, emergent, and unpredictable aspects of life.

Resiliency is an intrinsic principle of living systems—which have a far, far longer track record of success than any human construct.[14] It is this bigger, ever-unfolding “story of our times” that makes resiliency an essential foundation for how you allocate your precious resources of money and attention. No longer can we afford to think of the world as a controllable, linear, cause-and-effect place where we can base our actions based on what worked in the past. To be successful in these times, to face the monumental challenges that confront our economy, society, and ecology, we need to draw on the best thinking available to us. Fortunately, we live in a time where each of us has access to those ideas and the freedom to propose our own creative solutions.

Enhancing one’s resiliency is the most cogent response that springs from an awareness of complexity and emergence. But despite their acceptance in academic circles, relatively few people draw on these principles in a practical, every-day manner to guide their decision-making. We’ve found that even a layperson’s familiarity with the basic ideas is enough to cause a radical and productive shift in how we see the world and navigate towards the future. It is our hope that by distilling their essence into the Resilient Investing Map, more people will explore the vast range of opportunities that can help us thrive in these truly remarkable times.

[1] See for example: Ohio State University Center for Resilience , Stockholm Center for Resilience, President Obama’s Resilience initiative, Resilient Community initiative of Post-Carbon Institute.


[3] Robb Smith, TEDx talk, “The Transformational Life”,



[6] Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (2005); Thomas Homer-Dixon The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization (2006)

[7] Website of New England Complex Systems Institute,

[8] See Joshua Cooper Ramo, The Age of the Unthinkable: Why the New World Disorder Constantly Surprises Us And What We Can Do About It (2009), and Dan Gardner, Future Babble: Why Pundits Are Hedgehogs and Foxes Know Best (2011)


[10] Stuart Kauffman, At Home in the Universe: The Search for Laws of Self-Organization and Complexity, Oxford University Press (New York),1995. p 50.



[13] ibid

[14] 1st principle of resilience