Investors Series: Part 1 - The Assumptions We Can No Longer Afford

“We run carelessly to the precipice, after we have put something before us that prevents us from seeing it.”

— Blaise Pascal

I’ve built a friendship with someone whose mind is as sharp as it is skeptical. He writes AI code for fun, leads global operations in financial services, and has a strategist’s instinct for seeing around corners. Our bond grew from a shared sense that something fundamental in the world isn’t working—and that we need to reassess the assumptions we’ve long taken for granted.

Recently, while discussing the ideas in my upcoming book, he stopped me mid-sentence and asked, with rare intensity:

“Wait. Are you saying the basic assumptions we’ve used to run the world no longer apply?”

My answer: “Yes. Isn’t it obvious?”

That moment crystallized years of conversation. We’ve watched as industries, governments, and institutions are reshaped—sometimes violently—by forces that feel both overwhelming and inevitable. These aren’t isolated disruptions. They’re converging into a single, relentless tidal wave.

Four Forces, One Tidal Wave

Five years ago, I wrote Ten Years to Midnight to warn of four global trends:

• Climate change

• Demographic shifts

• A fractured world

• Technological disruption

Back then, they felt like separate earthquakes. Today, they’ve merged into a singular force—affecting every region, every sector, every person. The scaffolding we built over the last eighty years to support progress is buckling. Reinvention isn’t optional. It’s existential.

The Financial World’s Fault Lines

My friend works in financial services, so we explored how these trends are upending long-held beliefs in his field. Four assumptions stood out as no longer valid:

1. Uncorrelated Risk Is a Myth

Classic portfolio theory relies on diversification to manage risk. But today’s threats—climate, geopolitics, tech—are deeply intertwined. Risk is no longer isolated. It’s systemic. Therefore, truly uncorrelated risk will be increasingly difficult to find.

2. Uncertainty Is a Distraction

We know the risks: floods, fires, AI job loss, conflict, workforce limitations. What we don’t know is when they’ll strike. Obsessing over uncertainty delays action. The impact of the trends is so profound and their certainty so obvious they should take the vast majority of our attention. In a world where known change was less obvious and less profound, managing uncertainty mattered. Today, the impact of technology, climate, demography and a fractured world is so great, everything else pales. Bet the trend and manage uncertainty.

3. Comparative Advantage Is Obsolete

Global trade once thrived on specialization at the nation state level, let each nation or region do what it does best. This model permitted, barring trasnportation costs and natural disasters, maximal efficiency at a global level. But in an unstable world, nations can’t rely on others for critical resources. COVID, conflict and critical material shortages, such as rare earth, proved that. This growing need for self-sufficiency makes it extremely difficult to execute upon the logic of comparative advantage. Refocus investment on building strategic capability within a country or region.

4. Passive Investment Is Dangerous

Value is being destroyed in real time. Passive strategies won’t protect portfolios. Only proactive, future-focused investment can. Understand the impact of the trends upon the industry you are investing, the firms with strategies based upon those trends and proven executional capacity before investing.

These aren’t just financial insights. They’re a wake-up call for every domain—business, government, education, even personal belief systems. The processes and assumptions that once served us well may now be holding us back.

Principle 1: Understand the Trends. If you study the trends we are confronting deeply, you will learn how the assumptions guiding your investments are flawed, how the value of your investments is being destroyed in real time, how your purpose should change to adapt to new circumstances and where real opportunities for creating value lie.