Place your bets
Capital lottery
Care of FT Alphaville, who note the banalities of most outlook reports for the year-ahead, with it being ‘a challenge to tell them apart’:
Indeed. Are ‘crossroads’ the best image to invoke? Presumably LLMs suggest it is the most probable, but perhaps not the most helpful.
At the 2025 Prime Quadrant Conference, Russell Napier reflected on learning from history when approaching portfolio construction during a period of structural change:
…what you had to do was not own dangerous assets; you had to own them in dangerous quantities… [the] asset classes are not risky, but the quantities are risky. But they’re only risky compared to what everybody else is doing.
So the fundamental thing at a structural change is not to be intelligent particularly, but it’s to be bold in asset allocation.
Napier is talking specifically about investment, but the insight can be generalised. This offers a different image to that of a crossroads, as it is not simply about direction but also commitment. During a period of regime change, the discomfort comes from not simply recognising shifts taking place but following the logic of such observations. What does doing so mean? How must one position differently? And how to do so when incentives and socialisation push strongly towards more of the same?
A crude chart taken from my ‘great disorientation’ lecture:
At this point, to speak of ‘crossroads’ or announce various ‘ends’ (be that of post-89, post-49, US hegemony etc) is trite and banal. This is all well understood. The challenge is figuring out what is coming next. And this year has offered plenty of indicators of what possible orders, practices and trends that are forming and being willed into existence. The challenge is to see some of these signs, to connect some dots, to make some calls about what is likely taking shape and then being bold in betting on certain outcomes.
Thinking in these terms, one way of reading 2025 is to distinguish between actors who are placing bets and being bold in doing so. And those who are not. Those who do not dare. Or do not appreciate what is at stake, what might be being decided, the games being played. These dynamics are playing out at different scales, from the micro to the macro.
Boldness might come from belief in an ideology, faith in a higher power, ruthless self-interest, rigorous study, or many other sources. What has been evident this year is some actors are more willing to place big wagers, to use house money, and to prepare iron dice for rolling. Those willing to activate and emphasise their agency appear as apex predators in a crumbling world of beanbag managers focusing on holiday plans and retirement balances.
Sidestepping banalities, and looking towards what is taking shape, what do you see? What bets are you making? What bets are you taking?
Finishing with Jorge Luis Borges, ‘Lottery in Babylon’:
My father would tell how once, long ago—centuries? years?—the lottery in Babylon was a game played by commoners. He would tell (though whether this is true or not, I cannot say) how barbers would take a man’s copper coins and give back rectangles made of bone or parchment and adorned with symbols. Then, in broad daylight, a drawing would be held; those smiled upon by fate would, with no further corroboration by chance, win coins minted of silver. The procedure, as you can see, was rudimentary.
Naturally, those so-called “lotteries” were a failure. They had no moral force whatsoever; they appealed not to all a man’s faculties, but only to his hopefulness. Public indifference soon meant that the merchants who had founded these venal lotteries began to lose money. Someone tried something new: including among the list of lucky numbers a few unlucky draws. This innovation meant that those who bought those numbered rectangles now had a twofold chance: they might win a sum of money or they might be required to pay a fine—sometimes a considerable one.
As one might expect, that small risk (for every thirty “good” numbers there was one ill-omened one) piqued the public’s interest. Babylonians flocked to buy tickets. The man who bought none was considered a pusillanimous wretch, a man with no spirit of adventure.
Later the story continues:
There are also impersonal drawings, whose purpose is unclear. One drawing decrees that a sapphire from Taprobana be thrown into the waters of the Euphrates; another, that a bird be released from the top of a certain tower; another, that every hundred years a grain of sand be added to (or taken from) the countless grains of sand on a certain beach. Sometimes, the consequences are terrible.
Under the Company’s beneficent influence, our customs are now steeped in chance. The purchaser of a dozen amphora of Damascene wine will not be surprised if one contains a talisman, or a viper; the scribe who writes out a contract never fails to include some error; I myself, in this hurried statement, have misrepresented some splendor, some atrocity—perhaps, too, some mysterious monotony…. Our historians, the most perspicacious on the planet, have invented a method for correcting chance; it is well known that the outcomes of this method are (in general) trustworthy—although, of course, they are never divulged without a measure of deception. Besides, there is nothing so tainted with fiction as the history of the Company…. A paleographic document, unearthed at a certain temple, may come from yesterday’s drawing or from a drawing that took place centuries ago. No book is published without some discrepancy between each of the edition’s copies. Scribes take a secret oath to omit, interpolate, alter. In-direct falsehood is also practiced.
Lucky and unlucky draws… those with no spirit of adventure… terrible consequences… customs steeped in chance… measures of deception and falsehoods practiced: not only in Babylon.