Chaos Is Winning: How the Best Investors Prepare for What They Cannot See
Mental models & portfolio principles for suriving stormy times.
When the hurricane rolled in, every captain ran for cover.
Every captain but one.
In Forrest Gump, he and rolled out to the storm naive to what was going on. Blissfully so. And when worst came to worst Lieutenant Dan climbed the mast of the shrimp boat and screamed into the storm. He did not flee. He did not beg for safety. He dared the storm to do its worst. When the sun rose, the coastline was littered with wreckage. Every other boat had been smashed to pieces.
Forrest and Dan were the only ones left. And so was born the Bubba Gump shrimp dynasty.
They did not beat the storm. They survived it. Much to the surprise of every other person in the bayou that saw them and thought “those two boys don’t have a clue”.
That story is not just a Hollywood scene. It is a mental model for investing. In markets, like in life, you do not win by outrunning the storm. You win by building something that stays afloat when others sink. Something that can be flexible when everyone’s stuck. Something that can take advantage of chaos.
And maybe you just get a little lucky too.
You Can’t Predict the Weather (or the Economy or the direction of Interest Rates)
Every morning, men and women armed with the best data in the world try to predict something as basic as the weather. Billions of dollars in satellites. Supercomputers that simulate the atmosphere to the atom. Thousands of the brightest minds alive. AI has even gotten in on the game.
And looking at our track record over time shows pretty clearly that we as a society have improved, but still are below 50% ten days out and only 75% accurate 7 days out. I’m not talking weeks out. I’m talking days out.
So while we’ve improved, literally the only thing that gets you to more accurate is a shorter time horizon.
And it’s not for lack of trying. It’s because even with perfect inputs, the complexity of the system refuses to be tamed. The weather does not care how smart you are. It moves according to deeper laws, without regard for human plans. It changes. It migrates. It strengthens. It weakens. And worse, it doesn’t tell you when or how it’s going to happen.
When you think about it, it’s really quite humbling. It should be. And it’s a reminder that the future does not want to be known.
A quick note before we dive deeper:
Later this week, I am releasing a premium article on the top Alternative Asset Managers, how they are positioned, what matters most under stress, and where the real opportunities are.
Now, back to why you are here. Why Forrest Gump and Lieutenant Dan matter to you the investor.
A few decades ago, a quiet meteorologist and mathematician named Edward Lorenz discovered the limits of prediction the hard way. Running weather simulations on one of the earliest computers, he rounded a number slightly differently to save time. When he checked the model later, the future had changed entirely. A tiny imperfection, too small to notice, had spun into a wildly different outcome.
He was not trying to change the world. He was just trying to run a simple simulation. What he found instead became one of the most important lessons for anyone dealing with complex systems: small differences create massive consequences. Round a number slightly, miss a tiny input, and the future veers into completely different territory. Long-term prediction does not just get harder. It becomes impossible.
Lorenz showed that even with almost perfect information, chaos wins. You cannot model everything. You cannot predict far enough ahead to beat the system. It looks random up close, but zoom out, and strange patterns still emerge. You can influence outcomes at the margins. You can prepare for storms. But you cannot control them. Stability is the illusion. Sensitivity is the rule.
Lorenz also gave us the concept of strange attractors, which are patterns inside chaos. In these systems, outcomes never repeat, but they still orbit within invisible boundaries. The path is unpredictable, but the shape holds. Markets behave the same way. Prices swing wildly, headlines change, sentiment flips but over time, fear and greed cycle in familiar ways. You cannot time them. You cannot predict their shape. But you can recognize when you’re inside one. That awareness won’t tell you what comes next. But it might tell you how much risk you're really carrying.
And In markets, just like in weather, it is not the smartest forecaster who wins. It is the one who builds strong enough to survive what he cannot see coming.
Thus was born the butterfly effect. The idea that a butterfly flapping its wings in Brazil could eventually help set off a tornado in Texas. Or if you prefer Hollywood, think of Ian Malcolm smirking through Jurassic Park, explaining that even in a perfectly controlled environment, life veers wildly off script.
“Because the history of evolution is that life escapes all barriers. Life breaks free. Life expands to new territories. Painfully, perhaps even dangerously. But life finds a way.”
The Best In Investing Know That You Can’t Predict Markets, And Use it to Their Advantage
The greatest investors in history did not build fortunes by predicting the future. They built principles to survive it. Warren Buffett never wasted his days trying to guess the timing of the next recession. He knew better than to bet on precision in a world designed for surprise. Peter Lynch joked that if you spend more than 13 minutes a year on economic forecasts, you have already wasted 10 of them. Edward Thorp, who cracked blackjack and built one of the most successful hedge funds of all time, did not gamble on single outcomes either. He built systems that tilted the odds quietly in his favor and survived whatever chaos came next. Jamie Dimon does not pretend to know what tomorrow holds. He builds fortresses strong enough to withstand anything the storm might throw.
If there is a common mental model across all of them, it is this: build for a range of outcomes, not a specific outcome. Do not anchor yourself to forecasts. Do not fall in love with a narrative. Build your portfolio so that it can take a punch, survive the unexpected, and stay standing when others fold.
The goal is not prediction. It is survival. It is positioning. It is preparing yourself to endure uncertainty and still have the advantage when the dust settles.
You do not win by knowing. You win by building strong enough that you do not have to. You win by being able to by luck or by skill, survive the hurricane like Forrest Gump and Lieutenant Dan.
The Hurricane in the Markets is Back Now. And Stronger than Ever.
Markets last week were chaos in motion. A full-blown hurricane. The S&P 500 saw high single-digit intraday swings nearly every day, one of the most volatile five-day stretches since the major financial crises of the past few decades. The 10-year Treasury market buckled too, with yields whipsawing in wide ranges rarely seen outside of panic. Gold is making new highs. The yen is rallying. There’s growing fear that China may respond with a devaluation of its currency. Correlations are breaking down. Capital is flowing out of U.S. risk assets. The old 60-40 portfolio is offering little protection. What worked in stable regimes is failing in this one.
And while markets are thrashing, policy is lurching. Trump is playing tariff-on, tariff-off with the global economy like it's a light switch. One headline hikes costs, the next one walks it back. Meanwhile, veterans like Scott Bessent are floating the idea of a modern Operation Twist to contain the damage. The bond vigilantes are wide awake again, pushing back on fiscal indifference with yield spikes that scream warning. Rate volatility is no longer anchored. Policy, markets, and positioning are now pulling in opposite directions. Nobody's steering the ship. Everyone’s just trying not to capsize.
Reflexivity is in full bloom. Volatility is no longer an exception. It is the weather.
And we are not done yet. This is not the end of turbulence. It is not the soft landing some pray for. We are in the middle innings. More squalls are coming. More fake calms. More violent shakes. The worst mistake you can make now is thinking you can predict the next move. You cannot. Even if you had every piece of information in the world, you would still be playing a game designed to surprise you. The butterfly has already flapped its wings.
Build for Stress. Go Up in Quality.
My call to action is that you must build differently. You must think differently.
Build like Thorp. Think like Buffett. Survive like Forrest & Lieutenant Dan. A few principles matter most right now.
Prepare for a wide range of outcomes and stress test your assumptions. Do not assume rates will fall just because everyone says they will. Do not assume past protections will hold. Stress the portfolio under different weather. Seek uncorrelated bets where you can, but recognize the brutal truth: when real storms hit, correlations go to one because well … stocks and bonds can fall together. Things you thought were hedges often fail exactly when you need them.
Maybe the biggest piece of advice I can lend right now is this.
Go up in quality when prices get cheaper. Buy businesses that generate real cash flow, that have pricing power, that do not need blue-sky forecasts to survive. Weak companies die in storms. Great ones survive and take market share. And if you remember nothing else, remember this: buy great companies cheap. Not average companies. Not story stocks. Not speculative dreams. Great companies. Bought cheap. That principle alone will save you more than any forecast ever could.
Closing Thoughts.
It is tempting to believe you can predict. It feels good to have an opinion. It feels smart to call the next move. But the market is a storm. It does not care about your guesses. If you build strong enough, you do not need to be right. You just need to be in the boat when the sun comes back. Like Lieutenant Dan. Soaked, battered, but grinning at the sky because he survived.
Stay tuned for the premium release this week on the Alternative Managers. It will show you how the best-positioned players are building for the storm too. Chaos is not coming. It is already here. And the smart money knows: you do not beat the storm by outguessing it. You beat it by surviving it.
The best is ahead,
Victaurs