The Icarus Paradox offers a critical lesson on business, investing, and life.

Here’s a simple breakdown:

The story of Icarus is a famous tale from Greek mythology.

Icarus is the son of a craftsman—Daedalus.

To help the pair escape from Crete, Daedalus uses feathers and wax to create two sets of wings.

Prior to the attempt, Daedalus warns his son to avoid complacency and hubris.
Daedalus instructs Icarus to avoid flying too low or too high—cautioning that the sea's moisture or the sun's heat could cause the wings to malfunction.

But Icarus becomes amazed by his flight and soars away.

The sun melts the wax on his wings and Icarus falls to his death.
The tale of Icarus offers a poignant lesson:

Avoid complacency and hubris at all times.

What makes you successful initially may eventually lead to your downfall.

This is often referred to as "The Icarus Paradox”—it shows up constantly in business, investing, and life:
In business, how many incumbents have we seen achieve success with one product, only to be disrupted when the market shifts under their feet?

Overconfidence and success blinds incumbents to the coming wave of disruption.

60+ companies from the 1966 Fortune 100 no longer exist!
In investing, how many successful investors have blown up spectacularly when they refused to adapt to new information?

Success with one strategy blinds the investor to market change or tail risk.

Look no further than the demise of LTCM...

Everyone is a genius in a bull market!
The Icarus Paradox is a cautionary tale for incumbents—for anyone experiencing success.

Remember: You're only as good as your last pitch...

It's also a rallying cry for the disruptors—the incumbent's tendency towards complacency and hubris is on your side in the battle.

More from Sahil Bloom

THREAD: With #silversqueeze trending on Twitter, it appears that this week's market spectacle may well be in the silver market.

A perfect moment for a thread on the Hunt Brothers and their alleged attempt to corner the silver market...


1/ First, let's set the stage.

The Hunt Brothers - Nelson Bunker Hunt, William Herbert Hunt, and Lamar Hunt - were the sons of Texas tycoon H.L. Hunt.

H.L. Hunt had amassed a billion-dollar fortune in the oil industry.

He died in 1974 and left that fortune to his family.


2/ After H.L.'s passing, the Hunt Brothers had taken over the family holdings and successfully managed to expand the Hunt empire.

By the late 1970s, the family's fortune was estimated to be ~$5 billion.

In the financial world, the Hunt name was as good as gold (or silver!).


3/ But the 1970s were a turbulent time in America.

Following the oil crisis of the early 1970s, the U.S. had entered a period of stagflation - a dire macroeconomic condition characterized by high inflation, low growth, and high unemployment.


4/ The Hunt Brothers - particularly Nelson Bunker and William Herbert - believed that the inflationary environment would persist and destroy the value of their family's holdings.

To hedge this risk, they turned to silver.

They began buying the metal at ~$3 per ounce in 1973.

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