This week has been one troubling issue after another. It was a Western belief that all swans are white because these were the only ones which had been observed. Not so, in 1697 the Dutch explorer Willem de Vlamingh discovered black swans in Australia. The fact was used metaphorically in 2001 by Nassim Taleb to describe an event that comes as a surprise and is unpredictable but has a major effect on humanity. The world of finance likes this evaluation and uses it to describe an extremely negative event or occurrence that is impossible to predict. One of the attributes of such an event is that people will rationalize the event as having been predictable (known as the hindsight bias). A few reminders of recent Black Swan’s – the “Dotcom” crash in 2001-2 wiped out nearly a trillion dollars worth of stock value. The 9-11 attacks on the Twin Towers and other US targets closed the New York Stock Exchange and NASDAQ and over the next week $1.4 trillion in stock market value was lost. The 2008 Global Financial Crisis led to the collapse of Lehman Brothers – 25,000 lost their jobs and eventually over $10 trillion was erased in the global equity markets. Remember Brexit, just the surprising vote to leave the EU lost $2 trillion in global market value. I believe we are seeing a Black Swan in the form of COVID19. The Dow Jones is down over 3000 points or nearly 13% from the recent high. The rhetoric of our fearless leader does not inspire confidence and although there may be contributing factors, this is all about a global economy threatened by the known virus and the unknown outcomes. Science and medicine are critical in this crisis and ultimate containment will be in the hands of those well trained and properly supported professionals.
I could argue that a President tweeting about the verdict, the sentence, the jurors or the Judge’s bias in a trial in which he clearly has a conflict or attempting to ask two female Supreme Court Judges to recuse themselves is the tip of the iceberg on the next Black Swan. It is really sad that we have leadership with their head in the sand in regards to climate change, immigration, public safety, sovereignty of the courts, independence of the Federal Reserve, outside influence on our elections, the rule of law… the list goes on. Maybe no surprise that Fearless leader does not fear the Coronavirus, it is possible he knows the corona is a crown or garland bestowed by the Romans as a reward for distinguished service. No crown for the “chosen one”, I can only hope he takes a few minutes to think about the citizens of the United States and not his own self interest.
Thursday was a good day for a discussion with Hank about oxymorons. It was national chili day, a dish best served hot. Hank did not ever skip a beat as he said chili means you shiver if you are cold but the dish is served hot. Oscar Wilde said, “I can resist anything, except temptation.” To round out our oxymoronic quotes, this from Mark Twain “an honest politician is an oxymoron.”
The markets are now closed, you have not really lost anything until you sell. Enjoy the week end. Mike