Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event

MarketWatch/Mark Hulbert

Repost from 10-13-2021

image of black swan head“Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash.”

USAGOLD note: Too often, minor events are described as “black swan” even though the portfolio effect is minimal. We would underline the word “awful” in Hulbert’s description above. It is an essential component of a real black swan. As he points out, portfolio insurance plays an essential role in prepping the portfolio for a real market meltdown  – though he neglects to mention gold and silver, the two most frequently chosen alternatives for hedging such an outcome.

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