CIO Blog: Tails of the unexpected VII
Investment strategy - January 2020
Markets are exquisitely unpredictable, and each year, events – financial, economic, geopolitical, or otherwise – occur which few see coming, but cause powerful ripples to the prices of securities. Instead of consensus-tinged forecasting, we continue an annual tradition of exploring what unlikely but feasible events are not priced by markets in the year ahead. These Tails of the Unexpected, pushed to the overlooked “tails” of probability distributions, have the potential for outsized impact. If they occur, how would our portfolios perform? Do we have plans in place to protect against adverse market events? Are we positioned to prosper?