By Bill Taylor, CIO Entoro Wealth
“Grey swan is a term used to describe a potentially very significant event that is considered unlikely to happen but still possible. Because there is a slight chance the event will occur it should be anticipated, particularly as it could shake up the world, economy, and stock market” – Investopedia
This column is written to bring out thinking about potential significant market moving events that may or may not happen. In order to be totally objective and totally unencumbered there can be NO bias. That’s right, no political bias, no market position bias, no historical bias………just a completely objective thought on a potential “Grey Swan Event.”
So, you’re a billion dollar fund manager, a financial advisor, a passive investor, a proprietary firm trader or maybe even a global central banker. How would you position your investments, implement a strategy or hedge your positions?
Thoughts (mine); long financials, long high dividend equities, long commodities (soybeans, corn, grains)………short consumer equities, short energy
Thoughts (mine); Long dollar, bitcoin and gold; short energy (oil) companies, short green energy (solar, wind) companies
Thoughts (mine); Short Asian currencies, Long bitcoin and gold; Long defense equities and long cyber security equities; Short commodities (soybeans, corn, grains), long oil
These are just three of many lurking scenarios that are hiding in plain sight, but certainly not widely expected to actually take place; a Grey Swan Event. Remember, a Black Swan event is something totally unforeseen (a meteor crashes into earth, a dormant volcano erupts, etc) that you can’t prepare for. But, a Grey Swan……………..”what if?”
The Grey Swan column will continue to bring up possible market moving and global changing events that may be right in your line of vision always remembering that individual bias may be clouding the vision.