Friday, March 19, 2010

Beware Of The White Swan

Ever since Nassim Taleb popularized the term Black Swan to refer to an unexpected, surprising event; it has become a must use phrase in the investment lexicon. However, not many talk about the Black Swan's potentially more insideous cousin, the White Swan. The White Swan is an economic event that everyone sees coming, there is no surprise, however few do anything to properly prepare. Interest rate hikes is the near term White Swan event. India just raised rates sending shivers throughout the world's bullish stock community. Simply put, rates have no where to go but up. Despite the recent inflation quashing data, the Fed will find another reason to raise rates. It's going to happen, it's just a question of when.

No comments: