"Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface.
These artificially constrained systems become prone to 'Black Swans' — that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.
Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems."
Nassim Taleb, The Black Swan of Cairo, Foreign Affairs
"Having fallen from the eternal, the evil one's desires are endless, insatiable. Having fallen from pure Being, he is driven by the desire to possess, to fill his emptiness. But the problem is insoluble, always. He is compelled to have and to hold, to possess and consume, and nothing else. All he takes, he destroys."
Denis de Rougemont
“It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.”
Nassim Nicholas Taleb, The Black Swan
'Life is a school of probabilities.'
Walter Bagehot
...and the tuition is paid by their willful miscalculation and mispricing of risk. Good designs have linear consequences. Unfortunately bad designs have exponential consequences.
Stocks did the customary 'pop and flop' today, with a rally in the morning that faded out to nothing in the afternoon.
Gold bounced back, while silver endured its own wash and rinse to finish nearly unchanged.
VIX has come up a bit off its multi-year lows.
The market has weak underpinnings and is susceptible to any kind of exogenous surprise.
Have a pleasant evening.
