Once-In-A-Lifetime Happens More Than You Think

History reaffirms time and time again that, “Once in a lifetime” events are not reserved for only once in your lifetime. Consider this quote from Malcolm Gladwell taken from my first book, “Trend Following: Learn to Make Millions in Up or Down Markets”:

…[O]ne of the former top executives of LTCM [gave] a lecture in which he defended the gamble that the fund had made. What he said was, “Look, when I drive home every night in the fall, I see all these leaves scattered around the base of the trees…There is a statistical distribution that governs the way they fall, and I can be pretty accurate in figuring out what that distribution is going to be. But one day, I came home and the leaves were in little piles. Does that falsify my theory that there are statistical rules governing how leaves fall? No. It was a man-made event.” In other words, the Russians, by defaulting on their bonds, did something that they were not supposed to do, a once-in-a-lifetime, rule breaking event…[this] is just the point: In the markets, unlike in the physical universe, the rules of the game can be changed. Central banks can decide to default on government-backed securities.

Things happen. Whether you want to label these chaotic periods “Black Swan Events”, “Man-made events”, “Once-in-a-lifetime phenomenons”, etc… They will continue to happen, and they will continue to occur more frequently than you expect. Be prepared for the unexpected.

You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content. Out April 24th 2017.