It is ALL ALONG these clear skies that under any unforeseeable currents, you risk being awarded an observation of ruin.



In a chronic unstable environment, any long period of observable stability is telling us that further instability is nearer to come. So we don't know IF, we don't know the catalyst (WHAT) neither WHEN.

"What" is the uncertainty that can not be quantified in risk terms (measurement). But at least we know from long sets of data that something will happen (IF). Otherwise why buy puts, car insurance, tornado protection etc.



In quantum physics, the black swan can happen and not happen, both at the same time. Only by observation can this be solved. The Schrodinger' s cat uncertain life/death can not be measured on probabilistic terms. Uncertainty is complete and until box is opened and observation occurs, probabilities tell us that the cat can be alive and dead both at the same time.



But, like for the black swan (in the making) we know there is a cat.

The WHEN, under our current understanding of TIME, is impossible to forecast. Einstein's relativity theory proved that our widespread forward linear understanding of time is conceptually a mistake.



When the day comes and TIME can be managed as a physical dimension (we need to overcome speed of light and some other minor stuff, lol) "forecasting" events will be a word of history books, as it would amount to "searching" a recorded file in your hard disk drive.



Back to life



Under present rosy scenarios and outlandish valuations thanks to longer stability than past observations suggested, we do not know WHEN the current state of boring affairs will jump into a tailspin of instability and unmeasured uncertainty.



But we know it will come, at 100%.



Applying this to stock investing means 100% probabilities of buying any US index with a huge discount to today's prices in the coming future. Until the sentence "This time is different" is proven correct only once, stock indexes will keep mean reverting. 100% certain.



And mean reverting today would cause a nearby 60% price fall. Yeah, WHEN it rains, it pours. Dip buyers better become abyss buyers, or you will observe the jaws of death in your measured investment model.



In real terms ?



Today the once in a lifetime overcrowded trade of mechanically selling volatility is measured in terms of the profits that will be retrieved as if volatility (uncertainty) had been killed for good. Volatility sellers are quantifying their profits, not their risks based on the uncertainty they choose to ignore against all rationality.



Because the other side of the trade (in measurable risks) EXISTS at the same time. And if volatility spikes in earnest, today's unquantified potential losses will be measured as observable losses.



Dip buying mentality (volatility selling) has suppressed IF, WHAT and WHEN.









