Welcome to Let the Money Talk podcast.
In this special episode, one of our Dealing Manager for Global Markets, Roger Chan underlines why it is so important to prepare for so-called black swan events that cause market crashes because they are sudden, overwhelming and unpredictable.
A black swan is an extremely rare event with severe consequences. It cannot be predicted, though after the fact, many claim it should have been predictable.
Grey swan is a term used to describe a potentially very significant event whose possible occurrence may be predicted beforehand, but the probability of it occurring is considered small.
Here, we explore four potential black swan events and a positive grey swan event:
1. The retake of Afghanistan prompts fears of the emergence of a safe haven for terrorists.
2. Mother lode of cyberterrorism
3. The reality of a $200 barrel of crude oil
4. A deer caught in the headlights of runaway all-time-high inflation
5. Grey Swan sighted! Possible all-time high for Chinese technology stocks
The declaration by the World Health Organization (WHO) of the latest COVID-19 “variant of concern” Omicron on the day after the US Thanksgiving holiday caused the Dow Jones Index to plunge 905 points, or 2.5%. The S&P index fell 106.84 points, or 2.27%, while the Nasdaq Composite Index lost 353.57 points, or 2.2%.
The decline of the three major indices effectively marked their worst Black Friday performance since 1950.
Prior to this, governments worldwide had conducted extensive vaccination programs to safeguard their people. And countries were looking forward to opening their borders and economies with the resumption of travel between nations.
Families that had been separated for months were looking forward to reunite with loved ones. Everywhere there was a sense of “all might just be finally behind us”.
That was until COVID-19 gave us another jolt.
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