Nassim Taleb's book The Black Swan effectively demonstrates that seemingly highly improbable events are much more common than expected, often with significant...
Nassim Taleb's book The Black Swan effectively demonstrates that seemingly highly improbable events are much more common than expected, often with significant consequences. In fact, experts are often blind to these occurrences because past data is not necessarily a good predictor of the future. Most investors are aware a black swan event hit the Swiss franc earlier this month. After capping the value of the Swiss franc (CHF) relative to the euro at 1.20 since 2011, the Swiss National Bank (SNB) surprised the markets, suddenly abandoning its policy. The franc instantly soared by around 19% versus the euro, causing tremors in various corners of the capital markets. Currencies generally don't move in big chunks like was experienced by the Swiss franc on January 15. In fact, during the year ending January 14, 2015, the CHF/EUR traded in the 1.20-1.24 range, and volatility averaged just 0.1% per day. Continued: (VIEW LINK)
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