The Telegraph’s Jeremy Warner wonders if the political crisis that recently overturned the government in the Ukraine could be “the next Black Swan for West’s financial markets?” It’s a reasonable question, although a true Black Swan event, by definition, is unpredictable. Thinking about uncertainty deserves attention in designing and managing investment portfolios, but there’s only so much blood to be extracted from this stone. What we can’t fathom can still hurt us, but substantially reducing the potential fallout from the unknown unknowns is difficult if not impossible as a practical matter. Market risk, by contrast (price volatility, for instance) can be slightly less threatening to our wealth, assuming that we manage it prudently.
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