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black swan

Presumably you too are hearing, reading and learning that regarding China, it is not business as usual. Whether it is natural, man-made, under-reported, over-reported, engineered, hyped-up, or any other combination, the second and third order effects are very real and will very soon be felt HARD!

Black Swan Events
The term was popularized by Nassim Nicholas Taleb, a finance professor, writer, and former Wall Street trader. Taleb wrote about the idea of a black swan event in a 2007 book prior to the events of the 2008 financial crisis. Taleb argued that because black swan events are impossible to predict due to their extreme rarity yet have catastrophic consequences, it is important for people to always assume a black swan event is a possibility, whatever it may be, and to plan accordingly.

He later used the 2008 financial crisis and the idea of black swan events to argue that if a broken system is allowed to fail, it actually strengthens it against the catastrophe of future black swan events. He also argued that conversely, a system that is propped up and insulated from risk ultimately becomes more vulnerable to catastrophic loss in the face of rare, unpredictable events.

Taleb describes a black swan as an event that 1) is beyond normal expectations that is so rare that even the possibility that it might occur is unknown, 2) has a catastrophic impact when it does occur, and 3) is explained in hindsight as if it were actually predictable.

In the last decade it has become common for us to wryly note the impossibility of avoiding buying MADE IN CHINA. We can not shop in stores whose primary suppliers are Chinese, but even MADE IN USA or anywhere else on the planet has components, pieces, processing or packaging from China.

Today the pipeline from global raw materials, through Chinese factories, to world markets is normal. The pipeline has the products our marketplaces are accustomed to. Today nobody anywhere in that pipeline appears to be responding to the potential absence or scarcity of product. Cursory glances say “business as usual”.

THAT, my friends, is the time to serve your future needs. NOT when the screaming hordes are rushing the store, or worse, when the shelves are stripped bare.

May not happen.

But if it does …

Smart families stock up when times are easy … Note that easy is a relative term. Today might seem not so easy, but tomorrow you may look back with regret you did not recognize opportunity when it was within your reach.

If shortages do not manifest, you are a month or two, or a few ahead on your shopping. Put the money back into savings… OR remain two or three months ahead. The latter is not really such a bad place to be, eh?