“This Is Not A Tail Event”: A Subtle Reminder About Stock Market Mayhem

Large drawdowns happen a lot more often than you probably care to think about. Oh, and as you can see, it's becoming harder and harder to protect yourself with diversification because a "rising tide that lifts all boats" cuts both ways - it also "lifts" cross-market and cross-asset correlations to "1"... This seems like a good time to remind you what Morgan Stanley said a few Sundays ago... ******** When a tail event isn’t actually a tail event. Via Morgan Stanley Large equity drawdown