8. The Curious Case of the 2000–2001 Market Top and Demise of the Secular Bull Market

In 2007, Nassim Taleb published a book titled The Black Swan. The primary theme of the book is the impact of unforeseen events, that is, an event falling outside historical precedents. These so-called outliers can occur in nature, in human society, and in financial markets. Thus, while the Japanese constructed their nuclear power plants to withstand all expected earthquakes, the designers failed to anticipate a 9.0 magnitude quake and subsequent tsunami in March 2011 wiping out all back-up power, setting in motion a chain of events leading to the destruction of these plants. Similarly, the Nobel laureates at Long Term Capital Management did not account for a ...

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