At the start of the twentieth century, a young Winston Churchill, very much on the make, led a group of other young House of Commons members dubbed the Hooligans. Every Thursday, they invited a political eminence to a dinner discussion of the day’s important issues. Joseph Chamberlain, then a giant of British politics, joined them in July 1901. Chamberlain had a jolly good time. As he was leaving, he decided to repay his young hosts with the wisdom of experience.
“You young gentlemen have entertained me royally, and in return I shall give you a priceless secret. Tariffs! These are the politics of the future, and of the near future,” Chamberlain thundered. “Study them closely and make yourselves masters of them, and you will not regret your hospitality to me.”1 Churchill immersed himself in tariffs, ultimately rejecting the idea of protecting an economy by levying extra taxes on imported or exported goods. His decision encouraged the growth of free trade, and helped set the cornerstone of what would be called globalization some 100 years later. Now, at the onset of the twenty-first century, investors must contend with the indigestion of Churchill’s long-ago dinner. Volatility is globalization’s destructive side effect. Volatility has become the wings of the “black swan.” The black swan always hovers over the modern market’s horizon.