Crashes and swans

"No one can tell you when [crashes] will happen," Warren Buffett said last December. "The light can at any time go from green to red without pausing at yellow."

Most drivers slow down when a light flips yellow. A few, and I'm not naming names here, view yellow as an acceleration signal, a green race flag if you will. Neither is correct in investing, though most people, if they do see a yellow light in investing, pause.

Unfortunately for the Wall Streets bankers partying in the Hamptons on Saturday, October 19, 1929, Buffett wouldn't be born for another eight months, and even then most people don't take investment advice from babies.1 As that fateful weekend 90 years ago rolled into what appeared to be an average work week, Thursday October 24th proved to be anything but, and the largest stock market crash in U.S. commenced. Bottles of champagne morphed into bread lines.

For some strange psychological reason, prognosticators sound smart when they predict crashes and happy-but-maybe-oblivious when they predict gains, especially when worry prevails. Historically this is silly2: betting on stock market crashes is an excellent way to make yourself poor, or at least poor relative to where you should have been. The investor may have been right from time to time, but over a medium to long period that decision didn't work out well. A bet against markets is a bet against ingenuity, incentives, and a human desire to improve and change.

A few of you have mentioned Black Swans to me this week. First, actual black swans exist in nature, which I find cool. But the reference people are making is to Nassim Nicholas Taleb's 2007 book The Black Swan, which discusses the impact of highly improbable events. Culturally a Black Swan event is accepted now as a downside event, or something bad. But keep in mind the book defines them as "improbable," not "negative."

This is interesting to consider with recession talk swirling. Perhaps it is improbable, but a Black Swan event today may be that we sit only midway through an economic boom.

Dan Cunningham

(1) Though they probably should. Fidelity showed from 2003 - 2013 that investors who had died or forgot they had an account outperformed the average professional and retail investor. Based on this, random stock picks from a baby, as long as they were low in fees, plentiful, and not traded, have a decent chance of outperforming. Effectively the baby would be creating a pseudo-index. Source.

(2) But they build their media presence by doing so. Read this.

Return to Articles
How We Are Different
Low-fee index funds. Transparent & fiduciary financial advisors.
Local Financial Advisor
We are in your community. We are local.
Investment Management
We tailor to each client. Index funds at the core.
Index Funds
Broad market exposure, low expense.
Dan's Corner
Meaningful musings from our founder.
Your best interests are our priority.
Low Fees
Our fees are among the lowest in the nation.
Financial Planner
Financial advisor optimizes your financial picture.
U.S. Treasury Bonds
Use Treasury Bonds to reduce risk.
Book Recommendations
Here are some of our favorites.
What is inflation, and what cuases inflation.
When Should I Invest?
Life transitions = important financial decisions.
Retirement: 401k and More
Retiring? Plan the future you want.
IRA Rollovers
401k Rollovers. IRA Rollovers
Active vs. Passive Investing
We believe there is a winner in this debate.
The Investment Process
How we work: low-cost index funds, personalized attention.
Simplicity is the ultimate sophistication.
Investing: What to Focus On
Low-fee index funds. fee-only advisor.
Switching Financial Advisors
Can be uncomfortable, but an important step.
Advisor Recruiting
We attract top-tier talent. Not your usual firm.
Basic Investing
Let's start with Investing 101.
Understanding Your Financial Statement
Let's break it down to basics.
Taxes on Investments
What causes taxes within your investments?
Behavioral Economics
The less emotion, the better.
Timing the Market in 2020
2020 - a case study in the futility of market timing.
How Financial Firms Bill
Fee-based vs. fee-only, and lots more.
Who Supports Indexing?
Bogle, Swensen, Buffett, and others.
One click to see our fees.
Mutual Funds vs ETFs
Clarifying the difference.
Does Stock Picking Work?
The research says no.
Countering Arguments Against Index Funds
What happens in a down market?
Lots of fees, little clarity.
How Do Mutual Funds Work?
Invest in the basket.
How to Relieve Financial Stress
New client? anxiety is normal.
Financial Terms Glossary
Common investment terms you should know.
Firm Comparison
One Day In July vs the competition.
Retired Investing
Retiring? Let us help.
Accounts We Manage
We manage a wide range of investment account types.
High Net Worth Investors
Preserve and grow your wealth.
Investing an Inheritance
Prioritizing and planning for the future.
Frequently Asked Questions
Good questions, real answers.
Female Investors
Your voice needs to be heard. We are listening.
For the Business Owner
Choosing what's best for your business.
Environmental Investing
Carbon intensity, fossil fuels.




United States



401k Plans



Account Types


Cash Flows

Low Fees


Dedicated Advisor


Advisors: Join Us


Articles on Investing

About the Secure Act

Quarterly Booklets


Vermont Investment Management

Vermont Retirement Planning

Vermont Wealth Management

Vermont Financial Advisors

Investment Tools

In the Media

Shelburne, VT Financial Advisor

Frank Koster | Josh Kruk | Keith McCarthy

5247 Shelburne Rd, Suite #101

Shelburne, VT 05482

(802) 777-9768

Stowe, VT Finanical Advisor

Available for meetings in Stowe.

Peter Egolf

(802) 999-2321

Burlington, VT Financial Advisor

Hans Smith | Katie Muttitt

Nancy Westbrook | Peter Egolf

77 College Street #3A

Burlington, VT 05401

(802) 503-8280

Darien, CT Financial Advisor

Available for meetings in Darien.

Keith McCarthy

(203) 554-9466

v 2.1.4 | © One Day In July LLC. All Rights Reserved.