[steve19]

Are any black swans going to be black swans in hindsight?

Did anyone anticipate it enough to put their money where their mouth was? A fortune, and a major service to humanity, could have been made by a private individuals stockpiling PPE in vast quantities.

You say anyone with half a brain anticipated it. I didn't. Did you buy 500k N95 masks and put them in a warehouse?

Knowing someone will happen is easy. I know for sure that a large meatorite will hit the earth and cause mass deaths and crop failure, but I have no idea in how many 100s, 1000s or millions of year it will happen. If it happens tomorrow it would be a black Swan *

* an example only, we would get plenty of advanced warning.

[JoshuaDavid]

> Did anyone anticipate it enough to put their money where their mouth was? A fortune, and a major service to humanity, could have been made by a private individuals stockpiling PPE in vast quantities.

The response to this pandemic has actually worried me quite a lot on this front, because it seems likely now that anyone who stockpiled PPE at pre-pandemic prices and tries to resell during the pandemic at a price high enough to justify their initial investment will be accused of price gouging and possibly have their stockpile seized.

Which has the effect that nobody has an incentive to build a reserve of things that will be useful in a future crisis, even if that crisis is foreseeable.

So yeah, it's easy enough to say "I think there's at least a 5% chance per year of an event which results in at least 10 million people who will want to buy a portable generator" (which is 10x the amount normally sold in a year). I genuinely do think that's a true statement, and it would imply that the number of generators currently being produced would need to be at least 50% higher to meet demand averaged across all times rather than typical times, which is a pretty big difference in a pretty big market. Normally when you think you know something the market doesn't, you can bet against the market by investing in whatever the market is undervaluing, and if you're right you make money. In this case, I'm not sure how you would go about doing that. Investing in companies making generators doesn't increase production. Buying generators and leaving them in a warehouse risks your stockpile being seized in the case where you were right about the risk. I'm honestly not sure how I would go about putting my money where my mouth is here.

[roywiggins]

Even without the prospect of seizure, it's not free to maintain a stockpile, or maintain a short. So you're also making a bet that it will happen sooner rather than later- if it takes 100 years, your equipment will be rusted or obsolete and you'll probably be dead by then. And you'll have paid every year to maintain it, money you could have put into a slightly less risky and more liquid investment that would have long since paid out.

All the day-to-day costs and risks can just totally swamp the potential upside, even before the regulatory risk of seizure or being forced to sell your stockpile at pre-crisis prices. Price-gouging laws are already on the books, so it's not like it would be that much of a surprise.

[roywiggins]

The first one that comes to mind is the arrival of the Conquistadors, from the point of view of the locals. Even in retrospect, could they have any reason to believe it was possible? Well, not really, no. Invasion generally, maybe, but not from another hemisphere.

It has to be something that's just not accounted for in your worldview, something you couldn't expect based on anything you know about. A meteorite wouldn't be a black swan for us, but I think it would be for a society that hadn't discovered them yet. A meteorite strike on London circa 1800 would have been a black swan, because at the time people (Europeans, anyway) thought that shooting stars were atmospheric phenomena. Large rocks falling from the sky just wasn't in their cosmology.

https://en.wikipedia.org/wiki/Meteoroid#History

[roywiggins]

Everyone knows that the stock market will eventually drop a lot, due to some crisis or other. It will happen, to a near certainty. But the cost of maintaining a short position long term will exceed the payout, that's why it's really hard to make money off short selling. Otherwise it would be free money every decade or so.

Stockpiling costs money, and it costs more money the longer it takes for your bet to pay out, just like a short. Masks expire, rubber perishes. You have to bet on the timing, not just that it will eventually happen. A 100-year event will take 100 years to pay out on average, so how much money can you afford to lock away in anticipation of something that might not happen in your lifetime? The opportunity cost isn't zero.