THE UNEXPECTED

Uncertainty, in the presence of vivid hopes and fears, is painful, but must be endured if we wish to live without the support of comforting fairy tales” Bertrand Russell

"Our society and educational systems are analytically oriented.  Consequently, like the captain of the Titanic, it is easy for us to prefer to rely on data or other hard, empirical information (seeing the iceberg) versus clues (the telegraph).  Unfortunately, such reliance makes us vulnerable to the unexpected.  Of course it is easier to deal with certainty rather than with the unknown.  Thus it is easier to look at the numbers, which are historical as they measure events after the fact, and what management has to say (the table talk of the poker game of investing) than to deal subjectively with events and with what management is not saying"  Bennett Goodspeed 1978

"A boxer is rarely knocked out by the punch he expects. It's the unexpected one that does him in” S Stovall

“Whenever the market is pointing at something and saying this is a risk to be concerned about, in my experience, most of the time, the risk ends up being not as bad as the market anticipated” Jamie Mai

“I believe it’s very rare that when you’re focused on a risk that it kills you, because you’re doing something about it. It’s usually what people aren’t talking about that ends up hurting you.” Bruce Berkowitz

"Financial markets constantly anticipate events, both on the positive and on the negative side, which fail to materialize exactly because they have been anticipated.  No wonder that financial markets get so excited in anticipating events that seem quite harmless in retrospect!   It is an old joke that the stock market has predicted seven of the last two recessions. We can now understand why that should be so.  By the same token, financial crashes tend to occur only when they are unexpected." George Soros

“The real catastrophic events are the ones you never see coming. “ Robert Kleinschmidt

“A former colleague used to say, “It’s the things people aren’t worried about that you need to worry about,” which I think is often true. What hits us out of left field and we don’t anticipate” Stephen Goddard

“It does no good to rail against unexpected events in the world. The only thing unexpected should be the exact way that the world surprises us, not the fact of periodic surprises” Paul Singer

"The reality is that if you trade long enough everything happens"  Steve Cohen

“In the financial markets, there is rarely anything new under the sun, but you can never say you’ve seen it all, and what you thought you would never see can clobber you” Seth Klarman

"Being aware that a single, big mistake can wipe out a lifetime of successes, a wealth manager must be hardwired to recognise and avoid grave risks, including those never experienced before" Frank Martin

"We are information hounds. I have to be prepared for the unexpected and always afraid of missing something, paranoid about what I don't hear.  The risk of failure is an important driver"  Mario Gabelli

“The expected never happens; it is the unexpected always." John Maynard Keynes

"Markets .. can and will change in unexpected ways and at unexpected times"  Warren Buffett

“Be prepared for the unknown, it happens” Bruce Berkowitz

"I think I have a little bit better appreciation today, and I wished I had then, to not only expect the unexpected, but just how bizarre and severe the unexpected could be" Larry Robbins

“When you are uncertain about the future, don’t position your portfolio as if you were certain” James Montier

“Events can move from the impossible to the inevitable without ever stopping at the probable." David Einhorn 

"In life, both financial and social, sometimes events swing to extremes that seem inconceivable to conventional minds"  Barton Biggs

“Albert Einstein said: ‘Whoever undertakes to set himself up as a judge of truth and knowledge is shipwrecked by the laughter of the gods.’ We can’t predict what is going to happen in life. Never underestimate the chance of rare events” Peter Bevelin

“In an uncertain world, governed by probabilities rather than rules, the only constant may be that the more time that passes, the more probable it becomes that you will at some point encounter an improbable event” Leon Levy

“Things that have never happened before are bound to occur with some regularity. You must always be prepared for the unexpected, including sudden, sharp downward swings in markets and the economy. Whatever adverse scenario you can contemplate, reality can be far worse. “ Seth Klarman

“What may “kill me” is often what I least expect” Peter Bevelin

"No matter how well you think you understand a business, something can always happen that will surprise you" Peter Lynch

“Accepting that we cannot predict the future ie that there will always be unexpected and highly consequential events – is the first step in becoming less fragile and more adaptable.” Seth Klarman

“Despite claims to the contrary, even the best fund managers can never predict with any certainty what the future holds. Since fortune-telling is not a viable option, we must be prepared to react to whatever reality comes our way.” Bruce Berkowitz

“The assumption that something can’t happen has the potential to make it happen , since people who believe it can’t happen will engage in risky behaviour and thus alter the environment” Howard Marks

“Depend on the unimaginable. Its important that you put a non-zero imaginative quality to your approach.” John Burbank

"Occasionally .. the unthinkable happens" Warren Buffett

Failure of imagination consists in the first instance of not anticipating the possible extremeness of future events, and in the second instance of failing to understand the knock-on consequences of extreme events” Howard Marks

"You could say our failures of foresight were primarily failures of imagination, like the failure to foresee terrorists flying planes into buildings before September 11" Tim Geithner [on the GFC]

"We should all be humble enough to realize that once every 20 or 30 or 40 years, values go to real extremes.  Any investment program must take into account the impossibility of knowing when and to what extent such extremes might occur".  Paul Singer

"No matter how much time you put into addressing risk, sometimes there are unforeseen events that blindside you.. unexpected external events can leave you with no chance to respond. And they can be disastrous" Sam Zell

"In the investment business, relatively unpredictable outlier developments sometimes can quickly derail otherwise attractive investments. It comes with the territory.  So while we work hard to reduce the risks of large permanent loss, we cannot completely eliminate large risks. However, we can draw a line on how much risk we are willing to accept -  a line that provides sufficient apparent protection and yet prevents us from being so risk averse that we turn down too many attractive opportunities. One should not invest with the precept that the next 100-year storm is around the corner." Ed Wachenheim

"Though practically all days are relatively uneventful, tomorrow is always uncertain. (I felt no special apprehension
on December 6, 1941 or September 10, 2001.) And if you can’t predict what tomorrow will bring, you must be prepared for whatever it does." Warren Buffett