It's Becoming a 'Fat Tail' World

The world is becoming more volatile.  It is becoming more difficult for folks to make normal calculations about what to expect in the near future.  The investment world has a name for the possibility of experiencing extreme outcomes...they are called 'Fat Tails'.

Such unpredictability speaks to an uncomfortable possibility of extreme events. "Fat tails"—the technical term for the extremes of an outcome distribution—are risks for any global system that loses its anchors. Economies and markets function differently, companies and households feel unsettled, and policy measures become; less effective.

He goes on to say;

Every year has elements of unpredictability, but what's in play in 2012 goes far beyond the usual risk of policy slippages, unexpected election outcomes and geopolitical hotspots. This is also about the global economy losing important anchors.

With European economic fragmentation no longer totally unthinkable, expect even more people around the world to opt for "self insurance," thereby sucking growth oxygen from the global economy. We already see this in companies' preference for holding record levels of cash on their balance sheets, not because they like earning virtually no interest income but because they want lots of assurances of safety and freedom of action.

In such a world, prudence is the name of the game, and patience will likely be rewarded. To paraphrase Will Rogers, investors are well-advised to worry first about the return of their capital and second about the return on their capital. In doing so, they should exploit the flexibility that comes with cash and make prudent allocations to instruments that pay positive real returns, including high-quality municipals, bonds issued by countries with solid balance sheets, and the debt and equity of global companies with iron-clad cash flows and debt dynamics.

Here;  http://online.wsj.com/article/SB10001424052970203471004577140431509989506.html?mod=googlenews_wsj

I believe it is pretty interesting that this article talked about the global system losing it's anchors.

Bible readers know that the ONLY force that is holding this entire system together is the restraining power of Jesus Christ.  Without that...the whole thing would fling apart.

So as the world draws closer to The Great Tribulation it would make total sense to start seeing more "fat tails"....and even the secular authors writing in the Wall Street Journal seem to sense that SOMETHING IS GOING ON....fat tails seem to be happening every single day.