Friday, July 24, 2009

The 'Black Swan' Report: No Calm Waters Ahead

The market is having a good run. Yesterday's gain of 188 points now has the Dow at its highest close since early November. It would be nice to believe that the Great Recession is coming to a close, as some are daring to prognosticate. In such moments of euphoria, it is worthwhile to put your hands on "Preparing for 'Black Swan' Events," a special report issued by The Dilenschneider Group Inc.

Thanks to the financial crisis, the term Black Swan has entered the everyday lexicon. This particular report describes the theory as referring to "large-impact, hard to predict, rare events and their dominant role in history." As the Wall Street Journal recently put it, " 'Black swan' alludes to the once widespread belief that all swans are white — proved false when European explorers found black swans in Australia. A black swan event is something extreme and highly unexpected."

The Dilenschneider report offers concepts the researchers believe "may be helpful in dealing with 'Black Swan' events ... a glimpse of what we might expect in the interest of helping you prepare your business and yourself for tomorrow." In Part 2 of this citation of the Black Swan report posted earlier today (see below), I'll highlight a few of the report's projections for the nature of managerial leadership that we'll need to get the economy back on track.

Perhaps the release of something like this Black Swan report can be seen as a contrarian indicator — that maybe a paper like this, hitting the desks of decision makers in about the 18th month of this dank and dangerous recession, is a sign that we are near the end of it. But even if the worst is over, the report's main conclusion is sobering: "Do not expect calm waters ahead. We face a long period of turmoil."

Hence a report like this deserves a close reading. You'll find a copy on the firm's website (see link above).