The Black Swan is an ugly if - just right now - cheap bird

If Black Swans are very negative market-moving events that are difficult to predict, then this must be a White Swan market where everything is hunkey dorey as we all hold hands and skip towards the sunset as the stock market climbs higher and higher. Okay, okay, that analogy did get a bit out of hand. On to the stuff of substance.

The cost for hedge funds to insure themselves against unexpectedly large drops in the stock market (Black Swan events) has never been cheaper. With the VIX continually hovering near all-time lows, the bet that the market WON'T decline by that 6-7% figure in the next month is somewhere around 25-to-1. While the author certainly doesn't bet against a market that continues to grind higher - especially with the potential for tax reform up ahead - these odds may be tempting for some funds. If nothing else, their hedging strategy keeps getting cheaper.

Read about the VIX and some recent hedge fund activity here https://www.ft.com/content/f9fef394-4e8d-11e7-bfb8-997009366969