Decades ago, researchers showed price changes have fatter tails than the bell curve — wild moves are far more common than the simple model allows.[1]
The popular term for a rare, high-impact shock no one saw coming is a “black swan” — and history is full of them.[2]
Like assuming the calmest year of weather is normal, then being shocked by a once-in-a-century flood — that somehow turns up every decade or two.
The lesson isn’t to predict crashes; it’s to expect them. Keep some cushion, avoid betting the farm, and don’t trust models that assume the world is gentle.
Where these numbers come from
Finisdom stress-tests mixes against real crashes, not a smooth bell curve — so the worst case you see actually happened.