## Black Swans and the Investment Market 2023: Why Smart People Should Prepare Now

If you've ever heard the term "Black Swan" in the investment world and felt annoyed, there's a good reason. It refers to unpredictable events that no one can foresee, yet when they happen, they cause massive damage. The COVID-19 crisis, the sharp rise and fall of Bitcoin, the Russia-Ukraine war—all are examples of such phenomena. Thailand has not been immune to becoming a victim. This article will help you understand and prepare your portfolio accordingly.

### What is a Black Swan? Why is it Dangerous?

**Origin of the term "Black Swan"**

In ancient Rome, people believed that all swans in the world were white, with no other colors. That belief changed in 1697 when Dutch captain Willem de Vlamingh explored Australia and discovered black swans for the first time. This discovery shifted global perceptions: what was once thought impossible could actually happen.

**In 2007, before the global economic crisis** investor and author Nassim Nicholas Taleb published "The Black Swan: The Impact of the Highly Improbable." He explained that Black Swan events have three main characteristics:

1. They are outside the scope of past data and beyond most people's expectations.
2. They have a huge impact, causing markets worldwide to break.
3. After they occur, people tend to rationalize them, trying to explain why they happened.

### What should Thai investors worry about in 2023?

**1. The global economy is entering a slowdown**

Almost all international organizations forecast that in 2023, the economy will grow slowly or even contract in some countries. The main reasons are the aftermath of the Russia-Ukraine war and persistent inflation. Many countries are raising interest rates to combat inflation, leading to economic contraction.

Thai figures tell the same story: in Q4 2022, Thailand's economy grew only 1.4% (YoY), down from 4.6% in Q3. Although forecasts for 2023 suggest growth of 2.7-3.7%, that remains below normal.

The real problem stems from rising oil prices → higher living costs → increased fertilizer prices → weakened agricultural economy → reduced demand. Unemployment (1.23%) has increased.

**2. The Thai stock market has two faces**

Positive: Tourism recovery, increased domestic consumption, with travel, retail, and tourism sectors driving growth.

Risks: If inflation doesn't ease, central banks may continue raising interest rates. This is a double-edged sword—good for bondholders but bad for stocks.

**3. Cryptocurrency remains risky**

A year ago, (May 19, 2021), Bitcoin plunged to $30,000 USD—a very sharp decline. The crypto market has two characteristics: the emergence of Black Swans and rapid sell-offs.

Risks include: liquidity can vanish instantly, a programmed sell-off (Sell-off) can be triggered, and new Black Swans can occur at any time.

**4. Will gold go up or down?**

Gold has been under pressure from negative factors, but 2023 shows signs of improvement because:

- China and India (the countries that buy 50% of the world's gold) are recovering economically.
- China's easing of Zero-COVID policies will boost tourism.
- Demand for gold jewelry and investment will increase.

The rough target: around $1,900 USD/ounce initially. If it holds well, it could reach $2,000 USD/ounce. However, due to economic and political factors, no guarantees are given.

**5. The US dollar may weaken**

US inflation is easing faster than expected, ending the dollar's rally. The dollar may enter a weakening phase, which is good for other assets and for countries exporting goods.

### Which major risks threaten Thailand?

Thailand's foreign exchange reserves have decreased alarmingly: from about 10 trillion baht to 8.8 trillion baht, a reduction of 1.2 trillion baht (equivalent to 32 billion USD). Reasons include:

1. Lower investment returns
2. Decreased valuation of assets in dollar terms
3. Central bank interest rate hikes

This has many worried about a repeat of the 1997 Asian financial crisis.

### What should investors do? 5 Strategies to Protect Against Black Swans

**1. Accept that the next Black Swan will come**

It's not a question of "if," but "when." Unpredictable events happen all the time. Don't try to predict them—just prepare.

**2. Diversify investments across various asset classes**

- Stocks (60-70%)
- Bonds (15-20%)
- Gold or precious metals (5-10%)
- Real estate (5-10%)
- Crypto or high-risk investments (according to your risk tolerance)

Diversification helps ensure that when a Black Swan strikes, you won't be wiped out entirely.

**3. Take advantage of crises: buy when prices fall**

During unpredictable events, stock prices often drop sharply. Those with cash or systematic buying plans (DCA) can purchase quality stocks at lower prices. Markets tend to recover, and prices go back up.

**4. Have a "long-term investment horizon"**

Black Swans may cause short-term declines (weeks or months), but markets usually rebound over (several months or years). If you need money within 3 months, avoid risky investments.

**5. Use risk mitigation tools**

- Options (Options) for experienced traders
- Futures (Futures) to hedge risks
- Government bonds for stability

These tools are not "destructive securities" but "risk mitigation instruments."

### Black Swans help us become smarter, not more paranoid.

Key takeaway: The Black Swan theory isn't meant to sound gloomy. It's a reminder to be prepared. In an uncertain 2023, you can do three things:

1. **Accept** that no year is completely safe; Black Swans will always occur.
2. **Plan** by diversifying assets, keeping cash, and having a backup plan.
3. **Always think** that the worst-case scenario could happen, and be ready.

When the next Black Swan arrives—and it will—you'll be prepared. Not panicked. Don't let the market control you; let your plan guide your actions instead.