“(Gray swan is a term used to describe a potentially very significant event that is considered unlikely to happen but still possible. Because there is a slight chance the event will occur it should be anticipated, particularly as it could shake up the world, economy, and stock market)” - Investopedia

A black swan event is usually associated with a catastrophe which triggers a bearish market reaction. A "gray swan” might also create a market downturn, but it could also just as easily trigger a significant bullish reaction. One example of a gray swan might be the election of Donal Trump to the presidency, which triggered an unexpected bull market that continues to rise.

(As a reminder, this column is written to bring out thinking about potential significant market moving events that may or may not happen. In order to be totally objective there can be no bias. That’s right, no political bias, no market position bias, no historical bias, just a thought on a potential gray swan event.)

So what might a gray swan be trumpeting right now? The U.S stock market is experiencing a long term bullish move with new highs happening almost daily. It seems no matter what the news, stocks continue moving higher. Yet fewer and fewer people actually believe what’s happening right in front of them. Amidst talk of historically low global interest rates, trade wars easing and the U.S being the only place to invest money, almost no one believes the market can keep going.

Doubters are everywhere. Is the gray swan trumpeting a significant upside move? Possibly. For those that remember, the Japanese Nikkei index went ballistic, rising daily until in the late 1980s it neared an incredible 39,000, a true, unforeseen gray swan event. Are the U.S markets getting ready to experience the same? Is that the sound I hear of a swan trumpeting?

So, as a fund manager, a financial advisor, a passive investor or a proprietary firm trader, how would you position your investments, implement a strategy or hedge your positions? Remember, it’s not what’s happening right now but rather what comes next.

Bill Taylor is Managing Director of Entoro Wealth and architect of the Gray Swan Portfolio