Stability sows the seeds for instability, and vice versa

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Surprise has six common characteristics:
• Incomplete information
• Uncertainty
• Randomness
• Chance
• Unfortunate timing
• Poor incentives

With assets priced high and no room for error, markets would be hanging on by a thread, crushed at the first sniff of anything less than perfection.
The irony is that when markets are guaranteed not to crash—or more realistically, when people think that’s the case—they are far more likely to crash.
The mere idea of stability causes a smart and rational movement toward bidding asset prices up high enough to cause instability.
Stability is destabilizing.
Or, put another way: Calm plants the seeds of crazy. Always has, always will.

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