From 1990 until 2003 Siegfried and Roy at the Mirage Resort and Casino was regarded as one of the most visited shows in Las Vegas. Siegfried Fischbacher and Roy Horn were German-American magicians and entertainers who used white lions and tigers in their performances. The show brought the casino tremendous revenue as those attending were commonly in disbelief of what they were watching. The two men seemed to have domesticated the most intimidating of all living mammals. Tragically however, on Roy Horn’s birthday in 2003 one of the Tigers randomly attacked him causing severe injuries and bringing the show to an end.
All casinos have extensive risk management policies in place. They monitor their poker tables and slot machines for fraud constantly. They have insurance policies for high rollers who strike it big and win a jackpot. The Mirage even had a policy for the unlikely situation that one of Siegfried and Roy’s cats were to jump into the stands and maim an audience member. But they had overlooked the situation they found themselves in on that fateful day in 2003. It was one of the largest financial losses in the casino’s history and it was totally unexpected and unplanned for.
The story reminds me of a saying that my father has used since I was a little boy: it’s never the bus you see that hits you. In life, very often the most impactful events are most unexpected. The same is true with investing. The biggest drops in the stock market usually come out of nowhere and are completely surprising. No one saw a global pandemic roiling markets in the spring of 2020 and very few dreamed of the carnage that would result from a real estate boom and bust in 2008.
Working with a financial advisor cannot allow you to foresee these types of events. If anyone predicted them, they were probably right by accident. Afterall, you can always find someone calling for the end of the world. If you just wait long enough eventually, they will be right. A financial advisor is like a jungle safari guide. They know the terrain and climate. They also know the dangers that can be hiding inside the forest. He or she cannot predict when or where a lion might show up, but a good advisor knows how to react when it does.