Months before the economic crisis of 2008, or the "Great Recession," all three major credit rating agencies had given exaggerated credit ratings to many companies and countries. In the following days and months following the crisis, countries awarded the highest possible credit rating defaulted on their sovereign debt obligations, literally overnight. The same scenario occurred with firms who went from the highest level of investment grade one day to default the next. These defaults and the contagion that spread as a result of these "unforeseen" collapses snowballed into what we now call the Great Recession. This event and other previous market crashes are known as black swan events. The term "black swan," used to describe such economic events, was coined by Nassim Taleb, an author who published a book by the same name, referring to events that occur that are several standard deviations away from a normal distribution - that is, rare and unpredictable. Two weeks ago, an important indicator of market expectations of another black swan event reached its all-time high, predicting the expectation of another black swan.

The funny thing about black swans is that they are actually not that rare, something Taleb points out in his book. Similarly, major market moves have also become much more common in the past decade when compared to the previous 100 years of market data. Black swans are to be expected. The Chicago Board Options Exchange (CBOE) Skew Index, the black swan expectation indicator, last saw these levels once last year and again in 1998. Obviously, no one can predict black swan events, that is what makes them black swans, however, investors make bets that events that would normally never happen will happen as insurance against major market crashes. They do so through the purchase of out-of-the-money put options. Without going into much detail here, these instruments hedge investors' bets against potential losses in the event of a crash. So the real question now is, what spooked investors?

The U.S. Federal Reserve is currently meeting and will announce their interest rate decision on Thursday, either keeping the "federal funds rate" intact or moving it up for the first time in nine years. As those who read my column on a regular basis know, I have been predicting no rate increase in 2015 since last winter and stand by that prediction. Markets at first disagreed with me but have come around and changed course, pricing in the first rate increase for some time in 2016. So if market predictions are correct and no rate hike takes place, what is it that investors fear? Continued pressure on Chinese markets? A triple-dip recession for the eurozone? The spread of armed conflict in the Middle East? All of the above? The Chinese domestic market continues to be soft. The lack of a recovery in the eurozone has forced the European Central Bank (ECB) to reconsider increased quantitative easing. Russia is fighting a war in Syria at times in opposition to the United States. All powder kegs of uncertainty, one spark away from catastrophe. The take-away from the CBOE Skew index hitting its high is to ensure assets are properly insured lest we experience another black swan event.

I'd like to leave you with some thoughts on democracy and the upcoming Turkish parliamentary election coming up this Sunday. Turkey is beginning to experience election fatigue, voting in its fourth national election in a little over a year. The country was divided in the previous parliamentary election that took place in June with no coalitions emerging between any of the four parties represented in Parliament. While some voters have become disenfranchised with the entire process, turnout continues to be high - absentee ballots from overseas are higher now than the previous election. All parties have signaled that "this time is different," that should they return to Parliament they would be willing to join a coalition to govern. The pendulum of liberalism has shifted from a near totalitarian state for much of the Republic's history to one in which elections matter in the past decade. This at the very least is a great sign. Will Turkey go down the path of other developed countries with low turnouts with civil institutions operating independently of political tides? Will turnout continue to be high as democracy in Turkey matures? "Island-life" in the United States and even some parts of Europe has made it much easier for countries to ignore foreign crises, but if we've learned anything from the 2008 crisis, it is that "islands" don't exist. Here's to a peaceful and orderly election with results that will move Turkey forward in these most uncertain of times.