From the book Hedge Fund
Market Wizards:
“As a
general observation, markets tend to overdiscount the uncertainty related to
identified risks. Conversely, markets tend to underdiscount risks that have not
yet been expressly identified. Whenever the market is pointing at something and
saying this is a risk to be concerned about, in my experience, most of the
time, the risk ends up being not as bad as the market anticipated.”