Taleb discusses that this kind of risk is responsible for many investment industry blowups, like LTCM. However, the good news is that, as Michael Covel proves in his book Trend Following, momentum style traders, more often than not, tend to benefit from these rare events.
Shorting the stock below would have resulted in complete disaster, but no trend follower would have been short this stock in the first place, as it was above its 50dma, and making new 6 month highs at the time:
