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Black Swans and Simple Humans |
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26 July 2011 |
"It's not what you don't know that kills you.
It's what you know for sure that just ain't true.
"It's not what you don't know that kills you.
It's what you know for sure that just ain't true."
Mark Twain
Over the last few years, the phrase "Black Swan" has become commonplace (especially in the financial world) as a way to describe a rare event. Its appeal may well be that the theory behind it can be explained by a simple, and true, story. Up until the very late 17th century, the Western world had only ever encountered white swans; a 'black swan' was held to be non-existent in the same way as a 'pregnant man'. In 1697, Willem de Vlamingh changed that perception by discovering black swans in Western Australia (the pregnant man, thus far, remains undocumented).
Another similar-seeming expression is "a bolt from the blue," which originates in a description of lightning strikes occurring in areas with clear skies. Both of these phrases tend to be used interchangeably to illustrate an unexpected event.
However a Black Swan is different from a truly random shock. Nicholas Nassim Taleb, the main proponent of Black Swan Theory, gives the qualifying criteria:
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