Black Swan in History

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Russ Bredholt, Jr. of Bredholt & Co. sent me some bulleted Book Notes he had produced on a book “The Black Swan” by Nassim Taleb. In light of its relevance in today’s economic reality, I thought it might be of interest to pass along. I’m calling this a simple “Black Swan” in history. Take a look.

Book Notes
“The Black Swan”
by Nassim Taleb

Before they discovered Australia, the old world thought all swans were white.

This was confirmed by empirical evidence.

However, the sighting of the first black swan and many since proves the limitation of our learning from observation and experience.

Plus it shows how fragile our knowledge really is.

We tend to have blindness with respect to randomness—how many events ever come on schedule? The Great Depression (1929‐1930s), Pearl Harbor, 1987 stock market crash, 9‐11, global economic crisis?

A black swan event has three characteristics…

1. Rarity.
2. Extreme impact.
3. Retrospective predictability—hindsight has clear vision

Comment:

What if we are going through a “black swan” period in history? Being “fooled by randomness?” Instead of being thrown off course (and eventually returning to it when things get back to normal) there is actually a new “normal” underway?

How you see something determines how you respond.

 

Source: Russ Bredholt, Jr. rbredholt@strategist.com www.strategist.com

Original writing date: January 28, 2009

 

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