While COVID-19 itself was unpredictable, more measures could have been put in place to prevent the spread of a potential virus, which exhibited exponential growth as countries scrambled in an effort to contain the spread via lockdowns. government – yet somehow, the outbreak was exacerbated by mask shortages, lack of hospital beds, and delayed responses. Statistically, the possibility of a highly transmissible pathogenic virus targeting the respiratory system was well-known and even documented internally by the U.S. Note that the classification as a black swan event is relatively subjective – for instance, Taleb has criticized that the COVID-19 pandemic was not actually a Black Swan event. In other words, it all depends on the perspective and information on hand for whether an event is a “Black Swan” event or not – one person’s loss is most often another person’s gain. As such, this is one example of a “positive” black swan event. eventually emerged with many prominent companies, most notably Amazon. Still, despite the initial sell-off, the U.S. The “dot com” era consisted of a recession once the bubble popped.

Terrorist Attacks on September 11, 2001.

Rise of the Internet, Adoption of Personal Computing, Mobile Phones Listed below are examples of notable black swan events: Industry, Geography)īlack Swan Event Examples – Stock Market Impactĭespite the association with events with significantly negative impacts, black swan events are not all crises, per se.

In the case of investing and trading, a few examples of risk measures are:

Therefore, the investment strategy entails minimizing losses while placing bets to capitalize on irregular events, akin to a venture capitalist in pursuit of “home runs” to offset potential losses.

However, the idea behind the so-called “black swan theory” is NOT to attempt to predict such improbable events, but rather to be more defensive in terms of capital allocation.Įven if such events take place, there are measures already in place to limit possible losses, or potentially even profit from the events, if well-positioned (i.e. Retrospective BiasĮxcerpt from The Black Swan by Nassim Taleb (Source: The Black Swan) The term “black swan” – popularized by Nassim Nicholas Taleb – refers to unpredictable events with often catastrophic consequences.Īccording to Taleb, the three traits of a black swan event are: A Black Swan Event is a metaphor describing a rare, unexpected phenomenon with a low probability of occurrence, yet has a significant impact on society as a whole.

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