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What Is a Black Swan Event?

Nassim Nicholas Taleb is the author of The Black Swan, one of the most influential books of the last 50 years. This book is the arbitrariness and uncertainty, and to understand our chronic inability to accurately measure this phenomenon, and together. According to Taleb, Black Swan is an event that is unpredictable, but has a large impact.


More specifically, a Black Swan event, the following three properties: 1) It is not expected, a surprise (observer), 2) of this event is of great effect and spatial awareness, and 3) even though the event is not planned or expected, the Human nature causes the viewer to believe that the show is perfectly predictable and expected.


2007-2008 financial year crises are a perfect example of a typical case of the Black Swan. This fits the first criterion, because most people do not expect such an event occurs. In fact, before the crisis, many points to the fact that house prices not declined at the national level for decades, and the fact that this does not mean that it is impossible to happen. This crisis is clearly in line with the second criterion has a strong influence on how we look at the hole created by the crisis. And the crisis of the third criterion, because not many people see the financial crisis came to a crisis and to assert that should the decline in home prices perfect. In fact, many people are angry not prevented politicians, legislators and businessmen of the crisis, when people do not know that the crisis came.


The third criterion for the Black Swan event has the event for "predictable" after it happened, perhaps the most interesting from a psychological point of view. This is clearly a contradiction, that an event such as "predictable" only after it happened, but it seems to be a reference to a series of natural slope, including ex-post bias (ie, hindsight 20/20.)


As already mentioned, the financial crisis of 2007-2008, the prototype Black Swan event, as well as events that actually shoot Nassim Taleb popularity. In fact, published in a book before the crisis, Taleb says he does not invest in Fannie Mae and Freddie Mac because it sits seen on a ticking time bomb with all of its mortgage-backed securities on their balance sheets. Of course, the value of the securities fell from the roof, Fannie and Freddie had a massive relief operation, and finally saw Taleb as a prophet.


Taleb spends much time in his book is about the possible dangers of a negative Black Swan events, and how to avoid them, but also shows us that there is a positive Black Swan event, and you have to maximize your exposure through him. For example, the explosive growth in both markets personal computers and the Internet, both in a positive Black Swan event that no one has a big influence, and is considered to be expected after they occur.


has developed to protect against adverse events, Taleb a "balance" their strategy, in which are located in the center are ignored, invest most of your assets invested in ultra-safe as Treasury bills and then a small portion of your portfolio in assets, a give great reward if pan out, how-the-money options or shares of very small-caps. This strategy of "balance" that can protect against negative Black Swan events, while giving exposure to positive. In fact, Taleb acquired hedge fund a massive return in 2008 with a strategy of how to

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