5 ms·

Events like the Carrington & Covid seem to fit: high profile, hard to predict and rare. IMO, both qualify as Black swan. At some point, you have to pick a thre

Events like the Carrington & Covid seem to fit: high profile, hard to predict and rare. IMO, both qualify as Black swan. At some point, you have to pick a threshold on the probabilities involved... These events are likely independent & identically distributed (i.e. hard to predict for any year), and I'd call sub-1% annual chance pretty rare. But I'm receptive to a different threshold... But you can't just say "Black swan only counts for previously-inconceivable events". Edit: I'm assuming covid-19 is structurally different than Sars, mers, Ebola, & H1N1 purely based on the global effect it has had to date. If you found those others as pandemics (not according to WHO though), then you can remove it as Black swan.

AQuantized 7y ago
I think they are both categorically grey swans. https://www.investopedia.com/terms/g/grey-swan.asp https://www.investopedia.com/terms/g/grey-swan.asp COVID-19 especially because of the previous impact of Spanish Flu.
Izkata 7y ago
> These events are likely independent & identically distributed (i.e. hard to predict for any year), and I'd call sub-1% annual chance pretty rare. Put another way, it seems reasonable to me that "no one alive has experienced it before (and probably not their parents either)" is a decent threshold.
roywiggins 7y ago
Not to be all Word of God, but Nassim Taleb does not consider COVID19 a black swan at all. https://www.newyorker.com/news/daily-comment/the-pandemic-isnt-a-black-swan-but-a-portent-of-a-more-fragile-global-system https://www.newyorker.com/news/daily-comment/the-pandemic-is... It's not a black swan because everyone with half a brain could say that there would eventually be a global pandemic respiratory disease. H1N1 was technically one, it just happened to be mild. We thought there was going to be one in 1976 and raced to vaccinate everyone against it. These things happen, like earthquakes. Nobody knows when, but if the San Andreas went tomorrow it wouldn't be a black swan.
- steve19 7y ago
  Are any black swans going to be black swans in hindsight? Did anyone anticipate it enough to put their money where their mouth was? A fortune, and a major service to humanity, could have been made by a private individuals stockpiling PPE in vast quantities. You say anyone with half a brain anticipated it. I didn't. Did you buy 500k N95 masks and put them in a warehouse? Knowing someone will happen is easy. I know for sure that a large meatorite will hit the earth and cause mass deaths and crop failure, but I have no idea in how many 100s, 1000s or millions of year it will happen. If it happens tomorrow it would be a black Swan * * an example only, we would get plenty of advanced warning.
  - roywiggins 7y ago
    The first one that comes to mind is the arrival of the Conquistadors, from the point of view of the locals. Even in retrospect, could they have any reason to believe it was possible? Well, not really, no. Invasion generally, maybe, but not from another hemisphere. It has to be something that's just not accounted for in your worldview, something you couldn't expect based on anything you know about. A meteorite wouldn't be a black swan for us, but I think it would be for a society that hadn't discovered them yet. A meteorite strike on London circa 1800 would have been a black swan, because at the time people (Europeans, anyway) thought that shooting stars were atmospheric phenomena. Large rocks falling from the sky just wasn't in their cosmology. https://en.wikipedia.org/wiki/Meteoroid#History https://en.wikipedia.org/wiki/Meteoroid#History
  - JoshuaDavid 7y ago
    > Did anyone anticipate it enough to put their money where their mouth was? A fortune, and a major service to humanity, could have been made by a private individuals stockpiling PPE in vast quantities. The response to this pandemic has actually worried me quite a lot on this front, because it seems likely now that anyone who stockpiled PPE at pre-pandemic prices and tries to resell during the pandemic at a price high enough to justify their initial investment will be accused of price gouging and possibly have their stockpile seized. Which has the effect that nobody has an incentive to build a reserve of things that will be useful in a future crisis, even if that crisis is foreseeable. So yeah, it's easy enough to say "I think there's at least a 5% chance per year of an event which results in at least 10 million people who will want to buy a portable generator" (which is 10x the amount normally sold in a year). I genuinely do think that's a true statement, and it would imply that the number of generators currently being produced would need to be at least 50% higher to meet demand averaged across all times rather than typical times, which is a pretty big difference in a pretty big market. Normally when you think you know something the market doesn't, you can bet against the market by investing in whatever the market is undervaluing, and if you're right you make money. In this case, I'm not sure how you would go about doing that. Investing in companies making generators doesn't increase production. Buying generators and leaving them in a warehouse risks your stockpile being seized in the case where you were right about the risk. I'm honestly not sure how I would go about putting my money where my mouth is here.
thebean11 7y ago
Isn't previously inconceivable events pretty much the definition from the book? Unknown unknowns vs known unknowns? For example, winning the jackpot on a slot machine is not a black swan, no matter how small the probability.

AQuantized 7y ago

I think they are both categorically grey swans. https://www.investopedia.com/terms/g/grey-swan.asp https://www.investopedia.com/terms/g/grey-swan.asp COVID-19 especially because of the previous impact of Spanish Flu.

Izkata 7y ago

> These events are likely independent & identically distributed (i.e. hard to predict for any year), and I'd call sub-1% annual chance pretty rare. Put another way, it seems reasonable to me that "no one alive has experienced it before (and probably not their parents either)" is a decent threshold.

roywiggins 7y ago

Not to be all Word of God, but Nassim Taleb does not consider COVID19 a black swan at all. https://www.newyorker.com/news/daily-comment/the-pandemic-isnt-a-black-swan-but-a-portent-of-a-more-fragile-global-system https://www.newyorker.com/news/daily-comment/the-pandemic-is... It's not a black swan because everyone with half a brain could say that there would eventually be a global pandemic respiratory disease. H1N1 was technically one, it just happened to be mild. We thought there was going to be one in 1976 and raced to vaccinate everyone against it. These things happen, like earthquakes. Nobody knows when, but if the San Andreas went tomorrow it wouldn't be a black swan.

steve19 7y ago
Are any black swans going to be black swans in hindsight? Did anyone anticipate it enough to put their money where their mouth was? A fortune, and a major service to humanity, could have been made by a private individuals stockpiling PPE in vast quantities. You say anyone with half a brain anticipated it. I didn't. Did you buy 500k N95 masks and put them in a warehouse? Knowing someone will happen is easy. I know for sure that a large meatorite will hit the earth and cause mass deaths and crop failure, but I have no idea in how many 100s, 1000s or millions of year it will happen. If it happens tomorrow it would be a black Swan * * an example only, we would get plenty of advanced warning.
- roywiggins 7y ago
  The first one that comes to mind is the arrival of the Conquistadors, from the point of view of the locals. Even in retrospect, could they have any reason to believe it was possible? Well, not really, no. Invasion generally, maybe, but not from another hemisphere. It has to be something that's just not accounted for in your worldview, something you couldn't expect based on anything you know about. A meteorite wouldn't be a black swan for us, but I think it would be for a society that hadn't discovered them yet. A meteorite strike on London circa 1800 would have been a black swan, because at the time people (Europeans, anyway) thought that shooting stars were atmospheric phenomena. Large rocks falling from the sky just wasn't in their cosmology. https://en.wikipedia.org/wiki/Meteoroid#History https://en.wikipedia.org/wiki/Meteoroid#History
- JoshuaDavid 7y ago
  > Did anyone anticipate it enough to put their money where their mouth was? A fortune, and a major service to humanity, could have been made by a private individuals stockpiling PPE in vast quantities. The response to this pandemic has actually worried me quite a lot on this front, because it seems likely now that anyone who stockpiled PPE at pre-pandemic prices and tries to resell during the pandemic at a price high enough to justify their initial investment will be accused of price gouging and possibly have their stockpile seized. Which has the effect that nobody has an incentive to build a reserve of things that will be useful in a future crisis, even if that crisis is foreseeable. So yeah, it's easy enough to say "I think there's at least a 5% chance per year of an event which results in at least 10 million people who will want to buy a portable generator" (which is 10x the amount normally sold in a year). I genuinely do think that's a true statement, and it would imply that the number of generators currently being produced would need to be at least 50% higher to meet demand averaged across all times rather than typical times, which is a pretty big difference in a pretty big market. Normally when you think you know something the market doesn't, you can bet against the market by investing in whatever the market is undervaluing, and if you're right you make money. In this case, I'm not sure how you would go about doing that. Investing in companies making generators doesn't increase production. Buying generators and leaving them in a warehouse risks your stockpile being seized in the case where you were right about the risk. I'm honestly not sure how I would go about putting my money where my mouth is here.

thebean11 7y ago

Isn't previously inconceivable events pretty much the definition from the book? Unknown unknowns vs known unknowns? For example, winning the jackpot on a slot machine is not a black swan, no matter how small the probability.