4 ms·

A rather pedantic point, don't you think? The idea is to speculate with highly unlikely, but impactful events.

ben_w 3y ago
If I thought it was pedantic, I wouldn't have said it :) I think there's an important difference between "highly unlikely" and "black swan" — winning the lottery is the former, for any given number choices. Waking up one day to the news that cow moos have been translated into English, they had an average IQ all along, and therefore all beef and dairy products are banned worldwide… would be the latter — it's not physically impossible given what (little) we know, but there's also absolutely no reason to suspect it a priori (unless you're vegan or Hindu, or…)
- taeric 3y ago
  Funny, I took "black swan" to be thinking something doesn't exist, that is actually just something you haven't seen. Not even unpredictable, just never experienced by you.
  - prewett 3y ago
    In this context it has a technical meaning, as in Taleb's book "Black Swan" [1]. His hypothesis is that the distribution of (stock) market events is not gaussian, as usually assumed. In fact, the distribution is not even knowable. He uses the example of a turkey: every day you get fed, life is good, until Thanksgiving when you get killed. Nothing in your experience prepared you for that event. (I think market black swan examples would by 9/11. Maybe Lehman Brothers collapse, but I think that something like that was predictable.) Given the OP's question, it's not clear they are using Taleb's definition, either. As GP pointed out, Taleb's black swans are by definition unpredictable and un-reasonable. [1] https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory
    - taeric 3y ago
      I still take it to be a little different. They aren't unpredictable in the sense of fantasy cows. They are unpredictable in that you have no prior to cause you to expect them. Stated differently, fantasy cows are a thing that is impossible in our current understandings. Black swans are things that just don't happen. We don't necessarily have a reason to think they can't happen. As such, you can use counter factual planning to prepare for some of these events. Interest rate risks would fit here. This is complicated by his insistence that covid was not a black swan. As that seems to still fit the definition. That a pandemic could happen doesn't make it less impactful when it does. Would be like the expected earthquake on a fault line. Not knowing when it will come is a salient fact.
      - ben_w 3y ago
        Ooh, interest rates! Perhaps I should have used them as my example of a black swan — I'm old enough to remember when negative interest rates were "absolutely impossible and never ever going to happen". (That said: cow brains seem to be more complex than GPT-4 and LaMDA, and the latter managed to mimic sentience well enough to convince Blake Lemoine; a cow brain wired up like even a relatively mediocre LLM would certainly… be a surprise).
- darkclouds 3y ago
  Totally agree with you. Black Swans are unpredictable events, so we wake up to Black Swan news. On the point of cows having an IQ, all animals have an IQ, its just they cant vocalise our sounds well so whilst they can detect our sounds and respond, most cant even sign Makaton, so maybe we are the dumbs one for not coming up with a form of communication where they can communicate easily with us whilst accounting for their limited physical attributes and motor skills.
satvikpendem 3y ago
It's not pedantic, it's literally the point of the book Black Swan from which the term derives.

If I thought it was pedantic, I wouldn't have said it :) I think there's an important difference between "highly unlikely" and "black swan" — winning the lottery is the former, for any given number choices. Waking up one day to the news that cow moos have been translated into English, they had an average IQ all along, and therefore all beef and dairy products are banned worldwide… would be the latter — it's not physically impossible given what (little) we know, but there's also absolutely no reason to suspect it a priori (unless you're vegan or Hindu, or…)

taeric 3y ago
Funny, I took "black swan" to be thinking something doesn't exist, that is actually just something you haven't seen. Not even unpredictable, just never experienced by you.
- prewett 3y ago
  In this context it has a technical meaning, as in Taleb's book "Black Swan" [1]. His hypothesis is that the distribution of (stock) market events is not gaussian, as usually assumed. In fact, the distribution is not even knowable. He uses the example of a turkey: every day you get fed, life is good, until Thanksgiving when you get killed. Nothing in your experience prepared you for that event. (I think market black swan examples would by 9/11. Maybe Lehman Brothers collapse, but I think that something like that was predictable.) Given the OP's question, it's not clear they are using Taleb's definition, either. As GP pointed out, Taleb's black swans are by definition unpredictable and un-reasonable. [1] https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory
  - taeric 3y ago
    I still take it to be a little different. They aren't unpredictable in the sense of fantasy cows. They are unpredictable in that you have no prior to cause you to expect them. Stated differently, fantasy cows are a thing that is impossible in our current understandings. Black swans are things that just don't happen. We don't necessarily have a reason to think they can't happen. As such, you can use counter factual planning to prepare for some of these events. Interest rate risks would fit here. This is complicated by his insistence that covid was not a black swan. As that seems to still fit the definition. That a pandemic could happen doesn't make it less impactful when it does. Would be like the expected earthquake on a fault line. Not knowing when it will come is a salient fact.
    - ben_w 3y ago
      Ooh, interest rates! Perhaps I should have used them as my example of a black swan — I'm old enough to remember when negative interest rates were "absolutely impossible and never ever going to happen". (That said: cow brains seem to be more complex than GPT-4 and LaMDA, and the latter managed to mimic sentience well enough to convince Blake Lemoine; a cow brain wired up like even a relatively mediocre LLM would certainly… be a surprise).
darkclouds 3y ago
Totally agree with you. Black Swans are unpredictable events, so we wake up to Black Swan news. On the point of cows having an IQ, all animals have an IQ, its just they cant vocalise our sounds well so whilst they can detect our sounds and respond, most cant even sign Makaton, so maybe we are the dumbs one for not coming up with a form of communication where they can communicate easily with us whilst accounting for their limited physical attributes and motor skills.

satvikpendem 3y ago

It's not pedantic, it's literally the point of the book Black Swan from which the term derives.