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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 gaussia

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).

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).