A few days ago Nassim Nicholas Taleb, author of the book "The Blacks Swan: The Impact of the Highly Improbable," penned a piece for The Financial Times on avoiding "black swan" events.
Black swans in this context are very infrequent extreme events that have wide implication. (9/11, financial collapse, power grid failure, the internet, rapid climate change.)
Taleb has posted the article on his website and it can be downloaded here as a PDF: Ten Principles for a Black Swan-proof World.
A few of the ten principles: don't let anything get "too big to fail," stop the socialization of losses and the privatization of gain, and do not give children sticks of dynamite, even if it comes with a warning. (In this context the "dynamite" is complex financial derivatives that no one understands.)
The term "black swan" comes from the mistaken assumption that all swans are white. In this context a "black swan" is a metaphor for something that cannot exist. Black swans were discovered in Australia in the 18th century, thereby proving false the assumption that all swans are white. In Taleb's context "black swans" are rare events beyond the realm of normal exprectation. Photo: Big Gray Mare/flickr
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Financial Times: Ten Principles for a Black-Swan Proof World
Hi Merry Christmas and Happy New Year, a cool site I like
Posted by: school_dubl | December 28, 2010 at 12:38 PM
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Posted by: Music_master | September 24, 2010 at 06:17 AM
What about this explanation of Black Swan Event? http://www.youtube.com/watch?v=ANh6Jr4tfPQ
Posted by: Fred Tubbs | January 03, 2010 at 10:23 PM
Thanks for this Dennis. Very helpful
Posted by: Geoff Dabelko | April 16, 2009 at 02:52 PM