The Black Swan

The Black Swan explains why we are so bad at predicting the future, and how unlikely events dramatically change our lives if they do happen, as well as what you can do to become better at expecting the unexpected.

Nassim Taleb calls an event a “Black Swan” if it’s unpredictable not because it’s random, but because our outlook on what’s possible was too narrow. The name stems from the fact that up until 1697, mankind believed all swans were white. But when Dutch explorers finally saw black swans for the first time in Western Australia, the term morphed into describing an event that occurred in spite of seeming impossible.

As a logical consequence, those who are the least aware of a Black Swan coming, will suffer the most from its often already extreme consequences.

Imagine you’d known about the 9/11 attacks, the 2008 financial crisis or hurricane Katrina in advance. You wouldn’t have been shocked and surprised. In some cases, a Black Swan is only a tragedy for a single person.

For example if John bets on his favorite horse Onyx at the racing track, because he knows that Onyx is in great health, has a solid track record, a skilled jockey and poor competition, John will surely be devastated if he loses all his money, because when the race starts, Onyx doesn’t move an inch and instead lies down.

But what’s a Black Swan for John can be the deal of a lifetime for Tony, the owner of the horse, who’s known in advance that Onyx would protest and bet against his own horse.

However, often Black Swans affect entire societies, or even the whole world. Just think of Copernicus’s discovery that the sun is the center of the universe, not the earth, or when Neil Armstrong set foot on the moon.

One of our biggest erroneous behaviors is our tendency to predict what will happen in the future by using our past as an explanation. Based on the only things we can be certain of – what has happened in our lives in the past – we weave a narrative that makes sense and expect that the future simply must unfold this way. But there are many unknown factors that could change it. For example, imagine you’re a turkey and for years you live on a farm, get to roam free every day and are fed great food by a farmer. Why would you expect anything to change? But if tomorrow’s thanksgiving, you’re just 24 hours away from getting killed, stuffed and roasted. The very same thing happened to everyone who lost a lot of money during the financial crisis – people believed markets would go up forever,…