The Survival Economist
Premiered Jan 25, 2022
It was rare in Europe to see a black swan, and nobody there thought one existed.
This view was held for a thousand years. Until the Europeans arrived in Australia and were shocked to find that swans could be black. That’s why its called a “Black Swan Event” – an event that nobody saw coming.
A black swan is a metaphor for an event that comes as a surprise but has a massive impact on the market and is later rationalized.
For instance, the 2008 housing downturn was such an event. Now it’s pretty clear why and how it happened, but only a few saw it coming in 2007.
A black swan event is a term coined by Nassim Taleb which has three characteristics . It’s unpredictable. It has a massive impact. Afterward, everyone comes up with an explanation for it.
Besides, one man’s black swan event is another’s false flag event.
The fragility comes from being unaware of unexpected events. Easily, you can see a system that is incredibly fragile, and thus a Black Swan, though unexpected, can cause a very predictable disaster given the conditions.
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Black swans are events which are concave in nature, i.e., given our existing methods of forecasting, we ignore them.
The idea is to have tests and their forecasts based on antifragility and then separating those outcomes which are completely possible given the current scenario. It is like the time paradox. If you go back in the past, the past might change entirely or not, i.e. if a possible event is predicted, it should be removed from the list of black swans as it might as well be predicted by many other people.
But here again, is a catch of probability; if the masses anticipate it, it might be averted. However, like the CDs mania started after the 2nd quarter of ’07 when the adjustable rates kicked in, the people rather than predicting the underlying’s deteriorating value just went into buy and sell mode.
Conclusion: Use the Mandelbrot set. The Stock market reaches a new all-time high mark one after another. This trend seems hard to break. However, the market is cyclical;
https://www.youtube.com/watch?v=gEuD75eBRfI
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