What Is a Black Swan?

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Hindsight Predictability

The last criteria that Taleb lists are that of retrospective predictability. This was the most difficult one for me to wrap my head around. It was defined under the criteria as; after the first recorded event it is explained in hindsight as if the event could have been expected. All in all saying after the fact, we believe that it is actually something that we could have foreseen happening. This is because, as humans, we think we have the ability to construct a sensible explanation using only the information that we want to use and removing the information that we do not want to use. This practice can only be done with the benefit of hindsight and makes no sense in correlation because these are not events that will ever be predicted.

Turkey

Keeping with his bird theme, Taleb uses the turkeys raised for Christmas dinner as an example. These turkeys are bred for us, humans, to eat. Assume that turkeys think on our level for a second and keep an open mind. The turkeys are born and are fed every single day by humans from the beginning of their life. It becomes normal they get fed everyday and form a “relationship” with us. Everyday just strengthens the turkey’s mindset (hypothetically) that they are friends with the humans and that everyday for their life they will get fed. Then one day, BOOM, they are taken off and slaughtered. This event in the life of a turkey is a Black Swan. However, for a butcher this is just a regular day in the life. From that point of view, and if you think about it in the right mind set, Black Swan are just a sick joke meant for suckers. If you can keep and open mind and realize that anything can happen then there will never be a Black Swan that happens. The moral of this that Taleb wants to get across is to not be a turkey. DO not trust that certain things will not happen just because they have not in history. There is always a chance that something will happen. No matter how minuscule that chance is it could still happen and that is where a Black Swan will come into place. Do not be a turkey.

Gaussian Bell Curve