A black swan is a highly improbable event that is unpredictable and carries a massive impact. Only after the fact that we can develop an explanation for what happens, makes the event seem less random and more predictable than it was. Black Swan’s events are not predictable because they are unknown until after they occur.
The Author, Nicholas Taleb, was an options trader and quantitative analyst who mistrusts “bell-curve" models. The Black Swan, considered a rare and unpredictable condition for a swan, is a theory used as a metaphor to describe events that come as a surprise with a significant effect and is often inappropriately rationalized after the fact with the benefit of hindsight.
Taleb also claims that what a Black Swan event is conditional on the eye of the beholder. An example of this is offered by saying that what is a Black Swan event for a turkey may not be one for a butcher.
The book uses models of banks and trading firms to show that their financial models are defective and leave them exposed to losses far greater than their tools of analysis show them. It suggests that these types of events cannot be predicted or even studied, and they are left off bell curves tracking deviations because bell curve theory cannot handle them.
The book has been described by The Sunday Times as one of the twelve most influential books since World War II. As of 2019, it has been cited approximately 10,000 times and the book has spent 36 weeks on the New York Times Bestseller list and has been published in 32 languages.
Some may say that the book itself is a “Black Swan”.
Random House, ISBN 978-1400063512 | Books by Nassim Nicholas Taleb | Black swan theory | Epistemology