Black Swan Mania: Using Buzzwords Can Be a Dangerous Habit

Black Swan Mania: Using Buzzwords Can Be a Dangerous Habit

Jun 14th, 2011

Black Swan has been a viral epidemic culminating with the economic recession. We are referring to the use of the term “Black Swan”. Indeed Black Swan Mania: Using Buzzwords Can Be a Dangerous Habit.

Black Swan Mania: Using Buzzwords Can Be a Dangerous Habit

Of course we are not talking about the Tchaikovsky ballet, or the recent related movie. In fact we are referring to the Black Swan Theory which refers “to unexpected events of large magnitude and consequence and their dominant role in history”.

Nassim Nicholas Taleb developed “the theory” to explain, for example:

  1. The disproportionate role of high-impact, “hard to predict, rare events” that are beyond “normal expectations”
  2. The non-computability of the “small probability” of these “rare events” using scientific methods and finally.
  3. how, after the fact, the event is rationalized by hindsight. (we will get back later on this one)

What different Authors consider a Black Swan

In addition, lists of what is considered by various authors as Black Swan have appeared all over the media in the aftermath of the 2008 economic recession.

As a matter of fact, we are showing one list, among many, below, as an example:

• 2001, attacks on the World Trade Center and Pentagon;
• 78% decline in the Nasdaq;
• 2003 European heat wave (40,000 deaths);
• 2004 Tsunami in Sumatra, Indonesia (230,000 deaths);
• 2005 Kashmir, Pakistan, earthquake (80,000 deaths)
• 2008 Myanmar cyclone (140,000 deaths);
• 2008 Sichuan, China, earthquake ( 68,000 deaths);
• Derivatives roil the world’s banking system and financial markets;
• 2008 Failure of Lehman Brothers and the sale/liquidation of Bear Stearns;
• 30% drop in U.S. home prices;
• 2010 Port-Au-Prince, Haiti, earthquake (315,000 deaths);
• 2010 Russian heat wave (56,000 deaths);
• 2010 BP’s Gulf of Mexico oil spill;
• 2010 market flash crash (a 1,000-point drop in the DJIA);
• 2011 Surge of unrest in the Middle East; and finally,
• 2011 March earthquake and tsunami in Japan.

In the next parts , because there will be more, we will discuss why this list is MISLEADING, WRONG. Indeed,  and using “Black Swan” as

A BUZZWORD CAN BE A VERY DANGEROUS HABIT.

Tagged with: , , , , , , , , , ,

Category: Consequences, Hazard, Probabilities, Risk analysis

5 responses to “Black Swan Mania: Using Buzzwords Can Be a Dangerous Habit”

  1. […] the Black Swan list we can count 1 Political/social Black Swan (Unrest in the Middle […]

  2. […] Part 2  we examined social unrest and terrorism, of which we found only one each in the original list […]

  3. […] addition, in the Black Swan series of three posts beginning with this one we demonstrated how we, Humans, have a very short and biased memory and tend to believe that the […]

  4. […] high-level understanding (happy grin, now…)…”. Believe me, if he did not use the “Black-Swan”  stereotype, it was just because no one had invented it yet! Without losing emphasis he […]

  5. […] did not remember (were not even born) in 1929! The Black Swan “fad”, as we have demonstrated in earlier blog posts is indeed based on Humans having “short memory” and considering the last events as […]

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