Bblack_Sswan

Bblack_Sswan

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A black swan is an extremely rare event with severe consequences. It cannot be predicted beforehand, though after the fact, many falsely claim it should have been predictable. Black swan events can cause catastrophic damage to an economy by negatively impacting markets and investments, but even the use of robust modeling cannot prevent a black swan event. Reliance on standard forecasting tools can both fail to predict and potentially increase vulnerability to black swans by propagating risk and offering false security. The term was popularized by the book, The Black Swan, by Nassim Nicholas Taleb. 1

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A grey swan is an event that is possible and known, potentially extremely significant but considered not very likely to happen.

Tail risk is portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution.

A financial crisis is a situation where the value of assets drop rapidly and is often triggered by a panic or a run on banks.

Value at risk (VaR) is a statistic that quantifies the level of financial risk within a firm, portfolio, or position over a specific time frame.

A black box model is a system using inputs and outputs to create useful information, without any knowledge of its internal workings.

A bear market occurs when prices in the market fall by 20% or more.

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A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences.

Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.

The term was popularized by Nassim Nicholas Taleb, a finance professor, writer, and former Wall Street trader. Taleb wrote about the idea of a black swan event in a 2007 book prior to the events of the 2008 financial crisis . Taleb argued that because black swan events are impossible to predict due to their extreme rarity, yet have catastrophic consequences, it is important for people to always assume a black swan event is a possibility, whatever it may be, and to try to plan accordingly. 1 Some believe that diversification may offer some protection when a black swan event does occur.

Taleb later used the 2008 financial crisis and the idea of black swan events to argue that if a broken system is allowed to fail, it actually strengthens it against the catastrophe of future black swan events. He also argued that conversely, a system that is propped up and insulated from risk ultimately becomes more vulnerable to catastrophic loss in the face of rare, unpredictable events. 1

Taleb describes a black swan as an event that:

For extremely rare events, Taleb argues that the standard tools of probability and prediction, such as the normal distribution , do not apply since they depend on large population and past sample sizes that are never available for rare events by definition. Extrapolating, using statistics based on observations of past events is not helpful for predicting black swans, and might even make us more vulnerable to them.

The last key aspect of a black swan is that as a historically important event, observers are keen to explain it after the fact and speculate as to how it could have been predicted. Such retrospective speculation, however, does not actually help to predict future black swans as these can be anything from a credit crisis to a war.

The crash of the U.S. housing market during the 2008 financial crisis is one of the most recent and well-known black swan events. The effect of the crash was catastrophic and global, and only a few outliers were able to predict it happening.

Also in 2008, Zimbabwe had the worst case of hyperinflation in the 21st century with a peak inflation rate of more than 79.6 billion percent. 2 An inflation level of that amount is nearly impossible to predict and can easily ruin a country financially.

The dotcom bubble of 2001 is another black swan event that has similarities to the 2008 financial crisis. America was enjoying rapid economic growth and increases in private wealth before the economy catastrophically collapsed. Since the Internet was at its infancy in terms of commercial use, various investment funds were investing in technology companies with inflated valuations and no market traction. When these companies folded, the funds were hit hard, and the downside risk was passed on to the investors. The digital frontier was new so it was nearly impossible to predict the collapse.

As another example, the previously successful hedge fund Long-Term Capital Management (LTCM) , was driven into the ground in 1998 as a result of the ripple effect caused by the Russian government's debt default, something the company's computer models could not have predicted. 3

A more recent example could be the emergence of the COVID-19 virus that caused a global pandemic beginning in the Spring of 2020, and which disrupted markets and global economies around the world.

A black swan event in the stock market is often a market crash that exceeds six standard deviations, making it exceedingly rare from a probabilistic standpoint. Some have argued that stock prices are "fat-tailed" and that such events are, in reality, more frequent than the statistics would let on.
A black swan is considered to be rare, since most swans are white. In fact, the story goes that black swans were thought once to not at all exist, until finally one was discovered. The lesson is that what we think are very rare events may be more common than previously thought.
A grey swan event is an outlier, but which is more probably than a black swan. As a result, people can better prepare for and hedge against a grey swan than for a black swan.
Nassim Nicholas Taleb. " The Black Swan ." Random House Trade Paperbacks, 2010.
Hanke H. Steve, Kwok K. F. Alex. " On the Measurement of Zimbabwe's Hyperinflation ." Cato Journal, Vol.29, No. 2, June 2009.

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The most obvious cultural barrier that impacts negotiation is the language barrier. But beyond that, there are nearly 200 countries on the planet, and each has its own unique culture.
If you were to spend your time trying to learn every detail about each culture, you would be inundated with notebooks full of material. This would keep you from focusing on the true cultural barrier: one-on-one communication.
It’s not by accident that hostage negotiators in Tokyo, Tel Aviv, London, Johannesburg, Montreal, and Colombia are all trained in the same skill set.
If you’re new to negotiation and The Black Swan Method™, the first step to becoming a skilled negotiator is enrolling in our online class, Negotiation 9™ (N9™). This class teaches the nine core skills that are foundational to becoming a world-class negotiator.
As we continue coaching clients all around the world, there’s a tendency we see over and over again in which folks think that certain negotiation tactics only work in the United States.
We remind these people that hostage negotiators are all trained the same way, whether they work in Tokyo, Jakarta, Berlin, Johannesburg, or Santiago. The underlying Black Swan skills are universal because human nature is the same regardless of where you go.
That said, international negotiations are not without their challenges. Chief among them is the fact that language barriers exist. Certain words don’t have the same meaning when translated into different languages.
Keep reading to learn more about the challenges inherent in international negotiations and what you can do to get your desired outcomes.

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Nina (Natalie Portman) is a ballerina whose passion for the dance rules every facet of her life. When the company's artistic director decides to replace his prima ballerina for their opening production of "Swan Lake," Nina is his first choice. She has competition in newcomer Lily (Mila Kunis) however. While Nina is perfect for the role of the White Swan, Lily personifies the Black Swan. As rivalry between the two dancers transforms into a twisted friendship, Nina's dark side begins to emerge.

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