I had never heard of the expression "a Black Swan Event" until this past summer at the Trader's Expo.
Bo Yoder mentioned it in the middle of his prestentation.
Yesterday's action reminded me of what I had heard that day.
Of course on a percentage basis, it was nothing compared to the '87 crash, but it was still painful for those on the wrong side.
Some of you may be interested in reading more.
The author of this new book is Nassim Nicholas Taleb.
He spent 20+ years as a derivatives trader in NY and London –as a quant/market maker for complex derivatives 1984-1986, as a proprietary trader after June 1986, and, in addition to trading, as an volatility overlay/protection packages after 1999.
He says in his turtletrader.com blog:
"A black swan is an outlier, an event that lies beyond the realm of normal expectations. Most people expect all swans to be white because that's what their experience tells them; a black swan is by definition a surprise. Nevertheless, people tend to concoct explanations for them after the fact, which makes them appear more predictable, and less random, than they are."
The Black Swan: The Impact of the Highly Improbable
This title will be released on April 17, 2007
Amazon Book Description
A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives.
For years, Taleb has studied how we fool ourselves into thinking we know more than we actually do. We restrict our thinking to the irrelevant and inconsequential, while large events continue to surprise us and shape our world. Now, in this revelatory book, Taleb explains everything we know about what we don't know. He offers surprisingly simple tricks for dealing with black swans and benefiting from them.
About the Author
Nassim Nicholas Taleb has devoted his life to immersing himself in problems of luck, uncertainty, probability, and knowledge. Part literary essayist, part empiricist, part no-nonsense mathematical trader, he is currently taking a break as Dean's Professor in the Sciences of Uncertainty at the University of Massachusetts at Amherst. His last book, the bestseller Fooled by Randomness, has been published in nineteen languages. Taleb lives mostly in New York.
http://www.fooledbyrandomness.com/
Edited by Rogerdodger, 28 February 2007 - 11:05 PM.
