Nassim Taleb's Black Swan Theory Explained

Nassim Taleb's Black Swan Explained

In this video you’ll learn about black swan theory, which the famous author and quant trader Nassim Taleb made popular. Once you understand this black swan concept you’ll be able to protect yourself from the most dangerous market events — the type that wipe out people’s life savings and force them to start over from zero. You’ll learn to avoid the pain and disgust that comes with those types of disasters. And you won’t have to stay glued to your screen watching every tick in the market to do it either. So make sure to pay attention to this video you know how to correctly position yourself in the market.

A black swan is a highly improbable event. There are three characteristics that define a black swan. First, it’s unpredictable. Second, it has a massive impact. And third, after it happens everyone comes up with some explanation for it that makes it seem like it actually wasn’t random and could have been predicted.

In markets, if you’re not prepared for a black swan, you’re going to end up losing a lot of money. But the question is, how can you prepare if these events are unpredictable?

The first thing you have to do is realize that your predictions and forecasts are not foolproof. No matter how much you study markets, and how much you think you know, there are always going to be unknowns you have to deal with. And not only will there be unknowns, but there’ll even be unknown unknowns. So you won’t even know all the stuff you don’t know! And in a complex system like the market, there tends to be a lot of those. If you don’t accept this, you’re going to keep getting surprised when the “impossible” happens.

There are a number of things you can do make sure your strategy becomes robust enough to survive a black swan. I explain all of them and more in the video above. Make sure to watch!

And as always, stay Fallible investors!

***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only.

[woof]

Soon the comment section will be flooded with ARMY’s

[HueningStarr]

Anyone watching this after BTS’ black swan? 😂

[sidd]

90% in treasury bonds and 10% in VC do any institutional investors do that?

[heatherd.]

I learn the coolest things from this channel!

[micheallopez]

Nice never even heard of this. 90% is a little extreme for bonds lol


Thanks guys keep it up

[BabyBean]

Here's the portion I don't "buy" with Taleb, but I do with Buffett: the only realistic investment would be more akin to what you suggested, but tilted: invest 20% and keep 80% cash to buy "crazy stupid cheap deals". But ... FOMO gets in the way and unless you have massive amount of cash lined up, it's virtually impossible to mix both strategies (investing bc of FOMO while waiting for a black swan... and thus, this is also partially why black swans happen: because there is not enough cash to cushion the blows and deleverage blows everything up). Anyway ... it was clearer in my mind than in this comment. :-) KEEP UP THE GREAT VIDEOS!

[jeromeoaf]

A Y E E E, this was recommended to me which I thought was very timely given what's happening right now globally. AK your set up here with the different background and all looks like you are teaching in Skillshare or something. Not a bad thing. I am just used to your apartment background. Fascinating video as always!

[maxcapital]

Remember, those Q’s one standard deviation puts for the swans.

[diordrama]

No the first characteristic of a black swan is that it's black and the second is that it's a swan.