A black swan event, also known as black swan occurrences, is a metaphor for an unexpected event that has a significant impact.
A black swan, according to Taleb, is an event that is so uncommon that even the probability of its occurrence is unknown. There are three major components of the incident:
The Black Swan Theory, also known as the Theory of Black Swan Events, can be linked directly to a Latin phrase used by the Roman poet Juvenal in the 2nd century, when he characterized something as a "black swan event" as “in terris nigroque simillima cygno rara avis”
Lenders in the United States had drastically loosened their requirements for eligibility for mortgages, mostly as a consequence of the federal government's pressure. People with bad or no credit were accepted for mortgages on properties that were, to put it bluntly, well above their financial means.
Subprime mortgages soon grew into a large, bloated bubble that was about to explode. Lending behemoths, like Lehman Brothers, began to crumble and fail as payment dates passed and mortgages began to default in droves.
At present, the world is experiencing and recovering from one of the most spectacular examples of a black swan occurrence. The new coronavirus, also known as COVID-19, satisfies all of Taleb's requirements for this event. The pandemic struck without warning, and it rapidly became clear that no country was equipped to cope with it. Every day, we learned (still learning) a bit more about the worldwide pandemic's devastating impacts, which include record-breaking unemployment rates, stock market crashes, ever-increasing death tolls, and so on.
No one knows when a black swan event occurs, just as many people can’t predict seeing a black swan amongst a flock of white ones.
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