3 Black Swans

[jackangel]

Quote from Cutten:

9/11 was a black swan. 9/11 was likely to take place. The existence of black swans was *certain*, and that was by definition a "Black Swan".

A black swan is not something that is unlikely. It is something that is incorrectly *perceived* to be unlikely or impossible by the majority of people.

Also it's not a matter of logic, it's one of semantics. You and zdreg are using a definition of Black Swan that is not the definition used in Taleb's books. So zdreg is not just wrong in his definition, he and you were wrong to call it logic 101 - it's semantics 101.

i said nothing of logic. i agree, it's a matter of definition. i just read FBR and TBS recently and my impression is different than yours.

black swans are rare events, and they are unforeseen. not by every single person (with millions of market participants, there have to be some that could imagine any possible event), but by the masses.

at this point, with CNBC mentioning the possibility of $200 oil several times a day, it can't be considered a black swan because many people do see it as a possibility (even if they don't bank on it going there) and take action accordingly. if you're considering the likelihood of an event and then doing something about it, it's not a black swan to you.

fortunately, this point is a minor one and has nothing to do with the more important question of what one does with his money in this market.

 

[The Kin]

Quote from wutangfinancial:


BTW, none of what Jack Hershey said made any sense. It sounds like some dude on LSD talking about astrology.

It's good to know I'm not the only one. I thought that post was a t28 spoof at first until I realized it was the real deal.

 

[Trayo]

Rather than a dramatic sudden crash as in Oct 87, we may be in a for long, drawnout slow motion selloff as we had after the tech bubble bust.

1) Consumer confidence ALREADY at historal lows
2) Real estate has ALREADY hugely tanked
3) Credit markets have ALREADY massively locked-up
4) Public ALREADY tweaked about thier finances
5) Dow ALREADY down 20%
6) Commodities ALREADY at record prices
7) Bad news and more bad news ALREADY whacking us daily for a year now.
8) PE ratios at average levels.

However, the "black swan" that I do wonder about is the $50+ trillion dervatives house-of-cards getting kissed with a "tipping point".
If that really started to tilt there could be stopping it.

No wonder the fed scrambled to cover Bear Sterns.

 

[Cutten]

Quote from jackangel:



black swans are rare events, and they are unforeseen. not by every single person (with millions of market participants, there have to be some that could imagine any possible event), but by the masses.

That's why I cited OTM options for oil and the S&P - those options strikes will pay off very nicely if these events transpire. Thus, no matter what CNBC says, those prices are not being predicted by the vast majority of market participants.

Also I'm not sure you can use a purely relativistic definition like "It's not a Black Swan to you". Doesn't the term refers to mainstream expectations?

 

[Maverick74]

FYI, black swans cannot be predicted. If they can be, then they are not black swans. Too many people on this board misuse the term black swan by calling any market selloff of great magnitude, a black swan. That simply is not the case.

 

[daddyeaux]

a trillion dollars in outstanding GM CDSs on 250 billion in GM paper.

and GM is down to 8 billion in market cap.

there's a swan fer ya without looking too hard

 

[Maverick74]

Quote from daddyeaux:

a trillion dollars in outstanding GM CDSs on 250 billion in GM paper.

and GM is down to 8 billion in market cap.

there's a swan fer ya without looking too hard

No, that's not a black swan. It might help if you actually read Taleb's book.

 

[Bigpipn]

Quote from Maverick74:

FYI, black swans cannot be predicted. If they can be, then they are not black swans. Too many people on this board misuse the term black swan by calling any market selloff of great magnitude, a black swan. That simply is not the case.

+1

 

[daddyeaux]

Quote from Maverick74:

No, that's not a black swan. It might help if you actually read Taleb's book.

may not be a black swan to you (us), but it is a black swan to the 99.99% of the public that has no idea what a CDS is

 

[Maverick74]

Quote from daddyeaux:

may not be a black swan to you (us), but it is a black swan to the 99.99% of the public that has no idea what a CDS is

Please read the book and then re-post ok? The number of people who are aware of a certain event occuring has nothing to do with a black swan. In fact Taleb goes out of his way to use a qualifier stating that it's the experts who are the ones "fooled", not the common public.