Do you know what a black swan is ?

 

The central idea in the Black Swan is that: rare events cannot be estimated from empirical observation since they are rare.

—Nassim Taleb

A Black Swan is an unlikely event; its consequences are important, and all the explanations that can be offered afterward do not take into account chance and only seek to fit the unpredictable into a perfect model. The success of Google and YouTube, and even 9/11, are Black Swans.

Black swans are an integral part of our world, from the rise of religions to the events of our personal lives.

Why can’t we identify this phenomenon until it has already happened? 

Because humans insist on investigating things already known, forgetting what we do not know, this prevents us from recognizing opportunities and makes us too vulnerable to the impulse to simplify, narrate, and categorize, forgetting to reward those who know how to imagine the impossible.

A turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys with increased statistical confidence. The butcher will keep feeding the turkey until a few days before Thanksgiving. Then comes that day when it is really not a very good idea to be a turkey. So, with the butcher surprising it, the turkey will have a revision of belief —right when its confidence in the statement that the butcher loves turkeys is maximal and it is very quiet and soothingly predictable in the life of the turkey. This example builds on an adaptation of a metaphor by Bertrand Russell. The key here is that such a surprise will be a Black Swan event; but just for the turkey, not for the butcher.

We can also see from the turkey story the mother of all harmful mistakes: mistaking absence of evidence (of harm) for evidence of absence, a mistake that we will see tends to prevail in intellectual circles and one that is grounded in the social sciences. 

So, our mission in life becomes simply how not to be a turkey, or, if possible, how to be a turkey in reverse —antifragile, that is. Not being a turkey starts with figuring out the difference between true and manufactured stability.

—Nassim Taleb—

A turkey before and after Thanksgiving. The history of a process over a thousand days tells you nothing about what is to happen next. This naïve projection of the future from the past can be applied to anything. 

This model is the extension of Charlie Munger's idea of always invert the problems, to never go there. We have to be extraordinarily conservative and cautious, much more than logical reason based on past events indicates, since the events that are unpredictable can happen and we must be prepared for them.

Practical examples would be a conservative management of our assets, diversified in various types of investments, as well as having different sources of income, no matter how stable our job may seem.