Here is an excerpt from the book from the chapter “On forecasting and expertise“:
At one point, someone went really overboard to take charge of the situation. He asked his team, “Let us try and figure out which black swan events are possible in the near future.”
Spending time to identify a “black swan” in advance is futile. By definition, the moment you know a potential risk, it ceases to be a black swan.
The investors’ urge to know the future is the strongest when the overall interest is high – these are the times when the markets are at or near the peak. (The interest in the market can be gauged by the traded volumes or the number of participants interested in taking advantage of the situation.). These are the times when many investors are looking for short-cuts – the easy answers to making money.
It amazes me how regularly people try to find out the “black swans”. Here is a link to an article that tries to identify “3 potential black swans” – not just one. You can see the similarity between the excerpt of the book in ther starting of this blog and the article in the link.
#RidingTheRollerCoaster – 259