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Started By
Message
Black Swan Events
Posted on 11/5/22 at 8:36 am
Posted on 11/5/22 at 8:36 am
MT board, teach me about such events
LINK
Context: I am not retired. I am likely to retire in next 5-7 years. Financial plan accounts for "black swan event" (ie, finances can withstand such an event and fulfill retirement financial needs across retirement period).
Question 1: Are we in a Black Swan event?
Question 2: Was inflation inevitable (predictable) given the years of low interest rates?
Question 3: If so, was the low inflation environment itself a sort of white swan event?
quote:
Three defining attributes of a black swan event:
1. An event that is unpredictable
2. A black swan event results in severe and widespread consequences
3. After the occurrence of a black swan event, people will rationalize the event as having been predictable (known as the hindsight bias).
LINK
Context: I am not retired. I am likely to retire in next 5-7 years. Financial plan accounts for "black swan event" (ie, finances can withstand such an event and fulfill retirement financial needs across retirement period).
Question 1: Are we in a Black Swan event?
Question 2: Was inflation inevitable (predictable) given the years of low interest rates?
Question 3: If so, was the low inflation environment itself a sort of white swan event?
This post was edited on 11/5/22 at 8:38 am
6
Posted on 11/5/22 at 9:54 am to Turf Taint
I do believe that COVID was a black swan event in that we didn't know it was going to happen. I don't buy into the conspiracy theories that this was pre-planned.
Our inflation problem is because we did not have a proper response. The people and companies who truly needed financial help didn't get nearly enough, and people and companies that had little to know issues got tons of extra cash. (and are still getting it today due to the absurdity that is the ERC).
That caused a situation in which more dollars were chasing fewer available goods, which is a clear path to unhinged inflation.
These interest rate hikes are trying to drive down demand to meet the lower supply and reduce inflation. But... I don't understand why our government isn't doing more to try to bring up supply. (You couod argue the government needs to stay out of this completely... but I think focusing on demand side only is making the problem worse)
Our inflation problem is because we did not have a proper response. The people and companies who truly needed financial help didn't get nearly enough, and people and companies that had little to know issues got tons of extra cash. (and are still getting it today due to the absurdity that is the ERC).
That caused a situation in which more dollars were chasing fewer available goods, which is a clear path to unhinged inflation.
These interest rate hikes are trying to drive down demand to meet the lower supply and reduce inflation. But... I don't understand why our government isn't doing more to try to bring up supply. (You couod argue the government needs to stay out of this completely... but I think focusing on demand side only is making the problem worse)
Posted on 11/5/22 at 10:51 am to LSUFanHouston
The govt restricted energy supply and means to increase energy. High energy costs always lead to inflation and recession.
This was done after the govt destroyed many small businesses during Covid and injected ridiculous amounts of money. Hence we have stupid high inflation creating this nightmare that is coming to correct it
This was done after the govt destroyed many small businesses during Covid and injected ridiculous amounts of money. Hence we have stupid high inflation creating this nightmare that is coming to correct it
Posted on 11/5/22 at 11:17 am to Turf Taint
Alien confirmation is the next black swan event. Who knows how it will affect the market though?
Posted on 11/7/22 at 7:53 am to Turf Taint
This isn’t the real definition of a black swan event. There are 3 catastrophes. Known knowns, known unknowns, and unknown unknowns. COVID19 was a known unknown at worst as people talked about the possibility of a modern pandemic for years. Black swan refers to when people in England were first exposed to black swans from Australia, something they didn’t know they didn’t know about as all swans in England and Europe are white. So a black swan in something you can’t conceptualize because it is so foreign to you, a true blind spot in your knowledge. These events are rare. Most things that surprise people are known unknowns meaning you understand that you have risk in an area due to a lack of predictability but you ignore or do not hedge for it. This is not a true black swan.
This post was edited on 11/7/22 at 7:57 am
Posted on 11/7/22 at 9:19 am to Turf Taint
Have a senile old fool "win" the White House with 81 million "votes" certainly counts and has had major consequences on stocks.
Posted on 11/8/22 at 11:06 am to Drizzt
Correct, COVID was not a black swan. Taleb himself has said such.
Posted on 11/8/22 at 11:19 am to Turf Taint
quote:The other posters are technically right - covid was more of a "gray swan". However, in this case, I think it's a distinction without a difference.
Question 1: Are we in a Black Swan event?
quote:No. Inflation was only inevitable if demand picked back up for real in a supply-constrained environment. i.e. Exactly what happened.
Question 2: Was inflation inevitable (predictable) given the years of low interest rates?
quote:Not really. If one were willing to not throw out hyperventilations about "Weimar Germany" in 2011, they would have seen the math was pretty simple.
Question 3: If so, was the low inflation environment itself a sort of white swan event?
Posted on 11/8/22 at 12:02 pm to LSUtoOmaha
quote:
Correct, COVID was not a black swan. Taleb himself has said such.
COVID was not a black or gray swan.
The world leaders anxiety ridden hysterical response to COVID is what fueled this situation we were in.
Had we treated COVID like the swine flu and every other pandemic - it would have been a bump in the road.
The government is not good for business and is not good for freedom.
Posted on 11/8/22 at 12:19 pm to Turf Taint
We are not in a black swan. Inflation and the Fed’s response in raising rates and then the market response of going into recession is predictable and repeatable
Posted on 11/8/22 at 5:46 pm to Drizzt
That’s it
Posted on 11/9/22 at 8:23 am to Upperdecker
If you view the world and understand that those in charge are all about more control, and less freedom, then you realize there is never a black swan event. It’s a fallacy.
Everything is predictable. What’s not? An earthquake? A meteor strike? A nuclear plant meltdown? An invasion of Taiwan? The Tulip market? The 2008 housing crisis? The return of Christ?
Nothing is unpredictable, the day, and the hour are not predictable, but the season certainly is.
Everything is predictable. What’s not? An earthquake? A meteor strike? A nuclear plant meltdown? An invasion of Taiwan? The Tulip market? The 2008 housing crisis? The return of Christ?
Nothing is unpredictable, the day, and the hour are not predictable, but the season certainly is.
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