Black Swan Effect (Black Swan Theory)
In the 17th century, Europeans have always believed that swans are white. It was not until the appearance of the first black swan that people's previous perception of swans was changed, and the firm belief in "white swans" was overturned. Therefore, "black swan" events refer to certain events that seem to be absolutely impossible to happen, but actually happen in real life. They are usually unexpected and uncontrollable events. (Events with low probability of occurrence but huge impact)
Generally speaking, "Black Swan" events have the following three characteristics:
Ÿ Unexpectedness: Because human beings cannot use past experience to determine the possibility of its occurrence, "Black Swan" events It is usually difficult to predict;
Ÿ Shock: the impact of the unexpected "black swan" event is significant;
Ÿ hindsight predictability: because the "black swan" event is difficult to predict, people usually fabricate various reasons after the event its plausibility, and thus consider it more or less predictable.
Because human beings always believe in experience too much, the occurrence of "black swan" events is often enough to overturn everything. In the past history, many major events, such as the sinking of the Titanic, the 911 incident in the United States, and the Brexit incident in recent years, have confirmed that whether it is the forecast of the stock market, the government's decision-making, or even the daily life Choices, "black swans" are unpredictable. More importantly, humans usually only realize that it is a "black swan" event after it happens. The reason behind this is that we are used to paying attention to things that are already known or predictable, but we ignore that behind these things, there may be some factors that we do not know and are difficult to predict, which ultimately leads to the inability to truly evaluate opportunities.
In this ever-changing financial world with countless hidden worries, analysts and economists provide investors with the latest market consultation and investment advice every day. Even if these professionals can accurately predict the direction of the market, no one can predict when the "black swan" will come. Therefore, this unknown risk is often ignored, so that when an unexpected event occurs, the financial market is not prepared, which leads to a financial turmoil with heavy losses.
In fact, the truth hidden in the "black swan" is that no risk management model and technical analysis can keep investors out of unknown financial disasters. However, the author Naseem Nicholas Taleb mentioned in the book "Black Swan": Only investing 20% of the wealth in high-risk and high-return stocks is the only way to protect yourself. When the "black swan" comes, the returns that these high-risk stocks have brought to investors may reduce their losses. At the same time, a portfolio that only contains 20% of stocks can also greatly reduce the risk of losing everything. Although Taleb's suggestion seems reasonable, it is quite different from the investment policy advocated by investment consultants in the market. How to choose, still depends on the investor's heart. But remember not to ignore the unpredictable unknown risk of "black swan". You should always keep a clear head and be sensitive to things; for some suspicious economic trends and events, you should take precautions to prevent them from happening, and formulate countermeasures and plans in advance. A rainy day.
The Gray Rhino (The Gray Rhino) Gray rhinos live in the grasslands of Africa. They are large and slow, and they seem to be in no danger at all. So even if it is seen from a distance, it is often ignored. But once the gray rhino's attention is attracted, its rapid attack power will be unstoppable, and people will have nowhere to escape, resulting in heavy casualties. The “grey rhino” crisis thus refers to certain risks that are too common to be seen. Although these risks are often prompted, they are difficult to get sufficient attention, and finally lead to a crisis. (An event with a high probability of occurrence and a huge impact)
Contrary to the unpredictable "black swan", the "grey rhino" crisis did not come suddenly. Before it broke out, there would actually be a series of warning signs and signs, but they were not taken seriously , is repeatedly ignored. The "gray rhino" crisis is actually like a heart attack. In the early stage of a heart attack, the patient must experience a series of symptoms, such as chest discomfort, shortness of breath, sweating and shortness of breath, etc., but because the patient does not take it seriously, it may eventually lead to a heart attack and death. In the past history, there have actually been many "gray rhino" crises. Just like the financial crisis that broke out in 2008, in fact, before that, as early as 2001 to 2007, the International Monetary Fund (IMF) and the Bank for International Settlements (Bank for International Settlements) had repeatedly issued warnings, and some people continued to It was reminded that the financial bubble that was blowing bigger and bigger was about to burst, but government officials and financial people were unmoved and did not realize the seriousness of the problem, which finally led to the occurrence of this financial turmoil.
Perhaps the unpredictable "black swan" event will be difficult to defend against, but the predictable "grey rhino" event should be prepared in time. Don't wait until the real danger strikes before starting to panic and eagerly looking for a solution . The best way to prevent "black swans" and "grey rhinos" is to maintain risk awareness at all times. Don't concentrate all assets in one basket, and diversify your investments appropriately. When the risk of one of the assets rises, appropriate adjustments to the investment ratio should be considered. Regardless of whether these risks can be predicted or not, it is necessary to prevent them before they happen, formulate a response plan, and adapt to the situation so that they can be used in emergencies.
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