The Black Pterodactyl Event

ATrigueiro
Dollars and Sense
Published in
4 min readMar 6, 2021

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Most investors are familiar with the idea of a Black Swan event.

A black swan is an unpredictable event that is beyond what is normally expected. Black Swan events are characterized by their extreme rarity, severe impact, and widespread insistence they were obvious in hindsight.

Black Swan events were discussed by Nassim Nicholas Taleb in his 2001 book ‘ Fooled By Randomness’, which concerned financial events. His 2007 book ‘ The Black Swan’ extended the metaphor to events outside of financial markets.

Taleb regards almost all major scientific discoveries, historical events, and artistic accomplishments as “Black Swans”-undirected and unpredicted. He gives the rise of the Internet, the personal computer, World War I, the dissolution of the Soviet Union, and the September 11, 2001 attacks as examples of Black Swan events.

However, when one looks at what he characterizes as a Black Swan financial event in the past, they do not seem all that rare really. For example, events such as the dot-com bubble, Great Recession, and now a pandemic.

That means we have already had THREE Black Swan events in the last two decades. Something which happens every seven years or so is hardly an event of extreme rarity.

I admit the validity of the examples of the rise of the Internet, the personal computer, World War I, the dissolution of the Soviet Union, and the September 11, 2001 attacks as examples of Black Swan events.

These are much rarer events happening once a generation.

These types of events can be transformational for sure.

These ARE Black Swan events.

However, what we are going through now is a Black Pterodactyl event. A perhaps once in a century event. An event so transformational we will not recognize ourselves on the other side. Black Swan events come and they go on a fairly regular cycle based upon generational churn. The turn over in leadership as an upcoming generation moves into power creates the conditions for a black swan event more likely. There is a loss of experience as the generational churn occurs.

History repeats itself as it were.

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