Black Swan events are those that come by surprise and are a deviation from what is normal. Originally a Latin expression, it was believed that black swans did not exist, until the first one was seen in the wild, and then came to mean extremely rare. It was popularized by philosopher/author/professor Nassim Nicholas Taleb, and he explains Black Swan events in his book, Fooled by Randomness:
“First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme ‘impact’. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”
It is easy to see how the above definition can be used when discussing financial markets. They usually have a negative connotation behind them, as in the dot com bust in 2000, or the housing market collapse in 2008. But they are only negative if you can’t do anything with them. Black Swan Management Group looks for these Black Swans, or deviations in the marketplace, and sees them as opportunities. This is why we took the name Black Swan, because we see it as beautiful, and beneficial.