Black Swan: Impact of the highly improbable

Project two of toastmaster's speech

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For centuries together, Europeans were totally convinced "All Swans are white" Until the dutch explorers in 1697 discovered Australia and they spotted a Black Swan. One single event shattered the beliefs held for centuries.

Fellow toastmasters and my dear guests, Today, I'll summarize the ideas presented in the book "Black Swan: The impact of highly improbable" by a famous author Nassim Nicholas Taleb

Lets take another dramatic example to understand Black Swan event:
I assume you all know about the bird Turkey. Its bigger than a Hen. Its fed a variety of grains everyday by the friendly human race. With every feeding, the Turkey firms up its belief, the friendly human race is looking after its best interests. Until one Wednesday afternoon before the Thanksgiving, it incurs a revision of belief. Any guess? Yeah..its slaughtered, cooked and served as Dinner!!

I'm sure we can find a few Black Swan events from our own experiences: Stock market crashes, 9/11, Tsunami, Recent Satyam fiasco...

There is a common thread that runs through these Black Swan events:
1. Highly unpredictable
2. Huge impact
3. Human nature to attach a reason and explain them after they have happened

The First two characteristics are easy to grasp. Let me focus on the third one.

The future history books will say. Oh! SubPrime crisis lead to the Crash. India did not install earth quake sensors in the ocean bad or else Tsunami wouldn't have caused big damage. If all planes had bullet proof cockpits and sealed, terrorists wouldn't have flew into Twin Towers and collapsed them. If SEBI was more cautious, Satyam fiasco wouldn't have happened.

Let me describe a scientific experiment to show how human brain constructs these theories after the fact. Our brain is separated into two hemispheres: Left brain and Right brain with a few connections between the two. Split brain patients has no connections.

Ask the right brain of the split brain patient to lift his finger and then ask the left brain "Why did you lift the finger?" He'll shoot back...Oh! I saw a beautiful flower on the wall or Oh! there was a lizard crawling on the roof. If you do the same to left brain and ask the right brain...He'll say "I don't know"

Strange ways our brain got wired for evolutionary reasons. Be aware of it. Resist the temptation to explain away things as natural and predictable because this has happened or that has happened. We are being tricked by our circuits in the brain. Be aware of them.

So Dear Friends, the Black Swans are a realty. Ignore the experts who theorize and attach reasons after the fact and keep in check the arrogance of humans to attach precise reasons to events and think.... We know more than what we actually know.

Over to you Toastmaster