In his 2007 book, The Black Swan, Nassim Nicholas Taleb suggests that the most important, world changing, life altering events that occur in human history are highly improbable and unexpected. The term “black swan” is from the western belief that all swans are white. It was the zoological definition of swan that they’re white. In 1697 black swans were discovered in Australia and this redefined the scientific definition of swans.
History is a story of big events that no one expected. The first world war, the rise of Hitler, the collapse of the Soviet Union, the internet and 9/11 were all enormously high impact unforeseen occurrences. And think about your own life and how many things like meeting your spouse, your career or a death in the family was unexpected but made a big impact on your life.
These extreme events that change everything happen after long periods of “normalness”. A black swan comes along after centuries of seeing only white ones. Our human reasoning is faulty because we make general assumptions from past experience. Recognize how little we know about causality so you can be better prepared when the unexpected happens.
People radically under or overestimate the probability of events – like worrying about getting sued when you don’t even have a simple will and powers of attorney. The odds of a large judgment against you are extremely small, the odds of dying or becoming disabled are 100%; it’s a matter of time. My estate planning clients expect the best and plan for the worst. They have a War Chest of savings, legal documents and an awareness of our increasingly complex and unpredictable world.