Capitalizing on Positive Black Swans

Looking back at what had happened in the past one year, I find that we cannot take what we have for granted and continue to live in blissful unawareness as many significant negative events(such as the sub-prime crisis, natural disasters such as the Myanmar typhoon Nargis, Sichuan Earthquake etc)have started to unfold as the day progresses. All the above events came out of the blue, catching us unaware, yet the damage that they caused were so severe and mind boggling that it it leaves us wondering why we did not see them coming.

Black swans, as defined in a thought-provoking book "The Black Swan: The Impact of the Highly Improbable", are events which are highly rare, carries massive impact, and where people only seeks to find explanation for these events after the fact. Due to the existence of black swans, it urges us to stop listening to so-called "experts" whom think they know more than they do while in fact there are much more unknown unknowns not accounted for.

"Experts" continue to make more gloomy predictions of our future ie. skyrocketing oil prices, prolonged recessions, climate change, as these fall within their "sophisticated" models for forecasting. However, does anybody really know whether these "educated" guesses will actually manifest in the future? In fact, what we don't know and can't predict is even more worrying(another 9/11 perhaps?)

Of course, on the flip side of the coin, there can be positive black swans as well. Nobody would have predicted that the internet would have evolved to become so pervasive in our everyday lives or even enable stay at home entrepreneurs to build decent incomes online while in the past , you typically have to hold a real job to make money.

Therefore, there can also be opportunities for us to capitalize on positive black swans while minimizing the risk from negative ones. Here's a quick paraphrase from the book on the methods that can help us take advantage of uncertainty and benefit from them:

1) Learn to differentiate between positive contingencies and negative ones
Take up only opportunities where it is extremely beneficial for you if you don't know what is going to happen or what can happen.

2) Don't be narrow minded
Be prepared, get out of your comfort zone and gain broad exposure to ideas, people or chances. Do not look for specifics as you do not know how or when opportunity will present itself.

3) Seize any lucky breaks you might get
Don't hesistate! Take up the opportunity once you see it as they are more rare than you think and may never come again.

4) Don't take government plans for granted
Government policies may not be wrong but they tend to be over analyzed, and whats good for the general population might not be able to work for you.

5) Ignore the false prophets
"Experts" are are constrained by their own knowledge and assumptions. You will never be able to win an argument against them so it is better to ignore them.

To conclude, you are the captain of your own life and don't get caught up by the expectation of other people. Understand the high impact black swans can create, don't be caught unprepared, capitalize on the positive ones and your success is only your own to determine!

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