I don’t often find a Web posting that combines math, economics, and investing insight. The title “Black Swan” comes from philosopher Karl Popper’s observation that only a single black swan is required to falsify the theory that “all swans are white”. The subject discussed concerns the occurrence of exponential distributions (”power curves”) instead of normal distributions (”Bell curves”). The idea is that we expect Bell curves when reality gives us power curves. As a result, we are often wrong in our expectations and surprised by outcomes. It is also problematic that many political agendas are based on trying to force a power curve world into a Bell curve world view.
