A "black swan" is an unexpected, unpredictable event that has large impact. The author of the brilliant book with this title, Nassim Taleb, drew the term from the discovery of black swans in Australia (click on the pic of the book to buy it from Amazon). For centuries, everyone in Europe "knew" that all swans were white. They had hundreds of years of evidence. Then colonization of Australia produced a discovery that upended the definition of "swan".
In the areas of life where unexpected danger could bring great pain, be very careful and put in extra protections. Get life insurance, make an extra copy of important documents, include a good chunk of bonds in your investing, be 110% sure of your marriage partner choice, etc.
The central idea of the book is that black swan events have happened many times in history, in every area of life. It's not possible to predict what surprises are coming (by definition, it's an unexpected change). But it is possible to live wisely, knowing that eventually a black swan is coming.
How? Taleb recommends a barbell-shaped approach to life.
In the areas of life where unexpected wins could bring great gain, invest just as heavily. One incredible win can pay for all the other areas. For example, sell books or music (could explode into a bestseller, invest in a start-up company, take the effort to meet someone outside your circles, etc.
Don't spend much time and effort in the middle range, where there's moderate risk for regular rewards. Put yourself in position to survive the negative black swans and benefit from the positive black swans.
Be BOTH a pessimist (plan for doomsday) and a optimist (bet on the long shot).
