If you were to try to predict which event might be the catalyst for the next financial crisis, would you choose a) a war over South China Sea islands, b) a global debt crash, c) a collapsing Chinese economy, or d) none of the above?
The best answer, according to the Black Swan theory, is “d) none of the above.”
This theory was created by Nassim Taleb, a statistician who wrote a book about it in 2007. He explained that a “Black Swan” event is something that has a catastrophic effect on markets, and is also almost impossible to predict.
