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Black Swans and Defining Moments of Your Career – Part 1

March 11, 2009

If you took away the ten best days of the stock market’s history over the past 109 years, two-thirds of the cumulative gains produced by the Dow Jones Industrials would completely disappear. Conversely, if you avoided the ten worst days of the market’s performance over the span of its history, you would have tripled the actual return of the Dow.

Surprisingly, those market-changing events represented just .03% of the market’s history: 10 days out of 29,694. As Jason Zweig discussed in his January 24, 2009 Wall Street Journal article, “Why Market Forecasts Keep Missing the Mark,” history shows us that most of the time the market kind of bumbles along rather quietly. And then, when no one expects it, there is a giant gain or loss. Afterwards, the market settles back once again into its less dramatic track.

Zweig compares the behavior of the stock market with philosopher and trader Nassim Nicholas Taleb’s Black Swan theory, which says that life will periodically be interrupted by earth-shattering events that are hugely important, rare, and unpredictable. The label comes from an old philosophical argument: you might believe that all swans are white, but no matter how many white swans you see, you can never prove it is true.

On the other hand, you only have to observe one single, unexpected black swan to disprove it. Black Swan events, by definition, are enormous and staggering, but afterwards we all think that it should have been anticipated somehow. Couldn’t we have prevented 9/11? The Titanic disaster? The great credit market meltdown of 2008? I mean, the signs were there all along! Any nincompoop should have seen it coming, right?

According to Taleb, life is filled with unpredictability even though we are always surprised when it happens. The harsh reality is that we are very bad at predicting anything accurately, despite all the after-the-fact analysis that says we should have known better. Almost everything significant and life changing that happens – in world events or in your personal life – is considered a black swan event.

Those few dramatic swings of the stock market would also be considered Black Swans. No one could have predicted when they would happen, and we can only really understand why it happened after the fact. That is the reality of the stock market.

That unusual market behavior and the Black Swan theory reminded me a lot of the trajectory of my career path over the past twenty years. It goes something like this: nothing, nothing, boring, hard work, minor breakthrough, work, tedious, nothing, setback, routine, nothing, and then, suddenly – BAM! Out of the blue, a major can of whoop-ass is delivered to my door.

Some crisis or opportunity shows up, and everything changes. I have to respond. Once it was a call I received announcing that I was getting laid off. Another time it was a public speaking event I delivered that went horribly wrong. Another time it was a boss who turned apathetic towards me almost overnight. On the surface, each of these events might seem like moments of failure, but it was in how I responded, and what happened next, that proved to be launching points for my career into another realm entirely.

These Black Swan moments happen to each of us at various points throughout our lives and careers. There will be few, but very significant opportunities when you least expect it and suddenly all of your future seems to hang in the balance. How will you respond? What will you do?

These are the moments that define your future, the situations that will be branded forever as turning points in your life. These are the make-or-break situations that God is always preparing us for, even when we don’t know it.

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7 Comments leave one →
  1. March 11, 2009 7:47 pm

    thanks for the comments on my posts.
    speaking of sitting by the fire with a good book and wine…we are in the business of wine,
    my husband being a winemaker.

    he was a mechanical engineer for 21 years, and during that time started to make wine. he left his job as an engineer in 2001.

    this is another interesting post from you, well done!
    i googled taleb. it was interesting as well, to read
    about his background.

  2. March 11, 2009 8:25 pm

    Brad, great post. The “black swan” is particularly relevant to me as I’m in one of those moments in my work. I’ve sensed God working through that, and this is one more affirmation of that. Question remains, what will become of the moment? What will I allow God to do? Thanks.

  3. March 12, 2009 10:09 pm

    Brad, I’ve not seen other people talk about the crash (and 9/11) from a philosophical stand point yet.

    I wonder about what you said about your work trajectory: “nothing, nothing, boring, hard work, minor breakthrough, work, tedious, nothing, setback, routine, nothing.” Is that just perseverance? And without perseverance, would you have been able to turn the whoop-ass into opportunity?

    For example, I want to write. So I do. Eventually, the years of writing will open a can of whoop-ass. It may be a small can, but sheer odds are in my favor. If I hang out at the pond long enough, I’m more likely to see a black swan. Or at least a gray one. Or a purple one.

  4. Mary Ryan permalink
    March 13, 2009 10:08 am

    I can relate to the Whoop-ass!! each time I look at up to the heavens and ask “are you sure” I am ways get a nod.. and than I say “okay” brush my “ass” off and get going to see what God wants me to see when I stand up and look!

    Thanks,

    Mary

  5. March 13, 2009 12:57 pm

    I’m still learning to embrace the black swan. Good thoughts, though.

    Brad

  6. shrinkingthecamel permalink*
    March 13, 2009 8:20 pm

    Hey Mary and Lyla – Thanks for sharing about your own situations at work – I hope your black swan moments lead to something better! And thanks for the visit!

    Nancy – A winery? I knew it! Not really, but that somehow fits my imaginary picture of you. Making art, sniffing grapes, writing poetry, baking a pie….

    Marcus – Come back for Part 2 to get more on this – when I will I tell one of my personal stories. Yes, it’s partly persistance…persistance paves the way and makes us prepared — but also it’s how you respond in a crisis. The defining moment of a career can be as much a crisis as a terrific opportunity. Stay tuned. (In any case, I am certain you will be a huge big-shot editorial success within the next 5-10 years. So what are you worried about!)

    Brad – good to see you again, man.

  7. April 2, 2009 8:29 am

    No wonder we never remember to thank our second grade teachers! They just helped us along through the “nothing, nothing, nothing.” All important stuff, but not memorable.

    I only remember that my teacher had big eyes that flared when she got mad. I don’t remember a thing she taught me…but I know she did.

    It’s interesting how we define ourselves, our country, our faith, by rare, Black Swan moments. Should we?

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