How does a black swan operate in the financial market?

A ‘black swan’ is a rare event that is almost impossible to predict.
However, this type of event tends to lead to deep and widespread consequences for the global economy.
As black swans are events that have generally not occurred before, they are difficult to plan for.
Nevertheless, some believe that in hindsight the event could have been foreseen and anticipated.
Some, but far from all say that the 2020 Coronavirus pandemic is a good example of a black swan event.
Other such events include the 2001 terrorist attacks in the United States, the 2008 global financial crisis and the UK’s 2016 vote to leave the European Union.
The term black swan is usually credited to Nassim Nicholas Taleb, a finance professor and securities trader who wrote several books on the phenomenon.
Nassim Taleb has worked as a prop trader on Wall Street, a mathematician, a professor at Oxford University and the Polytechnic Institute of New York University.
He is also a former hedge fund manager who made a fortune from 2007 to 2010 on what he calls “black swans”.
His book on black swans is described by the Sunday Times as one of the 12 most important books since the Second World War.
His books include The Black Swan, Skin in the Game and Fooled by Randomness.
According to a review of his book The Black Swan, a black swan is “a highly improbable event with three main characteristics: It is unpredictable; it has a massive impact, and after the fact we have up an explanation that makes it look less random and more predictable than it was” While black swans are by definition unpredictable, investors should nevertheless prepare for their possible occurrence, Taleb argues.
While many events are unpredictable, black swans stand out for their huge, usually negative, impact on society.
However, they can also occur in an individual’s personal life, such as the unexpected death of a loved one, a job loss or a natural disaster.
Previously, it had been believed that all swans were white, anything else was considered unlikely.
As a curiosity, there are actually black swans, including Cygnus atratus.
They were discovered as early as 1697 when a Dutch expedition led by the explorer Willem de Vlamingh sailed up the Swan River in Western Australia.
When this happened, the term came to denote a perceived impossibility that was later proven.

Taleb, however, does not consider the Coronavirus to be a black swan

Yes you read that right, on March 31, 2020, Nassim Nicholas Taleb said he was annoyed when people referred to the Coronavirus pandemic as a black swan He says “The Black Swan” was meant to explain why in a networked world we need to change business practices and social norms – not, as he recently told me, to provide “a cliché for all the bad things that surprise us.” Moreover, the pandemic was entirely predictable – he, like Bill Gates, Laurie Garrett and others, had predicted it – a white swan if ever there was one.
“We gave our warning that you should actually kill it in the egg” Taleb told Bloomberg.
Governments “didn’t want to spend pennies in January; now they’re going to spend trillions” Note that the warning he referred to appeared in a January 26 paper he co-authored with Joseph Norman and Yaneer Bar-Yam, when the virus was still mainly confined to China. The paper warns that the spread due to “increased connectivity” will be “nonlinear” – two key contributors to Taleb’s anxiety.
For statisticians, “nonlinearity” describes events much like a pandemic: an output that is disproportionate to known inputs (the structure and growth of pathogens, say), due to both unknown and unknowable inputs (their incubation periods in humans, or random mutations), or eccentric interaction between different inputs (wet markets and airplanes), or exponential growth (from networked human contact), or all three.

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