When the COVID-19 pandemic struck, the severity of its impact on global societies and economies was shocking. Yet critics are insisting that the repercussions could (and should) have been foreseen. Does this make it a ‘black swan’ event?

Originally coined by financial theorist and writer Nassim Nicholas Taleb, the term ‘black swan’ has come to denote any event that:

• Is extremely rare
• Has a severe impact
• Is unpredictable (although some may claim in hindsight that the pandemic it could have been predicted).

Historic black swans

Examples of black swans from history include the Spanish Flu outbreak (1918), Wall Street Crash (1929), ‘Black Monday’ (1987), the terrorist attacks on the World Trade Center (2001), the SARS outbreak (2003) and, more recently, the global financial crisis (2008).

Black swan – or not?

While it may seem a textbook case on the surface, some are arguing that COVID-19 does not constitute a black swan event. Severe impact? Undoubtedly. Rare? Perhaps. But unpredictable? Maybe not. History shows us that significant outbreaks of infectious diseases do happen. What’s more, Bill Gates, George W. Bush, Barack Obama – and Taleb himself – have all previously issued dire warnings about what could happen if we failed to prepare for future pandemics. Can we really say, then, that the coronavirus pandemic was unpredictable?

The COVID difference?

Those who say it is a black swan event have pointed to the unique brutality and speed with which the virus spread around the world and hit financial markets. In the words of one financial commentator: “It has been incredibly fast-paced, faster than ’29, faster than ’87. The speed and ferocity has been utterly breathtaking.”

Even so, Taleb himself suggests that Covid 19 does not fit his description of a black swan event. Yes, it has had a severe impact on the global economy and people’s lives. But there are also multiple examples of serious global outbreaks from the 21st century alone – Ebola, SARS and the H1N1 influenza pandemic all spring to mind.

Financial Advice from Clifford Osborne

If you would like expert advice on your pensions, investments or mortgages due to the covid-19 pandemic, we are here to help. Paul Clifford at Clifford Osborne is a highly experienced independent financial adviser (IFA).

We offer our clients a free initial financial review – so please get in touch to book yours. We’re based in Eastbourne, East Sussex, and can either carry out meetings online, or visit your home or workplace in Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield in Sussex and Kent.

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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.