Friends,
On May 15th, 1997, Amazon filed its prospectus to become a publicly traded company. Nowhere in that document are the words "cloud computing" or "Amazon Web Services (AWS)" mentioned.
Amazon wouldn't be worth anywhere near what it is without AWS. Cut out that division, and shareholders would lose hundreds of billions overnight.
But no one saw it coming back then.
Nassim Taleb is most famous for the idea of Black Swans: large, consequential developments that play a huge role in how the world works, and are very difficult to predict.
One thing most people don't know: Taleb has added the nuance that Black Swans exist in the eye of the beholder. The attacks of 9/11 were a Black Swan for most, but not for those who carried out the attacks. They knew what was coming.
And most of the time, Black Swans uniformly refer to negative events like this. But Taleb has gone out of his way to say that Black Swans can be positive, too. The cover of the book The Black Swan says it best:
"A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11" [emphasis added]
Imagine telling a 1980s version of yourself that one day, you could type almost any question into a phone and get an answer. People would look at you like you were crazy. To someone from that time, Google would most definitely be a Black Swan.
The problem is, we adjust to the positive Black Swans quickly. They lose their sense of awe. That's evolution at play: we survive by being on the lookout for negative Black Swans, not reveling in the positive ones.
But that tendency can hamper us as investors.
Positive Black Swans drive most of the generational wealth created on the stock market. We can never tell where it's going to come from -- that's the nature of Black Swans.
But as long as we keep alive a reasonable optimism that the world creates just as many positive -- as negative -- Black Swans, we'll be exposed to tomorrow's breakthroughs.
That benefits humanity -- and our portfolios. Over the long run, that's a great deal.
Wishing you continued investing luck,
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Brian Feroldi, Brian Stoffel, & Brian Withers
Long Term Mindset
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