I don't think we are using the same sense of the word "model". In this context we're talking about using a Gaussian vs some other statistical model.
What does it mean to say that Black Swans are unquantifiable? Take these questions:
1) What is the probability that the S&P will be below 1000 within a month (bigger than 50% drop)? Is it .1%, .01%, .001%, .0001% ? Nobody knows. It's a sufficiently rare event, with so few precedents, that you can't give a useful or reasonable answer, with say an order of magnitude.
2) What is the value of the next YC batch, in 2020? Well if it has a company like AirBnB or Dropbox, it could be $10 B. Or it could be $100M. Nobody knows. (See Paul Graham's Black Swan farming essay.) Although the entire point of the VC industry is to try to make this return more predictable than it inherently is.
3) On September 10, 2001, if I asked you what is the probability that airliners would crash in to the World Trade Center, what would your response be? There was perhaps a prior in the 1993 World Trade Center attack. Still, nobody (outside the State department) could have spoken meaningfully about the probability of this event.
What does it mean to say that Black Swans are unquantifiable? Take these questions:
1) What is the probability that the S&P will be below 1000 within a month (bigger than 50% drop)? Is it .1%, .01%, .001%, .0001% ? Nobody knows. It's a sufficiently rare event, with so few precedents, that you can't give a useful or reasonable answer, with say an order of magnitude.
2) What is the value of the next YC batch, in 2020? Well if it has a company like AirBnB or Dropbox, it could be $10 B. Or it could be $100M. Nobody knows. (See Paul Graham's Black Swan farming essay.) Although the entire point of the VC industry is to try to make this return more predictable than it inherently is.
3) On September 10, 2001, if I asked you what is the probability that airliners would crash in to the World Trade Center, what would your response be? There was perhaps a prior in the 1993 World Trade Center attack. Still, nobody (outside the State department) could have spoken meaningfully about the probability of this event.