Grey Swan

AAA

DEFINITION of 'Grey Swan'

An event that can be anticipated to a certain degree, but is considered unlikely to occur and may have a sizable impact on the valuation of a security or the health of the overall market if it does occur. A grey swan event is unlike a black swan event whose total impact is difficult to predict. Despite the possibility of determining the properties and potential impact of such an event, it is difficult to create precise calculations regarding the total impact.

INVESTOPEDIA EXPLAINS 'Grey Swan'

The term "black swan" was coined by Nassim Nicholas Taleb to describe the uncertainty and risk posed by unpredictable events. Grey swan events, which are derived from the black swan concept, may include earthquakes and even events like the Great Depression. While analysts can look at the impacts that similar events had across history, the exact extent of damage and risk cannot be calculated.

RELATED TERMS
  1. Event Risk

    1. The risk due to unforeseen events partaken by or associated ...
  2. Anti-Fragility

    A postulated antithesis to fragility where high-impact events ...
  3. Black Swan

    An event or occurrence that deviates beyond what is normally ...
  4. Behavioral Finance

    A field of finance that proposes psychology-based theories to ...
  5. Random Walk Theory

    The theory that stock price changes have the same distribution ...
  6. Risk

    The chance that an investment's actual return will be different ...
Related Articles
  1. Investing Basics

    The Five Biggest Stock Market Myths

    Stocks that go down must come up, right? Wrong. We bust this myth and four other common market misconceptions.
  2. Active Trading

    What Is Market Efficiency?

    The efficient market hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is this possible?
  3. Fundamental Analysis

    Financial Markets: Random, Cyclical Or Both?

    Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument.
  4. Investing Basics

    Black Swan Events And Investment

    These world-changing events are rare and difficult to predict, but they have serious implications for your investments.
  5. Investing Basics

    10 Books Worth Investing In

    Here are 10 financial services books that are informative and useful.
  6. Investing Basics

    Defining The 3 Types Of Investments

    The first step to being a successful investor is knowing what is and isn't an investment.
  7. Active Trading

    Random Reinforcement: Why Most Traders Fail

    This phenomenon can cause a trader to abandon a proven strategy or risk everything on chance. Find out how to avoid it.
  8. Personal Finance

    Financial Physics: "Natural" Market Laws

    Physics uses math to define the laws of the universe; here, we look at what laws explain the financial universe.
  9. Options & Futures

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  10. Fundamental Analysis

    Monte Carlo Simulation With GBM

    Learn to predict future events through a series of random trials.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center