A black swan is an unpredictable, rare event with extreme consequences that is often rationalized with the benefit of hindsight. The concept was popularized by Nassim Nicholas Taleb in his 2007 book 'The Black Swan.' In financial markets, black swan events cause massive unexpected price movements and can wipe out portfolios that are not adequately hedged. Examples include the 2008 financial crisis, the COVID-19 market crash of 2020, and the collapse of major crypto exchanges.
Example
“The March 2020 COVID crash was a black swan event that sent the S&P 500 plunging 34% in just 23 trading days.”