Rare Events Happen All The Time In The Financial Markets

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		Home Tech Finance Markets Politics Strategy Entertainment Advertising Retail Sports Life Wednesday, December 19, 2012 Rare Events Happen All The Time In The Financial Markets Just because events are unlikely to happen doesn't mean they won't happen. That's the message of Deutsche Bank's special report "13 Outliers For 2013." When thinking about the year ahead, it is tempting to extrapolate the recent past whether looking at risks or one’s base case. Moreover, there is a tendency not to deviate too far from consensus, perhaps seeing safety in being part of the herd. From a statistical perspective, this is very similar to assuming markets follow a normal or Gaussian distribution. That is, markets are well behaved and extreme outcomes are rare. The financial crisis of 2008 taught us otherwise, yet it is very difficult to shrug off the bias to assume normality in markets. The report of included this chart of 3 standard deviation (i.e. very rare) moves in the markets: Read » Also On Money Game Today: David Rosenberg Presents 10 Things In The Economy That Are 'Nearly-Certain' STOCKS TUMBLE AFTER BOEHNER'S ANGRY PRESS CONFERENCE: Here's What You Need To Know Advertisement CHART OF THE DAY: Hedge Funds Haven't Been This Invested In Stocks Since 2006 CHART OF THE DAY: The Major Manufacturing Indices Are Pointing To A US Slowdown CHART OF THE DAY: Here's The Recession Indicator That Bears Are Passing Around Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.jobhuntportal11@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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