I'm surprised they are left with stuff themselves. I guess
the Fed save from the deadly tails (by cutting them) is a standard assumption
of all risk models nowadays, and that's exactly why this week
could prove to
be interesting. It could be business as usual, of course,
but way too much stuff is hitting the fan -g- There is no
reliable research on tails, cause those are rare. By
making "rare" "never", the Fed has made a lot of money for
the banks, but also has grown a monster tail,
which is just waiting to crawl upon the markets. The market
is very dangerous right now, and 300-point DOW daily swings,
UP or DOWN,
actually prove it - we are in a tail. So, nobody knows
where she goes -g-
By the way, folks at banks make money by assuming a random
walk market, which means there is no way to make money in it
by trading (except for beta and leverage). Hedge fund returns
prove it, since they usually underperform SP. PS and JO prove
it too - PS loses by betting against positive beta with
leverage, JO wins, that's all there is to it -g-
The deviation of probability distribution from Gaussian
(random walk) is minor.
You can only make real money by playing the tails -g- |
