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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: JeffA who wrote (55609)	8/27/1999 10:59:00 AM
From: stan s.	Respond to of 90042

>>>>>Probability distributions that are estimated largely, or exclusively, over cycles excluding periods of panic will underestimate the probability of extreme price movements because they fail to capture a secondary peak at the extreme negative tail that reflects the probability of occurrence of a panic. Furthermore, joint distributions estimated over periods without panics will misestimate the degree of correlation between asset returns during panics. Under these circumstances, fear and disengagement by investors often result in simultaneous declines in the values of private obligations, as investors no longer realistically differentiate among degrees of risk and liquidity, and increases in the values of riskless government securities. Consequently, the benefits of portfolio diversification will tend to be overestimated when the rare panic periods are not taken into account.<<<< Translation....shi....I mean stuff happens! be careful.

To: JeffA who wrote (55609)	8/27/1999 11:09:00 AM
From: Mare Britton	Read Replies (1) \| Respond to of 90042

thanks Jeff - Greenspan text very interesting on "collapsing confidence" and "Panic periods". When read carefully, it can be helpful, but once the media picks out its bits and bytes, totally distorting it for the sake of simplification, then it has its negative effect. I think he's speaking very carefully directly to the investor here and attempting to influence financial planners with some basic economic truths. As Stan put "be careful....sh....happens".