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Strategies & Market Trends : P&S and STO Death Blow's -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (1364)	5/31/2002 9:10:08 PM
From: exp	Read Replies (1) \| Respond to of 30712

Paul, The market seems to be pricing in political risk due to recent headlines. Very similar to "war premium" on oil prices due to the Middle East conflict. This "discounting" of political risk is most evident in rising gold prices. It's just an expected value of potential negative outcomes which range from mild (disruption in US war on terrorism) to average (limited India- Pak military conflict) to severe (large-scale I-P military conflict) to catastrophic (nuclear exchange). Even if the probabilities are 90%, 9%, and 1%, and .01%, the expected value is non-negligible given the high political/economic cost of the last 3 alternatives.