Explaining big events

Risk magazine team
02 Feb 2003

Tweet
Facebook
LinkedIn
Save this article
Send to
Print this page

The truth is more subtle. The sum total of the decisions of many unseen people, market events (large and small) have causes. However, a good starting point for modelling markets is to assume complete ignorance of these causes. Expressed mathematically, this implies that market events are random. The Gaussian probability distribution follows naturally as the simplest expression of such assumed ignorance.

Where things go wrong is when practitioners fail to recognise that ignorance is only a

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to print this content. Please contact [email protected] to find out more.

You are currently unable to copy this content. Please contact [email protected] to find out more.

You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/

If you would like to purchase additional rights please email [email protected]

You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/

If you would like to purchase additional rights please email [email protected]