Using a Fat Tail to Describe Stock Market Risk

When the unexpected occurs and changes our view of stock market risk, we call it a black swan or fat tail because it is far from the mean of a bell curve.

Economic Leadership

President Obama’s State of the Union address was primarily economic. The euro zone is dealing with an economic crisis. Developing nations are concerned with economic growth. So, are economists in charge? An academic study of 1200 policy makers in EU…

October Stock Markets

During October 1907, when the stock market crashed and the banking system panicked, we had no central monetary authority. We just had J.P. Morgan. “Why don’t you tell them what to do, Mr. Morgan? (Belle da Costa Greene, J.P. Morgan’s…

Stock Market Crashes

How to define a stock market crash? One economic paper has 2 suggestions: “When you see it you know it.” Look at depth and duration: A 20% drop is a crash while length can vary. Several possibilities: 1 day, 5…