UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75776  
Subject: Re: Four Pillars of Investing Date: 1/6/2005 5:22 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
JAFO,

And eventually Mike Milliken went to jail, too.

His jail 'event' was not an indication that junk bonds had higher premiums then they needed for the risks being taken. Both are facts and largely unrelated.

I agree with pretty much everything else you said. The summary to your post seems to be that the risk premiums shift for different reasons and size of market or liquidity (related I know) does influence a lot the returns.

As to six sigma. I do not know the math but you are heading in the right direct. The tail is long and the area under the curve is small. What the prices show normally are fat tails in that the prices do not follow what the theoretical curve implies. Friction in the marketplace and human nature to mis-price rare events.

There is a great book on the topic. The title if Fooled by Randomness by Nassim Taleb.

John
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Clorox Isn't Cleaning Up
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement