On Japan and fat tails.

An eloquent (as always) exposition of fat tails with regard to recent disaster in Japan:

But make no mistake: no tail risk can be completely mitigated. That is the nature of the tail: there is no upper limit to the magnitude of the potential threat. And just because we estimate that an event of certain magnitude should only occur once every 1024 years does not mean it will not happen tomorrow. Or this evening at 6:53 pm.

Via Epicurean Dealmaker


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