Should markets be priced assuming that nothing will go wrong ("random
shocks") or should markets be priced assuming that something will go wrong ?
If the answer is the latter, then shouldn't some margin of error provided
for the consequences of these "random shocks" ?Are these events truly random. While each one of them seems random, over a period none of them are really as random as they seem because country keep going through assassinations, wars, currency crises, oil price shocks, political crises, floods, droughts, hurricances, the "incompetents" reaching the highest office etc etc. In the last 100 years hasn't each country seen enough of these kind of "random shocks" so that we can no longer see them as random. IF that be so, shouldnt markets factor this in their pricing ? Koushik ----- Original Message ----- From: "Bryan D Caplan" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Thursday, January 23, 2003 12:19 PM Subject: Bubblemania > Another annoying thing about the "I told you there was a bubble" people > is that a good chunk of the stock market crash can be attributed to the > 9/11 attacks (more specifically, indirect effects via policy changes). > If ever there were a random shock, it was 9/11. > -- > Prof. Bryan Caplan > Department of Economics George Mason University > http://www.bcaplan.com [EMAIL PROTECTED] > > > Mr. Banks: Will you be good enough to explain all this?! > > Mary Poppins: First of all I would like to make one thing > perfectly clear. > > Banks: Yes? > > Poppins: I never explain *anything*. > > *Mary Poppins* > >
