Christmas season is as good a time as ever to remind you that a probability distribution has two tails. Event distributions have been getting a lot of attention over the past several years, especially their tails.
It used to be that Wall Street was functioning on the basic idea that financial events were subject to something very like a normal distribution, also known as a bell curve. Since they saw stock and bond prices as largely random variations from the average, they saw the risk to their portfolios as relatively low.
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