## Archive for July, 2012

We continue the previous post here that analysed the distribution of the Apple stock price daily %changes. We concluded that the distribution (if it is a static distribution) cannot be Gaussian. What can the probability distribution be then? There is a distribution called Levy distribution http://en.wikipedia.org/wiki/L%C3%A9vy_distribution which has 2 parameters and it is not really […]

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In his famous book Black Swan, Nassim Taleb introduced the concepts of Extremistan and Mediocristan (as two countries). He uses them as guides to define how predictable is the environment one’s studying. Mediocristan environments safely can use Gaussian distribution. In Extremistan environments, a Gaussian distribution is used at one’s peril. There are big fat tail […]

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