Fat Tails

I've heard it said before that the futures markets tend to have "fat tails." What exactly does this mean and how is it calculated?

Bong

 

"fat tails" - Refers to a bell curve that has more outlying events than a normal distribution.

Ex. Lets look at the probability distribution of the chances of my getting laid this weekend by an extremely hot or extremely ugly girl. Will say a girl that is a "5" is the mean.

first scenario: I am sober. I don't have the balls to talk to hot girls and I definetly not talking to ugly ones. Vey few low or high numbers(ie 2,3 or 8,9) going home with me this night.
=Standard distribution


second scenario: I am drunk as hell and saying just about anything to every girl in the bar. God only knows what I would go home with this night.

This distrubtion would have a lot of outlying events from the mean(1's and 10's)

"fat tails"(pardon the pun)



I think my friends would argue that the second scenario would actually result in more data points on one side of the mean.

 

now there's a useful analogy...

pretty sure most guys could relate to that...

 

Thanks for the info and interesting analogy.

 

The mind Boggles!!!!!!!!!!!!!!!!!!!!!

Oh well - I suppose boys will be boys...



Natalie

 

I went home at 2 with a 10 and woke up at 10 with a 2.....what happened???

 

Story of my life ...

 

I dated a 10, married a 6, slept with a 4, and now wake up to a 2. Problem is, she's the same person!

j/k

 

I asked my plastic surgeon friend to cut my 2 in half and add a zero.

you guys are cracking me up !!!

 

Has anyone else noticed that when you look at the gals sitting around a bar at about 1 in the morning, all the ugly ones have gotten up and gone home.