Philosopher, Juris Doctor, surfer, trader, investor, musician, black belt, sailor, semi-centenarian. He lives on the mountain in Kona, Hawaii, with his family.
James Sogi Analyzes "Delay":
Swoosh theories: Pondering the room cleaning/paint drying elevator phenomenon here are some possible ideas on comparable mechanisms of push/pull equilibrium then swoosh, or processing then swoosh, critical mass then swoosh/boom. The same effect may be at work over years as hours.
Analysis of delay:
Pondering the conundrum of fat tails, consider that the curve is an artifact of the interpolation of the distribution. Often, and whether significantly so is the issue, the fatness of the tail is not always a result of the occurrences in the shoulder/tail range, but as the as result of an outlier. The outlier is not caused by the same functions as the middles, but rather as a result of some sort of mechanical breakdown in the systems, circuit breakers, limit moves, Soes or Arca, Globex shut down as on August 29, 2005 or an act of war such as 9/11.
Take for example the following distribution after a panic:
-6 | 1 -5 | -5 | -4 | -4 | 4 -3 | -3 | 21 -2 | 66 -2 | 311 -1 | 998777666555 -1 | 4443333321111111000000 -0 | 99999888888877777777776666666665555555555555555 -0 | 44444444444444443333333333333333333222222222222222222222222211111111+20 0 | 00000001111111111111111111111111111111112222222222222222222222222222+52 0 | 55555555555555555555555555556666666666666666666677777777777778888888+5 1 | 0000000001111111122223334444444 1 | 5557777799 2 | 1234 2 | 56
Note that the big losers causing the fat tail gaps away in an isolated move. It is a different mechanism. Assuming that the same function is related to all occurrences leads to difficulty reconciling the outliers.
To define the issue as fat tails may be misleading when the study should be of that of system breakdown, outliers, 10 sigma, rogue wave theory Rather than assume smoothness, a study of the structural break mechanism might be productive, or time between failures. Perhaps this is the same mechanism that causes the break from a range during everyday action.
Jim Sogi, May 2005