"When you look at the distribution of annula S&P returns, 2008 is not an outlier, in fact it is not even the worst but the second worst return". Harry Markowitz

I watched this [interview with Harry Markowitz (caution: 74MB file)], and thought, you gotta be kidding!

It's the perfect manifestation of really smart guys who are just totally oblivious to the trenches, even though he (Markowitz) has been in the trenches for many years. When he speaks of the fact in this little 3 minute video that 2008 was only 2 1/2 standard deviations outlying, that we really haven't seen an annual outlier of 3 standard deviations in US market history, I'm left stupified.

I remember being on the phone in November of 2008, late at night with Mikey, who was consoling me, urging me to go meet the monster margin call I had to meet in about 9 hours time. In those days (since I was long equities out both a** and piehole) I was living with an airline barfbag by my cellphone.

"We've never seen 3 standard deviations in annual returns…."

Right……"Can I have till next year to meet that margin call? After all…."

Yeah, well, long story made short(er than Ted K's manifesto) I did manage to scrounge up the money, run around bittercoldBostonInABaseBallJacketInNovember, meet the call, and eventually get out of everything at a profit (thanks Mikey!). But annualized returns? What are we here, in the private placement world??? Weekly data is as far out as we can usually afford to go down here on the shop floor, usually, it's daily and hourly and minute-by-minute, though I try to look away as much as I can.

But that annualized returns thing just cracked me up, and I had to share, especially in the anecdote that 2008 has now faded off into.





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