From an article in the New York Times today:
More recently, executives have blamed very unusual events — known to experts as 25-standard deviation moves, things expected only every 100,000 years — for the disruptions that computers could not predict.
Um, according to my calculation, a 25 standard deviation move on a normal distribution has a chance of occuring which is about . This means then that if the above statement is correct (100,000 years equals one 25 standard deviation move), then financial transactions occur at a rate of one transaction every seconds. This is, you know, only times shorter than the Planck time relevant to a quantum theory of gravity.
Which is great if your a physicist! Forget about building the Large Hadron Collider, just use the financial markets to test your theory of quantum gravity! Maybe the recent credit crunch is evidence for the Higgs boson or a selectron? I mean, seriously, we already have huge numbers of physicists working in the financial sector. Maybe they were on to something we didn’t notice and they’re really doing fundamental physics using this incredible financial transaction speed (and even making money while they’re poor thesis advisors slave away in tenured at a state institute land )
More seriously, I wonder if one could predict the future behavior of a financial instrument by examining the incidences of mathematical jargon in the instruments literature and the percentage of times the statement actually makes sense (would you invest if you found a clarifier about 25 standard deviation moves in a hedge funds plan?)