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Well dont know but have a read here


re: "people usually underestimate low probability events"
Doesn't it matter whether the event has a positive or negative outcome? I thought the literature showed that people underestimate *negative* low-prob events but overestimate *positive* ones (e.g. winning the lottery).

Pierce Wetter

Or maybe CAPM is just broken.

(Note that I work at Marketocracy, so I've conclusively convinced myself that this is true...)

Jeroen van Bommel

As a student at the vrije universiteit amsterdam currently cramming for corporate finance as well as investment exams I am pleased to discover this most excellent blog/resource center on interesting finance stuff. Keep up the great work.

ps. CAPM broken is partly due to the fact that the model fails because of a flawed beta...from post 1964 (according fo Fama&French) the model is simply not accurate. Perhaps we can attribute it to the globalization of the world economy and perhaps a little bit of bretton woods decline/termination? what do you think?

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