The sub zero stature of Global Alpha

In August 2007 Goldman Sachs experienced very substantial declines (in the region of 25%) in a couple of its own hedge funds, including the Global Alpha fund which has subsequently been closed down owing to further major losses in 2011 as reported here.

Goldman's CFO David Viniar was quoted in connection with the 2007 losses as follows:

“We were seeing things that were 25-standard deviation moves, several days in a row,”

To put the ineptness of this kind of quantification into context let us apply similar logic to the notion of heights of adult males and consider one who was 25 standard deviations below the mean height (since it is the left tail of the distribution which most likely caused the losses).

Evidence suggests that the mean height for an American adult male is about 5 feet 9 inches and the standard deviation is approximately 3 inches. To be 75 inches below the mean (i.e. 25 times 3 inches) of the mean height of 69 inches would mean that a suitably appropriate male, with similar characteristics to the moves alluded to by Viniar, would have a stature of a negative six inches.

Donations for access: Straining credulity

The following video clip caught by an under cover journalist working for the London Sunday Times and which can be seen here is well worth a couple of minutes of viewing time.

Apart from the remarkable content of the video itself, what really strains credulity is the fact that Michael Fallon, the current deputy chairman of the UK's Conservative party, when interviewed on Sky News about this sale of access to the British PM, claimed that he has not personally met his own organization's co-Treasurer who is the sleazy man in the video selling access.

Equity markets not yet expensive enough to lure most retail investors

In an ironic twist to the "Going out for business" slogan which is sometimes seen adorning shop windows to lure customers to seek out retail bargains, equity markets, where inverse dynamics prevail, are doing their best to lure retail investors with higher prices.

However, as fund inflow data and overall volume levels suggest, there is still quite a way to go yet before the average "investor" feels that prices are high enough for it to be safe to put their savings to work in equities.