Are black swans just a short-term distraction?

Michael Kitces | Pinnacle Advisory Group | 15 June 2012


One of the most common criticisms to the use of Monte Carlo in financial planning is its typical assumption that investment returns are normally distributed, when in reality the market appears to go through environments that may be more volatile than a normal distribution would predict, as highlighted by the events of the Global Financial Crisis.

In the last four months of 2008 alone, the market experienced 20 high-volatility trading days with a standard...

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