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KNOW THE RISK

A change in stock price expected in 1 of 100 trading days has a similar size under a power law regime (red circles) and a Gaussian distribution (shaded circles). But for a 1-in-10,000 event, the power law predicts a much bigger price change. Credit: J. Farmer and J. Geanakoplos/Power Laws in Economics and Elsewhere 2008

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