We'll be publishing an article in Tharp's Thoughts shortly on the NON-Random nature of the markets. It's a simple, but very effective study. If you plot the percent changes in the market, they should be normally distributed. But they are not. The curve is very steep around the mean and has huge fat tails. This means that changes that you mght expect every 100,000 years on a normal curve will actually happen every 5-10 years.

Take the big move last Tuesday. It was one of the large point moves in the DOW, but only among the top several hundred percentagewise. Nevertheless, in one day it wiped out all of the profits for the year. And it all happened because of the global interdependencies of the markets. China blew up, Europe blew up and then the U.S. blew up.

I'd also like to point out that 1) the VIX has been at historical lows. 16 of the 50 lowest readings of all time on the VIX have occurred in 2007. This means that people are extremely confident about the market. At when the VIX nearly doubled.in a few days...news commentators were saying that everyone is panicking. That makes me laugh. The all time high on the VIX is 150... and commentators are saying that people are panicing when it hits 20.