He words it rather more politely than I would:blog.pmarca.com: Quote of the week: Michael Cembalest of JP MorganFrom Michael Cembalest, Chief Investment Officer of JP Morgan Private Bank (not online).
Advice to portfolio managers around the globe: please stop referring to "7-standard deviation events" when describing performance.
Whether it's the decline in home prices in real terms, a sudden widening of credit spreads, the impact of too much leverage on previously uncorrelated hedge fund strategies, a sudden shift in liquidity, a selloff in riskier emerging market stocks and bonds despite no change in fundamentals, unexpected outflows from fund investors, problems with credit derivatives or declines in bank credit lines, this has all happened before.
The smartest managers had prepared for volatility.
The good ones will learn from what's happened and make adjustments.
Those that spend too much time explaining why it wasn't likely in the first place fall into the bottom category.
When the going gets weird, the weird turn pro. - Hunter S. Thompson
14 September 2007
This has all happened before
Ganked directly from Marc Andreesen's blog: