Will the economic crisis alter that process by (for example) distorting the definition of “normal” market behaviour?
Again, I’m not in the business of making predictions. I do think there are some economic reasons for why things can’t continue to be quite as volatile as they have been in the last six months, but then again, economics is not nicknamed the “dismal science” for nothing. The one thing that has become obvious to my mind is that the “hidden risks” (risks that are very difficult if not impossible to capture using quantitative analysis) have increased so dramatically that a very conservative approach to risk management will continue to be at the forefront throughout 2009.
