Dr. Alan O'Sullivan

2008 so what's the statistics tell us is that these events fat tail events are very rare but they're not rare okay they're they're much more common than people realize and what we need to do in the context of sebastian page is saying is prepare our portfolios for fat tail events

And he's saying that the horizon is more than 10 years?

Absolutely.

I mean, anybody looking at trying to get an understanding of expected returns into the future needs to pull back their time series, needs to pull back their analysis.

I would argue 100 years, OK?

10 years is like five minutes because you could be looking at 10 years in an environment where growth is strong, no inflation.

How...

useful as that if you're going into a structurally higher inflationary environment and a structurally... Yeah, I mean, Putin's invasion of Ukraine was once in 80 years.

Yeah, you're right.

I mean, because, you know, if we looked at the basic statistical models, these things should happen once in a lifetime.

They're happening every couple of years.

So if there's a basic problem with how you're modeling risk.

you've got a big problem with how you allocate assets.

I mean, the main job of somebody like Sebastian Page and his team is to try as best as possible to look around corners.

OK, you can take a long term view on most assets like equities, corporate bonds and property and say over time they'll be they'll be OK.

But they don't have the luxury of that.

If you're retiring next year and you've got your two million in a portfolio or whatever you have, you need to understand that if there's a big shock.

I'm affected here.

So true risk is the risk we don't see.

The latent risk under the surface.