statistics

probability effects


5.

if an event has a low chance, e.g. 1 in 100, it may still occur on the first event of that type




6.

if a large number of items are present, e.g. 1,000,000 people, and there is an event with a 

low probability, e.g. 1 in one million, there is quite a good chance that the event will 

occur at least once in that collection of events. 




7. Random walks with random percentage moves have a negative, not zero, net return. This is because positive and

negative moves are not symmetrical.


For example, 

	100
		-10%

	90
		+10%

	99
	
the net value falls from 100 to 99 following the moves -10%, +10%.


This effect occurs in all cases

	. the greater the volatility, the faster the fall in value.
	
	. alternatively, a positive overall return may keep the fund value constant or lead to increased value.
	
	
	
	