Last week (6 – 10 Oct, 2008) saw some pretty wild happenings on global Stockmarkets. We had some record down days, with just about every market around the world capitulating on Friday. I’m sure by now everyone who takes an interest in all things financial will be pretty sick to death of reading about it, and it’s not surprising that you may feel a bit like Chicken Little at the moment (“the sky is falling, the sky is falling!”).

However, consider this. The odds of the market going down 8 straight days – which is exactly what it did – is approximately 1 in 26,000. I wouldn’t like to bet on that happening, but it’s still got a better chance of happening than you winning the lottery.

But, the market didn’t just go down 8 straight days – it went down 8 straight days with a movement of 2 standard deviations. That means wide, volatile swings, more than twice the size of its average daily move in each of those 8 days.

Now, the chances of that happening is approximately 1 in 1,820,000. That’s right, one in 1.82 Million!

By way of reference, the chances of being struck by lightning is approximately 1 in 600,000.

So if you play the odds, you should be struck by lightning at least 3 times before you would ever see a market like we saw the last week.

Hmmm. Maybe we should all stay inside for a few days…

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