Posts filed under “Bad Math”

Zombie Ideas? Blame the Billionaires…

 

“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.” -Ned Davis

 

I began my career in finance on a trading desk. You learn some things very early on in that sort of situation. One of the most important things is that while it’s OK to be wrong, it can be fatal to stay wrong.

Unfortunately, that standard doesn’t apply to people whose work isn’t evaluated on a daily and objective basis via their profit and loss results. In many fields, such as politics and policy-making, there are lots of shades of gray when it comes to being right or wrong.

And quite bluntly, that is a shame. As a society and a nation, we would all be better off if the people who are consistently wrong paid some sort of price for those errors. Unfortunately, that doesn’t happen enough these days.

Some bad policy decisions will lead to the occasional elected official being turned out of office. That — unfortunately — is the exception, not the rule. I doubt history will rank George W. Bush and Barack Obama among our great presidents , but both were re-elected despite being unpopular. Between gerrymandered congressional districts and apathetic voters, even the most incompetent elected official has almost lifetime tenure.

What underlies all of this nonrecourse bad policy? It is much more than corporate lobbying and partisan politics. The worst of today’s political malfeasance is being driven by failed ideologies. Zombie ideas that refuse to die have become enshrined in our collective intellectual legacy. The people behind these have been insulated from the economic costs they impose.

Blame the billionaires.

Continues here

 

 

Category: Bad Math, Philosophy, Politics, Really, really bad calls, Regulation

Wherein I Correct Nobel Laureate Daniel Kahneman’s Math

I am a fan of Morgan Housel, columnist at the Motley Fool. His writings evince a strong understanding of behavioral issues, and he has a gift of sifting through the nonsense to get to what really matters. Only on rare occasions do I get to disagree with him. Today is one of those times. Housel has…Read More

Category: Bad Math, Psychology

Got Math? Odds Are, You Don’t Understand Probabilities

Last week, we discussed the problems with having poor reading comprehension and the impact that has on consuming news. This week, I want to look at the lack of math skills. America seems to becoming a dangerously innumerate society. Innumeracy is incompetence with numbers rather than words. This is a worrisome issue for the future…Read More

Category: Apprenticed Investor, Bad Math, Data Analysis, Really, really bad calls

Why the American economy grows faster under Democrats

Another classic correlation versus causation issue:

Autoplay video after the jump

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Category: Bad Math, Video

Six Ways to Separate Lies From Statistics

From Betsey Stevenson & Justin Wolfers, a short primer on separating lies from statistics:   1. Focus on how robust a finding is, meaning that different ways of looking at the evidence point to the same conclusion. Do the same patterns repeat in many data sets, in different countries, industries or eras? 2. Results that…Read More

Category: Bad Math, Data Analysis, UnScience

Why Are So Many Traders Killing Themselves?

This column is not about working too hard, or the dangers of high cholesterol, or lack of exercise. It is about a rash of suicides within the financial community. What this actually means is less certain than the reporting on it might imply. Yesterday, 47-year-old Edmund Reilly, a trader at the Vertical Group, jumped in…Read More

Category: Bad Math

Get Lucky: 5 Years Ago Today

Five years ago today, I made the luckiest market call of my career. A few details and some context first, than an explanation as to why this was so lucky. In 2005, I knew something was amiss in the global markets. The various metrics we track showed that credit had become a full on bubble,…Read More

Category: Bad Math, Investing, Markets, UnGuru

How We Understand Risk: What Kills Us

One of the things that baffles me about people is how they completely misunderstand risk. Lots of my friends panic about things that have no real chance of killing them, but ignore the things that will. This can lead us to make irrational decisions, and sometimes irrational policy. What really will kill us? Watch and learn.

What Kills Us? How We Understand Risk.

Category: Bad Math, Psychology, Science, Video

Global Gross Gambling Winnings = $440 Billion in 2013

Source: Economist

Category: Bad Math, Consumer Spending

How accurate is the groundhog?

Not so good – less than chance, in fact. Approximately 90% of the time, Phil sees his shadow. Records indicate he’s right just 39% of the time — worse than a coin flip. Phil and his ancestors have been doing this since 1887 in Punxsutawney, Pennsylvania. -Wit & Wisdom  

Category: Bad Math, UnScience