Posts filed under “Mathematics”

Conditional Risk (or, trouble when you misapply stats)


Category: Mathematics, Weekend

Who Gets What If Tax Cuts Are Extended

The NYTimes graphic department has your Sunday morning chart porn regarding the extension of tax cuts. Its an illustration fueled by data from the Tax Policy Center, a nonpartisan research organization. The graphic shows how much Americans have gotten so far broken down by income groups. And it calculates that extending all of the Bush…Read More

Category: Mathematics, Politics, Taxes and Policy

Whatever Happened to that Apple iPhone Recall?

“If the current betting trends are to be believed, it now seems certain that a recall is in the cards” -Paddy Power, Irelands Biggest Bookmaker July 14, 2010 press release > Speaking of dumb bets: Its time to revisit a recent prediction market “winner,” and review the strengths and weaknesses of these markets: Recall this…Read More

Category: Mathematics, Really, really bad calls, UnScience

10 Habits of Mind for Investors

This comes from a math blog by a teacher called WITHOUT GEOMETRY, LIFE IS POINTLESS (get it?).

There is a recent post I wanted to reference — Habits of Mind — that was originally written for math students. With a few small changes, it can be readily adapted to thinking about markets, risk, investing, etc.

Have a go at it:

Habits of mind

1. Pattern Sniff
. . .A. On the lookout for patterns
. . .B. On the lookout for shortcuts

2. Experiment, Guess and Conjecture
. . .A. Can begin to work on a problem independently
. . .B. Estimates
. . .C. Conjectures
. . .D. Healthy skepticism of experimental results
. . .E. Determines lower and upper bounds
. . .F. Looks at small or large cases to find and test conjectures
. . .G. Is thoughtful and purposeful about which case(s) to explore
. . .H. Keeps all but one variable fixed
. . .I. Varies parameters in regular and useful ways
. . .J. Works backwards (guesses at a solution and see if it makes sense)

3. Organize and Simplify
. . .A. Records results in a useful way
. . .B. Process, solutions and answers are detailed and easy to follow
. . .C. Looks at information about the problem or solution in different ways
. . .D. Determine whether the problem can be broken up into simpler pieces
. . .E. Considers the form of data (deciding when, e.g., 1+2 is more helpful than 3)
. . .F. Uses parity and other methods to simplify and classify cases

4. Describe
. . .A. Verbal/visual articulation of thoughts, results, conjectures, arguments, etc.
. . .B. Written articulation of arguments, process, proofs, questions, opinions, etc.
. . .C. Can explain both how and why
. . .D. Creates precise problems
. . .E. Invents notation and language when helpful
. . .F. Ensures that this invented notation and language is precise

Read More

Category: Apprenticed Investor, Investing, Mathematics, Psychology, Rules

Reports of the death of mean reversion are premature

James Montier is a member of GMO’s asset allocation team. Prior to joining GMO in 2009, he was co-head of Global Strategy at Société Générale. Mr. Montier is the author of several books including Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance; as well as Value Investing: Tools and Techniques for Intelligent Investment; and…Read More

Category: Investing, Mathematics, Valuation

Tax Cut Changes

chart courtesy of CNN/Money > This chart is pretty stark in terms of who gets hit the hardest in the expiration of the Bush Tax cuts. But this comparisons isn’t all that informative — how many of each of these taxpayers are there? What is the total amount of tax dollars collected in each grouping?…Read More

Category: Mathematics, Taxes and Policy

Mandelbox Zoom

This will blow your minds Mandelbox Zoom from hömpörgő on Vimeo music: Dajuin Yao -­ Satisfactio­n of Oscilla­tion hat tip boingboing

Category: Mathematics, Weekend

Skill vs Luck

Legg Mason’s Michael Maubossin looks at the difficulties in untangling outcomes that are based on skill or luck or both as applied to the universe of investing. His conclusions? • The outcomes for most activities combine skill and luck. • Separating skill and luck encourages better thinking about outcomes and allows for sharply improved decision…Read More

Category: Investing, Mathematics

Presidential Stock Picks

There is a BusinessWeek article that notes “Shares of companies whose CEOs dine with Obama outdo the S&P.” I have a quote in that I would like to clarify: “Just a coincidence? Only partly, says Barry Ritholtz, CEO of equity research firm Fusion IQ. Losers don’t get asked to hang out with the President, he…Read More

Category: Mathematics, Really, really bad calls, Trading

“Saving” Social Security

“There is no trick. We can’t promise to work less, raise pensions and erase deficits.” -French Labor Minister Eric Woerth > The issue of government debt seems to be coming up a lot news lately. Courtesy of the credit collapse and economic recession, Deficits are front page news. Classic balance budget advocates are reiterating their…Read More

Category: Mathematics, Politics, Taxes and Policy