Friday, November 21, 2014

Stochastically Jumping without a clue

Recent research from NYU (1) that apparently demonstrates that the modeling techniques used to forecast stock market fluctuations could be used to predict animal behavior – in this case, movements of zebrafish – ignores many fundamental aspects of modeling. First, unknown to most people in the financial industry, stock market fluctuations cannot be predicted.In spite of the proclamations of a recent Nobel laureate, who claims he could smell a bubble anytime anywhere, he is still to demonstrate a usable prediction ex.ante. And, high flying hedge fund managers, without insider knowledge, could never create alpha – risk adjusted excess returns, systematically. And, second, equating animal behavior modeling to stock market predictions shows a level of incomprehension in both areas.

Stochastic jumps do occur – the problem with such things is that they are not predictable. Perhaps what the NYU team is missing is the right language – the characteristics of the underlying process of the movement of the zebrafish appear to have stochastic jumps in it. But that has nothing to do with stock market modeling – an oxymoron. The reason the zebrafish is jumping stochastically is the same why stock markets do at times – arrival of new information. And, by definition these are not predictable.

As trillion $ slosh around an industry with no value added to society, further research toward predictions of stochastic jumps seems unwarranted.

Sunday, November 16, 2014

The scope of ignorance

The scope of space and time appears incomprehensibly large – covered by what is visible to us in a narrow slice, covering 15 billion years and speculated to be at least ten times as large, beyond the horizon. This knowledge, albeit imperfect, has not awakened the intellect of the homo sapiens, most still locked in tactical struggle for basic necessities and the rest, perpetuating ignorance in every action and thought.

The scope of human ignorance is at least as fascinating as the artifacts of space and time. Their arrival on a planet that is impossible to detect in space-time – a completely insignificant event – seem to be of great importance to them.The most ignorant of the lot – the religious – seem to engage in such acts that a child would find objectionable. On the other hand, the intelligentsia, claiming superiority, simply make up stuff, as if they are allowed to do so. The most ignorant believe that color of skin and hair and useless religious beliefs are, somehow important. On the other hand, the intellectuals and academics, having figured everything out, wait in amazement why the world has already ended.

Humans, the most comical construct, will continue their journey to the abyss of ignorance.

Saturday, November 8, 2014

Policy by convenience

A recent study from Duke (1) showing that politicians believe or disbelieve in scientific theories, primarily based on their policy orientation, should not come as a surprise to anybody who has been watching the campaigns. This is also the reason that half the country has checked out of the process, with no intent of ever returning. This number will continue to increase as more objective millennials take hold of an archaic system ran by octogenarians. The question is how long it will take to clean up the system currently dominated by a few people, with little understanding of science, technology and accelerating knowledge.

Climate change has been an interesting area of contention, as noted by the Duke study. It appears that politicians with free market based policies tend to disbelieve that it is happening. And those, with a passion for severely regulating everything to save the world, believe the world has already ended. This is an unfortunate side effect. Science and analysis should guide policy as forecasts and expectations are not religious. However, forecasts have significant uncertainty and policy alternatives often present flexibility – both in terms of timing as well as choices. Scientists, heady with data and modern tools, have all but sure that the fate of the blue planet is sealed. However, policy is about trade-offs, something academics do not seem to appreciate well. And, any trade-off decision needs to avoid premature exercise of options based on known (but uncertain) data, when waiting is often optimal for policy actions.

It is a conundrum – we have ignorant politicians attempting policy and dogmatic scientists, crying wolf. Neither is likely to get it right.

(1) Denying problems when we don't like the political solutions. Published: Friday, November 7, 2014 - 04:43 in Psychology & Sociology. eScience

Thursday, November 6, 2014

Awakening by exercise

Exercise has been in the news – as the only non-medical route to avoid diabetes and cardio-vascular disease. It appears to be a good idea, especially in moderate amounts. But a healthy body without a healthy mind is value destroying for the individual and society. Not to be left behind, video games and other mind-exercising technology sites have been gearing up to awaken the little old grey cells. But they all seem to be missing the bigger picture.

The human brain, an energy hog and complex, does not exercise by playing games or solving puzzles on the computer screen. There is a lot of power behind the veil and most often, the organ simply retires to boredom. By feeding it prescriptive education and jobs that take nothing, society has been playing a losing game. The human brain has, substantially detached from the status-quo, for the problems fed to it seem so trivial and irrelevant.

Content, questions with the scope of the universe strategically and the world, more tactically, could possibly awaken the sleeping organ. More importantly, an advancing society could stitch live brains together to rediscover imagination, a feeling that has been dead for long.