Greek Complexity

An electronic Phoebe Buffay?

[via Minding the Planet] I dont' know what to make of this. Nova Spivack writes:

The Global Consciousness Project at Princeton has found that the behavior of a network of specially shielded random number generators deviates from stasticial randomness prior to major world events.

If that sounds abstruse, what he's saying is that the men in white coats and frizzy hair have built an electronic coin-tossing machine that seems to respond to and even predict major events.

Sounds crazy? According to this article, the machine responded to Princess Diana's funeral in 1997, NATO's bombing of Yugoslavia and America's contentious presidential election in 2000. The machine even "predicted" the events of September 11, 2001 and the tsunami late last year, say the scientists.

It gets weirder.

One explanation proposed by scientists is that time runs both backwards and forwards. So it could be that we can "remember" the future. Ok, accepted. It's possible.

But then the next step is what baffles me. Even if people could see the future, how could their "future-memories" influence a random number generator? After all, there's no physical connection between all the people out there and the machines. There are no "brain waves" emanating from our heads. (Or are there?) Then how do our thoughts interact with the machine?

But this quote is something I already believe in:

For what his experiments appear to demonstrate is that while we may all operate as individuals, we also appear to share something far, far greater -- a global consciousness.

I don't believe in this as something we all plug into simultaneously and dynamically as though we are one massive megaorganism. I just think it is normal information flow and collective memory.

Link: Minding the Planet: A Machine That Sees The Future?

Oh, and for those of you who didn't get the title of this post, Phoebe Buffay is a character on the TV series Friends, who thinks she's psychic.

After Nick Leeson

An interesting article from the Financial Times. Excerpts:

So what are the lessons a decade on [from Barings' collapse]? When people talk about lessons from such events, they usually mean ways to stop them recurring.

No, the lesson I take from Barings is more human - about how to cope when disaster strikes, as it occasionally will. Most people who run banks, even if they acknowledge the theoretical possibility, do not think it will happen to them. They cannot believe they would make such juvenile errors in believing a rogue trader's lies.

The first instinct of some [Barings executives] was to deny they were to blame. Then there was what has become known in US corporate trials as the "30,000-feet defence" - that those at the top could not have been expected to know what was going on.

[But] when companies do well, not many executives go around arguing that they have nothing to do with the achievements of people at the bottom of the organisation. Taking responsibility when things go wrong comes with the territory.

[Also], it is easier on the psyche to admit to yourself that you messed up. Otherwise, you will be doomed to keep droning on about all the mitigating factors to sceptical listeners.

Link: John Gapper: Human lesson of Nick Leeson's fraud

Connectivity. Now what?

Rajesh Jain writes:

From a time when I was barely connected (a computer at home and office; no notebook) to now when I have become arguably one of the most connected people has been a short ride. I have a Fujitsu S Series Lifebook notebook running Windows XP and Linux. It has three forms of in-built connectivity: Ethernet, dial-up and Wi-Fi.

To these, I have now added two more connectivity options. There is a Reliance R-Connect card which works as both a CDMA modem and phone, though I don’t use the phone capability. The Sierra Wireless card cost Rs 14,700 ($300) and the monthly service costs Rs 650 ($14) for 1 GB data transfer. (There is also a Rs 1,500 unlimited data transfer option). The Reliance network is present across hundreds of towns and cities in India and it is possible to get 30-40 Kbps connectivity speeds for the most part. Not great, but it is a good start. In addition, my Orange mobile phone now can also work as a GPRS modem via a USB-Bluetooth dongle. So, talk of being “ultimately connected.”

First reaction: "Phew!"

Immediately after that: "Ok, so now what?" What does one do with all this connectivity? In fact, what does Rajesh do with all this connectivity, I wonder.

What would be more useful for me (in my little utopian world) would be a fast, cheap, easy-to-understand, easy-to-configure, low-power and omnipresent connection. I want to forget about the connectivity with all its bells and whistles (although I concede I'd be excited for a couple of days if my wish ever came true) and get on with whatever it is I need the connectivity for.

Link: TECH TALK: The Mobile Phone Platform: My Mobile

Pricing securities

My friend Yi-wei and I were discussing today how useful it is to determine the "correct" price of financial securities using theoretical models. The conversation was sparked off when he commented:

It's quite fantastic when the same underlying model can be used to price so many different instruments.

To which I responded:

But I still keep hearing in my head one of the questions you once asked in class about whether market participants price a security according to a certain model because the model is correct, or because they believe the model to be correct. I remember the question was never really answered satisfactorily. You had referred to how options markets existed long before the Black Scholes model (for pricing options) was devised. So how were options priced before the model was developed?

Yi-wei:

I think people priced securities according to arbitrage... B-S is also based on arbitrage... after understanding B-S, it's not too bad a model... but it's a model after all.

Me:

Hmm.. but then how did participants know at what point to say, "I won't pay more than $x"

Yi-wei:

Because if you did, there would be arbitrage opportunities. If you pay less, there would be arb too.

Me:

No I think there is circular logic there.

Let's say the market consists of three participants. Or even just two. A certain security (does not have to be an option) is trading in the market.

I decide it is worth $5.

You agree.

Therefore the market price is $5.

But according to a theoretical model, it is worth $50.

I want to know how the individual participants arrive at $5 or 50 or whatever. Not how they take their cue from the market.

Yi-wei:

Any theoretical framework makes a lot of assumptions. The results (prices) differ to the extent that individuals' assumptions differ. We are all speculators, we speculate on the expectations we have of the future.

Me:

Exactly.. so then it means that the value one arrives at depends on the factors we use in our own mental models.. which may not agree with others' mental models or theoretical models.

So is there a "correct" model?

Or is it simply, "The market says so, so that's what the price is."

I tend to think it's the latter.

After all, take for example, HP's recent stock price movement. Before carly resigned, the price was X. After she resigned, the price was Y. Theoretically, i don't see why there should have been a large change. But the market disagreed.

So I conclude that there is no "correct" price.. only the price the market is willing to bear.

Yi-wei:

Haha.. I have some thoughts on that, but got to go now. Let's chat again after class.

So let's see where this discussion goes. I invite comments from readers and, since I'm sure this topic has already been debated by academics and practitioners, references to any resources on this topic are also welcomed.

Online search ads: legal or illegal

I'm seriously considering studying law -- both to make money and to protect myself.

From MIT's Technology Review:

A French court ruled that Google and its French subsidiary could not sell search-related advertisements against the trademark of the fashion designer Louis Vuitton Malletier, and charged Google with trademark counterfeiting, unfair competition and misleading advertising. U.S. courts have ruled in the opposite direction.

Link: Google and European Trademarks

Academic innovations

New university courses at the University of Calgary:

• How to send spam
• How to write spyware

I'm enormously tickled!

Link: University of Calgary Teaches Spam and Spyware Writing.

Bizarre! ...and yum?

Nova Spivack writes:

An unusual chef with a technical bent has modified an inkjet printer to print in edible colors on edible paper. He's printing out edible pictures, and even making his menus edible. But his ideas for the technology go far beyond this.

Link: Minding the Planet: Chef Invents Printer that Prints Out Food.

Skin consultations via MMS

An interesting service:

For a monthly subscription fee of up to $5, consumers can get skincare tips in the form of text, pictures and video via their mobile phones.

Link: picturephoning.com: Singapore Platic Surgeon and Dermatologist give skin consult by SMS

Ten questions to ask your VC

Reproducing from Dispatches Weblog [via TJ's Weblog] without the footnotes, so do visit Dispatches as well (link below):

1. How big is your fund?
2. How much is left in the fund after commitments and reserves for follow-ons are accounted for?
3. When do you intend to go out fundraising?
4. When you fundraise and tell the story of your three most successful investments, how will you describe how value was created for LPs?
5. Who is on your firm's investment committee?
6. What was your firm's advertised IRR when you raised your last fund?
7. May I get a copy of the "book" you sent around when you raised this fund?
8. What do you think the exit will be on this investment?  Do you think it will be a financial buyer or a strategic buyer?
9. As you think about how to shape the company so that it is optimally positioned for that exit, what three things do you think need to be done in my company?
10. What was your firm's biggest disaster as an investor?  How did the investment go sideways?

I read answers to these questions on a VC's blog recently. Don't remember who! Will update this post if I remember.

Link: 10 Questions to Ask a VC

Update (Mar 28, 2005): Jeff Nolan answered these questions on his blog. Thanks to David Bayless for pointing this out.

And THAT's why beer is good for you

Which beer company will bag this man first?

A Slovak man trapped in his car under an avalanche had 60 half-litre bottles of beer in his car, and after cracking one open to think about the problem he realised he could urinate on the snow to melt it.

Link: Ananova - Man peed way out of avalanche