Its fairly obvious that people are not, except for a few analytical souls, rational about risk: they worry obsessively about small risks and ignore ones that matter, and they are often no more rational about investing.
A few years ago we were assured that complex financial models used by banks could be relied on to correctly assess financial risk. This was supposed to ensure that banks would stay solvent, and the financial system stable. It turned out that insufficient back-testing, subtle pressure on those building the models to produce the “right” results, and the intrinsic problems of complex models, meant that the models were far from good enough.
We are also asked to trust complex models of climate change that predict rising temperatures. I am inclined to distrust complex models in general, but leaving that aside, are these likely to suffer the shortcomings of the bank’s risk models?
The XFCE version of Linux Mint is pretty, fast, uses the huge Debian/Ubuntu software repositories, and comes with a good selection of software installed by default, as well as Linux Mint’s nice utilities. Its also the worst Linux distribution I have tried.
I have just rewritten the Moneyterms article on volatility to cover common criticisms of volatility as a risk measure. The key points are that volatility makes intuitive sense when considered properly, correctly corrects for increased upside, and that the critics are unable to come up with a better measure.
With Mandriva Linux looking to have a few rough months, its a good time for me to look at alternatives. I am a bit of a distro-hopper (jumping from one LInux distribution to another), but I keep coming back to Mandriva
The fact that people can be convicted using evidence that only exists in electronic form makes it stunningly easy to frame someone, if you can get brief physical access to their computer, or you can fool them into inserting a malicious CD or USB drive into their computer. Here are some methods of doing it.
I assume that someone who puts a lot of trouble into writing a piece of software, wants people to actually use it: so why pick names like The GIMP and Gigolo? Both are good pieces of software, but the names convey embarrassment rather than cool.
The government has so far come up with two ideas to reduce cap immigration, both of which would be highly damaging to the country:
Take the first as it has had less attention. Educating foreign students is highly profitable for Britain and earns huge amount of money. It is like an extended, and far more profitable, version of tourism.
I usually comment only on British companies (as investments, that is), but I also like to keep an eye on tech and internet companies, and on anything that illustrates a point. Demand Media falls in to both categories.
This is partly the result of a discussion on Slashdot on why terorists are disproportionately engineers, and partly a follow up to my previous post about the staggering incompetence of most terrorists. There is also the issue of how the media and politicians actively help terrorists achieve their goals.
I have been reading Galbraith’s The Great Crash of 1929 and a lot of similarities have struck me, not all of which seem to have been noticed by everyone.
Richard Beddard has been annoying the gold bugs. This puts me in the unusual position of agreeing with him.
The most discussed problem with my proposals on how to fix capitalism is how one decides which companies to break up, and how one goes about doing it. Needless to say, I do have some answers
Two newspapers and a local radio station cover the same story, and it looks like two different stories. At the very least, one account is so incomplete as to be misleading.
Everyone seems to be interpreting the changes made by Google News as a victory for Murdoch and others who are trying t extract payments from Google in return for making their content searchable through Google. I disagree, and think it is designed to make life more difficult for those putting up pay walls.
This is a bit less ambitious than my plan to reform capitalism, but the principles are the same.
Big banks create too much systemic risk, and are far too much of a strain on government finances when they need to be bailed out.
My wife suggested an addition to my list of bad incentives created by pharmaceutical patents. It is actually one of two closely related problems. These are possibly the most harmful of all as they can lead to patients directly getting worse treatments, as well as wasting money.
Alan Patrick is sticking his neck out and calling the top on Google’s growth. I am not convinced, and there are specific points that I have comments on.
The reactions to my post on fixing capitalism have surprised me: almost everyone who has blogged or tweeted on it agrees with the broad thrust of what I advocate. For proposals so far from the political mainstream, what does that mean? Perhaps is shows how for the politicians are from a popular demand for change. There also a few points that need replies.
Richard Beddard’s extensive comments on my last post on efficient markets deserve a full reply. He is correct that I did not make it clear that the paper says that a behavioural explanation of the abnormal returns is possible.