http://www.amazon.com/Lecturing-Birds-Flying-Mathematical-Financial/dp/0470406755

Like Nicholas Taleb, who wrote the foreword, Triana is a strong opponent of the mathematicization of finance. Key points include:

1. The over-reliance on financial models that assume that financial data have a lognormal distribution.

2. Business schools do not provide enough of a practical education. Instead, they have sought out professors who do too much theoretical work—leading to a further fetishization (my words) of mathematical models.

3. He claims that financial markets will be better off without mathematical models that give us a false sense of security; they knew how to price products effectively before mathematics came on the scene (hence, “lecturing birds on flying”).

These points are not without validity; it is true that mathematical models, and their spinoff products, like Value at Risk (VaR), the Black Scholes model of option pricing, have led created a false sense of security that contributed to the financial crisis of 2008–2010. This is no doubt due to an ignorance (wilful or not) of the assumptions behind such models.

Triana is in a good position to critique these problems: he has the academic pedigree—an NYU postgraduate degree in finance—as well as the experience in trading to know what worked and what did not.

However, the points that he wishes to make does not warrant the length of the book. There is a lot of repeated material, and after some time the book becomes a tirade, and tiring because there is no new insight.

Second, one might wonder whether the flaws of existing models should lead to a complete denial of the value of academic research in finance. True, the existence of models, developed by academics and researchers, led to their adoption as practitioners sought out better ways to make money. However, I think that their flaws, and their terrible consequences for the economy, still do not mean that they should be banned. There is no way to ban them, anyway, and what is better is greater awareness of their shortcomings, especially on the part of regulators. And research promises us the possibility of better models that capture the behavior of existing data.

Lastly, it is unclear if a world without models is truly desirable; mathematical models did not exist before the late 19th century (when Brownian motion was used to model data), but financial crises predate this date. That said, we can’t say for sure whether early crises are due to other factors, such as the lack of regulation.

Reviews on Amazon also point out other flaws, e.g. the lack of evidence that mathematical models caused the October 1987 crash, as Triana claimed.

The book could be improved if it were made more concise, given more depth, and more data on how mathematical models came to be adopted over time. Triana should have enough mathematical background to deliver a clearer critique of the models, for example.

#The Game Makers: The Story of Parker Brothers, from Tiddledy Winks to Trivial Pursuit (Philip E. Orbanes)

This was a much easier read compared to Lecturing Birds on Flying. Orbanes was a former executive at one of the modern day incarnations of Parker Brothers, and had access to company archives and longtime employees, as sources for his history of the company. However, his position also makes me wonder about the objectivity he brings to the telling of the story (note the choice of word: “story”).

From a “literary” standpoint, it is interesting to see that Orbanes uses George Parker’s (the founder) twelve business principles (see below), and attributes George Parker and his successor’s success/failure according to whether they stuck to these principles or not.

#George S. Parker’s Twelve Business Principles

1. Know your goal, reach for it.
2. Find “winning moves.”
3. Play by the rules but capitalize on them.
4. Learn from failure, build upon success.
5. When faced with a choice, make the move with the most potential benefit versus risk.
6. When luck runs against you, hold emotion in check and set up for your next advance.
7. Never hesitate and give your opponents a second chance.
8. Seek help if the game threatens to overwhelm you.
9. Bet heavily when the odds are long in your favor.
10. If opportunity narrows, protect your strong points.
11. Be a gracious winner or loser. Don’t be petty. Share what you learn.
12. Ignore principles 1 to 11 at your peril!

1. Baked Potato

CarieD’s suggestion: To keep potatoes from drying out this is how we did them in the restaurants where I’ve worked and the results were good. The secret is to boil the potato first before baking it. Boil the whole potato until it’s easy to poke a fork in it but still somewhat firm, usually about ten minutes. If you were boiling it for mashed potatoes, it wouldn’t quite be done yet. After boiling and poking a few fork holes in the potato, you brush it with olive oil and coarse salt. They’re good like this for a while if you want to prepare them beforehand and pop them in the fridge, though having them cold will increase the time they need in the oven. Bake them at 400 degrees until internal temperature reaches 165. This’ll get the skin nice and crisp, but between the oil, the foil and the boil the insides won’t dry out.

When you take the potatoes out, cut a slit through the foil, fold it back slightly. Grab onto either end of the potato and squeeze them together. Voilà. I was always so proud of how these turned out .

2. No Knead Bread

All you need is patience.

For those of you who are not familiar with the process, Dell only starts manufacturing the laptop/desktop when your order is approved. However, I think I ordered at a wrong time: there’s (or was) apparently a worldwide shortage of LCD screens, and it coincided with Dell’s various promotions and the back-to-school season. So Dell was unable to promise me a delivery date, and it seemed like my laptop was “in build” (ie being manufactured) for the whole of 3 weeks.

The only comforting thing (to me, at least) is that I wasn’t alone. I found company in the Notebook Reviews forum, where other sufferers in Dell moaned and griped; I wasn’t a member, but I lurked around and I totally empathised with them, as I knew they would me.

There were a lot of complaints, and many were frustrated by the order status made available by Dell. Dell doesn’t say much, except to tell us general states like “in build”, “testing”, “shipping”. People wrote how they called up the (often-bumbling) customer service personnel and got non-answers. And there were replies by other people to call this hotline/check that website for order status because they provide certain information not available on the other. One person even wrote, based on his experience of working at assembly lines, on how orders could be delayed because factories tend to manufacture identical orders together, rather than produce them based on when the orders came in.

I too wanted to know what on earth was happening, but then I realised something:

It doesn’t matter. It doesn’t matter how much detail Dell (or any other company) is able to tell you. Whether your computer is held up because the guy assembling it is out for lunch, or because there was a 15-min power outage at the plant, or because the truck carrying the LCD screens broke down in the middle of the expressway, and the tow truck is stuck in a jam…

You could call up the customer service officer (CSO), and he/she might be just as befuddled as you are, but you are asking for answers from them so they have to find out. They don’t work at the factory, and even if they were there I doubt they can walk to the assembly line to check. If you authorised the CSOs to walk out to the assembly lines, it would disrupt the production and cause even more delays. So the honest CSO would tell you the official explanation, whereas the more sympathetic CSO might tell you the same thing, but maybe phrase it in a optimistic or even misleading way. (Note: I’m not saying that all CSOs are lying, intentionally or not. This is also not to imply that companies tell wild tales to mislead their customers.)

Even if the automated systems are configured to tell you every exact problem, would it matter? There’s not much you can do. Firstly, you cannot verify. Secondly, you cannot do anything about the problem. Thirdly, you cannot make them rush your order. All you can do, is to worry. And check, and check, and check, and check…

Everyone’s favourite Early Modern English poet has an online presence! Chaucer (or his ghost-writer – oops pardon the pun) writes about 21st century things in a clearly 16th century idiom.

There are several ‘classics’ which are notable for their ‘witte’. My favourite is The Cipher of Leonardo, all in verse!

* * *

The Morning News’ IKEA game walkthrough

An excerpt, for the “Marketplace” level:

Your goal in this world is to locate the five components of the DREAM BEDROOM ENSEMBLE (DBE): MALM white-lacquered queen bed frame, KILAN RAND full/queen 100% cotton quilt cover set, CORRAS bedside table (with casters and one adjustable shelf), HOPEN three-drawer chest, and PAX/BREVIK wardrobe with white-foil finish.

This world is filled with NON-PLAYER CHARACTERS (NPCs), and many will give you important clues if you interact with them. To “talk” with an NPC, stand in front of one as it tries to browse and wait for it to address you directly. If it tries to move around you, simply reposition yourself between it and its desired merchandise. If it refuses to acknowledge you, try cuffing it sharply on the side of the head and saying, “Hey! Hey buddy!”

(The lesson to draw from here is that Singapore has a manpower problem and we must rely on foreign talent to help us become a better place.)

But like so many things in life, you can’t have too much of a good thing. (I think Michelle Chia is a good thing. Gurmit Singh is not my type. ) I mean, there’s only so much Michelle Chia (henceforth ‘MC’) and Gurmit (‘GS’) you can see, without confusing the audience, right?

Alarm in Seng Kang Fire Station rings.
SSG Yen: (to CPT Daniel) Sir! There’s a cat stuck up a tree next to the hawker centre!
CPT Dan: (avoiding her gaze awkwardly) OK let’s go!

At the market, crowds are applauding around a tree at the two firefighters. SSG Yen holds the cat in her hands. CPT Daniel looks tenderly at the cat.. and at her.
SSG Yen: (looking away) Go and eat fish! (lets the cat go)
CPT Dan: OK let’s go. Mission accomplished. (Crowd begins to disperse)
SSG Yen:  I heard the prawn mee here is very famous. Shall we go and try?
CPT Dan: Why not? (They walk in.)

As it is the lunchtime crowd, a queue forms up in front of the stall. The stall is plastered with newspaper cuttings and photos of the owner with MPs and MediaCorp celebrities like Gurmit Singh and Michelle Chia.

CPT Dan: So crowded ah! It must be really famous!
SSG Yen: (goes to nearby table and asks the unsuspecting guy eating his noodles) Do you eat here often?
Guy: (bewildered, a bit camera shy, mumbling) No. no, my friends are sitting here. (points at packets of tissue paper on the table.)
SSG Yen: Oh no,  we are not really sitting here… er.. what’s so good about the prawn mee here?
Guy: Er… The mee isn’t too wet, they use fresh prawns.. ah.. the chilli is handmade.

Meanwhile, CPT Dan is talking to someone at the back of the queue.
CPT Dan: How long have you been waiting?
Auntie in queue: 很久了……有三四个字了咯！(on the screen, subtitles flash: Very long.. it’s been about 15, 20 minutes already.)
CPT Dan: That’s long! Why do you still queue up then?
Auntie: 出名吗！这个摊虾面很有名的嘛！(subtitles: It’s famous!)
Guy behind Auntie: (to CPT Dan)  You want to queue up or not?!

SSG Yen: (at the stall beside the stallowner) Sir! Come!
CPT Dan goes over.
SSG Yen: This is the owner of the stall, Mr Tan (Mr Tan looks a bit nervous and away from the camera). He’s been in this line for the past thirty years!
CPT Dan: (looking around) Mr Tan, you must be careful where you store your cooking oil all that! You keep it very close to your stove.. it’s a fire hazard! See (pointing to the entrance) You put so many pails here! What if there’s a fire, and they obstruct your way?
Tan: Ok, I change later, can?
SSG Yen: Anyway, so Mr Tan, why is your prawn mee so special from others?
Tan: This is trade secret, cannot say! (smiles awkwardly at camera.)

Voiceover while Mr Tan fries the noodles as SSG Yen and CPT Dan look on admiringly: The secret is in the stock. Mr Tan uses several different spices which he boils with pork ribs for 10 hours every day! And with his decades of experience, he is able to control the heat perfectly, ensuring that the noodles don’t get burnt.

CPT Dan and SSG Yen are seated with two steaming plates of prawn mee before them.
CPT Dan uses his chopsticks to pick up the noodles. The camera closes up on the noodles, which he swallows. His face contorts in delight.
CPT Dan: Amazing! Staff Yen, you try!
SSG Yen: Look at the prawn! (camera zooms in) It’s so big! And there are three of them!
CPT Dan: Yah, now a lot of hawkers actually throw in just two small prawns!
SSG Yen: Yah lor!
(Awkward silence)
CPT Dan: Staff Yen, finish up, then we go back.
SSG Yen: Yes sir.

In the past, before the advent of high speed Internet connections, guitar lessons were restricted to tablature (tabs) published in ASCII format, or FAQs written in prose.

Youtube has revolutionalized the way people learn to play the guitar. Its free registration, and relatively lax copyright standards, have allowed amateur and professional guitarists to upload videos of themselves and masters playing. The compression technology ensures that video quality is not sacrificed for speed.

Unregistered users are also allowed to view these videos at no charge. Its robust search system (probably influenced by Google) is able to associate videos with similar contents together quickly.

Instead of following a score and attending classes, guitarists are able to now log on, compare the playing styles of Andre Segovia, Julian Bream, John Williams, and a host of other professional and amateur guitarists, and learn their fingerings (the ‘pause’ button is very handy for that). And all these are provided for free, with the exception of the broadband connection.

Being socialable is a very easy thing to do, and it shouldn’t be something you’re either good at or not. You can learn to become a more social person – if you want to.

Generally extroverts will have less trouble getting out and talking to new people, but that’s to be expected. Don’t think, however, that outgoing people don’t make mistakes either. There are ways to make life easier while you’re out and about.

To Do:

Initiate conversation – A lot of people, while out, wait for other people to talk to them. Becoming the person that initiates conversation and breaks the ice is, as they say, half the battle. When you feel more comfortable doing this, you’ll find yourself meeting more and more interesting people and gaining fruitful friendships.

It can be somewhat daunting at first because of fear of rejection or being shut down. This will almost never happen. At worst you’ll receive a closed yet polite response. Just remember, people are out to be social. You have small groups of people who are sticking to themselves, but that doesn’t mean they don’t want to meet new people.

Smile - If you look like you’re unhappy you’ll be less approachable. This is an easy step to appearing open and social. When you initiate conversation, your smile should be mirrored and rapport will build from there.

Enjoy your company – When you look like you’re having fun you are instantly more likable. People want to know fun people, someone who enjoys company. While out with friends, have a good time. It may seem obvious, but many groups of people head out and do nothing but scan the room.

If you’re enjoying yourself, people will notice and want in on the action.

Acknowledge randoms – This can be as simple as a smile and a nod. When you make eye contact with a stranger, acknowledge it. If your smile is reciprocated, this will be an easy introduction. Later, initiate the conversation.

One of my favorite things to do while out is make friends with random people. How else do you make new friends? You’ll find the most fun and personally suitable people come from these random encounters.

Dress the part - I don’t find this the most important step, but it does make life a lot easier when you look like you belong somewhere. Now, I don’t mean losing any individuality. I mean don’t go out of your way to look unapproachable.

If you just came from work, for instance, loosen up. Unless it’s an after-work crowd you’ll find yourself out of place and more likely not to be approached. Personally, I don’t adhere to this rule very much, but it will make yourself that much approachable.

Then again, individuality goes a long way. Be yourself.

Listen - People enjoy talking about themselves. The worst, however, is when someone only waits for you to stop talking so they can begin again. Take a genuine interest in people. People are very interesting, so actively engage in a conversation. There is a lot to talk about in this world, small talk isn’t all that necessary – particularly because it can be painfully boring.

Converse, don’t rant - The best way to get good responses out of people is to ask good questions. Avoid ‘what do you do’ and ‘nice weather’ etc. Talk about something that interests you. People love explaining things they know, so when you don’t know what someone is talking about, ask them. Don’t pretend like you know, they will be more than happy to teach you.

Keep eye contact – Don’t scan the room while talking to someone. It is a clear indication you’re not interested in the conversation. If you really have no interest in what someone is saying, change the topic. Or excuse yourself. There’s a million reasons to end the encounter; not every conversation has to be meaningful.

Being able to look someone in the eyes is directly related to some recognizing honesty [see Fundamentals Of Eye Contact]

Keep open body language – Whether alone or not, avoid closing yourself off by crossing your arms etc. Remain open, remain active [see Closed Body Language]. People will generally not approach wallflowers. And in any case, what fun is there to be had just standing around?

Do stuff – It’s hard to talk about your day when you haven’t done anything. Don’t think that you don’t need to do any work in a conversation. Try to engage the other person and be interesting. Call on another time you were at this particular venue. Did you read something interesting today? Mention it and ask opinions. Everyone’s got them.

The Don’ts:

Sit on your phone – If in conversation, or in good company, I generally ignore my phone. Unless it is to arrange meetings etc, I’ll let it go and return the call when appropriate. There is something very rude about being in the middle of a discussion and being shut off by a phone call. You’re left in the lurch, sipping your drink with no one around.

If I can see that the call will be longer than 30 seconds, I’ll usually get up and go for a wander. It’s not to be rude. I’ll excuse myself and join someone else, maybe make a call myself.

Ignore randoms - As previously stated, meeting random people is excellent fun. You don’t need to launch into a discussion right away, or even really care about the person at all. But being polite and open to interaction will go a long way.

First of all, you might make a new friend. You might score a few free drinks or have a hilarious interaction. Secondly, if you are open to anyone approaching you, low and behold, you will look more approachable and find more people initiating conversation with you. You’re making life easier!

Dwell on smalltalk – I’m quite adverse to smalltalk. You really don’t need to ask the standard ‘interview’ questions. “What do you do?” etc. A lot of people have fairly uninteresting jobs and know that. People are out to forget their work lives, so why bring it up?

Granted, it’s an easy way to get a general picture of someone, but do you need it? Wouldn’t it be better to ask more pertinent questions like, “How is your night going?” or “Have you seen this DJ before?” Ask what someone is drinking or where they bought their shoes.

Smalltalk indicates almost no general interest until you come up with something out of the ordinary – like “I write blogs for a living”. Likewise, if you’re a student, don’t talk about school [If you must see How To Make Small Talk].

Get blind - If you’re out to be social, becoming a drunken zombie will do you no good. I’m not going to say it never happens to me, but if you want a fruitful evening, stay at least somewhat conscious. It’s easier to talk that way.

Criticize - It’s OK to give your critique of the music or selection of beers, but don’t let it get you down. No one has any fun with someone that’s continually upset about little things. You might be at a dive, but still enjoy yourself. You generally have the best times in the worst places possible.

Judge people - You’re making it very hard for yourself when you are continually judging people before talking to them. Almost no-one’s personality matches their look. Just because someone isn’t enjoying their company – as mentioned above – doesn’t mean they want to be shut out.

Go out of your way to approach wallflowers and people who aren’t smiling. You may not get a great, or even polite, response but don’t let that deter you. Some people don’t realize they are putting out particular signals [with body language etc] and you’ll be pleasantly surprised when they suddenly brighten up by your witty comments.

Most important:

Don’t feel like you have to do anything. You’re out for your own reasons and want to do your own thing. Different things work for different people. For instance, you might never feel comfortable approaching strangers. Find your own groove and be yourself.

Next week we’ll talk about How To Initiate Conversation in more detail.

Anything you don’t agree with?

Scientific studies have shown that circumcision can help to reduce HIV infection rates. Encouraged by these findings, some South African scientists have called for all infant boys to be circumcised.

Now, I don’t have anything in particular against circumcision, but this proposal seems downright ridiculous. What is the cause of most HIV infections? It’s unprotected sex with HIV carriers, not uncircumcised penes. (plural of penis = ?)

Why not take it a step further, and castrate all infant boys? Then they are even less likely to have unprotected sex when they grow up!

I think making the procedure compulsory, while reducing the chances of infection per sexual encounter, will instead create a false sense of security, and encourage people to take chances, which might in turn offset the benefits brought about by circumcision.

This will not stop the HIV epidemic, which is primarily due to unsafe sexual practices (eg having multiple sex partners, not using protection, ignorance of the risks). Circumcision is not a vaccination – it doesn’t prevent anyone from getting the virus!

The bottom line (pun unintended) is, AIDS is the result of having unprotected sex with HIV carriers, not uncircumcised penes!

note: upon re-reading my article I realised I meant to say “uncircumcised” when I typed “circumcised”. The edits are in bold. 

Avventura is the usual travel/cuisine show, but you can tell from its name that it’s specifically on Italy. The content is quite bland – the host just walks around, visits seafood markets, cooks and eats calamari – etc.

What I really don’t like, is the theme song. To express my visceral dislike for it, I must write it as such -

the @$()#$ THEME SONG!

A thoroughly annoying tune, scored for the violin on MIDI, written in a AA’BAA’ format. The theme (A), if we have to call it one, is a descending motive comprising of the notes of the first inversion of the tonic. This motive is then parodied (in the musical and literal sense) twice in the submediant. The combination is then repeated incessantly to make passengers uncomfortable with the bus ride, and dispel all notions of visiting Italy and eating spaghetti and whatnot.

(You can hear it at http://www.travelchannel.co.uk/ontv/programmeAtoZ/avventura.htm by playing the video. It’s this faint annoying whine disguising itself as a theme song in the background at the beginning. Warning: might cause nausea.)