Near record heat in NYC, 92 degrees even at 9pm.
U.S. govt messed up as usual. Europe too.
The Norway killings.
I was in Norway twice.? The first time was during the LTCM/Russian default crisis, which occurred while I was hiking around the fjords with a group of Norwegians, mostly middle-aged women it turned out. Every day before the start of the hike they played a cassette with the theme song of the Lillehammer Winter Olympics and did three minutes worth of aerobics to it in unison. I grinned the first time, but you should have seen them bound up and down the hills like mountain goats. Especially down, which took more skill. Not only that, but they all loved Bill Clinton. “I like a man who likes women,” one of them said. I went to Norway a second time, about six years later, to Balestrand and Bergen, and it was beautiful. I’d love to go again.
I spent yesterday and today frustratedly trying to communicate to various people at my publisher how get the figures in the proofs of my book corrected, and trying to get a cover design from them. There seems to be a disconnect between the people in charge of the figures and the people in charge of the text, which should coordinate. It reminds me of the disconnect between programmers building the interface to risk systems and people writing the analytics. One person needs to transcend the divide, else things fall in the cracks.
I am trying to see things the publishers’ way, with only a small amount of success. You imagine yours is the only book they’re handling, and in reality you are one of an endless sequence of books that come by their desk on an assembly line. There’s always the same number of books on their horizon; as one book rolls off their assembly line, another rolls on. Maybe I should think of them as a book production factory, with a certain inherent error rate. Then everything would be less surprising.
To escape the heat and boredom and frustration, I went to the Walter Reade theater last night. They were having a Sidney Lumet retrospective,? and I saw, appropriately, Dog Day Afternoon with Al Pacino, circa 1970s. I’d seen before when it first came out but I’d forgotten how good Pacino was.
What I meant to write about was what I once said I would: what I like to call sophisticated vulgarity in financial modeling.
In the natural sciences, it pays to be ambitious and deep. Kepler discovering that planets trace out ellipses about the sun is deep;? that their radii sweep out equal areas is unobvious and deeper still. Newton’s laws of mechanics even more so. De Maupertuis’s principle of least action, a broader and deeper restatement of Newton’s laws, but one analytically continuable to other non-mechanical systems, is a couple of levels deeper. “Nature is thrifty in all its actions,” he claimed. It sounds somewhat anthropomorphic and New-Agey, but he, and Euler afterwards, meant something precise and mathematical by “action.”
A theory like de Maupertuis’s penetrates to the inner that corresponds to the outer. You can use the knowledge of the inner to deduce many interesting and correct/true statements about things visible on the surface.
It would be wonderful if the social sciences, finance in particular, satisfied similar general principles that operated inside but affected the surface. But no such general principle works too well. After banging your head searching for really true subterranean general principles for a while, you begin to think that it’s better to be pragmatic and stay on the surface.
Is that because there is no inner – because there’s no inside inside? Or because we haven’t found it yet?
I call staying on the surface being vulgar – staying close to the descriptors of the crowds who make the market.
But it’s good to be sophisticatedly vulgar: to use the descriptors that traders use, but use them in a sophisticated way. (One man’s vulgarity of course, is another man’s sophistication). I’ll try to give an example of vulgarly sophisticated modeling in a subsequent post.