Of Maths, Shares and Horoscopes

I have been a mathematician since the age of eight. As such, I tend to look at the world through the optics of mathematics. For this reason, I have never understood why people believe that they can model financial markets: they're clearly far too complex/chaotic to be reduced to any equation, and trying to extrapolate with computers - no matter how powerful - is just doomed to failure.

And so it seems:

I hear many Risk Arb players at big shops are getting creamed. It seemed like you make money for 3 years, then give it all back in a couple weeks. Classic mode-mean trade: mode is positive, mean is zero.

In fact, what is most surprising - nay, shocking - is that this apparently unshakeable belief in the existence of some formula/method that will one day allow such markets to be tracked accurately enough to make dosh consistently is equivalent to a belief in horoscopes. After all, horoscopes are all about "deep" correlations - between the stars and your life. Maybe financial markets should try casting a few - they'd be just as likely to succeed as the current methods. (Via TechDirt.)

Persistent Search for the Ideal? I Think Not

Baidu.com, Google's main rival in China, has launched its own version of Wikipedia (called Baidu Baike). It turns out that Baidu's name is rather poetic. According to the site:

"Baidu" was inspired by a poem written more than 800 years ago during the Song Dynasty. The poem compares the search for a retreating beauty amid chaotic glamour with the search for one's dream while confronted by life's many obstacles. "…hundreds and thousands of times, for her I searched in chaos, suddenly, I turned by chance, to where the lights were waning, and there she stood." Baidu, whose literal meaning is hundreds of times, represents persistent search for the ideal.

Alas, neither Baidu nor Baidu Baike show much evidence of that persistent search for the ideal, since they censor great swathes of knowledge. The real, warts-and-all Wikipedia has some details:

According to Baidu Baike's policies, these kinds of articles or comments would be deleted:

1. pornographic or violent articles
2. advertising
3. politically reactionary content
4. personal attacks
5. unethical content
6. malicious, meaningless content

The third point is particularly notable, as the content of the encyclopedia will have to satisfy Chinese government censors. There are no articles about the Tiananmen Square protests of 1989, "六四" (literaly "six four", a common acronym for the protest), human rights ("人权"), democracy ("民主") or Falungong ("法轮功"). In fact, due to the effects of Great Firewall of China, attempts to search for these terms from some domains lead to denial of access to the Baidu search engine for several minutes, even for users outside China.

The last point is interesting. As this blog posting explains, if you cut and paste the Chinese characters for terribly naughty words like "democracy" (民主) into Baidu,

Not only will you receive no response, but you won’t be able to access the site again for a while. First-hand evidence of censorship.

Maybe we should all give it a whirl to show our unquenchable interest in concepts such as democracy: let's just call it a persistent search for the ideal.