Originally posted by jbpatzer
My business is creating mathematical models of the real world, and as such I'm forever trying to question my assumptions and compare to reality. I don't want to end up like those economists that Taleb laughs at. Taking randomness into account in deterministic models (uncertainty quantification as its called now) is a hot topic here at Nottingham and elsewhere. Personally, I've always tried to steer clear of stochastic models because I know fuck all about them, but poker has given me more of an interest. I also have a PhD student who is developing a stochastic model of an etching process, for which we're having to talk to somebody else because I'm not in the business of bullshitting my students. A lot of my colleagues are interested in problems like nuclear waste disposal in permeable reservoirs for which there's limited data on the permeability. In that context, stock market crash = poisoning people's water - best taken seriously.
When I was studying Geology there was a huge push to apply statistical methods to fault systems. 40 years on and they're no closer. With weather systems they've come a long way. Big problem is almost a complete lack of data on fault systems.
Although luck and randomness may play a role in markets, but the influence would be slight in the face of all the vested interests cooking the game to suit yourself.
It is rather like complaining about "variance" when you lose at poker when 3 of the 6 players are colluding.
Peace,
VS

