Ming the Mechanic:
Mandelbrot and financial patterns

The NewsLog of Flemming Funch
 Mandelbrot and financial patterns2004-08-08 20:25
13 comments
picture by Flemming Funch

BenoƮt Mandelbrot is the guy who "invented" fractals. I.e. the mathematical formulas that made them visible in pretty patterns.

He's obviously a smart guy, and now he wrote a book about patterns in financial markets, and part of it is quoted as an article in Wired. Now, when I first saw the link to it, I got excited. Actually applying the best possible math to really understand how to economy works - that would be a splendid idea. Maybe we can calculate how we maximize that everybody gets what they need, and creativity and good work is encouraged the most. That's just a matter of optimizing how the game is played. Well, I say "just", but I don't know how to do it. But with a study of patterns, and simulations, and lots of math, that ought to be possible.

Turns out it isn't about that at all. Seems he's rather appealing to the wizards of wall street to do better simulations of the stock market. And he's appealing to "regulators" to regulate global bank reserves. Oh, I'm sure he knows what he's talking about ...within a certain scope. I just think the real story is way outside that scope. I don't think the Bank for International Settlements have in mind suddenly being regulated. Their little corner of Basel have by treaties been beyond the law and scrutiny of any government for a long time, and I don't see why they would change that. And I have no doubt that they already are spending many billions of dollars each year on computer simulations. And, no, I don't think it is just of the stock market and the employment rates. But what do I know?

Anyway, he does say some quotable things:
A well-managed corporation devotes some portion of its research and development budget to basic research, in fields of science that underlie its main business. Isn't understanding the market as important to the economy as understanding solid-state physics is to IBM? If we can map the human genome, why can't we map how a man loses his livelihood? If millions can contribute a few cycles of their PCs to the search for a signal from outer space, why can't they join a coordinated search for patterns in financial markets?
Well, yeah, why not. Or rather, why can't we run better simulations of our overall society? Or, rather, why can't WE do that, rather than just the supercomputers of some central central bank who isn't sharing what they find?

The first thing we'd notice would probably be that there's a curious absence of know-how on how to do that, and I lot of experts who'll say it is impossible or uncessary. All the more reason for somebody to do it.

OK, it isn't easy, as human factors play a big part. But we really ought to be able to evaluate alternative scenarios for how we structure our society economically. With an eye towards maximizing the lasting benefit for 6.4 billion people, not to mention the planet we live on. As opposed to just scenarios to help capital holders hold on to their capital.


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13 comments

9 Aug 2004 @ 21:48 by Uncle $cam @12.169.185.34 : He who owns the gold...
A Note Of Appreciation From The Rich  


9 Aug 2004 @ 21:49 by Uncle $cam @12.169.185.34 : Grrrrr...sorry.
opps...
http://www.wealth4freedom.com/truth/8/richscum.htm  



11 Aug 2004 @ 15:20 by astrid : Oh, Wow!.....Ming....we are....
.....working in the same direction....That's Good News! I've spent hours this morning to get familiar with the web-site you give in your article.
Will eventually respond with my (third ) article that touches these same Life-Issues.

Have you checked out ProsperityUK yet? Both "your" and "my" site will get a few. " oh yeah, so, that's how it is"-comments and a few people will wake up a little....
But both these sites MISS the TWO MOST IMPORTANT TRUTHS about each and every one of us and Life Itself, as I see it (and we all have the right to our perception, don't we? ... and we have the right to change our perception; maybe we grow in our Understanding of Life --or maybe we choose to sell out completely!.... YES; We DO have that right. )
But, something really IS brewing....the Big Q is exactly WHAT is it... and why should we care???.... and IF we do; WHAT is OUR role in the scheme of Life ( whether Life on Earth has the Right --and a CHANCE-- to survive us, or not???? It --of course-- depends on what we believe to be the TRUE TRUTH about Life and what we want out of it......)
In conclusion; thanks for the thought-provoking article.

Sincerely / Astrid  



12 Aug 2004 @ 20:44 by phil jones @200.103.112.39 : Simulating for a better society ...
"Well, yeah, why not. Or rather, why can't we run better simulations of our overall society? Or, rather, why can't WE do that, rather than just the supercomputers of some central central bank who isn't sharing what they find?"

Ming, we have a project for this RIGHT now. We're trying to get a distributed, international community of amateurs interested in using simulation to investigate things like local currencies, gift economies and any other questions that pop into our heads about how to organize a better world. We have some code and are starting to make contacts ...

Maybe you can help spread the word :-)

http://www.nooranch.com/synaesmedia/optimaes/optimaes.cgi  



16 Aug 2004 @ 09:12 by Quirkeboy @209.92.185.198 : Getting organized..
I find that alot of people in the U.S. feel like they have no control.. why are we stuck with buying such JUNK? Why are there Walmarts opening all over the place? What happened to the small mom and pop stores? Why is there not more creativity and appreciation of the arts? Well.. we do live in a capitalistic society.. and I dont know much about the economy.. but I do know that each dollar we spend is a vote.. and when you give your money to Walmart.. your choosing to NOT support the mom and pop store down the street. Why buy an original painting by me (an artist) when you can have a framed poster of a Norman Rockwell over your fireplace?
Truth be told.. the mom and pop store cant compete with the low prices of Walmart.. and an artist cant sell his hand made dining room set for the same price as the mass produced crap at Ikea. But.. then we cant wonder why only a few major corporations are raking in the bucks.. because WE are the ones who VOTE to make them rich!! We need an organized way of deciding as a nation what we value.. what we want in our country... and all agreeing to support those interests instead of the big corporations.  



28 Aug 2004 @ 12:23 by Riccardo "Bru" Cambiassi @213.26.168.187 : Strange attractors
Interesting, I just posted a few lines about the butterfly effect and social networking... ;)
So somebody says it's impossible, probably because most of the laws of market follows non-linear patterns, which are generally unresolvable with our poor math :-/
But yes, I'm with you in believing that WE could do something in that, at the very least, trying to put a somehow generalised effort in this distributed simulation could add in creating a more tangible feeling of open collaboration, which would be good, even beyond the actual results of the simulation.

Great idea Flemming, and really great post!!!

Thank you  



19 Dec 2014 @ 18:15 by Patryk @169.196.176.75 : pUoMJQWWEbEAero
Ramy, thanks for this insgfhtiul comment. I couldn't agree more and intend to write more on this topic in the future.I noticed your background is also FEA-related. Besides open source tools, I can also envision posting Abaqus or Ansys input files via github once papers are accepted so an interested party can verify your simulation.I have tried to recreate several analytical simulations from papers with little success. They may indicate the overall material models but often omit smaller but quite necessary details, such as boundary conditions, convergence controls, etc., that make quite a difference. I think sharing such files would be a tremendous help to younger researchers who are trying to figure out how to even set up complex nonlinear models.  


23 Dec 2014 @ 12:35 by Rharha @186.219.216.88 : JPehswxFSy
Ben , yuo are right . Do you Remember that I was in a big trouble rernadigg the convergence problem of a beam model using damaged plasticity in ABAQUS ? I searched a lot in Internet but could not find a suitable explanation. It seemed to me that i have to make trail and if god wills I shall find the correct parameter.It was a pain and as I could not find a scientific explanation to choose value of parameter, I was frustrated. We should share once we publish and possibly with illustrated explanations in some complex cases.  


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Other stories in
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2011-11-07 17:22: Notice the incidental
2010-07-14 13:35: Consciousness of Pattern
2010-06-28 00:03: Pump up the synchronicity
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2007-03-15 01:06: Structural holes
2007-02-27 23:50: Leverage



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