Misconception or misperception about risk
- Thread starter harrytrader
- Start date
Words are just proxy for thoughts and sometimes words can difficultly encompass your thoughts especially when you use a foreign langage 
. Well I wanted to mean some sort of generalisation of the "barbarian" word "heteroscedasticity" used by statisticians when they refer to that concept for variance. Variance mesure variations but it is a statistical parameter that varies from sampling to sampling so its estimation will vary also so how can you say that it varies but with some stability ? That is the purpose of the word above : something that is not scattered "regularly" (again a proxy for thought) is heteroscedastic. Now generalise that concept for risk that's what I was meaning.
. Well I wanted to mean some sort of generalisation of the "barbarian" word "heteroscedasticity" used by statisticians when they refer to that concept for variance. Variance mesure variations but it is a statistical parameter that varies from sampling to sampling so its estimation will vary also so how can you say that it varies but with some stability ? That is the purpose of the word above : something that is not scattered "regularly" (again a proxy for thought) is heteroscedastic. Now generalise that concept for risk that's what I was meaning.I think I could have unique interpretation for a bunch of words like "freedom", "equality" (Because I criticise elitism people could think that I am for "equality" but I am not at least in its common sense of socialism fake assistancy ) but we would derive from the subject of the thread 
. In fact I am not directed by trying to be original because I have many thoughts that are just common to many people in the street : that is to say common sense and concretness but I formalise so I seem to be abstract whereas I am rather directed by "operationality". This spirit came from my frequentation of Quality domain field but from the Deming School which originates to the founder of Statistical Control : Walter Shewart who was a statistician and above all a practician engineer at Bell ATT. And Walter Shewart said that statistics from the point of view of pure mathematic is worthless if you can't define it operationally. In short defining "what" is not enough, "how" you can "reify" (somehow "realise" it but on paper : again word is a proxy for thought ) the "what" in real world is what really matters. For example he did it for the word "randomness" : he defines the "how to recognise randomness" and by doing that he founded statistical control field (I caricature the story of course ) which has been the seed of industrial area improvment until now especially for Japanese products - which had very bad reputation up to 1970 some people not old enough to remember that ! I have also a funny book untitled : "Quality ? I will recognise it when I will see it !" which shows that what people in industry commonly think about quality is misleading. The same thing for other things like capitalism, freedom, equality: it is not enough to just claim that they exist without checking that they really do : I would like to see it and I don't see it. I would see it for example if the majority of people had their own business instead of working for the giant governement-corporate firms consortium. In the past industrial assets were belonging to more people than today so there was more capitalism in the past and so more prosperity because freedom and prosperity go together. But also in the past Governement and corporate firms have tried to unify: that was under Nazism and Communism... see it
) but we would derive from the subject of the thread . In fact I am not directed by trying to be original because I have many thoughts that are just common to many people in the street : that is to say common sense and concretness but I formalise so I seem to be abstract whereas I am rather directed by "operationality". This spirit came from my frequentation of Quality domain field but from the Deming School which originates to the founder of Statistical Control : Walter Shewart who was a statistician and above all a practician engineer at Bell ATT. And Walter Shewart said that statistics from the point of view of pure mathematic is worthless if you can't define it operationally. In short defining "what" is not enough, "how" you can "reify" (somehow "realise" it but on paper : again word is a proxy for thought ) the "what" in real world is what really matters. For example he did it for the word "randomness" : he defines the "how to recognise randomness" and by doing that he founded statistical control field (I caricature the story of course ) which has been the seed of industrial area improvment until now especially for Japanese products - which had very bad reputation up to 1970 some people not old enough to remember that ! I have also a funny book untitled : "Quality ? I will recognise it when I will see it !" which shows that what people in industry commonly think about quality is misleading. The same thing for other things like capitalism, freedom, equality: it is not enough to just claim that they exist without checking that they really do : I would like to see it and I don't see it. I would see it for example if the majority of people had their own business instead of working for the giant governement-corporate firms consortium. In the past industrial assets were belonging to more people than today so there was more capitalism in the past and so more prosperity because freedom and prosperity go together. But also in the past Governement and corporate firms have tried to unify: that was under Nazism and Communism... see it Quote from harrytrader:
! I have also a funny book untitled : "Quality ? I will recognise it when I will see it !" which shows that what people in industry commonly think about quality is misleading. The same thing for other things like capitalism, freedom, equality: it is not enough to just claim that they exist without checking that they really do : I would like to see it and I don't see it. I would see it for example if the majority of people had their own business instead of working for the giant governement-corporate firms consortium. In the past industrial assets were belonging to more people than today so there was more capitalism in the past and so more prosperity because freedom and prosperity go together. But also in the past Governement and corporate firms have tried to unify: that was under Nazism and Communism... see it
Excellant point about ''freedom + prosperity go together''
I see in North America + some in South America lots of excellance in industry. Include Israel in the high standards of quality also.
As far as gov + corporate unity like Nazism, Communism;
a general rule is bigger is bad. Common trend of great big businesses is tendancy to be too rigid,Citicorp Citigroup is an exception.
Figure the thoughts, words + deeds of public+ private rulers is much more important than size or even structure.
King Solomon , big with the wisdom of Solomon,had the highest quality + standards as high as they come , the book of Proverbs.
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''Big government is not the solution it is the PROBLEM''-President Ronald Reagan, elected with HUGE % of vote
Quality Control deals much with risk, and it is not astonishing that it has first penetrated the health domain and software engineering and now seems to have some interest in finance field for example for judging if a portofolio manager is good or bad:
http://www.northinfo.com/papers/pdf/Philips.pdf
Nevertheless I am rather careful about the use of these techniques in stock market because the degree of unstability is greater than in industrial process. This is considered as new techniques in these fields and as usual when used without care it can lead to abuse. For the article above I don't totally agree with the author although he tried to be rigourous he missed some important premisces like the one I cited and also he just uses the traditional benchmark criteria which I find silly in the spirit of Quality Control. Also "modern" controller tend to become buraucratic (for example they ask to fill tons of forms) so that they lost the spirit of original quality control which aims at helping people or process to progress than controlling the people like policemen. Same degradation for the so-called ISO norms which are more and more marketing and political tools than real commitment with progress for employees and investors. It's better to have a firm which really commits in true quality control without an iso norm than a firm that buys an iso norm a few millions and store tons of documents that nobody never read. I saw it several times that's why I say it.
I bet that sooner or later we will see iso 900XXX financial fund with the slogan: "now you can invest with iso trust" the next generation of financial marketing huhu !
http://www.northinfo.com/papers/pdf/Philips.pdf
Nevertheless I am rather careful about the use of these techniques in stock market because the degree of unstability is greater than in industrial process. This is considered as new techniques in these fields and as usual when used without care it can lead to abuse. For the article above I don't totally agree with the author although he tried to be rigourous he missed some important premisces like the one I cited and also he just uses the traditional benchmark criteria which I find silly in the spirit of Quality Control. Also "modern" controller tend to become buraucratic (for example they ask to fill tons of forms) so that they lost the spirit of original quality control which aims at helping people or process to progress than controlling the people like policemen. Same degradation for the so-called ISO norms which are more and more marketing and political tools than real commitment with progress for employees and investors. It's better to have a firm which really commits in true quality control without an iso norm than a firm that buys an iso norm a few millions and store tons of documents that nobody never read. I saw it several times that's why I say it.
I bet that sooner or later we will see iso 900XXX financial fund with the slogan: "now you can invest with iso trust" the next generation of financial marketing huhu !
I just said that also in the other thread on IDEA cycle - which is just another name for PDCA (PDCA is also just a synonym from Shewart for quality control but put the accents on framework and not only statistics - if you read the article above about monitoring the portfolio managers the monitoring aspect is part of PDCA philosophy):
"PDCA, six sigma and things like that are spreading out of industries to services like health and software industries (although it is hidden through other acronyms like RUP acronym of Rational Unified Process from Rational Software and since IBM has just bought them you can be sure that it will be spread), it is a new trend in methodology that has touched some services - whereas it is well known already in industries - and so it will touch finance in some years. I bet that in a few years a fund manager that doesn't know what PDCA is - because it is just a logical suite to VAR concept launched by JP Morgan - will have some difficulty to get a job huhu !"
As always if you are the first among the fund managers who are aware of the new trend you get an advantage on the job market - if you exploit it of course if you don't ceise the opportunity nobody will do for you. But Finance industries is always the last to adopt new methodology widely so you have all the time to prepare.
"PDCA, six sigma and things like that are spreading out of industries to services like health and software industries (although it is hidden through other acronyms like RUP acronym of Rational Unified Process from Rational Software and since IBM has just bought them you can be sure that it will be spread), it is a new trend in methodology that has touched some services - whereas it is well known already in industries - and so it will touch finance in some years. I bet that in a few years a fund manager that doesn't know what PDCA is - because it is just a logical suite to VAR concept launched by JP Morgan - will have some difficulty to get a job huhu !"
As always if you are the first among the fund managers who are aware of the new trend you get an advantage on the job market - if you exploit it of course if you don't ceise the opportunity nobody will do for you. But Finance industries is always the last to adopt new methodology widely so you have all the time to prepare.