Lent 2015: Untitled #19

Lent 2015: Untitled #19
by Matthew Hunt and K. Sekelsky

Sentence of the day: This prose makes me temporally mental

Ars Technica on Xeon vs. Itanium:

Let's take the last one first, since it came first temporally.

This comes after the part where the author compares an annual revenue figure to a quarterly revenue figure, then just gives up, and stops bothering to even say whether figures are annual or quarterly or product-lifetime or fortnightly.

ZIPpity-doo-dah

Today’s ZipCar IPO was underpriced, so the institutional investors—not ZipCar—made lots of money on the day’s gains:

ZipCar's underwriters, Goldman Sachs and JP Morgan, just screwed the company and its shareholders to the tune of an astounding $50 million.

How?

By wildly underpricing the deal and selling ZipCar's stock to institutional clients way too cheaply.

Google did it right, using an auction to set the IPO price of its shares. Why doesn’t everyone do it that way?

Chart of the day: Sierra Erratica edition

In the annual report of the Caltech Employees’ Federal Credit Union:

They tried to carry over the mountain motif used for the page background, but the shape of the mountain, with its decrease at the end, really wrecks the first impression of the actual trend (bar height).

I’m not sure that constitutes a “material financial impact”

Maximum PC, on Intel’s Sandy Bridge recall:

(The article was later corrected to $700 million.)

I am become Debt, the destroyer of worlds

From the Manhattan Project to collateralized debt obligations, we physicists have unleashed destruction and havoc upon the earth.

However, I don’t think that “fund our experiments or we’ll go out in the world and eff things up real good” is an ethical or compelling argument.

Confessions of a market manipulator

From RISKS 26.19, Financial market automated amplification of trades:

"The two men worked out how the computerized system would react to certain trading patterns—allowing them to influence the price of low-volume stocks." Although the article gives no indication of how they did it, the day traders “gave false and misleading signals about supply, demand and prices'', which caused the robots to take action—which the day traders then took advantage of.

Yeah, I did that once.

Longcat is shrt

Todd Combs has been hired to manage investments at Berkshire Hathaway. The news story reports:

Combs also made money before the financial crisis by shorting shares of mortgage giant Fannie Mae and reinsurer RenaissanceRe Holdings.

Short positions, or negative bets, returned 35.56% in 2007 and 36.68% in 2008 for the Castle Point Capital Master Fund, Combs’s hedge fund, according to investor letters and other documents obtained by MarketWatch.

...

The Financial Select Sector SPDR fund (XLF), an exchange-traded fund that tracks financial-services stocks in the S&P 500, slumped more than 46% in the same period. This is the benchmark Castle Point uses to judge performance.

On GPS navigators, traffic, and correlations

Our old TomTom GPS navigation device recently bit the dust, so we bought a new one, which came with free lifetime traffic information.  We don’t get traffic information around home—nor do we need it—but it’s a nice bonus when we travel to the big cities.

Generally speaking, traffic data is available for freeways, but not surface streets.  The TomTom unit has statistic knowledge of speeds on the surface streets, called “IQ Routes” (e.g. on Monday mornings, traffic on Foo Street averages 25 mph).

When there’s traffic on the freeway, TomTom will announce the delays (“12 minutes”) and in some cases suggest an alternate route (“5 minutes faster”).  The alternate route usually involves surface streets in lieu of the freeway.  It seems to me that TomTom must be comparing the actual freeway speed with the typical surface street speed (because it has no real-time data for the surface street). But does it understand correlations?  If the freeways are unusually slow, then presumably more people than normal would have already opted for the surface streets on the basis of traffic reports.

Second, what happens when most people have GPS navigators with real-time traffic, and follow the units’ advice?  Thousands of drivers may swamp a side street, trying to avoid a jam on the highway.  When that happens, we have a scenario more like finance than physics: the predictions of the model influence reality.  If you think you have a profit-making (time-saving) opportunity, it disappears in response to the advice.

The solution may be for the GPS navigators to introduce randomness into the suggested routes, dispersing their drivers onto several alternate routes.

I’ve also thought that TomTom should recommend randomized routes as a matter of course (when there are multiple almost-equally-good options) as a means of improving the IQ Routes database.