Apple Town Prince

What has been wanting on the right at the start of this century is a true “conservative disposition” — the disposition to enjoy what is rather than pining for what might be (to paraphrase Himmelfarb), to enjoy the givens and the goods of life without subjecting them to social or political validation.

Rationalism in Politics, despite being clouded by the “fumes of tradition”, is a breath of fresh air.

His [the Rationalist’s] mental attitude is at once sceptical and optimistic: sceptical, because there is no opinion, no habit, no belief, nothing so firmly rooted or so widely held that he hesitates to question it and to judge it by what he calls his ‘reason’; optimistic, because the Rationalist never doubts the power of his ‘reason (when properly applied) to determine the worth of a thing, the truth of an opinion or the propriety of an action. Moreover, he is fortified by a belief in a reason’ common to all mankind, a common power of rational consideration, which is the ground and inspiration of argument: set up on his door is the precept of Parmenides–judge by rational argument. But besides this, which gives the Rationalist a touch of intellectual equalitarianism, he is something also of an individualist, finding it difficult to believe that anyone who can think honestly and clearly will think differently from himself.

Volatility is usually expressed as the annualized standard deviation of returns. Volatility is proportional to the square root of time. That means one can approximate a volatility over a smaller time period than one year by dividing the annual vol by the square root of the number of trading periods one is interested in.

So, to convert annual volatility to a daily vol, divide by 16, which is the square root of 256 — about the number of trading days in the year. This paper on converting 1-day to h-day volatility contains some important caveats. (Summary: Modeling volatility only at one short horizon, followed by scaling to convert to longer horizons, is likely to be inappropriate and misleading, because temporal aggregation should reduce volatility fluctuations, whereas scaling amplifies them.

Back in the days when vol was 15-20% annually (way back in 2007), a daily vol was about 1%. These days, the VIX is closer to 80 which implies a daily return of +- 5%.

On Sept 15th, 2008, when Lehman was allowed to go bankrupt (“Lehman is not too big to fail” – Paulson), the VIX went up to 80 and has been in that region ever since. The Lehman bankruptcy has turned out to be a massive event in financial history.

Stilling the eternal, internal murmur of self-reproach…

God stopped to show us that what we create becomes meaningful to us only once we stop creating it and start to think about why we did so. The implication is clear. We could let the world wind us up and set us to marching, like mechanical dolls that go and go until they fall over, because they don’t have a mechanism that allows them to pause. But that would make us less than human. We have to remember to stop because we have to stop to remember. 

This just in: there are absolute, logical limits to the ability of any method (including the scientific one) for acquiring knowledge to produce a comprehensive theory of the world

Well, call off the search for a theory of everything. Physicist David Wolpert, in an article published in the prestigious Physica D (vol. 237, pp. 1257–1281, 2008), has shown that — at best — we can achieve a theory of almost everything. Wolpert’s work is very technical, but its implications are spectacular. Unlike the above mentioned limits to knowledge, which come out of empirical disciplines, Wolpert used logic to prove his point, following in the steps of the famousincompleteness theorem demonstrated by Kurt Godel in 1931. (An accessible summary of Wolpert’s discovery can be found in an article by P.-M. Binder in Nature, 16 October 2008.)

Basically, Wolpert — building on previous work by Alan Turing — formalized a description of “inference machines,” i.e. machines capable of arriving at inferences about the world (human beings are one example of such machines). Wolpert focused on what he calls strong inference, the ability of one machine to predict the totality of conclusions arrived at by another similar machine. Wolpert then logically proved the following two conclusions: a) For every machine capable of conducting strong inferences on the totality of the laws of physics there will be a second machine that cannot be strongly inferred from the first one; b) Given any pair of such machines, they cannot be strongly inferred from each other.

Of course, the article ends with the obligatory sideswipe at creationists.

Reference to original paper:

Physica D: Nonlinear Phenomena, Volume 237, Issue 9, 1 July 2008, Pages 1257-1281
David H. Wolpert

No one seems to talk about the Iraq war any more. I suppose positions harden over time and discussion becomes increasingly futile. I’ve always thought, though, that most debate in the aftermath draws a comparison between the Iraq of today and the Iraq of 2002. Maybe because it’s difficult to imagine an alternative course of history. 

I read a book this weekend called ‘A Long Way Gone: Memoirs of a Boy Soldier’ . I highly recommend it although it is a harrowing read and I felt drained by the end. It’s the story of a 12-year old boy who gets swept up in the brutal bush war in Sierra Leone in the 1990’s.

In one sense, it’s about the debate we never have: the cost of inaction and the other path that history could take.

Others have weighed in on whether volatility should be considered an asset class. From the point of view of a long term investor it clearly doesn’t make sense to buy and hold volatility. (In that sense, it is the ultimate cyclical asset class and we should be glad we don’t live in a world of ever increasing volatility!). However, in terms of the diversification benefit for a portfolio, the VIX does exhibit low (and negative) correlation with many of the major asset classes. The table below shows the correlation matrix for major asset classes over the past 750 days, a period during which the VIX had negative correlation with US stocks and real estate and no correlation with European stocks. Notice, though, that a similar diversification benefit could probably have been achieved with a combination of treasuries and bonds.

Note: this chart was generated on the AssetCorrelation website which is an excellent resource for monitoring the diversification of your own portfolio.

[youtube=http://www.youtube.com/watch?v=J5qp04zJsFA]

This video is funny. I’ve never seen cats wrestle like that 🙂

Rails Guides

Keeping Ruby on Rails up to date:

Installing gems on Dreamhost

Rails > 2.1 now with gem dependencies and here

ruby -v — check which version of ruby you have installed

rails -v — check which version of rails you have installed

gem list — check versions of all installed gems

sudo gem update — bulk update of all installed gems (some say this is a bad idea)

sudo gem update –system (updates rubygems, note use of double dash)

sudo gem uninstall <gem_name> — uninstall a specific gem

sudo gem install <gem_name> — install a specific gem

sudo gem cleanup — remove old versions of gems

sudo gem install -v=2.0.2 rails — install a specific version of Rails (to stay in synch with Dreamhost)

Rmagick

Installing Rmagick

1. sudo apt-get update
2. sudo apt-get install imagemagick
3. Then, install the imagemagick9 dev library:
   sudo apt-get install libmagick9-dev
4. Last, install the RMagick gem:
sudo gem install rmagick

Rails Migrations

Useful cheat sheet

Use rake db:schema:load if having trouble with Rails migrations and you have a working schema.

Use rake db:migrate VERSION=3 to roll back to version 3

Use rake db:migrate:reset — drop db, recreate it, and then run all migrations

rake db:rollback — go back one migration

rake db:migrate:redo — undo last migration and then redo it

rake db:sessions:clear — purge sessions from database

MySQL

To create a new MySQL DB on Dreamhost it is best to use the Dreamhost panel.

To create a database locally: mysqladmin -u root -p create <dbname>_development

mysql -u yourdblogin -p -hyourdbdomain.yourdomain.com yourdb

To load a table into a database:

mysql -u [username] -p[password] -hmysql.[domainname].com [database_name] < iso_country_list.sql

drop table sessions; — delete the sessions table

show tables; — show all tables for database

describe sessions; — show the sessions table

check table sessions; — check the sessions table for corruption and/or nonexistence

Gem Sources

Make sure to add GitHub: gem sources -a http://gems.github.com

I’ve been watching the Olympics on TV Tonic’s platform. NBC collaborated with TV Tonic to provide viewers with the ability to watch the Olympics over the internet.

Some scattered thoughts in no particular order:

1. It’s great that NBC has finally realized that some of us want to watch the Olympics over the web and this is a huge leap forward from prior years.
2. NBC apparently managed to sell ad space to only one company: Lenovo. I used to contemplate buying a Lenovo laptop. After watching the same ad 15-20 times a day I can now say I will never buy a Lenovo laptop.
3. It’s great to be able to watch sports sequentially. I no longer have to have gymnastics coverage interrupted with rowing. Far less time is wasted.
4. The user interface becomes somewhat unuseable after a while. It’s difficult to see which events you’ve watched, they don’t always seem to appear in chronological order. Also, it would be nice to be able to remove the heats and only download the finals. Even better would be able to specify exactly which events to download rather than having NBC decide for us.
5. I realize that nothing is live for us poor saps in the USA but posting the content more than 24 hours later makes a mockery of the idea of live sport.
6. It’s a pity the water polo isn’t broadcast in higher definition. The compression algorithm completely choked with all the water and the end result is that you can’t see the ball. That detracts from the experience but leads to my next point…
7. We all want HIGH DEFINITION. You’re making us wait until the next day to watch the events everyone was talking about at work….at least give it to us in high definition. People watching the Olympics over the web have a decent setup. You should cater to them or risk ending up on the scrap heap of failed internet video start ups.
8. Those Chinese gymnasts definitely aren’t 16. (That was obvious even on the low def video that NBC slopped up to us.) Let’s call it what it is: CHEATING
9. Phelps is a legend in any quality video.

If you’re using and Ubuntu virtual machine with VMware Player and are having a problem with the toolbar covering the Ubuntu toolbar then this should fix the problem:

1. Open “C:\Documents and Settings\<your account>\Application Data\VMware\preferences.ini”
2. Add this line to the bottom of the file:    pref.vmplayer.fullscreen.nobar = “TRUE”

The “Application Data” folder in C:\Documents and Settings\<your account>\ is typically a hidden folder so you’ll need to view the hidden files to find it.