ALL THINGS BIG AND SMALL 2.0

*Articles on Economics and Finance are especially perishable. Change is continuous and fast and what you say one day may be irrelevant the next. Putting my thoughts down on this 29th day of September 2006, I will come back and read it one year from now and see how relevant it will be then. As the first baby boomer turns 60 this year, and 78 million more in America born between 1946 and 1964 do so in the next 25 years, will this have an earth-shaking effect on the U.S. economy? As the baby boomers sell their stock market holdings or downgrade to smaller homes to free up cash, investors all the over the world shudder at the possible consequences on the stock market and the real estate market. There is no consensus on how serious this impact will be. Professor Jeremy Siegel of the Wharton School of Business and author of the best seller " The Future for Investors" certainly thinks that we will all suffer a lowering in our standard of living, but street-smart reformed junk bond k...

There are two aspects of American culture that I will never get accustomed to: (1) The practice of separate bills [or checks as they call it] for meals, and (2) The practice of greeting anyone and everyone with ‘How are you doing?’ [Often it becomes a lazy ‘How ya DO-ING as in the sound you would make riding a pogo pole with springs] Lets get (1) out of the way first: I can never understand how Americans can act so calmly, and stone-faced, with no sign of awkwardness or embarrassment whatsoever, when at the end of a meal with a friend [s], they calmly ask the waiter for separate checks. In Asia, this is unheard of, no matter how poor anyone is. Why not, be more gracious, and yet practical as in Asia, by letting one party pay for the meal. The one who wants to do the paying would insist on doing so, while the other would protest most vehemently, but ultimately only one party would pay the bill, with a promise [and insistence] by the other party to reciprocate such an act of graciousness...

Blackbox models of complex situations are tempting. Without the need to specify parameters, and not limited by choice of variables, you can throw in everything including the kitchen sink, and see how the model performs. But in real life, it is not that simple. With every variable that you throw in, you are increasing the complexity of the model exponentially as well as the computational workload. Although there are algorithms for dimension reduction as well as for assessing the significance of an input towards model accuracy, nothing beats a good old human being with expertise in the subject domain, for initial choice of input variables. Let's do an academic exercise for the building of a model that (1) hopefully gives an objective, 'true' valuation of a house. (2) predict the future house price. We will attempt to build our model using a Neural Network, or a hybrid Neural with Genetic Algorithms for the last mile of calculation, to avoid local optima. Any human expert in r...

One of the most common things we humans face in our daily lives is the problem of optimization. viz what is the optimum solution for a problem using certain mix of resources that we have, and bearing in mind our objective(s) In Life we seldom find that there is only one solution to a problem, but in fact many possible choices for a solution. Here are some examples: Which is the best route to travel from A to B, after defining what is ‘best’. {is it the shortest route in time, which again is different from the shortest route in distance, or is it the most economical route, the most scenic route etc}. What is the minimum risk and maximum gain I can get from re-allocating the number of shares in each stock that I hold in a portfolio? What combination of resources [land, labor, capital] will enable me to complete a certain construction project in a specified period of time. What is the best way to draw up the School timetable using the variables we can juggle with viz the school hours Mon-...