Monthly Archives: September 2006

The (Mis)Behavior of Markets – Mandelbrot (2004)

The (Mis)Behavior of Markets

Benoit Mandelbrot is best known for his work on fractals, but with The (Mis)Behavior of Markets he sums up his work on the application of fractal ideas to economics. Fractals, he says, are in a way the study of ‘roughness’; as opposed to classical geometry which was all about smoothness – lines, planes, etc. Fractals have the property of retaining the roughness at many different scales.

In this book Mandelbrot takes on the classical economics of markets, with regard to the ‘efficient market hypothesis’. He rejects the claims that prices move according to smooth bell curves, and instead follow power laws that make big price changes quite common. Likewise he investigates the notion that prices are dependent on past prices; ie. that a big change today makes a big change tomorrow more likely. Both of these notions mean that markets are much riskier than the efficient market ideas claim it is, and that volatility will vary over time; some patches of time will contain many big changes, while others will be relatively stable. In the fractal sense, the chart of price changes of an asset tends to look the same regardless of the time scale.

Overall this work supports the ideas contained in the excellent Fooled by Randomness.

Modern Times – Bob Dylan (2006)

Modern Times

Bob Dylan’s first senior citizen release hit the racks last week, and I’ve played it a few times now. I’d say it’s most similar to the last one, “Love and Theft” but is thematically oriented towards romance. It’s a mellow sound, intimate and relaxed and not in a hurry. Uses age-old blues rhythms and ancient pop songs to create a ‘modern’ sound for Bob. Recommended for Bob fans, and I have no idea what non-Bob fans would make of it.

I just picked up some tickets for Bob’s show in Portland, Oct 14. The never-ending tour continues.

Here’s a good review of the recent book of Dylan interviews, by Louis Menand in the New Yorker, Sept 4, 2006 issue. He parenthetically makes this comment on the new one:

A new album, Dylan’s forty-fourth, called “Modern Times,” is being released this month. The songs are simple riffs, with laid-back arrangements, and all feature prominently Dylan’s gorgeous late-period croak. It sounds a little the way “Buena Vista Social Club” might have sounded if Cuba had been the birthplace of the blues.

Update:  I note today (Sept 7) that Modern Times was the #1 selling CD last week! Pretty good for an old guy.

Play Money by Julian Dibbell (2006)

Play Money

Play Money is a quick read on the adventures of Julian Dibbell attempting to make a living at trading virtual goods within online worlds. I found the first half of the book to be most interesting, as he ranges fairly widely over the topics of play, work, and money. In the second half he becomes consumed with trying to make money himself, and it’s pretty hard to make stories of ‘buy low, sell high’ very compelling.

Here’s a tidbit that intrigued me:

Could it be that scarcity is not so much a necessary evil as an economic good? Could it be that the real world’s never-ending abundance of scarcity has prevented us from recognizing, until now, that we’ve actually developed a taste for the stuff?

Some links: Dibbell’s Play Money blog, where much of the material in the book first appeared. And the ongoing Terranova blog on matters virtual.

Halleluwah!

Halleluwah 2006

Tomorrow I’m going to check out day 2 of the Halleluwah Festival here in Portland. Performers include Vashti Bunyan, Jackie O MF, Dengue Fever and many many more (plus art & films). Should be weird and mind-bending. Here’s what Pitchfork has to say about it.

Update:  As it turns out, I didn’t make it to this show.  Got sick over the weekend 😦    A report in The Oregonian indicated that the Bunyan set was good despite a hot & noisy venue.