hakank.blogg

I'm delighted. I always felt that science as the preserve of people from Oxbridge or Ivy League universities - and not for the common mortal - was a very bad idea.
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Fractals seem to appear all over nature and in economics. Even the internet is fractal. What does that say about the underlying nature of these phenomena?

Well, it depends on the field. Circles and straight lines also appear everywhere. Does this mean that all those phenomena have something in common? Of course not. The roughly circular trajectory of a planet around the sun is due to gravitational interactions. Berries are round because a sphere has a smaller skin. The beauty of geometry is that it is a language of extraordinary subtlety that serves many purposes.
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Do better theories [about world wide finance] really matter, though?
Financial risks are much underestimated. The effects of wrong business decisions are global. Nobody takes realistic measurements of risk and we should. I think we should take a strongly conservative attitude towards evaluating risks. I have lived all my life skating on thin ice, which does make you conservative. I've met stockbrokers who say that they are perfectly happy that they have judged the financial risks correctly in 95 per cent of their cases. They wonder why they should bother about a few cases that turned out wrong. Well, those are the ones that matter most - such as the Russian market crash of 1998.

I would like scientists, engineers and the whole of society to understand the true meaning of statistics. People have generally been indoctrinated to believe that the world is simpler than it is. I'd like people to understand the difference between what I call mild randomness and wild randomness. Mild randomness is the thing that everyone thinks about where things go up and down a little bit in the financial market. Wild randomness is where one bad event in the stockmarket wipes out a long period of favourable events.