Tuesday, March 17, 2009

formulae gone awry.

this semester i've been telling my 0DE students this: formulas will only help you when used in the right context.

a large number of them have been memorizing random formula and misusing them -- eg. computing the chara¢teristic polynomial when the 0DE does not have constant coefficients, etc.

the following excerpt brings this back into mind, which i read some weeks ago and saw again today on ars mathematica.

"They didn't know, or didn't ask. One reason was that the outputs came from "black b0x" computer models and were hard to subject to a commonsense smell test. Another was that the quants, who should have been more aware of the copu1a's weaknesses, weren't the ones making the big asset-allocation decisions. Their managers, who made the actual calls, lacked the math skills to understand what the models were doing or how they worked. They could, however, understand something as simple as a single correlation number. That was the problem."

"Recipe for Disaster: The Formula That Killed Wall Street"
By Felix Salmon, on 02.23.09

so i suppose some people will never lose their bad habits. granted, i'm not a finan¢e person and i don't fully understand the problems facing the u.s. economy now.

then again, all blogs are self-serving to their authors. i personally the world would be a better place if everyone knew a little mathematics.

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