Using random investments to stabilize markets

While randomness and uncertainty are often seen as undesirable, that needn't always be the case.  What if, for example, central banks could use random investment strategies to make markets more stable, to protect markets from human instinct and old habit?

Forbes:

The authors suggest that one way that markets could be stabilized in the long run would be for central banks to adopt random investment strategies to reduce volatility.

The benefit of that central bank strategy, the authors state, might be two-fold: 'From an individual point of view, agents would suffer less for asymmetric or insider information, due to the consciousness of a 'fog of uncertainty’ created by the random investments. From a systemic point of view, again the herding behavior would be consequently reduced and eventual bubbles would burst when they are still small and are less dangerous; thus, the entire financial system would be less prone to the speculative behaviour of credible ‘guru’ traders.'

Wikipedia: econophysics

Stay curious!

Wayne

Image: Some rights reserved by Perpetualtourist2000

Finding "More Beautiful Questions"

We are all agreed that your theory is crazy. The question which divides us is whether it is crazy enough to have a chance of being correct. My own feeling is that it is not crazy enough. - Niels Bohr

Asking a really good question is a bit like splitting the atom - full of potential energy right up until the moment the question is actually asked.

Warren Berger, who is writing a book, "an inquiry," he says, "into the value of inquiry," is interested in the kinds of questions that are answerable, even if the timeline for answering them is long. "The Quest to Ask Better Questions," The Atlantic:

[The search for better questions] has a Talmudic side. A question is a spiral that leads to more questions. But when does Berger stop questioning and settle for some answers? He explains that deep questioning can be the first step in bringing about change—but you also have to begin to act on those questions at some point. Berger is less interested in philosophical or existential questions that are basically unanswerable. 'I'm aiming for something a bit more practical,' he says. 'To me, a Beautiful Question is something that should feel important, meaningful, profound—but also potentially answerable and achievable. Once you've set your sights on a question like that, the idea is to really tackle it. These are usually very difficult questions to answer. You can't look it up on Google or answers.com—you have to grapple with it. You may spend months or years 'living the question.'

Better questions clarify, genuinely ask for input and raise the possibility of a breakthrough.

That means, of course, that question asking is terribly important to any business. Many successful innovations can be traced to that one insightful question. Berger in FastCo.Design:

According to Keith Yamashita of design consultancy SYPartners, 'In business, our ability to ask questions is an opportunity to reframe the challenges in front of us.'

But as Yamashita notes, that can only happen if business leaders are willing to question boldly. He says we’re coming off an era of 'small-minded questions' geared to efficiency: How can we do it faster, cheaper, where can we cut? 'But in order to innovate today,' Yamashita maintains, 'companies must ask more expansive questions.'

"Expansive questions" are always on tap at the IdeaFestival. Come. You may hear one that could change the course of your life or business for the better. Who knows, inspired by something you've seen or heard, you may be the one to ask it.

Stay curious!

Wayne

Image: Geoff Oliver Bugbee

Think like Sherlock Holmes. Maria Konnikova confirmed for IF13!

Well, in case you haven't picked up on the hints from the blog posts, we can now confirm that Maria Konnikova, author of the best selling "Mastermind: How to Think Like Sherlock Holmes," is among the confirmed speakers for IdeaFestival 2013!

Other speaker announcements and information on how you can attend IdeaFestival 2013 will be available soon.

Be sure to subscribe to our IF newsletter and follow us on Twitter, Facebook and YouTube to stay up-to-date on the latest news and announcements from the IF Team.

Stay Curious!

Wayne

Image: Geoff Oliver Bugbee

What happened once upon a time happens all the time

What happened once upon a time happens all the time.

Buried in a story linked by @beingtweets recently, I stumbled upon this quote and immediately liked it because its use of "once upon a time" speaks to a children's tales, to faith of every kind and to what we've recently come to know about human frailty.

Most religious traditions, including mine, describe how we'll pass by trouble, or an obvious need, without taking the time to investigate - or help. If you travel, you're are familiar with the homeless who wander urban centers. I'm guilty of pushing past them too.

But these days, our frailty has been located in our biology, not just our ethics. Daniel Simons, who has spoken at the IdeaFestival by the way, is well known for a series of "invisible gorilla" videos that illustrate just how "inattentional blindness" can cut us off from the obvious. We humans can look past what's in front of our noses with remarkable ease. The philosopher of psychology, Eric Schwitzgebel, has written extensively about how opaque we are to ourselves - even when volunteer subjects, for example, have been instructed to report certain events in environments favorable for extended reflection. He has concluded that "we are not simply fallible at the margins but broadly inept."

But an inability to fully know ourselves also serves us well. Who, otherwise, would mentally step outside old (and ancient) habits of mind that prioritize threats instead of opportunities, or question received wisdom and "common sense" that can hide better solutions, or press on in spite of the latest hurt? "Once upon a time" is associated with a fairy tales, but it's our unknown, and unplumbed, depths that leave room for the happily ever after.

Stay curious.

Wayne

Image: Some rights reserved by infomatique

Sherlock Holmes does not care for your Pink Elephants

Sitting down with the technology journalist Om Malik in the video posted here, Maria Konnikova describes the ways in which the fictional detective Sherlock Holmes still speaks to her, saying that his observant, all-seeing mind and quaint single tasking methods are particularly relevant to the digital age.

Holmes' skill: treating any thought, which requires an initial credulousness to fix the idea, with an appropriate skepticism.

From the New York Times yesterday:

'Holmes’s trick is to treat every thought, every experience and every perception the way he would a pink elephant,' Ms. Konnikova writes. 'In other words, begin with a healthy dose of skepticism instead of the credulity that is your mind’s natural state of being.' This requires mindfulness — constant presence of mind, 'the attentiveness and hereness that is so essential for real active observation of the world.' If we want to think like Sherlock Holmes,' we must want, actively, to think like him.' And practice, practice, practice.

We also have to learn to ignore the superfluous.

Separating the merely unnecessary from the half-truths is a constant need in these digital days, the perfect job for Holmes - or The Onion. If the first step is always one of momentary belief so that the mind can take in the information, it's the second one, the "hereness" of an appropriate and learned skepticism, that is in such short supply. The two options on offer today appear to be a belief of the conspiratorial variety, or a resolute and unmoving disbelief -  despite the evidence.

Watch the video. I'd love to know from Konnikova how Holmes would bring his critcal thinking and its skepticism into the 21st Century, or if what we need instead is merely to be reminded of old skills and "practice, practice, practice."

Maria Konnikova is the author of “Mastermind: How to Think Like Sherlock Holmes.”

Wayne