kvcc01

It seems the indices are down 30% or so from their prior highs, which is unpleasant but nothing like the 1929-32 period. Even Nasdaq had cratered far worse in the early 2000s. By comparison, Dow Jones went from 381 to 41 in just about 3 years from its 1929 high, which is an astonishing 90% loss. Actually I didn't know it was that bad until I looked it up.

Of course! What makes this letter effective and relatable are all those little things that wouldn't have passed the ordinary editorial, legal, or PR filters, if it were written by a typical corporate CEO. If I was teaching at business school, I'd have my students read this as a model of effective stakeholder communications. I think Mr. Watanabe is a shokunin (you know, in the Jiro Ono sense) of the chalk business.

I read the whole letter and loved the tone of it! It jumps at you right away that: (1) Here's a guy who really cares about his business, its future, his employees. (2) He talks candidly about the reasons for closing up: his declining health, sales volumes, even including awkward sentences like "So chalk is more environmentally friendly, I think." I am now a fan of Hagoromo.

It was rather refreshing at a time when I can't stand reading more than a paragraph of a typical press release of a BigCo written by lawyers or PR specialists. Unlike this essay, those are intended to obfuscate, not to inform.

Yes, there’s a "frequency spectrum" of sorts and HFT is at the short end of it. Here, your models monitor and react to trading tick-by-tick, and execution speed is paramount. It’s also where you have the fiercest arms race for the fastest systems, colocation, FPGAs, etc. Next up comes what’s often called “statistical arbitrage,” where you have models that no longer look at tick-by-tick trading but may look at what happens at 30-second, 1-minute, or 5-minute windows. Here you have more interesting relations emerge between stocks and the market, e.g., what does IBM do relative to the tech index, or relative to MSFT, etc. (Such cross sectional relationships don’t seem to matter as much in HFT.) Actually stat-arb was the domain where the earliest statistical approaches such as "pairs trading" emerged. Next up come models that trade daily (or less frequently), and here you begin to see the long-short market-neutral relative-value type of approaches, where some quantitative [mutual] funds may operate. Next up will be the traditional mutual funds, and beyond that you have your Warren Buffett’s, etc.

One thing to keep in mind is that the higher your trading frequency, the smaller the price moves you can hope to capture, which limits how much capital you can deploy in your models. This is why HFT models are usually small in size but have high Sharpe ratios. As you reduce your trading frequency, you can expect to capture larger price movements and deploy more capital but you’ll also be exposed to more of the vicissitudes of the general market, so your Sharpe ratio will decline. Market participants usually carve themselves a happy spot on this frequency spectrum and stay there. I don’t know of any firm who is successful at every spot.

I work in quantitative finance and find that basic probability and statistics help a lot in this field. In fact, they are almost like prerequisites for hiring.

That said, I think everyone would benefit by reading a bit about these subjects, whether or not they’re developers. We seem to have a built-in tendency to underestimate the effect of randomness in life (see Fooled by Randomness and How to Lie with Statistics). To counteract that, I find statistical methods (e.g., hypothesis testing, confidence intervals, etc.) to be very useful tools to keep in mind. Having basic familiarity with such tools may not necessarily make us better programmers but it'll probably make us more rational decision makers in the general sense.

This degradation in comforts of air travel is very regrettable. Especially when it comes to seat pitch, coach class is clearly denied what is necessary and, worse still, this is intentional. There's a lovely quote by a French engineer named Jules Dupuit going back to 1849, which explains the conundrum. I think he was talking about railroad cars but the argument applies to air travel just the same. Quote:

"It is not because of the few thousand francs which would have to be spent to put a roof over the third-class carriage or to upholster the third-class seats that some company or other has open carriages with wooden benches ... What the company is trying to do is prevent the passengers who can pay the second-class fare from traveling third class; it hits the poor, not because it wants to hurt them, but to frighten the rich ... And it is again for the same reason that the companies, having proved almost cruel to the third-class passengers and mean to the second-class ones, become lavish in dealing with first-class customers. Having refused the poor what is necessary, they give the rich what is superfluous."

Snapchat is doing well. I sometimes get on the bus around the same time when the local high school is dismissed, and watch in amazement all the kids pull out their phones and work through their accumulated snaps for the day. Some have hundreds. It's a 45-minute ride to my stop and they’re still watching when I get off.

Few months back I got jealous and installed Snapschat myself. It conveniently scanned my contacts, and found that none of my friends are on it. (I’m late 30s.) To this day, the only snap I received is the default welcome message they send to everyone.

They’re doing a good job of confining their appeal to their target age group. The minute I and my peers appear on Snapchat, it's time to get worried.

And then there's snapchat.com, which is another enigma. I consider myself a reasonably competent technologist but Snapchat makes me feel like an ape trying to figure out a mysterious monolith.

I agree with you both. "One can, and one should," and it’s even better if the profession provides a mechanism to remove from practice its own worst offenders. The AMA/ABA examples I gave above do not just offer protection to their members, but they also hold power to send their unethical practitioners to the poorhouse. (If you’re a junior physician with lots of student loans but lose your license due to an ethics violation, I don’t know what you’ll do. Loans don’t go away in a bankruptcy.) So those professions come with a terrible downside for flagrant violators. We don’t have any such downside in software, which may explain some of the moral depravity mentioned.

A Hippocratic-like oath by itself would be useless without a powerful professional organization watching out for our interests. If I take the moral high road and get fired by my MBA boss, I have no course of appeal. If an MBA were to fire a doctor for refusing to compromise on ethics, I'm sure the AMA would unleash hell on the MBA. Same for lawyers and ABA. Actually those two organizations make it difficult for MBAs to manage their members so they have two safeguards we lack. (I've seen this in the bank I work. The lawyers report to other lawyers all the way up to the general counsel, who reports to the CEO and the board. Such structure makes it easy to keep ethical conduct high priority without fear of retribution from the MBAs.)