reflexivity Wednesday, September 8, 2004 9:19 PM
Last few years I have attempted to develop a writing style. Never before have I worked at it. “I’m not good at it, why try?” I would say. But with the changes in the tech market and traumatic events, I have come to appreciate the advantage of communicating in English
My reading and writing were all part of my plan to adjust to changes in circumstances. Reading over what I started to write, I could not sometimes understand what I had just wrote; other times peoples response would be totally different then what I had intended. Mostly it was only the ten second scan.
Last year I stopped writing code and was dedicated to improving my reading and writing, this year, not having found anyone to pay me to write English, I am back to coding. I explored books on financial trading learning about its history and notable events in recent history like the collapse of Long Term Capital. I was involved in past employment, never having an opportunity to read about the history, my contribution was strictly technical. The books I read then were strictly technical. I build models to translate from one value to another. Always under the sponsorship of a trader who was responsible to combine the results from the models and take the risk.
The models never could encompass the whole problem; there was other element. This perception reinforced what I felt happening in my life. I had certain control over the physical world yet felt victim when dealing with people. How could this be? How come people so readily disregard the rules? I had to be missing something. Focusing on the models keep me in food and cloths but left me without much control over my destiny.
Let me list some of the title of the books that put clarity on this problem. “The Alchemy of Finance” by George Soros, “Fooled by Randomness” by Nassim Nicholas Taleb and “When Genius Failed” by Roger Lowenstein. The common point of these books was that logical deductions are inadequate in solving problems that extend beyond simple technical problems.
Soros coins the phrase reflexivity. The central idea of which is -when two people enter into a trade they develop a mythology that they both can agree upon. It starts with a common understanding of the fundamentals but extends beyond. This is why markets bubble up and crash. In Lowenstein’s book the story is told about long-term capital management a fund that was managed by “geniuses” from MIT. They thought they had a sure thing and managed trillions of dollars under their hedge fund only to crash badly during the late nineties and needed to be bailed out by the government to keep the markets from collapsing.