Here is a fun game for all of you. A certain vendor sells decision systems over a bunch of vertical industries. Here is a blurb from one of their webpages that outlines their offerings for the financial industry:
Modeling: Price and Risk Models
We model the equity market as an open, irreversible, far from equilibrium thermodynamic model subject to dynamic constraints. This approach results in a bi-linear model composed of two dynamical sub-models: price evolution and risk evolution. The price evolution sub-model represents the behavior of pricing of commodities and a market aggregate as a function of exogenous demand and control actions. The risk sub-model represents the behavior of risk as a function of exogenous uncertainty and actions. Further, the risk sub-model represents the uncertainty range of the values computed by the price evolution model.
The game here is to decode the blurb and tell me what this system does.
©2006 Marc Adler - All Rights Reserved
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1 comment:
It hopefully attracts gullible customers who watch Numb3rs on CBS.
In a world where people buy on rumor and sell on news there is usually limited success at best in attempting to map physics terminology/concepts to financial markets.
IMHO a better approach, and one with even more opportunity for ground breaking gobbledegook, would be to model the markets based on the principles of Evolutionary Cybernetics (see http://pcp.vub.ac.be/EVOLCYB.html ).
This would allow the combination of Chaos Theory, Universal Darwinism, Memetics, Psychology/Ethics, and the Peter Principle, amoung other things! Any recent Scott Adam's publication should provide a good starting point.
- ratbert
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