Commonplace Book: August 2004 Archives

Following on the previous post (my enthusiasm for this book bubbles over) this bit of analysis:

from The (Mis)Behavior of Markets
Benoit Mandelbrot and Richard L. Hudson

Second, contrary to orthodoxy, price changes are very far from following the bell curve. If they did, you should be able to run any market's price records through a computer, analyze the changes and watch them fall into the approximate "normality" assumed by Bachelier's random walk. They should cluster about the mean, or average, of no change. In fact, the bell curve fits reality very poorly. From 1916 to 2003, the daily index movements of the Dow Jones Industrial Average do not spread out on graph paper like a simple bell curve. The far edges flare too high: too many big changes. Theory suggests that over time there should be fifty-eight days when the Dow moved more than 3.4 percent; in fact, there were 1,001. Theory predicts six days of index swings beyond 4.5 percent; in fact, there were 366. And index swings of more than 7 percent should come once every 300,000 years; in fact, the twentieth century saw forty-eight such days. Truly a calamitous era that insists on flaunting all predictions. Or, perhaps, our assumptions are wrong.

When I was doing my graduate work, I hated most statistics. Most particularly I hated "random walk" models and "monte-carlo simulations." Whenever there was an anomalous blip that could not be readily explained, someone trotted out these hoary old creatures and set them to dancing.

How dellightful then to chance upon this:

from The (Mis)Behavior of Markets
Benoit Mandlebrot and Richard L. Hudson

With such theories [Bachelier's Analysis, Gaussian Curves (Bell-Curves), and Random Walks] , economists developed a very elaborate toolkit to analyzing markets, measuring the "variance" and "betas" of different securities and classifiying investment portfolios by their probability of risk. According to the theory, a fund manager can build an "efficient" porfolio to target a specific return, with a desired level of risk. It is the financial equivalent of alchemy. Want to earn more without risking too much more? Use the modern finance toolkit to alter the mix of volatile and stable stocks, or to change the ratio of stocks, bonds, and cash. Want to reward employees more without paying more? Use the tollkit to devise an employee stock-option program,with a tunable probability that the option grants will be "in the money." Indeed, the Internet bubble, fueled in part by lavish executive stock options, may not have happened without Bachelier and his heirs.

Alas, the theory is elegant but flawed, as anyone who lived through the booms and busts of the 1990s can now see. The old financial orthodoxy was founded on two critical assuptions in Bachelier's key model: Price changes are statistically independent, and they are normally distributed. The facts, as I vehemently argued in the 1960s and many economists now acknowledge, show otherwise.

The financial equivalent of Alchemy! Now there's a delight. I'll be the first to admit that I understand almost nothing of the stock market and its workings. What's more, life is too short, I don't plan to spend a lot of time learning more--I have far more essential things to be spending time with. However, my general theory of statistics and most statistical approaches was shaped, in part by my advisor, who quoting some source, now lost to memory, used to say, "A scientist uses statistics as a drunk uses a lamppost--for support, not illumination."

Yeah. Well, he had a higher opinion of most statistical work than I do. Once I discovered that you could manipulate your statistics by running non-parametrics, I realized that you could indeed make black into white. Didn't like the graphing in eigenspace try canonical cross-correlation, or better yet, run a rank variable analysis and then use a nonparametric correlation technique. I could run the information from my fossil sites through the number cruncher and come up with any environmental model you wanted. Want to prove that there was a gigantic four-hundred mile-an-hour hurricane that lasted most of the Permian Period? Just dump that paleocurrent data you derived from bryozoan analysis into the magic black box and turn the crank. You'd be amazed at what could spill out.

So, I will long cherish the trenchant analysis--"The financial equivalent of alchemy." Oh well, perhaps it's one of those things that you have to have been there.

I found this quotation interesting and horrifying.

"At the beginning of the year [1603], there were about 4,000 people in Lancelot Andrewes's parish. By December 1603, 2,878 of them had been killed by the disease [plague]."

from Adam Nicolson God's Secretaries: The Making of the King James Bible

I don't quite understand the purppose of a book like Less is More: The Art of Voluntary Poverty, unless, like many devotionals it is designed to provide food for meditation and reflection. I don't much care for devotionals, and most books of quotations give only momentary interest. However, this has some interesting reflections both from the relligious world and the secular world against the society of consumption and use.

from Less is More
Edited by Goldian Vanderbroeck

We forgot that the sensual objects were pleasant and cool only like the shade under the hissing hood of an angry serpent and we sought them as capable of giving us happiness. --Sri Changrasekhara Bharati Swamigal, d. 1954

Riches destroy the foolish, if they look not for the other shore; by his thirst for riches the foolish many destroys himself as if he were his own enemy. --Dhamapada

Let thy walk be an interior one. Blessed Henry Suso, ca. 1295-1365

A certain hermit named Kyo-yu owned nothing whatever: even water he drank out of his hand. Seeing this, someone gave him a bowl made of a gourd. One day, he hung it on the branch of a tree but the wind made it bang about and rattle noisily, so he took it and threw it away and drank water out of his hand as before.-- Yoshida Kenko, 1283-1350

In everything, love simplicity.--St. Francis de Sales, 1567-1622

Unless a man is simple, he cannot recognize God, the Simple One.--Bengali Song

That most of us are considered poor is no disgrace, but does us credit; for, as the mind is weakened by luxurious living, so it is strengthened by a frugal life.--Minucius Felix 3rd Century AD

Teach children to want little while they are little.--Surya Prem, 1965

Luxury enters into citities in the first place, afterwards satiety, then lascivious insolence, and after all these destruction.--Pythagoras, 6th century BC

What is detachment? That which clings to nothing. Spiritual poverty clings to nothing, and nothing clings to it.--Johannes Tauler, 1300-1362

Possessions give me no more than I already have.--Rene Pascal, 1623-1662

A variety of thoughts on the subject of voluntary poverty and simplicity of spirit. The two are not identical, but they do walk hand-in-hand. I do not think simplicity of spirit is possible as long as we continue to desire more of anything. Until we can learn to be content where we are, we will largely be unable to advance. And this must be one of the very hardest lessons for those of us living in one of the most privileged places and cultures of all time.

Glancing through the unread books that litter too many shelves in my house, I found this one. Leafing through the pages, I found some insights worthy of my attention. Likely it will be next on the list after Dallas Willard.

from A Tree Full of Angels: Seeking the Holy in the Ordinary
Macrina Weiderkehr

I am concerned about he many people today who are lured to extraordinary spiritual phenomena that are manifested, it seems to me, in sensational ways. Stories abound about visions and trances, weeping statues, rosaries turning gold. Celestial beings are emerging everywhere, and angels are in danger of becoming trendy. The fast pace of our lives makes it difficult for us to find grace in the present moment, and when the simple gifts at our fingertips cease to nourish us, we have a tendency to crave the sensational.

A second concern is this: As we pine for angels and the otherworldly, there is the danger of missing a precious aspect of Christiianity. We are an incarnational people. The Word was made flesh in our midst. We are rooted in an earth that God has proclaimed good. Here on this good earth we have become flesh with the seed fo God hidden in us. THe greatest of all visions is to see Christ, indeed, to see God, in the frail and glorious human family of the world.

Too easily I tend to dismiss the everyday, the very essence of God's speech to us. How often have I overlooked His direct word to me in the events of the day, seeking extraordinary guidance by a word, a sign, by bible roulette? I cast about seeking God, and He is right there before my eyes. I need only open them and see His Will displayed in every event, in every action of the day. I numb myself to the world, buying into the Manichean tendency to separate the spiritual (=good) and the material (=bad). Although I know better, I cannot seem to overcome my naturally dichotomous mind. I know the spiritual is good, and that good must have an opposite--the opposite of spiritual is material and the opposite of good is bad. But I deceive myself with the facile syllogism. The reality is that spiritual does not mean necessarily good. Satan and his fallen angels belong the spiritual. Hence, the dichotomy is false; and yet it is embedded. Nevertheless, there are moments when God's sense breaks through and I am enfolded in an epiphany of His revelation in the goodness of the world around me. Hence, the need to open my eyes and to be continual enfolded in the events He has caused to be my life. To learn once again what it is to rejoice in the goodness of the world. To become, in this sense, the litle child for whom all things are wonder and light.

TSO made an excellent point about the plethora of great Catholic Classics available for us to read. In large part I agree with him; however, I sometimes find that the Catholic Classics fail me, not because they are not good works, but because so few of them come from a time near enough to address the issues I face every day. Yes, they teach immortal principles and should be read for that reason alone. But sometimes it is good to hear a voice, like that of John Paul II who faces what I face today and who gives me some guidance as to how to deal with. For that reason, I do read a variety of spiritual works from all times, not wishing to succumb to chronological snobbery in either sense.

That said, suffice to say that I abandoned the Monks of New Skete, largely because of the company their publishers decided to have them keep. I hadn't noticed the "publicity" on the jacket and when I finally looked I noticed overwhelming acclaim from Rev. Frank Griswold and Peter Gomes. From what I have seen of other works by these two men, I find myself in disagreement with their approach to the Bible, and in all likelihood much of their approach to spirituality. (As to this latter I cannot definitively say as no single work is likely to have spelled out their complete view of spirituality. But as they tend to take the guidance of scripture somewhat lightly, I have sufficient grounds for discontinuing my reading. ) After the first shock of those recommendations wears off, I will likely return to the book. But because I had Dallas Willard's Renovation of the Heart at home anyway, I thought I would pick IT up in preference to the Monks of New Skete for the time being.

from Renovation of the Heart
Dallas Willard

We must make no mistake about it. In thus sending out his trainees, he [Jesus] set afoot a perpetual world revolution: one that is still in process and will continue until God's will is done on earth as it is in heaven. As this revolution culminates, all the forces of evil known to mankind will be defeated and the goodness of God will be known, accepted, and joyously conformed to in every aspect of human life. He has chosen to accomplish this win and, in part, through his students.

It is even now true, as angelic seraphim proclaimed to Isaiah in his vision, that "the whole earth is full of His glory,” the glory of the holy Lord of hosts (Isaiah 6:3). But the day is yet to come when "the earth will be filled with the knowledge of the glory of the Lord, as the waters cover the sea" (Habakkuk 2:14, emphasis added).

The revolution of Jesus is in the first place and continuously a revolution of the human heart or spirit. It did not and does not proceed by means of the formation of social institutions and laws, the outer forms of our existence, intending that these would then impose a good order of life upon people who come under their power. Rather, his is a revolution of character., which proceeds by changing people from the inside through ongoing personal relationship to God in Christ and to one another. It is one that changes their ideas, beliefs, feelings, and habits of choice, as well as their bodily tendencies and social relations. It penetrates to the deepest layers of their soul. External, social arrangements may be useful to this end, but they are not the end, nor are the fundamental part of the means.

What I liked particularly about this description is the revolution of Jesus as a revolution of character which does reflect itself in the transformation of the world, but not a revolution in the world that affects transformation of character. I think it rightly sets the matter in order. First we change, and then through our change we effect change in the world. It is one of the reasons that restrictive laws with regard to very popular things have so little effect--prohibition and anti-pornography legislation come to mind. But the focus on individual transformation in Christ seems exact. What is even better is that Willard suggests, as those of us within any Church community already know, that this transformation does not take place in isolation but in the community of believers. We are affected by what happens around us, good and bad. Witness the calamitous and still reechoing effect of the scandals a year or more ago. We will be living with the pain of that betrayal for some time to come--it inflicted a grievous wound to the Body of Christ.

We understand the communal nature of salvation and of transformation. And again, Willard uses the proper term for this when he speaks of Spiritual Formation, which can only rightly occur within the bounds of a community. (In a sense, this is where the old adage, "It takes a village to raise a child," is fundamentally true. We need a rock-solid foundation in the faith, and part of that comes from seeing different ways of being believers and still functioning in the world. The community of faith offers a great many models for us to observe and to take our lead from. Hence, the Church is especially blessed in her continued recognition of the Communion of the Saints--extending our community of models into eternity.)

I suspect that I will read this book very slowly, and I do hope to share some of the fruits of that reading with you. However, I do expect to read it exceedingly slowly. So expect reports over a fairly long period of time.

(in the Joycean sense)

from In the Spirit of Happiness
The Monks of New Skete

Life never seems to prepare us sufficiently for epiphanies. By definition they come upon us suddenly, dazzling us by their raw power. They are not magical intrusions from another world, but reality, naked and without shame. Their very ordinariness shimmers with unexpected depth, which is why they take us by such surprise. It does not matter whether they occur in the majesty of Hagia Sophia or in the elegant simplicity of a wooden chapel, the effect is the same.

Indeed, when God breaks in, it little matter what the location, His presence is profoundly felt.

From the Intercessions in Morning Prayer, my sincere prayer for all who visit and for those unable to visit--my companions in the spirit.

May our companions today be free of sorrow, and filled with joy.

What a truly wonderful blessing is the treasure-trove of the Church's tradition. Praise God for this gift.

And another snippet:

Let the radiance of Your love
scatter the floom of our hearts.
The light of heaven's Love has restored us to life:
free us from the desires that belong to darkness.

How mysteriously familiar the following may sound. Certain key words have been deleted in the interest of articulating the profound similiarities:

When urged. . . to support the . . . petitions in the House, [he] responded, "Altho I feel the force of many of your remarks, I can not embrace the idea to which they lead." When pressed to explain the dispcrepancy bewteen his hypothetical position and his actual dedication to self-imposed paralysis, he tended to offer several different anasers. Sometimes it was a matter of his . . . constituents: "Those from whom I derive my public station," he explained, "are know by me to be greatly interested in that species of property, and to view the matter in that light."

All through you knew that it wasn't the person who speaks today. But who is the speaker?

The excerpt comes from Joseph Ellis's magnificent study Founding Brothers (p. 113-114 in the trade paperback edition) and the speaker is James Madison. Of course, the subject is slavery.

When Madison and his generation refused to deal with the problem of slavery they simply left a pot on to boil. That pot would eventually erupt into one of the saddest and most divisive struggles in the history of our nation--a war that lasted a little over four years, but the implications and emanations of which survive until the present day.

For those that argue that it is legitimate to allow evil to continue to exist in deference to a majority opinion or out of service to one's constituents, this should provide lesson enough on where that path leads. When such fundamental moral conflicts simmer, the end result is either what we know to be right, or the potential for a great deal more wrong.

Our present debate may take as long to erupt, it may never erupt in this fashion; however, it does tear at the fabric of society.

For those who argue that we should not pass laws that impose our own vision of morality on others, I think it's important to point out that nearly all laws impose someone's vision of morality upon us. If we do not struggle to try to keep that line clearly defined, the laws that will pass will land us in the same world as people in the Netherlands now face. We start with euthanasia upon request and we end with euthanasia at the request of another. A variant of the slippery slide argument I realize.

However, support of a candidate who supports what is unquestionably a moral evil derived from an immoral license tends to dull our senses to what is truly evil. To say that we will vote for so and so and then work to change this stand is like so many women who move from one abusive relationship to another. In each they have great hope for changing the person they knew when they entered the relationship. The sad reality is that it happens all too seldom.

It is unlikely that we will change either the people or the parties that back them. Many have already said, and I agree, that the only recourse is not to participate in one of those two parties, but either to find some other party that represents our interests or start a party that would do so.

The problem with this last suggestion is that given the diversity of opinion just within St. Blogs on any number of non-religious issues, what would be the unifying principle other than pro-life? Perhaps that is enough. But is Pro-life also pro-gun-control? Is it economically conservative or liberal? Is there a prefential option for the poor or "medical spending accounts" as a solution to the problem of no health insurance? What is the face of pro-life once you move beyond that issue? Is that issue in itself enough to form a party? Would the internicine divisions allow it to be effective in any way?

I think the issue is strong enough to form a party. But would it end up being like the Women's Christian Temperance League? Would it work toward an end that society ultimately could not tolerate for one reason or another? Would this one issue group push us toward the new version of the nineteenth and twenty first(?) amendments?

I don't know the answer. But it all comes back to the rhetoric that has been with us since the beginning. "Personally, I find it morally repugnant; however, who am I to force my morality upon others?" Leadership is more than making laws, it is showing the way to live. If you don't feel qualified to speak on moral points and to point the way for a people lost in themselves, then perhaps you should consider another profession.