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The Modern World-System IV: Centrist Liberalism Triumphant, 1789–1914

September 20, 2015 / posted in Business, dialectics, life as we know it, rational choice theory and homo economicus, reviews, Theory / No Comments

The Modern World-System IV: Centrist Liberalism Triumphant, 1789–1914The Modern World-System IV: Centrist Liberalism Triumphant, 1789–1914 by Immanuel Wallerstein
My rating: 4 of 5 stars

In this latest installment of his amazing series, Wallerstein shows us how various contemporary institutions arose as a response to the sudden awareness the French Revolution engendered: that people could self rule.

From this point, the elites took over, commandeered the economic and political machinery and proceeded to institute laws in the name of equality. These laws/policies split populations into groups to divide them for state/technocractic management. We can thus understand the development of the modern state as the development of various fragmented knowledges (of technological/social institutional agency) in the name of the social body.

Wallerstein does not talk too much about technological development — in fact this period of world history is THICK. He sticks mainly to institutional development as the development of the state ideology — which it is his argument that this multifaceted approach to ideological interpellation has largely succeeded by this point. The elites rule the world. It is the triumph of the centrist liberal state to co-opt two other ideologies, progressivism and conservatism as arms pushing forth its own agenda for further globalization.

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Discourse as Social Interaction

September 20, 2015 / posted in Business, dialectics, reviews, Theory, utility / No Comments

Discourse as Social InteractionDiscourse as Social Interaction by Teun A. van Dijk
My rating: 3 of 5 stars

This is a fairly standard introductory text. Here we see a Foucaultean influenced approach to rhetoric in which the positions and interruptions, cuts and corrections of a text reproduce the power structures and people’s places in them. Knowledge is presented as active positioning within a time index. This is managed through a variety of different contexts, each chapter meant to highlight a cut of institutional rhetoric, whether this is between sexes, as politicians, in a community, between races and so on. All the differentials are made available when we take a specific view — with our knowledge of how those institutions work. Is this a manner of finding the information we want in the text? Or are we super imposing only one view? There is only one view available at a time, otherwise how can we tell if someone is behaving in this or that manner due to their positions in a transaction (store owner, customer) or race, or age or any other difference?

This is where discourse studies breaks down, because we can’t isolate those interactions solely though one context at a time except in our study. In real life these contexts cross over each other and depattern one another.

In many ways this was a good refresher as to the many approaches and methods, although these different views only work because we assume an identity as a more basic substrate to the participants identity — one founded on the unquestionable equality of subjectivity. It is only with this unquestionable “0 level equality” that we are able to understand that there is a difference in power between participants. This difference must then be attributed to the institution and their relative agency in their roles, because without it, how could we under that there is any differential at all (so therefore, they must be equal).

This normalization of equalization has often been the role of universities in order to insist that knowledge based approaches is a way to elitist enforced equality… that the advanced studies of rationalization (mostly only available to the wealthy) is the way for one to signify that one is more deserving to be equal and not fooled by the power differential of institutions used to create inequality.

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The Romantic Manifesto

August 21, 2015 / posted in Business, dialectics, images of being-human, rational choice theory and homo economicus, reviews, Theory / No Comments

The Romantic ManifestoThe Romantic Manifesto by Ayn Rand
My rating: 3 of 5 stars

This book more clearly explains Ayn Rand’s position than any other book of hers I’ve read in the past.

Rand is often hotly contested; but it’s not enough to say that something nonsensical or stupid because to truly understand something we should be able to explain what it is or why something is dismissed. Not only that but we should also be able to explain how a view is (in)valid. In a sense, Rand often fails to explain what is detestable in others, resorting to words like “evil” or “irrational” to carry an emotional weight in her argument.

(Un)surprisingly though, there is much in here that is admirable. After all, anyone who can inspire and move people like she does must say something somewhere that is correct.

What is interesting is that there is much basis for similarity between herself and other thinker’s conclusions she would dismiss as they argue from a very similar basis. As hinted before, I do believe that she is a bad reader of Kant, for example.

She is correct, that Kant is the root of what she detests in modernism, but Kant’s concept of will, reason and pragmatics leads him to very nearly the same structure that Rand poses. Kant sees reason as being a tool for will finally, because Kant dismisses “pure reason” as being inherently undecidable. Rand doesn’t see things this way. She believes will is a tool for pure reason because “a=a”; that functionality is purpose therefore a consistency in reason will work itself out if we have the will to do so. This last point of reason and will being only positive is perhaps the biggest flaw for her philosophy.

In this way Rand is actually alot like Heidigger. Both Heidigger and Rand believe that language is reasonable, and non-contradictory in-itself. Both believe that ironing out consistency in languaged reason will result in successful and fulfilling lives.

This makes them both throwbacks to early modernism, towards a kind of Cartesian truth-value. This signifies a break because it is Kant who provides the initial break in his critique of pure reason that demonstrated a gap inherent within things-in-themselves and a gap within our relationship with those things. The gap with our relationship with those things formulates a basis for science and for existentialism. Unfortunately not many understand that the split also echos within reason itself, so that reasoning through sheer consistency will undeniably lead to contradiction.

Given a post-Kantian view, of which society has progressed towards, there can be no point of view from which the world will be stable, without consistency, because the world is not consistent in a human fashion. It is this last point which Rand seems unwilling to grasp resorting instead to calling all that is thought to be rational (including Classism) as subjective and arbitrary. She is correct. All views are inherently subjective and arbitrary, including her own. What makes Kant non-arbitrary though, is that he grounds human behavior and a will to maxims in his critique of practical reason that is in the supersensible. This gives up reasoning in this world as a coherency in favor of a faith, which is what makes Kant still a christian philosopher.

Rand of course, cannot stand this. From her assumption that functionality in the world is purpose, and that making one into a functional person will result in purpose she proves remarkably consistent in her assessment of the arts throughout this small book. What makes her irritating to read however, is that she is unable to express herself beyond calling positions she dislikes evil or irrational. It is in her style to insist on a singular view that is ultimately arbitrary… without providing a neutral grounds to assess what is meaningful we cannot help but judge everything else as being arbitrary to something else. Rand does seem unable to explain herself philosophically — hence she does so artistically to give us feelings of purposefulness.

Unfortunately for her, if the adherence to will as a resolution of being in existentialism is irrational then her art/philosophy in which characters will themselves to a resolution of function and purpose must also be equally irrational.

Calling something philosophy or rational doesn’t make it rational if you cannot provide a cogent basis from which to assess everything else including your own work. After all, if continual self insistence is adequate than it should be equally adequate for anything and everything else as well…and given a modernist aesthetic in which there can only be one truth and language can only mean one thing this last “equally adequation” would be inherently unacceptable!

But I doubt that Rand has the ability to express why language should be a seamless and complete consistency (a=a) with reality other than “it is”

Still, despite my disagreement and all the holes I’ve just poked at her work, I do admire the clarity with which this book is written. After all, without this clarity I would have had a harder time finding the conflicts inherent in her own writing.

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Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

August 21, 2015 / posted in Business, dialectics, images of being-human, rational choice theory and homo economicus, reviews, rules, Theory / No Comments

Fooled by Randomness: The Hidden Role of Chance in Life and in the MarketsFooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb
My rating: 2 of 5 stars

As impressive as this book sets out to be, about 1/3 of the way through Taleb sets a very impressive bar for himself. By citing Hume’s critique on induction, Taleb aligns his thoughts on probability with Hume’s critique of induction. He then nearly immediately backs off from Hume’s scathing remarks on causality to say, well, no, we don’t want to go that far, there is causality.

The rest of the book is disappointing. Despite his address on the subject in a variety of ways, Taleb never returns to tell us what rationality is or how he realizes there is causation (to separate the signal from the noise, as he likes to say).

The rest of the book is a celebration of his own rationality. Very slyly, he then insists on his own rationality with the following structure (all the while admitting that he is not totally rational but aspires to be as such, at least in his career).

He demonstrates that scientists, other stock traders, humanities academics and so on often persist on their lines of consistency because they are beholden to such positions based on their career, despite their attempts at rational argument. He then states that because he changes his mind often in his work, he is not like them. Thus, as they are irrational and he is not like them, ERGO he must be rational.

Sorry buddy, proofs by negation do not work in real life.

There are a few failings that occur out of this.

1. Despite propounding on what is not rational (an inconsistency of basis given what is actually driving their work) Taleb fails to explain what is rational.

2. Taleb insists that he understands that there is causation despite Hume’s critique of induction — but nonetheless never addresses that point. His proof by negation is repeated maybe two or three times, and then he leaves off at that. He utilizes philosophy’s context to heighten his remarks on others but neglects to engage at that level with that context when he decides to disagree with them.

3. Changing one’s mind mysteriously without explanation may be a perfectly good behavior for a stock trader, but it is not a sign of rationality. Instead, given that academics, scientists and politicians cannot change their mind because of their career, we should understand that stock traders judged on their performance MUST change their mind because marks change it for them. If stock traders are rational because they must match their career context to survive, does this also not signify the rationality of academics, politicians and scientists because their career context requires them to behave in a consistent manner? If we judge people’s behavior based off of their career isn’t the proof by negation faulty because Taleb switches basis to assess different groups? If he wishes to judge the veracity of one group on one criteria should he not also judge other groups on a similar criteria when comparing what is rational?

4. Taleb seems to take it for granted that economic thinking is what rationality is. His he wishes his discourse to be intellectually, sound he should address Hume in terms of economics, instead of just referencing him and a bunch of other thinkers as signals of his intellectual prowess.

5. Early on, Taleb states that in the long run, all strategies even out, that given profit and loss, there is a zero sum situation. Throughout the entire book, however, he states that traders who get exceedingly rich are often so because their strategies match a trend for a time. When those trends change, they will lose out. He cites his own staying power as a sign of his own rationality. Does this mean that in the end no one is rational, that he is only right “for now”? I would think that this reading does not match the desired conclusion he wishes to leave us with about rationality.

And finally, in this sense, it seems that Taleb has no conception of rationality other than whatever allows us to have staying power. If this is true then he has to take back his statements on rationality in the face of academics, scientists and so on. He should also consider that “lucky” trends like memes which are proof of human irrationality are in fact rational in their persistence.

Taleb provides little means for us to address the ideas he puts forward critically. In fact, while he is critical of others, he provides little basis for his own rational backing. This started as a promising book but ended up being very disappointing because in the end we have the IDEAS Taleb admires although in terms of actual examples, he ends up very nearly being the only example of what is rational.

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Anarchy, State, and Utopia

July 18, 2015 / posted in Business, rational choice theory and homo economicus, reviews, Theory / No Comments

Anarchy, State, and UtopiaAnarchy, State, and Utopia by Robert Nozick
My rating: 2 of 5 stars

Basically Robert Nozick argues for small government because there is no process by which any intervening distribution could be fair.

In fact he may go so far as to be saying that there is no legitimate fairness at all, other than a given impersonal process of arbitration (none of which could ever guarantee fairness).

In essence, he supports small government because there is an absence of genuine legitimacy.

The fact that Nozick supports any given neutral process even given the context of contigency shows us that Nozick is really formally a bureaucrat in disguise.

Nozick however, creates an antinomy here by confusing 1st order phenomenon with 2nd order judgement. For instance:

Fairness is only possible because there are things that are unfair to begin with. I don’t think we can dispute that there isn’t any source of legitimacy. If there was a source then we wouldn’t have to worry about fairness at all. If there was a source (any given source) no doubt it would most likely be arbitrary in its absoluteness. Fairness like beauty is better as a metaphysical guide than an enforced physical standard. That is a difference with 2nd level orders, that they do not exist at the 1st level.

Other than this small quibble, which strikes at the heart of this book, Nozick is concisely written and clear headed. I have a feeling that his obscuration of fairness is deceptive, but that would impart ill-intention on his part. I do however, think that his pursuit of an analytical analysis stems from the same kind of ill-fated kind of origin as logical positivism in its insistence that its transcendental logics be of the same level/kind as the phenomenon it seeks to explain.

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The Effective Executive: The Definitive Guide to Getting the Right Things Done

May 29, 2015 / posted in Business, rational choice theory and homo economicus, reviews, rules / No Comments

The Effective Executive: The Definitive Guide to Getting the Right Things DoneThe Effective Executive: The Definitive Guide to Getting the Right Things Done by Peter F. Drucker
My rating: 4 of 5 stars

Peter Drucker outlines wha makes an effective executive. Perhaps understanding and anticipating the role of “technocrats” as nominalized by Galbraith, Drucker notes that effective executives make effective decisions.

A huge portion of this, as Drucker outlines has to do with a few things.

1. understanding the material process a corporation is embedded in (the industry, its market)
2. understanding the needs of individuals working within a corporation
3. understanding the material organization a corporation has for placing individuals

All of this is to structure and effectively limit (yet empower) employees agency for the corporation.

In this manner, effective executives must be able to understand the maximal agency of their own situation, in order to make decisions. Drucker also sagely advises that such executives don’t make decisions lightly but still do so in a timely manner. All of this rests on the maximization of a corporation/departments ability to enact materially. To understand this, one must of course, understand the technical requirements of the corporation/position as lived by people on the ground. In this way Drucker is correct in anticipating a regime of individual whose job is to make decisions from theory rather than practice. In this way, Drucker explains the larger mode of executive apprati, seeing a need for the contemporary executive to “think outside the box” by welcoming greater opportunity to process information, take in points of view, and weight things according to process metrics.

He also correctly anticipates the role of computers in requiring people make decisions more often. You can read this as a self help manual for improving your executive role, in aligning yourself for the corporate world. Or you can conversely see this book as a calibration needed for executives to fit the modern international corporation milieu. Drucker may be a little dated in some ways, with his examples, but on principles, this is still how business is run today.

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The Affluent Society and Other Writings, 1952-1967

February 8, 2015 / posted in Business, dialectics, images of being-human, life as we know it, rational choice theory and homo economicus, reviews, Theory, utility / No Comments

The Affluent Society and Other Writings, 1952-1967The Affluent Society and Other Writings, 1952-1967 by John Kenneth Galbraith
My rating: 5 of 5 stars

I am definitely a fan of Galbraith…and I don’t say that about many authors. While not a complete collection of his writing, this is definitely a good selection of what he was about as an economist.

What I find fascinating is that The Affluent Society and The New Industrial State come from an American economist (or Canadian if you like) and yet support many of Marx’s conclusions about merchant ideology. The sense that merchant capital extended to producers and consumers alike (producers since the Dutch in the 1600s and then, to consumers after WW2, as state backed consumerism) guarantees the use value that makes production monetarily sound (completing the material dialectic of merchant capital) ex post facto is astounding. That Galbraith extends this idea by recognizing that technology is the key to capitalism, in terms of production and social disruption, something not yet recognized by Adam Smith, Thomas Malthus, David Ricardo or Marx is will worth the read. If communist minded individuals and Marxists alike read more of Marx and actually kept their minds open instead of being reactionary we might have a deeper understanding of our state backed capitalism.

While Galbriath does not advocate revolution, he definitely insists that we need to change our values if we want to survive in a degrading environment and do more with our lives than make the anonymous bureaucrats wealthy (technocrats of our technostructure as he calls them).

Despite this insistence that humanity use its powers for more than making wealth and endless production and increased poverty and degradation, Galbraith adds with this thought a heavy analysis of the inner workings of state and industry as a unity that transcends the explicated boundaries of American politics. He understands that we are not really free anymore; that our freedom is limited to our consumerist subjectivity. While this analysis does miss some of Marx’s social understandings (that a change in material relations means a change in societal arrangement) Galbraith does add a refreshing view of how economics and infact higher education is complacent in arguing for the status quo. For why should they bite the hand that feeds them?

Furthermore, as we specialize deeper and deeper into fields of study, we lose the ability to connect the more general dots. Our world becomes fragmented across many areas. Specialists cannot see where they are going, much like those economists who eschew math appear less rigorous. People doing specific tasks will more likely see their world through the filter of that task, and be unable to comprehend outside of it. As our complexity in our world rises with each year, it becomes less and less likely that there is anyone driving the wheel. This is how we can see the technostructure, as an faith that promotes itself so that we become less and less able to break from it as time goes on, as our specific interests (employment, leisure, study) becomes less and less able to identify the nature of our cage — as an over arching planning structure. Much like how the planning system in the Soviet state was run by anonymous bureaucrats in a state apparatus, our planning system is run by anonymous technocrats in various corporate chains backed by a state system.

I won’t continue on about how this is reflective in our worldview of modernism — our production of epistemes — but there is a direct link here, between how our knowledge is formed and our value system is driven by philosophical, educational and economic concerns for no other reason than to develop itself further, for us to be more completely mired in its logic and its mindless production of demand desires and status on various corporate and civil chains of our own unthinkable making.

We live on this Earth, and fulfill the needs of the very game we create in order to live together on this Earth without ever really looking up and acknowledging that we have created extreme wealth and extreme suffering with no end in sight… if only so that one can be satisfied at the expense of another, and for what? So we can die together and leave the world a slightly more ugly place?

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Flash Boys: A Wall Street Revolt

September 9, 2014 / posted in Business, reviews / No Comments

Flash Boys: A Wall Street RevoltFlash Boys: A Wall Street Revolt by Michael Lewis
My rating: 4 of 5 stars

When you start this book, you’re given a vague impression that the “bad guys” are the high frequency traders (HFT) because they are exploiting the market, or cheating people, or what not. In fact, we get that because most of the book is written from the point of view of who we think are the good guys who oppose HFT… we know this because these guys have names and histories. We identify with them. Not with the anonymous HFT firms.

What started off as a scandalous book about brokers and traders who take people’s money and give them less bang for their buck, even willfully doing the opposite of what their clients want, soon takes an unexpected turn, however.

As the story develops deeper and deeper, things seem worse and worse. Constantly, it’s a detective novel. Small changes, small anomalies in their consistency reveal larger patterns that need explaining. The men in this story are as much brilliant as they are idealistic. For if nothing else, than ideas of fairness and free trade are but excuses for a system built on air. After all, money is nothing else but idea. Sure, it moves material, transforms it into anything we like. But its basis is a shared idea. As we dive deeper, the idea seems to become more corrupt and more controlled. But then, an interesting turn happens.

We consider things from the HFT’s point of view: “I think most of them have just rationalized that the market is creating the inefficiencies and they are just capitalizing on them.” Are they not supposed to? What makes it cheating is that they are utilizing a gap in technology to effectively find out orders in one exchange to execute them on another. The lag in the decentralized stock market allows HFT’s orders to travel through time. The way to see it as cheating is to recognize that true market inefficiencies can be corrected by the market. True profit, defined economically, is only available for a short time when the innovation is new and unheard of. But once the market knows about it, the market can adjust. Technological gaps on the structure of executing trades are not something markets can easily account for… at least not of this kind. But it will adjust. New exchanges (such as IEX) will arise and compensate for such HFT advantage, or laws will be passed to counter them.

This last paragraph seems to detract from the scandal of the story. But as Ron Popeil said, “But wait, there’s more.” We see things from the banker’s point of view. With their dark pools. We see things from the trader’s point of view. We see them from the technologists’s point of view. In the end, no one is really behaving badly; or rather they are behaving badly against the client’s wishes… but also, they are also behaving rationally. Maximizing utility. Using what they have to preserve their own position.

Lewis stops short of jumping off this deep end, and that’s okay. He’s not out to critique capitalism itself, although there are a few of these: “It’s rational for a broker to behave badly.” Of course, a true critique would entail a discussion of homo economicus, and to note that the model for this behavior, defined as rationality, isn’t complete because it fails to grasp many actual intangibles that humans do value and gain utility from.

One reason to stop at this point is to avoid becoming mired in academic jargon. The other point is that people may want to read about Wall Street corruption, but it’s unlikely they will want to throw everything out because of “a few bad apples”. For many of us who can read this book, and do so, are living nicely, with freedom and wouldn’t wish to destroy a system which supports us in our leisure (among many other things). Still, it is a myth to think we can simply carve out a group of people get rid of all the corruption that human greed can entail. Because greed isn’t found just on Wall Street or any other capitalist exchange. We are greedy creatures, because the future is uncertain. A system founded on greed is one we hold dear to much of our nature, but it’s also a lopsided system as it only rewards part of how we are. Those of us who are fuller, rounder and more generous as human aren’t often praised by a system that only focuses on a narrow sliver of being human.

So even while I’ve undid the entire premise of the book here… the book is well written. Clear, and deals with fairly complex stock trading information in an easy to understand, distilled form. I rather enjoyed reading it. I kept not wanting to put it down.

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Disneywar

September 9, 2014 / posted in Business, reviews / No Comments

DisneywarDisneywar by James B. Stewart
My rating: 5 of 5 stars

The scope of this book seems pretty modest: it covers the reign of one Michael Eisner, who from his introduction as CEO took Disney as a static company and revitalized it as a meta-conglomerate it is today. Whats interesting about this nearly 600 page book is that how it chronicles the 20 years he worked as CEO… mostly as a series of conversations he had with others. The main interest in this book has to do with the internal politics and policies that the high level managers of Disney implemented… mainly that while Eisner was highly successful in his earlier years, in his later years he kind of lost touch with creative innovation and took to securing his own stardom and success at the expense of the talent he sought to bring into Disney.

If you know the history of some of the worst tyrants, who started off good, you can see this trend, when power blinds one to their short-comings. The last 1/3 of the book is intensely interesting as Eisner seeks to maintain control of the board of directors, the very people who he needs to answer to, rather than letting them keep him in check.

If you want a short analysis here it is: the main flaw in Shakesphearean tragedy is hubris; extensive pride. Any civilization or individual letting their ego run wild will have excessive pride. How this is flaw is easy: one coasts on past success and lets that speak for their present action. One over extends or hyper-focuses on specific problems at the expense of maintaining a balanced ecology. This is what happened. In Eisner’s profit chasing and empire making, he made many profoundly bad choices, which where really only bad in hindsight. Towards the end of his tenure as CEO he focused on securing his position against all others who might contend with him… creating an environment of spying, hostility and backstabbing.

I won’t go over much of the book’s narrative line in detail, but this book, while I thought it might be boring, turned out to be the exact opposite. I can’t really think too much of what more I’d like to have seen, in its construction. I think Stewart did an excellent job… the book seems pretty thorough, considering much of the “plot” is dialogue and conversation which may or may not have been recorded. It’s actually a very fascinating human drama.

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A Mathematician Plays The Stock Market

June 11, 2014 / posted in Business, dialectics, images of being-human, rational choice theory and homo economicus, reviews, Theory / No Comments

A Mathematician Plays The Stock MarketA Mathematician Plays The Stock Market by John Allen Paulos
My rating: 4 of 5 stars

What’s really interesting about other people’s reviews of this book is that they seem to expect a book on the stock market from a mathematician to be somehow be based in finance.

There are plenty of books on the stock market out there… that do so from a finance point of view.

This book is pretty brilliant although at first glance, it appears to be pretty straight forward… you think a mathematician would use his knowledge about math to somehow find some brilliant trick about the stock market. But that’s not how this plays out.

Math is a game of numbers. It’s a field of study that looks at patterns. But ultimately the numbers are a measurement, some kind of metric. What’s faulty about using the stock market from a pure numbers point of view is that the numbers in stock prices need to measure the a consistent value for any math relation to work. What I mean is simply that stock prices are based on what people do in terms of trading volume of a stock. Abstract all you like, but the immediate particular reason why anyone does what they do with stock is anyone’s guess.

We can assume that a change in stock prices has to do with an anecdote on the news about a company, or something happening somewhere related to a company. But that’s not always true. Sometimes things happen for seemingly no reason. Much of this, Paulos tries to explain has as much to do with how people perceive the market as much as it has to do with actual values. The later chapters are particularly brilliant on this account. The earlier chapters which seemed to promise this or that mathematical model, or this or that economic model… don’t pan out because as Paulos convincingly tells us, any model that we use to predict the stock market can be outdated unless the model itself anticipates how others will use it, made predictions and how those predictions will affect the market. In other words, any stock market model needs to also be self reflexive in how it’s applied — not just when it’s applied.

Paulo makes some pretty complex abstractions to do this; for instance, applying how the “Efficient Market Hypothesis” is either always correct (when people believe it to be wrong, thus playing the stock market off of information in the news, or about a company’s state) or it is always incorrect (when other people believe the information on the news is invalid as the stock prices already reflect the current value of the stock)… that is to say that particular hypothesis doesn’t work as it should because it takes for its model an absolute system of values based on how other people act. People don’t do things as mechanisms do; people evaluate based off of what they believe others will do as well.

This twist of self reflexivity makes it particularly difficult to formulate any theory that is both consistent (non-contradictory) and complete… in essence, we need to formulate a model that can predict how its predictions are taken into account and then provide us with “a few steps ahead” so that profit can be captured. That would be a pretty sophisticated theory; and in fact be impossible because that theory could only work in the case of the one individual who has it. By definition the same theory could not with all the other individuals who also have it, otherwise there would be no profit!

So a quick conclusion is that the market can at times reflect real values, but often it doesn’t because there’s too much white noise as meanings, theories, trends and news all impact the same metric. So how can we make any consistent model on the stock market if all this information flies under the same metric as the very metric a stock price is supposed to represent?

This is all of course, extracted from the book. What I found really interesting, if one read between the lines from the get go, was that one can always take the meaning of a stock’s movement anyway one likes. That is to say, we have an abundance of narratives that can fit the model of “what really happens”. We simply pick the one we like the best, and go forth as if that were true. As Paulo points out, even through random chance a few individuals are bound to hit it big. And once people notice that, they will follow that person’s movements, ensuring that they will always be right.

Thus, the modeling of stocks, properly considered, must also model how we think as well. But that’s nothing new. Paulo is of course, writing this book as a lament of his own failed investments…and in the process of doing so, he’s also somewhat justifying the bubble bursting was inevitable, a kind of normal market behavior. But he’s correct; the uncertainty in the stock market is not just an uncertainty as to what the price means, but similarly that its certainty is also a reflection of what we all would also believe it to mean.

All in all, I found the book to be really entertaining and interesting. I would have liked a little more direction midway through the book… with each theory or direction Paulo brought up, he quickly shot it down at the end of the chapter. Of course, he was setting this bed of failed theories for the self reflexive analysises… but I didn’t see it coming. So it felt much like wandering, and that’s not a good way to treat your reader as it throws your reader out of the process of reading.

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