Next Friday, March 9, there's going to be an MIT Sloan Investment Management Conference, over in Cambridge MA. It's pretty cheap (~$100), and you can register here. Makes me a little jealous of people who live near Megacities like Boston, New York City, or Chicago, where all the Bloomberg terminals exist, because such things are so much more frequent. I'll be a discussant there on Low Volatility Strategies, and I'm hoping for some vigorous disagreement between various factions in the way...

I was reading a lot by David Rock, who seems to have some pretty neat insights on the mind. Anyway, I was struck by this insight on generating 'aha!' moments:variables that improve the ability to detect weak associations may improve insight solving. In short, insights tend to involve connections between small numbers of neurons....Just as it is hard to hear a quiet cell phone at a loud party, it is difficult to notice signals that have less energy than the general energy level already present...

So, this Russian immigrant left his first and only finance job after a couple of years to work at another firm for 3 times the pay--and around $1 million-- a pretty clear case of stealing intellectual property (he was busted taking many lines of code). Yet interestingly, Goldman Sachs somehow got they guy convicted criminally, under the Economic Espionage Act, highlighting they have the best relations with all levels of our government. Aleynikov was freed on appeal last week.Goldman is...

All this discussion about Santorum's religious beliefs reminded me of a remark in a famous speech on existentialism by the German-American philosopher Walter Kaufmann back in 1960. In "Kierkegaard and the Crisis in Religion" he makes this point (around 51:00):[People today think] that one ought to have some faith in some organized religion, but let me be blunt, not take it seriously......I don't think the people of the United States today would stand for a Presidential candidate who would...

Alison Gopnik studies babies, and finds them active little theorists, academics with no responsibilities and lots of time for inquiry. She titled a paper Explanation as Orgasm, noting our desire for explanations is like an orgasm, in that it must have some kind of innate reward to get us to do it. Children need to learn about the causal structure of the world, so there must be something hard wired to get them all to seek theories to explain the world, otherwise it wouldn't be common. Gopnik...

Perez, Fuertes, and Miffre present a paper highlighting that lower volatility is associated with higher returns in general. Looking at he 1992-2011 period, the commodity futures with low volatility outperformed those with high volatility by 4.6%. The effects appears independent of momentum and contango/backwardization effects.I doubt this finding is truly a good investment strategy because while really highly volatile assets have low, often negative returns, they have such high volatility...

Over at Edge.org, a couple scientists (Benjamin K. Bergen and Simone Schnall) mentioned that metaphors are a very powerful explanation of how humans think. The idea is that you don't just talk about understanding as seeing, you think about understanding as seeing; morality is thought of as cleanliness, affection as warmth, winners are thought of as being in front of others. The abstract is explained via the concrete, something we know, such as seeing, feeling warmth, clean, catching, escaping....

I'm rather baffled by the strong atheism espoused by Dawkins and Hitchens, for reasons well put by English writer Alain de Botton:Instead, he connects his father's militant atheism to the affliction that he reckons made Dawkins and Christopher Hitchens so caustic in their bestselling attacks on religion. "I've got a generational theory about this. Particularly if you're a man over 55 or so, perhaps something bad happened to you at the hands of religion – you came across a corrupt priest, you...

Macroeconomists dislike criticism like anyone else, and especially hate the idea that their opinions are no better than anyone else. So, I especially liked this little quip from one of the most insecure economists blogging today, Brad DeLong, who was invited to speak on macro at some poli-sci class:Professor Intro:Brad’s a great guy, we go way back ...he blogs...here’s BradJ.Bradford DeLong: I do remember being horrified once when I was introduced by the Vice President of the Federal Reserve...

One of the most interesting things about finance is that while the past seems predictable, in practice it is very difficult to outperform passive indices using simple rules. Ivo Welch and Amit Goyal showed that a bunch of signals, such as the dividend-earnings ratio, may work with hindsight, but in real-time do not generate attractive results. The best intuition for this bias is that if we take a set of data generated by a simple time series and plot the stock price vs. future return for that...