My Journey

I have made all the calculations; fate will do the rest -(Napoleon)

Sunday, February 19, 2006

Rules are simple



I have been thinking for the past few days and stumbled upon something. I know this is not a new or novel and everyone knows it. If you keep driving through any complex phenomenon then you will reach very simple and basic concept. The base always has the simple rules. The only difference is what way the rules are applied. If you analyse Schrödinger wave equation or movement of a pram the basic rules are simple and same.

We all know the simple rules. For example it is most basic understanding that ‘All eggs should not be kept in same basket’. This is the driving concept of Portfolio management and decision theory or basic feature of a successful human relationship. Brutus asks Cassius to attack than to wait cause ‘what goes up will come down’. This is same as used in financial management.

There are and can be many examples like this. When ever there is dilemma one should try to think from the most basic views. The answers would be there.

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Update :- Those in India could do well to buy the stock of Venkey's and few other hotel stocks. Venkey's is down by around 14.5%, expected to go down further. Have a investment range of 6 months.

P.S - I hold no position in any of the above stocks. Advised in academic interest.

16 Comments:

  • At 7:39 AM, Blogger XVSA013 said…

    Keynes was the one who suggested to bet on one company/industry ... till Harry Markowitz busted it.

    perhaps ... with benefit of hind sight everything looks simpler !!

     
  • At 10:16 AM, Blogger Raj said…

    I was here :)

     
  • At 10:27 AM, Blogger Y said…

    Yes very true.
    And theres a Chinese saying(not sure, just adding for the effect ;)) The greatest truths are the simplest.

    Take this space to narrate an incident. Mercedes Benz in 1970 or 80's launched a diesel car with a special feature. We all know how badly Diesel's vibrate. This car, the vibrations were very less.

    Benz launched the car with great fanfare and a hi fi german name attached to the technology. It was thought to be a complex technology. And much applauded but I dont think as much appreciation was given to the simplicity behind the approach.

    Actually what it did was, install a vibration generator. It was just set in such a phase that its waves cancelled the waves generated by the engine.

     
  • At 10:45 AM, Blogger greensatya said…

    Mowgli - Yeah Markowitz used the common sense to design portfolios with overall risk profile. Keynes could not think on those lines, hence busted.

    Yep, in the hindsight eveything looks simpler reason - only in hindsight people anlayse.

    Raj - Thanks

    Sher - That was such a good example. There was one more car example, I got that in a fwd long time back. It was a man buying icecream and his car won't start when he bought flavoured and would start when he bought vanilla..I think you might remember that one.

    To think simple is the best approach.

     
  • At 11:34 AM, Blogger XVSA013 said…

    NASA wanted a pen which astronauts can use to write when they are in orbit ... normal pens wont work in the zero gravity conditions ... so they hired a big shot consulting company and developed a hi-fi pen costing 100's of thousands of dollars.

    Russians used a pencil.

     
  • At 11:40 AM, Blogger greensatya said…

    Mowgli - haha, that's the classic example. Last week we were discussing this example in our office when someone told us about the latest research in US. News is that in US they are designing an intelligent higway with sensors on the sides so that people can travel in cars with no drivers. I don't know how much of money and time would be wasted in this.

     
  • At 12:18 PM, Blogger Sara said…

    but the problem here is during a very complex situation people loose their cool and are so confused that they are not able to think simple...

    thoughts run very complex then

     
  • At 12:39 PM, Blogger greensatya said…

    Sara - that's so true. This is where cosultants come in picture. They confused everyone while themselves manage to think simple :p

     
  • At 2:22 PM, Blogger Freeze said…

    Schrodinger wave equation?! Yikes. i remember this equation. but there was nothing simple abt the derivation! phew!

    nice readin tho...

     
  • At 2:49 PM, Anonymous Anonymous said…

    The rules may be simple, but the problem is that anything in the world more complex than basic physics doesn't play by the rules.

    For example, modern economics relies heavily on predictability but suddenly when the (man-made) equations break, chaos ensues. After all, humans are not exactly logical or reasonable creatures.

     
  • At 2:52 PM, Blogger Y said…

    Satya, yeah that Ice cream example was so good and also that pencil one. Actually I think the logic behind this world would be so simple that it won't occur to us.

     
  • At 3:18 PM, Blogger greensatya said…

    Freeze - Sorry, I knew that Schrodinger wave equation is not easy :d blame Planck and debroglie :)

    Sami - //After all, humans are not exactly logical or reasonable creatures//
    I think this is the reason why things don't play by rules. Sad, but true.

    Sher - Yeah, it is human tendency to ignore simple things. Voltaire has said that "Common sense is not common"

     
  • At 3:22 PM, Blogger Freeze said…

    i blamed them a thousand times while studyin :p

     
  • At 8:10 AM, Blogger greensatya said…

    Freeze - You did, but they said the simple things :p

     
  • At 7:17 PM, Anonymous Anonymous said…

    I agree totally Satya. Life is simple. We make it complex by thinking in complex terms. :)

     
  • At 11:55 PM, Blogger greensatya said…

    Yeah Pratyush, if only we can think in simple terms about complex problems, we will get the answers.

     

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