Uncertainty….

If there’s one thing I would like to get better at, it is probability. And permutations and combinations. Make that two then. I think it’s one of those things some people get, and some people just don’t. And I am certainly not in category one. No matter how hard I try, it seems to be one of those things I just can’t get a hang of.

I sometimes wonder if this disability, if I can call it that, has anything to do with the way I studied at school. Mostly by rote. I have more or less stopped doing that over the last few years. I have gradually drifted toward trying to learn by analogy, association and images. Rather painful I must admit. Often I manage somewhow. Other times, the rote habit kicks in sub consciously. But with respect to probability and permutations, nothing ever seems to work. Sometimes when I am very alert, I get a hang of it, but it’s still a momentary thing.

Running Monte Carlo simulations is quite fun. Would be nicer if I can get hold of some real data. Amazes me the types of creative derivative instruments that investment bankers keep coming up with. Except for the guy who created the instrument in the first place, I am quite sure no one’s got a clue how it will turn out in the long run. Maybe even he doesn’t, who is to say! Small wonder then that they need to employ all kinds of risk management techniques.

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Posted on December 18, 2003, in Uncategorized. Bookmark the permalink. 5 Comments.

  1. Great post, man! I’ve always faced the exact same problem too… I’ve been studying probability and permutation / combinations since 11th standard. When I work hard enough at it, I can understand the principles enough to solve any simple problems thrown at me… But when it comes to applying the principles to real world problems, I just can’t seem to get the hang of it!

    I mean, what the hell do I mean when I say the probability of winning a lottery is 60% and hence the expected value is xxx? To me, I either win the lottery or don’t. There’s no in-between state to worry about and I’m definitely never going to receive a figure of xxx.. Yet based on this probability figure, we have whole fields of academics and industries spawning out…

    To me, its one of the most non-intutive fields of mathematics… And learning by rote has nothing to do with it!

  2. Me no comprehend. Maybe me no smart enough? Me no good with math. Me study human psychology.

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