Emanuel Derman

Emanuel Derman (ED) grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. He started his professional life as a theoretical physicist, doing research on unified theories of elementary particles. From 1985 to 2002 he worked on Wall Street where he developed models for valuing options and volatility. Since then he has been a professor at Columbia University and head of their program in financial engineering. In 2004, he wrote the memoir My Life As A Quant. This piece came up in a Twitter thread about hotels people would be happy to sequester themselves in and we thought it was a beautiful reflection not only on a hotel, but a city and a time. -Colin (CJN) Emanuel here. I first visited Tokyo in 1990, when I worked at Goldman, Sachs & Co. as head of the Quantitative Strategies group. Our job was to write software and models for the equity derivatives traders at Goldman, and we had just created a risk management system for managing the “Nikkei book,” the portfolio of derivative contracts we owned that had in common their dependence on the value of the Nikkei index. Our equity derivatives traders were a global team, with members in London, Tokyo, and New York, and the management of the book was passed around the world from team to team like a 400-meter relay runners’ baton as one market closed and the next one opened. I traveled to Tokyo to introduce the new system to our traders there.This was my first experience with the ritual of traveling to Tokyo. First, the long wearying airplane flight with the sun at your side all the way. On this first trip to Asia for Goldman, the senior administrative colleague I traveled with had booked us in First Class, a luxury I was willing to let someone inflict on me but wouldn’t have felt right indulging in myself. Goldman had a policy that linked the class in which you could travel to the length of the flight, and I suspect that First Class was legitimate to Tokyo, though I still felt a little bad about it. My traveling colleague closed his eyes after we boarded the 2 p.m. flight and didn’t open them again or even twitch once until 14 hours had passed and we were approaching Tokyo, a feat that still amazes me. Shortly afterward the equity derivatives group I was part of decided that Business Class was the appropriate way to travel.Goldman had a policy about cab fares too, which meant that the expensive cab ride from Narita airport to downtown Tokyo was forbidden. So there followed the long long bus ride from Narita to the Hotel Okura, the buses (like Tokyo itself) so modern and automated compared to New York City, with prerecorded charming female voices providing automated instructions about boarding at every stop.I’m afraid I led a very sheltered life in Tokyo, all of my trips being business trips, and I always stayed in the South Wing of the Okura. I don’t normally care too much about perquisites – they’re the trimmings, not life itself. Therefore, I’m a little ashamed to say how much I loved the Hotel Okura; I’ve never stayed anywhere that was so wonderfully and unintrusively peaceful, a place where people paid so much attention to every detail. Someone there had somehow figured out exactly what people needed to stay calm and provided it. The rooms were tranquil, spacious, and bright; you could close the curtains at night and open them in the morning from the comfort of your bed with buttons that controlled them electrically. One day, when I lay down on the floor beside the curtains to do some situps before going for a run, I looked up and noticed that the sides of the curtains were attached to the wall framing the window by means of long strips of Velcro, to ensure that when the electric motors pulled open the curtains they would not disturb the light seal between curtains and wall. And so it went with everything in the Okura: room service, the restaurants and coffee shops, the gymnasium, the swimming pool, the wonderful small shops in the arcades beneath the hotel. All of them were just about perfect. Also impeccable was the fruit they put in your room each day. On my first trip, they included a few nostalgically delicious perfect loquats I hadn’t seen or tasted since I left South Africa, where they grew on trees in my neighborhood each spring.From then on, throughout the 1990s, I visited our Tokyo office once or twice a year. Whenever I did, I aimed to arrive on a Saturday night, one full day before work started, not only to decompress and get rid of some jetlag but also because I just loved the Okura.Why is this interesting? One had no worries living in the Okura, despite the daily twelve-hour stints in the office. Left behind were bills, mail, email, chores, hassles, the weight of the world; your belongings were restricted to what you could carry in a garment bag – a few pairs of underwear, some shirts, and two suits. As soon as one item got dirty you sent it down to the laundry and a day later, or faster if you required, it was lying on your bed in a little straw basket, washed and pressed, every detail taken care of. The hotel provided razors and high-quality shaving cream in little pressurized canisters (I still have a few I use for travel). If you felt like getting into bed in the evening after work and eating grilled cheese and French fries, you just called Room Service. And of course, all of this seemed to cost nothing because the firm paid for it. I began to understand Nabokov choosing to live in a hotel in Montreux, undesirous of his own apartment or house. It felt deceptively like being in a monastery when one lived in the Okura – such peace and freedom from want. (I understand of course the inappropriate nature of this analogy; your desires hadn’t really vanished in the Okura; the peace came from desires fulfilled at a high but invisible price. But, nevertheless … )The Okura was imperfect in only two respects, both of them erring on the side of profligacy. There were young women they had hired simply to stand at the elevators and bow graciously when you entered or exited; it was a bit too much. And the people who filled your coffee cup at breakfast topped it up as soon as you had drunk a few sips so that it was impossible to know just how many cups of coffee you had consumed by the time you left the table.I told a South African friend about peace of mind in the Okura and he quoted to me someone (it could have been Naipaul) who said that good hotels disembody you but don’t depersonalize you.There was a downside to visiting Japan. First of all, the numbing anomie that went with the stuporous body-wringing jetlag. Even on the few occasions when I stayed in Japan over the weekend and could get some rest, there were still those waves of weariness that poured over you at 11 a.m. in the morning and forced you to lie on your bed with your eyes closed. Second, the large evening meals. My hosts at Goldman (Japan) were enthusiastic to take me out to eat after work, at 8 p.m. in the evening, for sushi. But 8 p.m. for my hosts and my soul in Tokyo was unfortunately about 7 a.m. for my body, still mistakenly assuming it was in New York and finding itself awake after an entire night without sleep. To my great embarrassment, I couldn’t swallow more than a bite or two, despite repeated urgings.One other ancillary but wonderful thing about being in Tokyo was running. Jetlagged, I would wake at the latest at 4 or 5 a.m. and then, tired but nevertheless wide awake on my body’s 5 p.m. New York clock, in the clean dawn I would run down the hill from the Okura and then along the long straight Sakurada Dori that led to the Imperial Palace and its gardens, There you could run an uninterrupted loop around the protective moat surrounding the Palace grounds, finally coming back to the hotel five or so miles later. It was something I always looked forward to.In some strange way, my perception always adjusted to Tokyo very quickly. A few days after I arrived, as I looked at men and women walking down the street to work, I could no longer tell whether they were Japanese or New Yorkers. It was, I suppose, a case of one’s mind equating the background, whatever it was, to the background one was used to. Only contrasts stuck out.I didn’t get away totally scot-free with the First-Class flight that initially took me to Tokyo. When I returned to Narita airport at the end of that first week, I ran into Fischer Black, who was also passing through Passport Control on his way back from visiting Goldman’s Tokyo office. He glanced at the FIRST CLASS label on my garment bag and took me aside and reprimanded me. It wasn’t necessary, he said, to travel First or even Business, although the firm allowed you to do so; he personally preferred to sit in Economy because it was actually more comfortable, he claimed. I could think of no good polite reply. (ED) Fish of the day: A juvenile boxfish aka “the world’s squarest fish” in waters off Indonesia. Via NYT (CJN)Quick links: Vilnius gives public space to bars and cafes to allow physical distancing during lockdown (CJN)Imagineering in a box via BP (CJN) Ikea shares its famous meatball recipe (CJN) Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Japan Edition

Emanuel Derman (ED) wrote the excellent Japan edition from last week, and we loved this take on the beauty of being foreign. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. His memoir is My Life As A Quant. - Colin (CJN)Emanuel here. If you like art movies, you may have occasionally experienced what I have. You watch a movie in a theater on a large screen and there you are, deeply engrossed in the story. Then suddenly another part of your mind becomes aware of what the filmmaker is doing, how he or she is doing it—the panning and voice-over, the devices the director is using to embed you even as you are being embedded. Your consciousness splits: you experience the flow of the movie and, simultaneously, perceive its construction. You are inside the film and yet outside it.It’s been a while since I had this experience. It requires a theater and calm attentiveness, two things in short supply these days. The last occasion I recall this consciousness split is while re-watching an old  Antonioni movie, maybe La Notte or Red Desert. This inside-outsideness is a wonderful feeling, perhaps the very heart of consciousness; you are aware of two streams, one your attentiveness, and the other the outside world. You’re experiencing yourself experiencing something. It’s the primal split. It’s being a foreigner and being a local at the same time.Why is this interesting? This is why I love New York City. I’ve lived here for close to fifty years, but I still see it with foreign eyes through which New York is a glamorous sophisticated place with skyscrapers and Top of the Sixes and the Village and the Fillmore East—the center of the universe actually—and everyone should envy you for being part of it. I’m a local, and even though I go out of my neighborhood less and less often … New York is still Delirious New York with the Chrysler Building and the Empire State caught in flagrante delicto.In New York City, for a long long time after I came here, it was unambivalently good to be foreign. Everyone’s a foreigner here. You could be foreign and still be a New Yorker, or, failing that, an American (look at Nabokov). That’s what charmed me when I first arrived.There are cities in Europe where being foreign is a disadvantage. Once in Paris twenty years ago I mentioned to an East European desk clerk who was checking me out of the hotel that in New York you felt more interesting to be from some foreign place, whereas in Oxford (when I lived there in the distant Seventies) and in Paris, I sensed you were inferior if you were not local. She leaned over towards me, looked around to see that no one was listening, and then assented.I like feeling foreign even if it sometimes makes you sad. I don’t like feeling lonely but I can take it in a city that has a street life of people ambling around, Hopperesque diners you can have coffee in, hopeful that something will change in the next instant. I like America, but I fear living in some town where you have to drive to go anywhere there are people. I like being inside, but I want the freedom to criticize as an outsider. This living in two worlds and trying to bridge them is what scientists do. They use their minds locally to try to understand the universe, a foreign country indeed. In my experience, non-scientists often don’t understand how great discoveries about the foreign land are made. Some are arrived at by logic, but not the truly astonishing ones. That’s because logic and deduction merely take you from one initial proposition to its consequences. But where does the initial proposition come from? How did Kepler come up with Kepler’s laws, Newton with Newton’s equations, Einstein with the principle of relativity, Dirac with the theory that predicted antiparticles, Darwin with the theory of evolution? And where, analogously actually, do great works of art come from?They come from intuition. As Einstein wrote, “The supreme task of the physicist is to arrive at those universal elementary laws from which the cosmos can be built up by pure deduction. There is no logical path to these laws; only intuition, resting on sympathetic understanding of experience, can reach them.” And Schopenhauer: “Genuine works bearing immortal life arise only from such immediate apprehension. … He works, as people say, from mere feeling and unconsciously, indeed instinctively.”Intuition is that sympathetic understanding, a merging of the observer with the observed, bridging the gap between the local and the foreign and unifying the inside and the out. (ED) Photo of the Day:Jimmy’s Corner, on West 44th Street near Times Square in Manhattan, is one of a dying breed of NYC dive bars. Beer was cheap and stale pretzels plentiful. When I think about New York opening up again, I think a lot about going to places like Jimmy’s Corner. Sadly, the owner, 89-year-old Jimmy Glenn, lost his life to COVID-19 this week. When I shared the news on WITI Slack, contributor Eric Matthies pulled out this 1998 pinhole photo he took of the bar. “Exposure was generally as long as it took to open the shutter, go inside and have a pint,” Eric explained.© Eric MatthiesQuick Links:Amanda Petrusich remembers Florian Schneider-Esleben of Kraftwerk (NRB)How to Draw a Horse from Emma Hunsinger (NRB)I enjoyed this police officer doing a fakie biggerflip on a skateboard, not an easy trick to do with such panache, with a sidearm no less. Thanks to Dietz for correcting the trick. (CJN) Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Being Foreign Edition

Emanuel Derman (ED) wrote the excellent Being Foreign and Japan editions. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. His memoir is My Life As A Quant. - Colin (CJN)Emanuel here. One of my favorite artworks is a 1986 collage by David Hockney called  Pearblossom Hwy. A photo or print cannot do justice to the original, which is approximately 64” x 46”. I have a miniature version on my iPhone and sometimes use it as wallpaper.The picture Pearblossom Hwy consists of a tatty barely two-lane road perpendicular to the actual Pearblossom Hwy somewhere in the Mojave Desert in Southern California. (Pearblossom Highway itself cannot be seen in the picture.) The side of the road is littered with car-tossed cans and bottles. There are man-made warning STOP AHEAD and STOP signs as the road approaches the intersection with the highway. The desert landscape looks extraterrestrial. The combination of detritus on the side and the lunar Joshua Tree landscape brings to mind the space junk now circling the earth. And yet there’s something human about the scene. “Originally it was meant to illustrate a story for Vanity Fair about Humbert Humbert looking for Lolita,” Nabokov explained somewhere. According to the internet, this is how dull the exact same spot looked in 2010:The collage is painstakingly constructed out of about 800 overlapping rectangular photos, each one capturing just a tiny several-inches-long part of the scene, all put together to form a panorama of the road at some time during the day (more about the time later).Why is this interesting?The landscape in the collage looks almost continuous, but it’s distorted. It violates the rules of perspective. Some objects are too large, others too small. What’s too large are the items of familiar human significance—the farthest STOP sign, the letters painted on the road, the distant ‘Pearblossom Hwy’ street sign. Psychological perspective dominates linear perspective.The collage technique mimics the way the mind (psychology) and the eye (physiology) work together. When you look at a scene, your eye cannot finely encompass the whole area at once. Though the entire image is focused on the back of the eye, most of the retina is capable of only low resolution; only the minute fovea has the power to resolve the detail. Necessarily, therefore, the eye darts about the collage, its lens pausing to focus between saccades, the fovea taking in each photo-size part. Your mind then patches everything together and you “see” the whole picture. Hockney’s piece is doing to the desert road what your eye then recursively does to his collage. You reconstruct the patchwork of his art from many tiny sequential glimpses of it, just as the collage itself reconstructs the desert scene from many separate photos. But it’s arguably even more abstruse. There’s not only a fracturing of space, but also of time. Those photos have been snapped over several days—there’s nothing simultaneous about the view. No one ever saw anything like that. Similarly, there’s nothing simultaneous about the mind’s picture composed between saccades. I recently watched Secret Knowledge, a video in which Hockney surmised that 15th Century Dutch artists had used concave mirrors to create their stunningly detailed small paintings. At the end, he claims that his treatment of Pearblossom Hwy is similar to that of the 1420 Adoration of the Mystic Lamb in Ghent, which similarly employs psychological rather than perspective sizing. Both pictures create a unity made out of small entangled bits of time and space—E pluribus unum. It reminds me of Schopenhauer on aesthetics: “Art ... plucks the object of its contemplation out of the stream of the world's course, and has it isolated before it.” (ED)YouTube Video of the Day:Amazing story of the SR-71 showing up the competition. “Major Brian Shul relays the true story of a ground speed check with Los Angeles Center, while piloting the SR-71 Blackbird over Southern California.” [via The Prepared] Quick Links:Five-time WITI contributor Anita Schillhorn van Veen has taken the plunge into newslettering with Framing (“Culture, marketing, and strategy with a dash of social impact”). Her excellent first issue is about the various approaches brands are taking to COVID. (NRB)Library of Congress Launches Open-Source Hip-Hop Sampling Tool. Here’s the site preview: Citizen DJ. (NRB) This version of Warren Buffett (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The E Pluribus Unum Edition

Emanuel Derman (ED) wrote the excellent Being Foreign, Japan, and E Pluribus Unum Editions. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. His memoir is My Life As A Quant. - Colin (CJN)Emanuel here. Volatility is the propensity to continually change one’s current state, irrespective of the direction of the change. You could argue that the elimination of volatility is the implicit (perhaps futile) aim of Economic and Political Science, and that the toleration of volatility is the aim of psychotherapy. In physics, a volatile liquid easily undergoes a phase transition into a gas. Volatile substances can sublimate, moving directly from solid to vapor. (“Everything solid melts into air,” as Marx and Engels wrote about modernity.) In humans, volatility characterizes an easy excitability that moves swiftly from calmness to agitation and back again. Volatility involves uncertain changes of state. In physics one can go a long way before having to theorize about uncertainty. The great founding triumphs of theoretical prediction, from Kepler to Newton, ignored uncertainty. In the late 1800s Gibbs, Maxwell, and Helmholtz explained the behavior of gases by regarding them as statistical averages over the random distributions of their microscopic atoms whose speeds and positions just happened to be unknown but not unknowable. In 20th Century quantum mechanics, however, uncertainty became intrinsic rather than accidental. Unknowability is baked in, puzzlingly undodgeable. Why is this interesting?Whereas uncertainty came late in the discussion of matter, it was there right at the start of finance. When you buy a stock, you cannot know what return you will have earned in the future. Time and chance happen to us all. A stock price that moves unpredictably up and down is volatile. Its volatility reflects the unstable equilibrium between two simultaneous but conflicting occurrences: good news and bad news, the desire to buy and the desire to sell, in permanent conflict. As in politics, there is no volatility without conflict. Stock prices are not concrete in the way that atoms are; they are more mental than physical. The struggle to comprehend their volatility has devolved around how to quantify the fluctuating nature of prices, affected, of course, by the fluctuating nature of the world and the fluctuations of  human feelings. It has become traditional to model the uncertain nature of mental stock prices by analogy with the random movement of physical atoms. More about this at the end. Gases diffuse through space as their atoms sometimes get jolted left and sometimes right by other atoms. Adolf Fick in 1855 derived the diffusion equation, a partial differential equation that describes the diffusion quantitatively. Since the 1960s financial theorists have described the behavior of stock prices analogously. As pictured crudely below, a stock whose initial price is 100 has equal probabilities of being jostled up or down by a small amount, here 1%, in the next very short instant of time δt. This is what it looks like after six successive instants have passed. The numbers on the right-hand side indicate the possible stock prices. The red line represents their probability. You can see the volatility. After this happens repeatedly, many many times, the stock price in this model is eventually distributed according to a normal or Gaussian distribution. In Germany where they honor scientists and artists rather than only politicians, you could find Gauss and his distribution (like the red line above) pictured on the old 10-Mark note. The famous Black-Scholes model for options prices is based on a version of the diffusion equation applied to mental things (stock prices) rather than physical things (gases). Under the originally plausible notion that this approach captures reality, it seemed possible that one could buy and sell stock market volatility. At times, this can be done. But, if you’ve been watching the market during the pandemic, you will have observed that stocks don’t always go up or down by a small amount of 1% or less. Sometimes they jump down (more often) and up (less often) by a giant amount, say 10% or even 20% during a day. The evolution of stock prices that can jump an arbitrary amount at any  time in the future leads to what is colloquially called a fat-tailed distribution, because its tail—the likelihood of making a big up or down move—is much greater than that of a Gaussian distribution. The figure below shows the distribution of 2000 daily returns for Apple stock, compared to a Gaussian. You can see the small but significant fat tails, especially on the left side. Persisting in the use of Gaussian distributions, as emphasized by Nassim Taleb, sweeps under the rug much of the danger of owning stocks.Most financial models, even ones that try go beyond the Gaussian, use the behavior of physical things as a metaphor for the behavior of mental things. But we always understand the rules of the physical better than the rules of the mental, and so we still struggle. (ED)Image of the Day:From the European Southern Observatory: “This image shows the disc around the young AB Aurigae star, where ESO’s Very Large Telescope (VLT) has spotted signs of planet birth. Close to the centre of the image, in the inner region of the disc, we see the ‘twist’ (in very bright yellow) that scientists believe marks the spot where a planet is forming. This twist lies at about the same distance from the AB Aurigae star as Neptune from the Sun.” (NRB)Quick Links:What's supercharging Amphan? (NRB)Do rehabs actually work? (NRB)Very cool Quanta timeline of our understanding of time (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Volatility Edition

Emanuel Derman (ED) has written a number of excellent editions for us, most recently The Volatility Edition. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. The following is adapted from a chapter in his book Models.Behaving.Badly.Emanuel here. From an early age in school, I was taught to pray in Hebrew, though no one ever took the trouble to tell me what the prayers meant. In kindergarten we learned to chant the Modeh, a prayer to be recited on waking that, I now understand, thanks God for restoring your soul after its disappearance during the night. Translated, it begins:I give thanks before you, living and eternal king, that youhave returned within me my soul with compassion ...Nowhere in the Modeh does the Hebrew word for God actually appear. The prayer refers to him only metaphorically as the living and eternal king.But God in the bible actually has a name, יהוה, or for the sake of simplicity YHVH (four Hebrew consonants corresponding approximately to these English letters, pronounced Yahweh), and the Tetragrammaton is the name of his name. A single name—Bjork or Madonna—is grand. A single name with its own name is even grander.If you are familiar with Hebrew prayer, you will recognize the awe that accompanies a glimpse of the Tetragrammaton. It is the letters that produce the awe, not their pronunciation. I have seen the word printed innumerable times in bibles and prayer books, yet I never once heard the word pronounced as Yahweh. Everyone I knew pronounced YHVH as though it were the entirely different Hebrew word אֲדֹנָי, or, transliterated,  ADNY, pronounced Adonai and meaning roughly Milords, as though the letters YHVH were, in reality, the letters ADNY. The words ADNY and YHVH barely resemble each other. It was as though you were taught to say ‘HRM’ whenever you saw the printed name of the Queen of England, but never pronounce the word ‘Elizabeth’ itself.Why is this interesting?ADNY is one of God’s many aliases in the book of Genesis. The Bible sometimes also refers to God as ADNY ADNM, pronounced Adonai Adonim, a vocative My Lords of Lords, more wondrous than Adonai alone by virtue of its recursion. Surprisingly, God’s aliases in the Bible precede the appearance of his real name. God as Yahweh is absent throughout the first chapter of Genesis, whose first line reads “In the beginning Elohim created the skies and the earth ...” Elohim is the plural of El, a generic God, and means simply Gods in the sense of a royal pluralized divinity.The Tetragrammaton YHVH makes its first appearance in Genesis 2:4 only after God has perfected the Creation and can finally rest: “These are the generations of the heavens and of the earth when they were created, in the day that YHVH Elohim made earth and the skies.”It was not until late adulthood that it dawned on me that the letters YHVH did not literally spell ADNY. We were taught to pronounce Adonai whenever we saw the letters YHVH.No one ever mentioned that the actual pronunciation of YHVH was not ADNY. No observant Jew ever utters the word Yahweh. By custom rather than commandment, God’s name is not pronounced aloud or even under one’s breath. Being brought up customarily, my friends and I were never told not to say his name. We really didn’t know he had one.A few of my more observant school friends went a step further: not only did they avoid uttering the word, they also avoided uttering the alias ADNY. Instead, they pronounced Adonai as AdoShem, because the Y in ADNY is the first letter of YHVH, and so you shouldn’t even pronounce that letter. Shem instead means name itself. It’s as though HRM, when it refers to Queen Mary, is pronounced HRName.Orthodox Jews carry this to extremes, and avoid pronouncing anything reminiscent of the Tetragrammaton. Thus even the word Elohim is pronounced Elokim, so that the shared H of and EloHim and YHVH is replaced by the cognate but symbolically insignificant ‘K’. And even the number 15, which in the Hebrew alphabet would be written as YH = 10+5, because Y is the 10th letter and H is the 5th, is replaced by TV = 9+6. Some don't know where to stop, and write G-d rather than God, as though "God" were God's name. It isn't.We like to understand puzzling things by comparing them to things we already comprehend. Thus, when computers first appeared people used to explain that the computer is like a brain, and now they like to say that a brain is like a computer. Either comparison provides a relative kind of knowledge, and when someone says one thing is like another you are entitled to ask for justification. I like to think that a deeper kind of knowledge is absolute knowledge, actual properties of reality. Here are some examples: matter has inertia, electric charges with the same sign repel each other, people enjoy jokes, even good jokes when repeated too much lose their funniness  … Both science and art in their own way are most penetrating when they identify a previously unarticulated bit of reality.How is this related to the idea of God? The following story in the Book of Exodus is concerned with absoluteness.Moses, tending the flock of his father-in-law, Jethro, near the mountain of Horeb, saw a burning bush whose flame could not consume it. God, from within the bush, declared Himself to Moses and commanded him to deliver the Israelites from Pharaoh."Who shall I tell them sent me?" asks Moses."Tell them: I am that which I am," answers YHVH.YHVH is the phenomenon that cannot be described or known by comparison. A bit like Popeye, He is what He is. (ED)Comic of the Day:A) This XKCD is great. B) I had never heard the bit about Von Neumann and Shannon. Looks like it’s probably not true. Here’s Shannon in an interview from 1989 with John Horgan being asked about it: “It sounds like the kind of remark I might have made as a joke… Crudely speaking, the amount of information is how much chaos is there in the system. But the mathematics comes out right, so to speak. The amount of information measured by entropy determines how much capacity to leave in the channel.” (NRB)Quick Links:Coolors seems like a pretty nice little color palette generator (via Steve) (NRB)I love this breakdown of a bit of Wikipedia circular reporting on the Scatman John page. (More on circular reporting from the Wikipedia edition.) (NRB)Hundreds of Thousands of Tiny Buyers Swarm to Insolvency Stocks (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Tetragrammaton Edition

Emanuel Derman (ED) has written a number of excellent editions for us, most recently The Tetragrammaton Edition. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan.Emanuel here. Though I hardly run much anymore, I recently bought myself a pair of fluorescent-pink Nike Vaporfly shoes (the only color available), the ones in which Eliud Kipchoge broke the world marathon record, though it was not in a genuine race. It was run in a park in Vienna on repetitive laps with very long straightaways and with the assistance of scores of professional pacemakers, an event set up simply to break the world record. The rotation of pacemakers formed a V around him to provide aerodynamic shielding; they knew exactly in which position and at what pace to run by following a green laser beam.When I read about the shoes, which many other runners, even those under contract to other companies, now seem to use while removing the markings, I thought I would try them. They have a carbon-fiber plate in the forefoot, and when I tried mine, my God, they really do seem to propel you.Why Is This Interesting?Roger Bannister ran his first four-minute mile in 1954 on a three-laps-to-the-mile cinder track in Oxford. He was a final year medical student and didn’t do weight training. Now everyone is a professional with a team of trainers, nutritionists, and psychologists and runs on perfect 400m Tartan tracks. This technological alteration of the event is, of course, the rule rather than the exception. When I was a child we learned to high jump using the “scissors.” If you want to jump over a bar as efficiently as possible, you need to lift your center of gravity the minimum amount. That obviously means you don’t want to jump up vertically to clear the bar,  as though you were on a pogo stick—that would require a force to move your center of gravity about twice as high as necessary. Instead, with the scissors, you propel yourself up just high enough that your rear end gets to bar height, and then move your legs over the bar in a scissor-like motion, one blade after the other, so that your legs go over horizontally rather than vertically. Finally, you land in the pit on your feet, one after the other hitting the sawdust.I say sawdust because that’s what high jump pits used to be made of, and the relative firmness of the sawdust meant you had to land on your feet so as not to injure your body. There was no landing spine-first. In the early 1960s sports meets started replacing the sawdust pits with scrap foam, which then allowed Dick Fosbury to invent and refine the Fosbury Flop: a method of jumping in which he ran in a sort of J shape towards the bar and then “went over backward, head-first, curving his body over the bar and kicking his legs up in the air at the end of the jump. Because his path over the bar was actually a parabola—the path that Newtonian mechanics dictates for a jumper in the earth’s gravitational field—and because he needed the zenith of the parabola to occur at the position of the bar, he had to take off further from the bar the higher the bar was. This is now pretty much how everyone jumps. Interestingly, he broke a couple of vertebra during the first few years when not all meets had moved to foam yet.Something similar applied to the pole vault. Eons ago poles were made out of ash or bamboo and then later of aluminum. Now they are made of a mix of metal, fiberglass, and even carbon fiber, which have much greater propulsion energy. Successful or unsuccessful, the vaulters land on their backs, which would be impossible if foam hadn’t replaced sawdust. Swimming similarly has involved the development of suits that streamline and compress the body. Some really successful suits have later been banned. Pools now have walls that minimize the disturbance and make outer lanes less disadvantageous. Golf clubs and golf balls keep pushing the envelope. Tennis rackets metamorphosized from beautifully constructed Dunlop Maxply multi-layer wood rackets (John McEnroe still used one late in his career) to tubular steel to fiberglass to carbon fiber with larger sizes and sweet spots. “Spaghetti” double-strung rackets that produced a disconcerting spin were quickly banned in the Seventies, a rare retrograde motion. So it goes with almost any sport. All of this makes it impossible to compare current times, heights, and distances with the past. But there is something appealing about a time-invariant view of the best a human being can be, even though few can hope to achieve it. I often wish they would have a really pure Organic Olympics with only classic events where the rules are invariant through time: everyone is compelled to compete barefoot on a grass track or field or in a standard pool, wearing only Speedos, and the rules never change and are as close as possible to discounting technological advantages. I know this is mostly a dream. Where on earth would one draw the line? Doping? Hyperbaric training? Surgery for torn rotator cuffs? Contact lenses? Nutritional supplements? Coffee? People are too complicated and always figure out some way to evade the rules while observing them.A cautionary example is Limbo 90, a 1952 novel by Bernard Wolfe in which idealistic people cut off their arms and/or legs to protest the nuclear arms race. They want to eliminate the possibility of war by literally ‘disarming’. But technologists invent nuclear powered clip-on brain-connected prostheses that propel high jumpers to 30 meters or more and the Olympic competition between East and West becomes a competition between their technologists. Soon amputation and luxury prostheses become status symbols, and then, in dialectic response, amputation without any prostheses and living helplessly in a basket becomes a selflessness status symbol and a turn-on too. Still, things do change. You can still find small presses that produce books by hand-press. I know people who homestead and others who knit sweaters out of the wool shorn from their own sheep. Maybe one day? (ED)Robot of the Day:This amazing robot bar comes courtesy of interior designer Kelly Wearstler on Twitter (by way of WITI contributor Edith Zimmerman). Quick Links:Ben Dolnick on punctuation and culture. “Here’s something I used to think about, back in the before-times: A clause set off by em dashes is like dropping underwater while swimming breaststroke — just a quick dip before popping back to the sentence’s surface. A parenthetical clause is more like diving down to the pool bottom to pick up a coin. And a footnote is a full-blown scuba dive — you have strapped on equipment and left the surface behind and you had better, after going to all that trouble, see something interesting down there.” (NRB)This newsletter from Surjan Singh outlining “the cultural differences on stiffness” is excellent. (NRB)More points against fMRI (previously in WITI) (NRB) Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Leveling Up Edition

Emanuel Derman (ED) wrote the excellent Being Foreign, Japan, and E Pluribus Unum Editions. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. His memoir is My Life As A Quant. - Colin (CJN)Emanuel here. Being of sound mind, I nevertheless succumbed a few weeks ago to the urge to try to write a memoir of growing up in Cape Town where I lived from birth to age twenty-one.It originated with my wanting to write something, anything really. But what? Then one day my niece in Cape Town asked me about our family background, questions that, by virtue of survival, only I have some of the answers to. I began to write a long reply to her. I have a good memory and things came flooding back faster than I could transcribe.I put together fifteen dense pages in chronological order, about my parents and their origins, about my very early real or imagined memories, about our large extended immigrant family. I dug up and labeled photos of people and places—all my relatives in a giant group photo at my Bar Mitzvah for example—to help her match faces she once met to names I knew.Why is this Interesting?Everyone has a history. As I compiled it I began to imagine that I could write an actual book about that time, that place, those people, myself, my life before America, and how I perceived that life as it happened. I began to rewrite everything I’d written. I told a friend of mine and he cautioned me severely not to rewrite and edit, not to do a Lot’s wife until I reached the end. Only then would I begin to recognize the theme of my book. I scoffed. I’d written books before and seemed to recall that I knew what I was doing as I did it. So I did begin again, removed the photos, and tried to write in a more literary style an unknown reader rather than my niece. I put in chapter headings and sections, and wrote about twenty-five pages in the continuous present, to report through the eyes of the child that prevailed at each instant. Something went wrong. I began to write about an uncle I had never known who was interned by the British in a jail in Acre in the 1920s and eventually died in the Holocaust. I wrote about an aunt I liked whose romantic lifestyle generated family disapproval I learned about later. But the style of these stories jarred with the rest. They could be told only by looking back; the rest was written through the child's eyes.So I began again by rewriting everything I had as a series of interconnected short tales about people, inspired by Clive James’ Cultural Amnesia. And in doing so I began to recognize that some current bugs in my character were actually features, already there in the very early years. Perhaps my friend was right—those bugs might be the larger theme.Meanwhile, I reread a few memoirs, despite worrying that their style might affect me. Stop Time by Frank Conroy looks back from adulthood at a peripatetic neglected childhood in Florida and New York. My life wasn’t like that and I wasn’t tempted. Stronger influences were Boyhood and Youth, the first two books of  J.M. Coetzee’s trilogy Scenes from Provincial Life, which I have reread every few years, partly because of my familiarity with the world he writes about. The books are the pseudo- or quasi-memoirs of an ambitious self-aware unhappy young protagonist who is continually trying to master the confusion, conflict, and mystery of his maturing life as it happens. The books’ protagonist is “John Coetzee” but the real John Coetzee markets them as novels. This sounds like a Nabokovian or Borgesian stunt, but in fact, there is nothing postmodern about them. The “John Coetzee” in the book writes in the present continuous tense, describing events and thoughts at each successive time in the book as though they are happening now. He is never ostensibly looking back at his youth from maturity, though of course, that is in practice exactly what John Coetzee is doing by writing about an earlier time.  Though it’s clear that the books are autobiographical—I recognize the names of some of the actual people in Cape Town and London—one cannot know how much is true. His approach attracts me. I would like to write a book about growing up, filled with the larger-than-life immigrant parents and sisters and uncles and aunts and teachers and cousins and friends and friends’ parents, some of them genuine magical-realist swindlers and liars and a small few of them noble. I would like to write about their happy and tragic peculiarities which seemed then so quotidian and unexceptional and blow them up beyond life-size like the characters in Fellini’s Amarcord.That’s my ambition, but I find this particular effort more of a struggle than anything I’ve tried to write before, and often give up. As “John Coetzee” observes in Youth about his attempts to write:Of course in his heart he knows destiny will not visit him unless he makes her do so. He has to sit down and write, that is the only way. But he cannot begin writing until the moment is right, and no matter how scrupulously he prepares himself, wiping the table clean, positioning the lamp, ruling a margin down the side of the blank page, sitting with his eyes shut, emptying his mind in readiness -- in spite of all this, the words will not come to him. Or rather, many words will come, but not the right words, the sentence he will recognize at once, from its weight, from its poise and balance, as the destined one. He hates these confrontations with the blank page, hates them to the extent of beginning to avoid them. He cannot bear the weight of despair that descends at the end of each fruitless session, the realization that again he has failed. Better not to wound oneself in this way, over and over. One might cease to be able to respond to the call when it comes, might become too weak, too abject.What I thought was going to be straightforward hasn’t been. Every approach to reconstructing the past for someone else has turned out to have its limitations.  If I can continue, there are choices to be made. Write in the continuous present or reflect on the past? Organize by time or by theme? And, temptingly, can I, like Coetzee, feel free enough to fictionalize my past, taking my recollection of reality as a foundation and then allowing my real characters to do things they never did, but might have? (ED)Startup of the day: IpsaIpsa is a frozen foods company founded by friend of WITI Josh Brau. They launched in February 2020, with a line of frozen, locally-sourced meals that could be popped in the oven at dinnertime. Predictably they had a lot of interest during the lockdown, and the nascent brand surged in popularity. It was helped by a nice New Yorker review which described “[Ipsa’s] soups, stews, and casseroles … are the sort your friend who is an exceptional home cook might drop off when you’re under the weather,” the magazines Food Critic Hannah Goldfield wrote. Go read a longer interview with Josh here and you can buy it on their website.Quick Links:Jeff Goldblum and Sam Neill reunite, with a duet (CJN) Want to make it big in fashion? Think small. via Noah Wunch (CJN)Finding escape in a murder mystery (CJN)Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? The Memoirs in Progress Edition

Emanuel Derman (ED) wrote the excellent Being Foreign, Japan, and E Pluribus Unum Editions (amongst others). He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. His memoir is My Life As A Quant.Emanuel here. I’ve programmed computers on and off for almost five decades. I started at the University of Cape Town during a summer research job in nuclear physics, using MAC, Manchester Auto Code, a FORTRAN-like language, on a British ICT 1301 to plot crude graphs from experimental numbers. One bored evening I got it to produce random five-line poems from words I had programmed it to print, not realizing that text manipulation rather than numerical computation might actually be a serious thing to do. In those days you wrote your program on paper, line by line, composed like an essay, with an eraser. When you thought it was right, you had to punch the program, line by line, as coded holes onto cards using a keyboard that controlled a mechanical punch.  To check for typos, you then put the cards into a verifier, on whose keyboard you typed the same instructions again and had the verifier check the match. My next experience was in graduate school at Columbia, on an IBM 360. I wrote Monte Carlo programs to numerically evaluate integrals in formulas I had derived for my thesis on the observable effects of the standard model. I again wrote the program like an essay, punched cards, and submitted the card stack at night to the computer center which ran 24/7. The computer, rather than a verifier, found the typographical errors and then printed them out. If there had been a nonsensical typo it rejected the program. The next morning you got the results, corrected them, and resubmitted the next night.A few years later I wrote more Monte Carlos as a postdoc at various different universities. By then, however, I had bought one of the first HP hand-held calculators, programmable in a crude kind of assembler language, and could check the output of my program in simple cases against that. I remember Columbia faculty members going to the Kiev particle physics conference in the early 1970s and taking expensive HP calculators to give to their Soviet physicist counterparts.It was at Bell Labs in 1980 that I learned to use a computer terminal to type programs directly into a file on the computer rather than on paper. Now the computer could execute programs directly from the file, bypassing the cards. I learned to write programs in C and to manipulate, check and run them on a VAX or a SUN Workstation running UNIX. Until I arrived at the Labs, I had never realized how elegant and challenging programming could be. Programming then was in the late stages of a revolution that demanded that programs be humanly comprehensible texts of information.The following is from a book I wrote about that era:What are you doing when you program? You are trying to use a language to specify an imagined world and its details as accurately as possible. You are trying to create this world on a machine that can understand and execute only simple commands. You do this solely by writing precise instructions, often many hundreds of thousands of lines long. Your sequence of instructions must be executed without ambiguity, by an uncomprehending automaton, the computer, and yet, in parallel, must be read, comprehended, remembered and modified by you and other programmers. Just as poetry strives to resolve the tension between form and meaning, so programming must resolve the conflict between intelligibility and concision.What all of these languages—FORTRAN, C, the UNIX shell sh and its text manipulation tools such as awk, vi and sed—had in common was that they were procedural: you gave a series of commands in a procedure and ordered the computer to carry them out step by step.Why Is This Interesting?Recently I began to learn Mathematica, more recently renamed as the Wolfram Language, a system for doing symbolic mathematics as well as numerical computation. It has truly amazing facilities. I knew Stephen Wolfram, the author, as an immensely precocious Eton student when I was a physics postdoc at Oxford in 1976.Mathematica knows almost everything about the language of much of math. And each year Wolfram and company add more math algorithms to it. Mathematica is a  functional rather than procedural language, somewhat inspired by the early AI language LISP. In a procedural language, you specify, step by step, what the machine must do. You can, for example, write a statement that tells the program to simply go to another line in the program and execute that command, or to store a number in a  certain memory register. These are actions without output. In a functional language, in contrast, every statement is a function that takes input and transforms it into a different output, which in some generalized sense is what a program in toto is supposed to do A toy example would be the program statement y = SquareOf(3), which uses the function SquareOf(_)to provide the square of 3 as output and put the result in the variable called y.  If you want to calculate the fourth power of 3 in this spirit, you would create the function for doing by writing y = SquareOf(SquareOf(3)).Mathematica knows how to evaluate mathematical functions f(x,y,z,…), wheref( ) is some arbitrary function such as sin( ) or a calculus derivative or integral. It can evaluate functions and functions of functions, and functions of functions of functions …  What’s subtle in Mathematica is that to get something calculated, you need to use Mathematica’s functions to create a more complex function that does what you need. You have to use its commands not so much to directly tell it what to do step by step, but rather to construct a mathematical text sentence that builds the function of functions you want. Once you’ve done that, Mathematica knows how to deal with it, even if it contains symbols rather than numbers. Its power is not just that it can carry out procedures or evaluate functions, but also that it understands (almost) all mathematical notation. It can do symbolic mathematics.What Mathematica lacks for me is the easy human comprehensibility that modern programming style stressed when I first learned UNIX. Mathematica afiçionados tend to write one-line elegant but somewhat cryptic-looking functions of functions of functions to do their bidding. Here is a short simple example of nested functions, taken from Wolfram’s introductory book, that generates Pascal’s triangle:The output of this function isI find that doing simple things in Mathematica seems complicated. Its power and structure shine when it comes to doing complex things. To do that you have to start thinking of everything you want to do as a function that accepts input and produces output. My difficulties are likely in part a reflection of my relative novice status. Getting fluent in any new language takes time and an adjustment of your thinking style, and the more powerful and compact the language, the harder it is to read or write at the beginning. (ED)Quick Links:Quote Investigator on the Bezos what’s not going to change quote. (NRB)Imagine your flexible office work future from Anne Helen Petersen (NRB)The Ins and Outs of Vaccine Diplomacy (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

The Programming Edition 

Ideas and inspiration worth paying for. Subscribe to WITI for $7 a month.Subscribe nowWe first met Emanuel Derman (ED) when wrote the excellent Japan edition for WITI. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. He wrote the book My Life as a Quant, and is syndicating a memoir on Substack which is worth a read. - Colin (CJN)Emanuel here. It’s odd how little one remembers of one’s childhood. I’m pretty sure I remember more than most. Childhood amnesia has been a named condition since 1895. There are a variety of psychological and neurobiological theories about it. Freud thought it was a kind of hysterical repression of events of a sexual nature. There is a study that indicates that people with greater recall are more likely to disclose a greater range of information to others in everyday interactions and I feel that might be true. There are theories that there can be no autobiographical recall until children develop a sense of themself as a continuous entity. Others believe there can be no memory without language to encode it. I find this highly implausible because most of my memories from that time don’t involve words, but rather, strong emotional imagery. Why is this interesting?I have many many early childhood memories, a rush of them from my first three or four years, all of them vivid. Dread. The earliest is of a darkened room filled entirely by a long heavy dark dining table. The curtains are drawn. Several doors lead off. I want to go through one of them to a bedroom on the far side. They won't let me. It must have been when my father's mother, whom I don’t remember, had died and her body was lying in that bedroom. It was1946 and I was thirteen months old. Longing. I remember missing my mother when she was away at work in my father’s garage nearby. I recall sitting on the front steps of the stoop of our house, looking down in the direction of the garage around the corner, and try to reel her in with my imaginary fishing rod, winding the imaginary spool. I knew it wouldn’t work but it made me feel better to do it. Longing Relieved. When my parents go to the movies in town on a Saturday night, I often wake up before they come home and I cry for my mother. My sister sings me a long song with infinite verses, about what my parents are doing moment by moment. The song continues until I fall asleep or they come home. Pleasure. My twelve-year-old sister wheels me around the block in my pram in the morning before her school, singing Half a pound of tuppeny rice/ half a pound of treacle/ Mix them up and make them nice/ … Pop goes the weasel! and then bouncing the pram at the end to give me a fearful and expected thrill. Pleasure Forbidden. My nursemaid takes me for a walk beside the park. I have just had my fingernails cut, and I run my newly bare fingertips over the sinusoidal bump bump bump of the dusty green corrugated iron fence. It is a strange pleasurable sensation to have the raw ends of my fingers bounce and throb over the metal. My fingers turn a little green and grey from the dust. She scolds me for getting my hands dirty and wipes them clean.Shame. My father carries me on his back when I am too lazy to walk when I am three or four, and I am embarrassed and hide my face when we pass kids I know at the beach. A Treat. I am four and my father takes me into a kiosk in the boardwalk where you can record a little vinyl record about two minutes long. I sing songs I know. Later he takes me into the camera obscura on the elevated promenade above the beach where, in the dim darkness, you see projected on the table the moving images of people strolling outside. Fear & Empathy. I like to sit on the front steps of our house, facing the street. One afternoon an old bearded homeless man leans over the gate and speaks to me. I get scared and run inside for safety. When my mother and sisters comfort me, I feel bad for having hurt his feelings. Guilt. I am four and I like to play with the garden hose in front of our house. I stand on the red cement walkway that runs from the front gate to the front door of our house and grip the rubber hose, aiming the shiny brass nozzle so that the parabola of water lands on the little lawn on the right. Then I want to make the water go to the little lawn on the left. I swing the black rubber snake and shiny brass mouth with both fists, aiming to make the stream leap through the air without any water touching the cement. The nozzle strikes the forehead of my father who has come up behind me. He is taken to the hospital for stitches. It’s my fault. (ED)WITI x McKinsey:An ongoing partnership where we highlight interesting McKinsey research, writing, and data.When will the COVID-19 pandemic end? The Omicron variant is spreading rapidly; what does it mean? Our modeling offers some scenarios to understand potential outcomes. We also cover three other new developments on the bumpy road to endemicity. Navigate new developments here. Thanks for reading,Noah (NRB) & Colin (CJN) & Emmanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

The Childhood Amnesia Edition

Editor’s note: I hate acknowledging the existence of jetlag, but as I sit awake at 1:57 am, I am reminded of this great piece by a great writer and WITI contributor. Re-running it today. It will be new to many of you, thanks to our growing audience. -Colin (CJN) Emanuel Derman (ED) grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. He started his professional life as a theoretical physicist, doing research on unified theories of elementary particles. From 1985 to 2002 he worked on Wall Street where he developed models for valuing options and volatility. Since then he has been a professor at Columbia University and head of their program in financial engineering. In 2004, he wrote the memoir My Life As A Quant.  Emanuel here. I first visited Tokyo in 1990, when I worked at Goldman, Sachs & Co. as head of the Quantitative Strategies group. Our job was to write software and models for the equity derivatives traders at Goldman, and we had just created a risk management system for managing the “Nikkei book,” the portfolio of derivative contracts we owned that had in common their dependence on the value of the Nikkei index. Our equity derivatives traders were a global team, with members in London, Tokyo, and New York, and the management of the book was passed around the world from team to team like a 400-meter relay runners’ baton as one market closed and the next one opened. I traveled to Tokyo to introduce the new system to our traders there.This was my first experience with the ritual of traveling to Tokyo. First, the long wearying airplane flight with the sun at your side all the way. On this first trip to Asia for Goldman, the senior administrative colleague I traveled with had booked us in First Class, a luxury I was willing to let someone inflict on me but wouldn’t have felt right indulging in myself. Goldman had a policy that linked the class in which you could travel to the length of the flight, and I suspect that First Class was legitimate to Tokyo, though I still felt a little bad about it. My traveling colleague closed his eyes after we boarded the 2 p.m. flight and didn’t open them again or even twitch once until 14 hours had passed and we were approaching Tokyo, a feat that still amazes me. Shortly afterward the equity derivatives group I was part of decided that Business Class was the appropriate way to travel.Goldman had a policy about cab fares too, which meant that the expensive cab ride from Narita airport to downtown Tokyo was forbidden. So there followed the long long bus ride from Narita to the Hotel Okura, the buses (like Tokyo itself) so modern and automated compared to New York City, with prerecorded charming female voices providing automated instructions about boarding at every stop.I’m afraid I led a very sheltered life in Tokyo, all of my trips being business trips, and I always stayed in the South Wing of the Okura. I don’t normally care too much about perquisites – they’re the trimmings, not life itself. Therefore, I’m a little ashamed to say how much I loved the Hotel Okura; I’ve never stayed anywhere that was so wonderfully and unintrusively peaceful, a place where people paid so much attention to every detail. Someone there had somehow figured out exactly what people needed to stay calm and provided it. The rooms were tranquil, spacious, and bright; you could close the curtains at night and open them in the morning from the comfort of your bed with buttons that controlled them electrically. One day, when I lay down on the floor beside the curtains to do some situps before going for a run, I looked up and noticed that the sides of the curtains were attached to the wall framing the window by means of long strips of Velcro, to ensure that when the electric motors pulled open the curtains they would not disturb the light seal between curtains and wall. And so it went with everything in the Okura: room service, the restaurants and coffee shops, the gymnasium, the swimming pool, the wonderful small shops in the arcades beneath the hotel. All of them were just about perfect. Also impeccable was the fruit they put in your room each day. On my first trip, they included a few nostalgically delicious perfect loquats I hadn’t seen or tasted since I left South Africa, where they grew on trees in my neighborhood each spring.From then on, throughout the 1990s, I visited our Tokyo office once or twice a year. Whenever I did, I aimed to arrive on a Saturday night, one full day before work started, not only to decompress and get rid of some jetlag but also because I just loved the Okura.Why is this interesting? One had no worries living in the Okura, despite the daily twelve-hour stints in the office. Left behind were bills, mail, email, chores, hassles, the weight of the world; your belongings were restricted to what you could carry in a garment bag – a few pairs of underwear, some shirts, and two suits. As soon as one item got dirty you sent it down to the laundry and a day later, or faster if you required, it was lying on your bed in a little straw basket, washed and pressed, every detail taken care of. The hotel provided razors and high-quality shaving cream in little pressurized canisters (I still have a few I use for travel). If you felt like getting into bed in the evening after work and eating grilled cheese and French fries, you just called Room Service. And of course, all of this seemed to cost nothing because the firm paid for it. I began to understand Nabokov choosing to live in a hotel in Montreux, undesirous of his own apartment or house. It felt deceptively like being in a monastery when one lived in the Okura – such peace and freedom from want. (I understand of course the inappropriate nature of this analogy; your desires hadn’t really vanished in the Okura; the peace came from desires fulfilled at a high but invisible price. But, nevertheless … )The Okura was imperfect in only two respects, both of them erring on the side of profligacy. There were young women they had hired simply to stand at the elevators and bow graciously when you entered or exited; it was a bit too much. And the people who filled your coffee cup at breakfast topped it up as soon as you had drunk a few sips so that it was impossible to know just how many cups of coffee you had consumed by the time you left the table.I told a South African friend about peace of mind in the Okura and he quoted to me someone (it could have been Naipaul) who said that good hotels disembody you but don’t depersonalize you.There was a downside to visiting Japan. First of all, the numbing anomie that went with the stuporous body-wringing jetlag. Even on the few occasions when I stayed in Japan over the weekend and could get some rest, there were still those waves of weariness that poured over you at 11 a.m. in the morning and forced you to lie on your bed with your eyes closed. Second, the large evening meals. My hosts at Goldman (Japan) were enthusiastic to take me out to eat after work, at 8 p.m. in the evening, for sushi. But 8 p.m. for my hosts and my soul in Tokyo was unfortunately about 7 a.m. for my body, still mistakenly assuming it was in New York and finding itself awake after an entire night without sleep. To my great embarrassment, I couldn’t swallow more than a bite or two, despite repeated urgings.One other ancillary but wonderful thing about being in Tokyo was running. Jetlagged, I would wake at the latest at 4 or 5 a.m. and then, tired but nevertheless wide awake on my body’s 5 p.m. New York clock, in the clean dawn I would run down the hill from the Okura and then along the long straight Sakurada Dori that led to the Imperial Palace and its gardens, There you could run an uninterrupted loop around the protective moat surrounding the Palace grounds, finally coming back to the hotel five or so miles later. It was something I always looked forward to.In some strange way, my perception always adjusted to Tokyo very quickly. A few days after I arrived, as I looked at men and women walking down the street to work, I could no longer tell whether they were Japanese or New Yorkers. It was, I suppose, a case of one’s mind equating the background, whatever it was, to the background one was used to. Only contrasts stuck out.I didn’t get away totally scot-free with the First-Class flight that initially took me to Tokyo. When I returned to Narita airport at the end of that first week, I ran into Fischer Black, who was also passing through Passport Control on his way back from visiting Goldman’s Tokyo office. He glanced at the FIRST CLASS label on my garment bag and took me aside and reprimanded me. It wasn’t necessary, he said, to travel First or even Business, although the firm allowed you to do so; he personally preferred to sit in Economy because it was actually more comfortable, he claimed. I could think of no good polite reply. (ED) Fish of the day: A juvenile boxfish aka “the world’s squarest fish” in waters off Indonesia. Via NYT (CJN)—WITI x McKinsey:An ongoing partnership where we highlight interesting McKinsey research, writing, and data.How the fashion industry can get into a metaverse mindset. Shoppers, particularly those in Gen Z, are spending more time online and exploring the possibilities of the metaverse. Here’s what you need to know about this emerging frontier.–Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

The Japan Edition 

We first met Emanuel Derman (ED) when wrote the excellent Japan edition for WITI. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. He wrote the book My Life as a Quant, and is syndicating a memoir on Substack which is worth a read.Emanuel here. I have a long-time college friend who is good company and a fount of knowledge. When he reads The Economist he checks off the articles he has finished with a ballpoint pen. He loves to travel and in recent years has been to Patagonia, taken a cruise to the Antarctic, flown to India and Nepal, traveled on a cross-Canada rail trip, done an Alaska cruise and a river cruise from Moscow to St Petersburg. I know he has more on his bucket list, though he wouldn’t refer to it by that vulgar term. As with all of us, the pandemic has really put a crimp in his social life, but it’s demolished his travel life completely. Why Is This Interesting? I don’t really like to go out of my way for things. (I don’t even like to go far for restaurants.) I cannot truthfully say I’ve always longed to see Notre Dame, the Taj Mahal, Mount Kilimanjaro, the Great Wall of China, the Pyramids at Giza, the fjords, Macchu Pichu, Chichen Itza … though I have seen several of them. I want to go to foreign climes, but not to see sights. What I want in a foreign place is to feel like it’s my home, or at least the home of me as an expat. I want to wake up not too early, go down to the town square or the local cafe, get coffee and breakfast and a newspaper and sit around with (what I hope are) the locals. If it’s Paris, freshly baked croissants with soft unrefrigerated butter and jam and coffee and a small glass of freshly squeezed orange juice with a glass of water to extend it. Or le petit déjeuner américain. If it’s Mexico, a baby pig roasted in a cart in the street and sliced off into tacos. I want a leisurely start to the day, at my own pace. After that, I want to take an ambling walk and then maybe have a run and shower. Then I can start looking. I like to walk the streets, going everywhere by foot, stopping off at things that catch my eye. I go into small stores, stop for coffee or lunch. (I’m still nostalgic for the Île Flottante I had for dessert.) I go to museums, but at most for two hours at a time. I want a slow day. I’d rather end it hungry than feeling force-fed. I don’t want to be trapped on a cruise ship or riverboat and carry out someone else’s idea of a schedule. I want to live, not see. I look at people more than at sights. I want to feel as though that little town or part of that big city is mine, the way people who live there do, or the way I will some day when I will move there for a few months or a year. I want to join in a conversation I overhear with people I don’t know. I want to understand other people’s sensibilities. I imagine stumbling into romance with exotically different people whose language I barely know but whom I can intuit are kindred sensibilities. I much prefer beaches and the South to mountains and the North. I like desert areas—the Karoo or New Mexico. Less is more. Northern climes are ok, but only in the summer when it’s light until eleven and you can walk along trails past meadows and cows and pasture and say Guten Tag to people you pass. I know there aren’t clear demarcations, but I want people more than places. I want insides more than outsides. I like finding out about the insides of people from outside places. (ED)Quick Links:The Mavericks Finally Built The Right Machine For Luka Dončić To Drive (NRB)Climate Change Has Made Deadly Heat Waves Normal (NRB)Experts divided on possible cause of mystery hepatitis in children (NRB)Noah here. A little promotion buried down here. Have some new content for you to check out from Variance, my company focused on helping digital companies grow faster using customer data. New guides on Meddic/Meddpicc, Product Led Growth, Expansion Qualified Leads (XQL/EQL), and Product Qualified Leads. We are also tracking an ever-expanding list product led growth companies on our PLG Index. Hope it’s helpful. (NRB)        WITI x McKinsey:An ongoing partnership where we highlight interesting McKinsey research, writing, and data.Congrats, grads: Now what? It’s commencement season, which means a new flush of graduates will be starting internships or jobs soon. Need a primer on the world of work, from navigating office politics to working smarter, not harder? Our graduate’s guide can help you hit the ground running. Check it out.––Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

The Anti-Sightseeing Edition

We first met Emanuel Derman (ED) when wrote the excellent Japan edition for WITI. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. He wrote the book My Life as a Quant, and is syndicating a memoir on Substack which is worth a read.Emanuel here. From an early age in school, I was taught to pray in Hebrew, though no one ever took the trouble to tell me what the prayers meant. In kindergarten we learned to chant the Modeh, a prayer to be recited on waking that, I now understand, thanks God for restoring your soul after its disappearance during the night. Translated, it begins:I give thanks before you, living and eternal king, that youhave returned within me my soul with compassion ...Nowhere in the Modeh does the Hebrew word for God actually appear. The prayer refers to him only metaphorically as the living and eternal king.But God in the bible actually has a name, יהוה, or for the sake of simplicity YHVH (four Hebrew consonants corresponding approximately to these English letters, pronounced Yahweh), and the Tetragrammaton is the name of his name. A single name—Bjork or Madonna—is grand. A single name with its own name is even grander.If you are familiar with Hebrew prayer, you will recognize the awe that accompanies a glimpse of the Tetragrammaton. It is the letters that produce the awe, not their pronunciation. I have seen the word printed innumerable times in bibles and prayer books, yet I never once heard the word pronounced as Yahweh. Everyone I knew pronounced YHVH as though it were the entirely different Hebrew word אֲדֹנָי, or, transliterated,  ADNY, pronounced Adonai and meaning roughly Milords, as though the letters YHVH were, in reality, the letters ADNY. The words ADNY and YHVH barely resemble each other. It was as though you were taught to say ‘HRM’ whenever you saw the printed name of the Queen of England, but never pronounce the word ‘Elizabeth’ itself.Why is this interesting?ADNY is one of God’s many aliases in the book of Genesis. The Bible sometimes also refers to God as ADNY ADNM, pronounced Adonai Adonim, a vocative My Lords of Lords, more wondrous than Adonai alone by virtue of its recursion. Surprisingly, God’s aliases in the Bible precede the appearance of his real name. God as Yahweh is absent throughout the first chapter of Genesis, whose first line reads “In the beginning Elohim created the skies and the earth ...” Elohim is the plural of El, a generic God, and means simply Gods in the sense of a royal pluralized divinity.The Tetragrammaton YHVH makes its first appearance in Genesis 2:4 only after God has perfected the Creation and can finally rest: “These are the generations of the heavens and of the earth when they were created, in the day that YHVH Elohim made earth and the skies.”It was not until late adulthood that it dawned on me that the letters YHVH did not literally spell ADNY. We were taught to pronounce Adonai whenever we saw the letters YHVH.No one ever mentioned that the actual pronunciation of YHVH was not ADNY. No observant Jew ever utters the word Yahweh. By custom rather than commandment, God’s name is not pronounced aloud or even under one’s breath. Being brought up customarily, my friends and I were never told not to say his name. We really didn’t know he had one.A few of my more observant school friends went a step further: not only did they avoid uttering the word, they also avoided uttering the alias ADNY. Instead, they pronounced Adonai as AdoShem, because the Y in ADNY is the first letter of YHVH, and so you shouldn’t even pronounce that letter. Shem instead means name itself. It’s as though HRM, when it refers to Queen Mary, is pronounced HRName.Orthodox Jews carry this to extremes, and avoid pronouncing anything reminiscent of the Tetragrammaton. Thus even the word Elohim is pronounced Elokim, so that the shared H of and EloHim and YHVH is replaced by the cognate but symbolically insignificant ‘K’. And even the number 15, which in the Hebrew alphabet would be written as YH = 10+5, because Y is the 10th letter and H is the 5th, is replaced by TV = 9+6. Some don't know where to stop, and write G-d rather than God, as though "God" were God's name. It isn't.We like to understand puzzling things by comparing them to things we already comprehend. Thus, when computers first appeared people used to explain that the computer is like a brain, and now they like to say that a brain is like a computer. Either comparison provides a relative kind of knowledge, and when someone says one thing is like another you are entitled to ask for justification. I like to think that a deeper kind of knowledge is absolute knowledge, actual properties of reality. Here are some examples: matter has inertia, electric charges with the same sign repel each other, people enjoy jokes, even good jokes when repeated too much lose their funniness  … Both science and art in their own way are most penetrating when they identify a previously unarticulated bit of reality.How is this related to the idea of God? The following story in the Book of Exodus is concerned with absoluteness.Moses, tending the flock of his father-in-law, Jethro, near the mountain of Horeb, saw a burning bush whose flame could not consume it. God, from within the bush, declared Himself to Moses and commanded him to deliver the Israelites from Pharaoh."Who shall I tell them sent me?" asks Moses."Tell them: I am that which I am," answers YHVH.YHVH is the phenomenon that cannot be described or known by comparison. A bit like Popeye, He is what He is. (ED)Quick Links:‘I accidentally invented trip-hop’ – how we made DJ Shadow’s Endtroducing (NRB)Alex Balk on the Bittersweetness of Encountering a Beloved Childhood Toy (NRB)Calculated Risk: Five High Frequency Indicators for the Economy (NRB)—WITI x McKinsey:An ongoing partnership where we highlight interesting McKinsey research, writing, and data.Reality and myth in the metaverse. Are you ready to dive into the metaverse? Consumers will be the driving force in its evolution, so we asked more than 1,000 typical consumers what they  about the metaverse, since their views could shape how brands may venture into this new space. Despite some skepticism, our findings indicate Americans of all ages are ready to embrace emerging, immersive digital spaces. Prepare for the future with this new article. —Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).Why is this interesting? is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

The Tetragrammaton Edition

We first met Emanuel Derman (ED) when wrote the excellent Japan edition for WITI. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. He wrote the book My Life as a Quant, and is syndicating a memoir on Substack which is worth a read.Why is this interesting? is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.In 1963, in the Feynman Lectures on Physics, Richard Feynman wrote: If, in some cataclysm, all of scientific knowledge were to be destroyed, and only one sentence passed on to the next generation of creatures, what statement would contain the most information in the fewest words? I believe it is the atomic hypothesis that all things are made of atoms — little particles that move around in perpetual motion, attracting each other when they are a little distance apart, but repelling upon being squeezed into one another. In that one sentence, you will see, there is an enormous amount of information about the world, if just a little imagination and thinking are applied.But why do we believe in the reality of atoms? You can console yourself by  invoking “photos” of atoms like this one, made with an electron microscope: each bump is indeed a tiny atom about 10-8 cm in diameter. But that is putting the cart before the horse. It took a knowledge of atoms and electrons and quantum mechanics to build an electron microscope. That image rests on a deep understructure of theory that was developed after people already believed in atoms. So, how did people get convinced of the existence of invisible atoms?Atoms had been conjectured without much solid evidence for centuries. Then, by the middle of the 1800s, chemists had established that elements combined to form compounds in simple integral combinations. For example, 2 grams of hydrogen combine with 16 grams of oxygen to make 18 grams of water with nothing left over. Similarly, 12 grams of carbon combines with 16 grams of oxygen to make carbon monoxide. Simple ratios like these led chemists to imagine that there were discrete atoms combining inside the gases. Meanwhile, physicists were studying what is now called thermodynamics, the relationship between heat and mechanical work. They wanted to know, for example, how much work you can get out of gas in a cylinder by heating the gas and making it expand and move a piston. (An aside: At that time, physicists thought of heat as a sort of fluid (“caloric” or “phlogiston”) that flowed from hot bodies to cold bodies. Indeed it’s still intuitively the way one thinks and talks about heat even now, though there is no such thing as either of those fluids. When a hot body is put in contact with a colder body, there is no literal “heat that flows.” What really happens is that the molecules in the hotter body bump into those of the colder body, and by bumping, impart more energy and higher average velocity, which corresponds to an increase in temperature.) The investigations of the conversion of heat into work and work into heat led to the discovery of the laws of thermodynamics: First Law: Heat is a form of energy, just like mechanical energy. Energy is conserved, merely converted from one form to another. Mechanical work (e.g. friction) can produce heat, and heat can produce mechanical work (as in a steam engine). Second Law: While mechanical energy can be completely turned into heat (e.g. by friction), heat cannot be completely turned into mechanical energy. When heat flows into a system to produce work (e.g. the moving piston), some heat must always flow out again. These two laws are very general, as you can see, and they are very powerful. Together they allowed physicists to figure out how to build the most efficient engines that convert heat into work. The laws of thermodynamics are macroscopic laws; they don’t refer to the detailed structure of gases or other materials. Starting in 1857, the great Scottish physicist James Clerk Maxwell and the German physicist Rudolf Clausius began to take atoms seriously. They developed the kinetic theory of gases by assuming that a gas consists of invisible microscopic atoms or molecules bouncing around. The bouncing produces the gas pressure, and the gas temperature corresponds to the average energy of the bouncing atoms or molecules. From this viewpoint, Ludwig Boltzmann was able to show, amazingly, that the laws of thermodynamics which seem so general, are simply the mathematical result of the statistically averaged behavior of the molecules. So, heat and the behavior of gases could be understood as the consequence of gases consisting of invisible molecules or atoms. But many physicists, Mach and Poincaré among them, were reluctant to believe in the actual existence of atoms. They were content to think of gases as continuous media, and atoms themselves as convenient fictions that led to the right thermodynamic results. Atoms were a nice explanation, but an unnecessary one. No one had actually observed something that could be predicted and explained only as a result of the material existence of atoms.Why is this interesting? In 1905, the year Einstein invented the quantum to explain the photoelectric effect and created the theory of relativity to describe the unintuitive nature of relativistic space and time, he also developed the theory of Brownian motion that set the seal on the actual existence of material atoms. This is how it happened. Brownian motion is the name for the jittery movement of tiny particles of pollen, about 10-4 cm in diameter, suspended in water, as first noticed by Robert Brown with a microscope in 1827. Brown at first thought that the particles might be alive, but soon ruled that out. Almost eighty years later, Einstein realized that the pollen particles were being jostled by collisions with invisible atoms in the water. Any individual pollen particle undergoes random successive moves (a “drunkard’s walk”). He thought of each pollen particle as just a sort of very large atom being jostled by its smaller brethren. Analyzing the mathematics of the random collisions, Einstein was able to derive a formula for the rate at which a single pollen particle slowly diffuses through the water as it is bumped. A pollen particle that was just hit once would move away steadily at a constant speed, its distance growing proportional to the time elapsed. But if there are repeated random collisions with atoms, the particle’s distance from where it starts grows like the square root of the time elapsed. Einstein’s formula predicted exactly how fast the particle would diffuse, with a coefficient related to the (known) viscosity of the water, its (known) temperature, and the (previously estimated) number of atoms in a volume of gas. A few years later, Perrin measured the diffusion of pollen particles and verified Einstein’s formula by experiment. It was the first time that the theory of atoms explained something that wasn’t already known from thermodynamics. And since then, atoms are a fact. (ED)Quick Links:Why do new cars look like wet putty? (NRB)After the Kith/Seinfeld launch yesterday, someone pointed out the label Aime Leon Dore’s connections to George Constanza. (NRB)Celibacy has surprising evolutionary advantages, according to new research (NRB)—WITI x McKinsey:An ongoing partnership where we highlight interesting McKinsey research, writing, and data.How and where to work next. Selling, general, and administrative functions are integral to your organization’s success. What’s the best place for those people to work? Read here to see how the future of work will take shape. —Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED) —Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).Why is this interesting? is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

The Atoms are Real Edition

Emanuel Derman (ED) wrote the excellent Being Foreign, Japan, and E Pluribus Unum Editions. He grew up in Cape Town, South Africa, and came to Columbia University in New York to study for a PhD in physics. Since then he’s lived mostly in Manhattan. His memoir is My Life As A Quant. - Colin (CJN)Emanuel here. Volatility is the propensity to continually change one’s current state, irrespective of the direction of the change. You could argue that the elimination of volatility is the implicit (perhaps futile) aim of Economic and Political Science, and that the toleration of volatility is the aim of psychotherapy. Why is this interesting? is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.In physics, a volatile liquid easily undergoes a phase transition into a gas. Volatile substances can sublimate, moving directly from solid to vapor. (“Everything solid melts into air,” as Marx and Engels wrote about modernity.) In humans, volatility characterizes an easy excitability that moves swiftly from calmness to agitation and back again. Volatility involves uncertain changes of state. In physics one can go a long way before having to theorize about uncertainty. The great founding triumphs of theoretical prediction, from Kepler to Newton, ignored uncertainty. In the late 1800s Gibbs, Maxwell, and Helmholtz explained the behavior of gases by regarding them as statistical averages over the random distributions of their microscopic atoms whose speeds and positions just happened to be unknown but not unknowable. In 20th Century quantum mechanics, however, uncertainty became intrinsic rather than accidental. Unknowability is baked in, puzzlingly undodgeable. Why is this interesting?Whereas uncertainty came late in the discussion of matter, it was there right at the start of finance. When you buy a stock, you cannot know what return you will have earned in the future. Time and chance happen to us all. A stock price that moves unpredictably up and down is volatile. Its volatility reflects the unstable equilibrium between two simultaneous but conflicting occurrences: good news and bad news, the desire to buy and the desire to sell, in permanent conflict. As in politics, there is no volatility without conflict. WITI Classifieds:We are experimenting with running some weekly classifieds in WITI. If you’re interested in running an ad, you can purchase one through this form. If you buy this week, we’ll throw an extra week in for free on any ad. If you have any questions, don’t hesitate to drop a line.Nudge, get customer insights with ease. Try NudgeA world of music in your inbox, one song at a time. Get Ecléctico.The finest micro-creators across all platforms (TikTok, YouTube, Reddit, more!) in one place. Indie World is here.Stock prices are not concrete in the way that atoms are; they are more mental than physical. The struggle to comprehend their volatility has devolved around how to quantify the fluctuating nature of prices, affected, of course, by the fluctuating nature of the world and the fluctuations of  human feelings. It has become traditional to model the uncertain nature of mental stock prices by analogy with the random movement of physical atoms. More about this at the end. Gases diffuse through space as their atoms sometimes get jolted left and sometimes right by other atoms. Adolf Fick in 1855 derived the diffusion equation, a partial differential equation that describes the diffusion quantitatively. Since the 1960s financial theorists have described the behavior of stock prices analogously. As pictured crudely below, a stock whose initial price is 100 has equal probabilities of being jostled up or down by a small amount, here 1%, in the next very short instant of time δt. This is what it looks like after six successive instants have passed. The numbers on the right-hand side indicate the possible stock prices. The red line represents their probability. You can see the volatility. After this happens repeatedly, many many times, the stock price in this model is eventually distributed according to a normal or Gaussian distribution. In Germany where they honor scientists and artists rather than only politicians, you could find Gauss and his distribution (like the red line above) pictured on the old 10-Mark note. The famous Black-Scholes model for options prices is based on a version of the diffusion equation applied to mental things (stock prices) rather than physical things (gases). Under the originally plausible notion that this approach captures reality, it seemed possible that one could buy and sell stock market volatility. At times, this can be done. But, if you’ve been watching the market during the pandemic, you will have observed that stocks don’t always go up or down by a small amount of 1% or less. Sometimes they jump down (more often) and up (less often) by a giant amount, say 10% or even 20% during a day. The evolution of stock prices that can jump an arbitrary amount at any  time in the future leads to what is colloquially called a fat-tailed distribution, because its tail—the likelihood of making a big up or down move—is much greater than that of a Gaussian distribution. The figure below shows the distribution of 2000 daily returns for Apple stock, compared to a Gaussian. You can see the small but significant fat tails, especially on the left side. Persisting in the use of Gaussian distributions, as emphasized by Nassim Taleb, sweeps under the rug much of the danger of owning stocks.Most financial models, even ones that try go beyond the Gaussian, use the behavior of physical things as a metaphor for the behavior of mental things. But we always understand the rules of the physical better than the rules of the mental, and so we still struggle. (ED)—Thanks for reading,Noah (NRB) & Colin (CJN) & Emanuel (ED)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing.Why is this interesting? is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.