Dirk’s comment is actually spot on. I’ve asked the same damn question at least 4-5 times. Only I didn’t really understand it was the same question. That’s one of the problems of not really being good at something; it’s hard to think abstractly about it. I’m not really good at R, so sometimes I don’t realize that multiple concepts are related. As I talk with other new users of R it’s clear that unless they come from a programming language with an apply-esque construct they likely are struggling with R. I think most of the confusion comes from a) not understanding what data format apply() is going to return and b) not understanding anonymous functions.

With this in mind I did a little screencast illustrating how this struggle plays out for a new users. I also show why I use the plyr package for much of the stuff other folks use apply() for.

Any feedback you have is appreciated. This is my first stab at a screencast, so I am still trying to figure out the best approach/method as well as how many drinks puts me on the Ballmer Peak.

EDIT: it’s been pointed out that I misuse some terminology a number of times. I should have named my year vector “yearVector.” By calling it “yearList” I then refer to the vector as a list. I was using “list” in the vernacular, but since list is a specific R data structure it is confusing that I named a vector a name with “list” in it.

Ever since Sept 15th, 2008 I have had a bit of a fetish with studying accident theory (that’s when our financial system started its current free fall).  One of the best books I have read on how big studs like Sully make decisions is the book Sources of Power by Gary Klein. Mr Klein helps us understand how critical descionmakers think under fire (both literal and figurative). It’s definitly worth reading.

Taleb is a bit harder to like than Mandelbrot. He’s mouthy, arrogant, and demands that his publisher not edit his books. If he crosses your ideology you will find yourself wanting to write him a pissy letter starting with the greeting, “Look you arrogant ass…” But he also has some really great intuition about risk. Most folks get religion after they have a near death experience. Taleb got his religion after he got rich. NNT was holding a double butt load (that’s a technical term, go look it up) of calls when the financial world went to hell in 1987. NNT knew that the reason he got rich was not because he was smarter or had more foresight than anyone else. He did know one thing, there is no way to know what the probability of a huge price swing is. So he bought out of the money options in both directions since he suspected that the probability of these options paying off BIG was not properly accounted for in the price. It seems he may have been right. He’s also waged a war against value at risk or VAR which I don’t fully agree with, but C’est la vie.

Below is a video segment from PBS News Hour where they interview NNT and Dr. Mandelbrot (notice how I did not use his initials? gotta show him some respect). It’s a good interview, but it cracks me up that the host clearly has Mandelbrot’s ideas confused with Edward Lorenz, the man who coined the phrase ‘Butterfly Effect.’ See 4:55 in the video for the most blatant confusion. Mandelbrot does a good job of ignoring the confusion but eventually at 6:20ish he starts to redirect the host to his true thought contribution which is that big movements are under-anticipated. To the host’s credit Mandelbrot and Lorenz have co-authored papers so it’s not like they are totally disconnected.

I can’t mention Mandelbrot without posting this great tribute song/video made in honor of his namesake Mandelbrot Set.

Shameless commerce (yeah, I stole that from those Car Talk Guys) related to this post:

If you are an option trader or would like to learn how options markets really work, try NNT’s first book: