When you take as many notes as I do over the course of the day, you end up spending a rather inordinate amount of time trying to organize them.  Over the course of the years as my requirements have changed, I’ve switched from using WikidPad to OneNote to TiddlyWiki, but there still wasn’t anything out there that was just right - so I decided to create it, and after two months of on-and-off development, fumarole is the result.

I was enthralled when I saw a research poster that a number of students had put together describing the optimal strategy for playing Monopoly.  As it turns out, people have tried to figure this out before (here and here), but this one looked like a much clearer technique and presentation.  I thought I’d share their results, after a blurb about their technique:

“If the monopoly board had only 40 property spaces, the probability of landing on any given space would be a uniform 2.5%.  However, because of chance cards, community chest cards, and the existence of jail, these otherwise uniform probabilities are skewed.  To figure out the new board probabilities, we created a probability matrix that answered the scenario: given that we are on square X, what is the probability that we came from square Y?  This matrix corresponds to a system of 40 linear equations with 40 variables, which we can then solve in MATLAB to determine the steady state probabilities of being on any given square.  To make sure that our steady state solution is applicable to our problem, we also used Excel to dynamically generate the board probabilities for a given turn, given that we start on Go.  Our analysis shows that we approach steady state by turn 30, well within the bounds of a typical monopoly game.”

These are the probabilities of landing on any given square (boards derived from Wikipedia graphics):

or if (like me) you’re more used to the British version:

and here’s a spreadsheet with more data on the properties by group:

It turns out they define the “best” monopoly in terms of the profit, which is a function of the length of the game and the number of players.

JB Straubel, the CTO of Tesla Motors, gave a talk to a packed Stanford CarLab forum a few days ago. Some of the interesting tidbits from his presentation:

• the battery pack in a Tesla roadster costs around $25,000
• battery technology is improving at 8% per year in terms of gravimetric or volumetric energy density
• there are approximately 12,000 fuses in the battery pack
• in terms of well-to-wheel efficiency, electric cars can currency reach 85% efficiency.
• hydrogen systems eke out 32% efficiency, through combined losses from electrolysis (70% efficient), hydrogen compression during storage (90% efficient), and fuel cells (50% efficient)
• an acre of solar cells can take a car 36x the distance than an acre of ethanol
• quoted Sheikh Yamani, a former Saudi oil minster stating “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.”

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Adeo Ressi, a seasoned entrepreneur and founder of theFunded.com, spoke recently to a group of students and CEOs on campus about startup fundraising in the current climate:

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There was something bothering me a few weeks ago about an argument I remembered from James Surowiecki’s book, the Wisdom of the Crowds, which is surprising as I had read it about two years ago.  It regards the passage below, from page 8:

“What this means is that the stock market had, almost immediately, labeled Morton Thiokol as the company that was responsible for the Challenger disaster… the steep decline in Thiokol’s stock price - especially compared with the slight declines in the stock prices of its competitors - was an unmistakable sign that the investors believed Thiokol was responsible… on the day of the disaster there were no public comments singling out Thiokol as the guilty party… regardless, the market was right… six months after the explosion… Thiokol was held liable for the accident.”

First off, the word “competitors” is not accurate - because the correct comparison to be made is to other companies who manufactured parts for the space shuttle, not companies who were competing with Thiokol but had nothing to do with the spacecraft; but no worries, the paper he cites is a-OK in this regard.

The claim being made is that because the stock price of Thiokol went down further than the other manufacturers, the market must have “known” they were guilty.  Given the nature of insider trading, this is a possibility.  But can you make such a claim from the evidence?

Let’s look at the data, then: a few of the large companies that built components for the space shuttle included Lockheed, Martin Marietta, and Rockwell International.  Here are graphs of the stock prices, and traded volumes, of their ticker symbols (LK, ML, and ROK, respectively, along with Thiokol’s MTI) the month of the disaster (thanks to my friend Salman for digging up some of the historical data for me):

while all 4 stocks have a jump in volume on the 28th (the day of the disaster), Thiokol’s certainly does dip lower than the rest.  According to the paper written by professors Mulherin and Maloney, Thiokol dipped 12% compared to 3% for the others.  They mention that the “data show no evidence of trading by insiders on January 28, 1986,” yet go on to make the claim that there was “no ambiguity that the stock market quickly isolated Morton Thiokol as the cause of the accident.”  Moreover, “the fact that market liquidity was available to maintain a market in Lockheed, Martin Marietta, and Rockwell while the market for Morton Thiokol dried up suggests that the stock market discerned the guilty party within minutes of the announcement of the crash” (an older draft of the paper used “is evidence that” in place of “suggests that”).

Even if it was statistically significant, I’d say the evidence is still inconclusive, simply because you can’t rely on correlation to be anything more robust than an indicator.  Perhaps I should proffer an alternative explanation for the larger fall in Thiokol’s stock price, then?  How about, Morton Thiokol was a much smaller, less-diversified company than any of the other three, and had the most to lose from the space shuttle disaster?  If I could get my hands on some of the annual reports to see what percentage of their revenues come from NASA contracts…

Nevertheless, I don’t think the argument holds water.  But I do love it when people anthropomorphize the markets

the Stock Market Reaction to the Challenger Crash