Monthly Archives: October 2017

A Poem Every College Graduate Should Know

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IF – Rudyard Kipling
If you can keep your head when all about you
    Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
    But make allowance for their doubting too;
If you can wait and not be tired by waiting,
    Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
    And yet don’t look too good, nor talk too wise:
If you can dream—and not make dreams your master;
    If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
    And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
    Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
    And stoop and build ’em up with worn-out tools:
 If you can make one heap of all your winnings
    And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
    And never breathe a word about your loss;
If you can force your heart and nerve and sinew
    To serve your turn long after they are gone,
And so hold on when there is nothing in you
    Except the Will which says to them: ‘Hold on!’
  If you can talk with crowds and keep your virtue,
    Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
    If all men count with you, but none too much;
If you can fill the unforgiving minute
    With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
    And—which is more—you’ll be a Man, my son!
Comment: over the last 40 years this is the only poem I have seen circulated in the workplace. It is the only one I have included in a public presentation – a speech on the
meaning of financial risk (the point being that the unquantifiable risk of character is more important than quantifiable risk like Sharpe ratios). An excerpt from this poem is to be found above the entrance to the center court at Wimbledon. An Indian writer has called this poem “the essence of the Gita in English.” It was included by the Boston Red Sox
in a tribute video to David Ortiz.
YOUR TURN: What poem or poems have meant the most to you over your life?

Simpson’s Paradox

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What hospital to go to: A or B? Well, hospital A’s patients survive 90% of the time and hospital B’s survive 10% of time.
Clearly hospital A is the right choice. Well, not necessarily. Hospital B’s patients could be a much sicker group to begin with. Should you buy stock in company A or company B? Well, A has higher margin and faster growth, So clearly company A. Well, not necessarily. Company A also has too much debt and its growth is all from acquisitions. Company B’s growth is organic and its balance sheet is debt free. Similarly, is there gender discrimination in at college x. Well, say 60% of women who apply are admitted while 90% of men are. Clearly there is discrimination, right? Not necessarily. Perhaps the women are applying to more competitive departments. It is extraordinarily easy to come to the wrong conclusion based on incomplete data. Demagogues love twisting your emotions with data that sound compelling when critical, granular data is omitted.
THE MOST FAMOUS EXAMPLE (from Wikipedia)

UC Berkeley gender bias

One of the best-known examples of Simpson’s paradox is a study of gender bias among graduate school admissions to University of California, Berkeley. The admission figures for the fall of 1973 showed that men applying were more likely than women to be admitted, and the difference was so large that it was unlikely to be due to chance.[14][15]
Applicants Admitted
Men 8442 44%
Women 4321 35%
But when examining the individual departments, it appeared that six out of 85 departments were significantly biased against men, whereas only four were significantly biased against women. In fact, the pooled and corrected data showed a “small but statistically significant bias in favor of women.”[15] The data from the six largest departments is listed below.
Department Men Women
Applicants Admitted Applicants Admitted
A 825 62% 108 82%
B 560 63%  25 68%
C 325 37% 593 34%
D 417 33% 375 35%
E 191 28% 393 24%
F 373  6% 341  7%
The research paper by Bickel et al.[15] concluded that women tended to apply to competitive departments with low rates of admission even among qualified applicants (such as in the English Department), whereas men tended to apply to less-competitive departments with high rates of admission among the qualified applicants (such as in engineering and chemistry).