All-in Blind: Stop-Loss Considered Harmful

Simulation of the impact of stop-losses on returns (MSFT stock)

In the investing world, stop-loss orders are the most used risk management device: so simple and intuitive that they confuse reason and common sense. But the hidden costs of stop-losses alter the shape of expected future return distributions, resulting in no inherent edge to be had in using neither stop-losses nor profit-taking stops, or any combination of them; and as volatility of the underlying asset’s returns is increased, the impact of stop-losses increase as well, generating higher portfolio volatility. Precisely, the opposite of what is intended: the perceived benefits of the stop-loss are largely balanced out by the hidden costs.

Note: Trading desks may profit from large quantities of sell orders from client’s stop-loss/profit-taking orders known in advance, so don’t expect them to disappear anytime soon.

Telco Market Distortions

The FCC allowed small and rural telcos (local exchange carriers, LECs) in the USA to charge higher access fees to long distance and wireless companies (AT&T, Sprint, Verizon) to subsidize them, under the auspices of the Telecommunications Act of 1996. Abusing the prerogative, they partnered with conference call providers and providers of other shady services, giving birth to traffic pumping: generate high volume of incoming calls above typical rural usage to charge millions of dollars of fees to long distance and wireless companies and split the revenues with the service providers. Fast-forward to the present, technological advances and new business models are having a hard time to operate under this old set of rules, hampering new innovative services like Google Voice.

Every distortion introduced by regulators in the free market and the natural state of technology, however well-intended, sows the seeds of its own self-destruction.

Samsung: Advantages from Vertical Integration

BOM (Bill of Materials) for Mobile Phones

The mobile industry is not like the PC industry, populated by manufacturers that are just component assemblers of the various parts (memory, CPU, HD, …). In the mobile industry, the more vertical integrated mobile manufacturer is Samsung, a market leader in displays, memory and CPUs for mobile phones that also sells its quality components to other OEMs and ODMs (Apple To Buy Components Worth $7.8 Bln From Samsung Electronics This Year).

As shown in the graph above of a typical bill of materials of a mobile phone, those parts are the costlier and more important of a mobile phone: from this point of view, Samsung looks like a vertical mainframe manufacturer from the 60–70s, but with much of its software developed by an external provider (Android). So not only they have an obvious cost advantage on the low end of the smartphone market, they are also the leaders managing component droughts and bullwhip effects, which are very profit destroying in the mobile industry. Finally, note that the first reason Nokia has decided to go the Microsoft’s route is to differentiate enough from Samsung’s Android offerings, the second biggest mobile manufacturer after Nokia.

Addictive Number Theory

Addictive Number Theory

In 1996, just after Springer-Verlag published my books Additive Number Theory: The Classical Bases [34] and Additive Number Theory: Inverse Problems and the Geometry of Sumsets [35], I went into my local Barnes and Noble superstore on Route 22 in Springfield, New Jersey, and looked for them on the shelves. Suburban bookstores do not usually stock technical mathematical books, and, of course, the books were not there. As an experiment, I asked if they could be ordered. The person at the information desk typed in the titles, and told me that his computer search reported that the books did not exist. However, when I gave him the ISBN numbers, he did find them in the Barnes and Noble database. The problem was that the book titles had been cataloged incorrectly. The data entry person had written Addictive Number Theory.

Automatic Exploit Generation

The automatic exploit generation challenge is given a program, automatically find vulnerabilities and generate exploits for them. In this paper we present AEG, the first end-to-end system for fully automatic exploit generation. We used AEG to analyze 14 open-source projects and successfully generated 16 control flow hijacking exploits. Two of the generated exploits (expect‑5.43 and htget‑0.93) are zero-day exploits against unknown vulnerabilities. Our contributions are: 1) we show how exploit generation for control flow hijack attacks can be modeled as a formal verification problem, 2) we propose preconditioned symbolic execution, a novel technique for targeting symbolic execution, 3) we present a general approach for generating working exploits once a bug is found, and 4) we build the first end-to-end system that automatically finds vulnerabilities and generates exploits that produce a shell.

The first step to automatically search for and exploit the most basic vulnerabilities is done, and incremental improvements will surely follow. While this won’t have a deep impact on the computer security industry, since it’s already full of people exploiting software for free, it will surely have a real impact on the programming world: right now, all coders not acquainted with secure code-writing skills should be fired. For more information, visit the following link: Automatic Exploit Generation.

Best Android Apps for Development

  • DynJava. Java dynamic scripting interpreter engine. Gives you runtime access to all protected and private methods and fields of all running applications, and executes arbitrary Java code with all permissions.
  • AndroidShell. You can invoke any Android APIs from PC and see the execution result immediately.
  • aLogCat. View color-coded, scrolling (tailed) Android device (logcat) logs directly from your phone. No USB, adb, or emailing necessary.
  • adbWireless. adbWireless enable ADB wireless connection to connect to the phone as if connected by USB.
  • Titanium Backup. Backup, restore, freeze your apps + data + Market links, even protected apps.
  • Android Scripting Environment. Scripting Layer for Android (SL4A) brings scripting languages to Android by allowing you to edit and execute scripts and interactive interpreters directly on the Android device. These scripts have access to many of the APIs available to full-fledged Android applications, but with a greatly simplified interface that makes it easy to get things done.
  • touchqode. View and edit source code on Android phone. Touchqode is a true mobile code editor that comes with syntax highlighting, autocomplete and other features found in a desktop IDE. We support Java, HTML, JavaScript, Python, C++, C#, Ruby and PHP.
  • aGrep. aGrep is a open-source text search program like a “grep”.

Movable Type Printing Press vs Internet

Information Technology and Economic Change: The Impact of the Printing Press

The estimates suggest early adoption of the printing press was associated with a population growth advantage of 21 percentage points 1500–1600, when mean city growth was 30 percentage points. The difference-in-differences model shows that cities that adopted the printing press in the late 1400s had no prior growth advantage, but grew at least 35 percentage points more than similar non-adopting cities from 1500 to 1600.

Exploiting distance from Mainz as an instrument for adoption, I find large and significant estimates of the relationship between the adoption of the printing press and city growth. I find a 60 percentage point growth advantage between 1500–1600.

The computer equipment manufacturing industry comprised only 0.3 percent of U.S. value added from 1960–2007, but generated 2.7 percent of economic growth and 25 percent of productivity growth.

Hertz, No Moore

More than half of all computers aren’t computers anymore

More than half of all computers aren’t computers anymore. Smartphone shipments surpass PCs. The transition is done. But in this new era of mobile personal computing, the limiting factor is not the CPU, it’s the spectral efficiency of the whole mobile environment, experienced as the user goodput. At least 1MBit/s is needed to get an optimal browsing experience on a mobile phone.

Evolution of average versus peak spectral efficiency over time

As in Moore’s law, the growth is exponential, but with a rather less pronounced slope. And underlying both, economic models that serve as a self-fulfilling prophecy and a barrier of what technology could achieve in the future: the costly deployments of mobile networks, financed by debt, parallel those of semiconductor chip fabrication plants that Rock’s law models as constraints to transistor integration limits.

Microkia, in Search of the New Wintel

Nokia jumps into the abyss

Nokia retreats into its manufacturer roots and gives the keys of his kingdom to Microsoft: Symbian, purposely created to hold Microsoft back from the mobile space, much to the ire of Gates, is gracefully terminated by a Microsoftie in exchange for a promise of a better mobile operating system in the future and hundreds of millions of dollars in kind. The transition will be so hard that Nokia will not provide any forecast for the full year and the stock has fallen 15% on a day: a master deal for Microsoft, a disaster for Nokia. No software, no soul.

The economics underlying mobile operating systems and their adjacent ecosystems are very different from the PC space: more complex, faster releases, costlier product recalls, energy constrained, lower margins.On a typical PC, >30% of its price goes to Microsoft; on a smartphone, less than 7%. That is, the incentives to get a perfect OS release from day one are much lower, and that for a company that is used to deliver good software after 2–3 versions. Only the much better post-handset-sale incentives of monetizing mobile apps through advertising can align the two companies to succeed on this new deal, except that this model is very disparate to what Microsoft is used to.

Intel’s Mobile Backdoor?

Total system power breakdown with and without considering the Idle state time

On a modern smartphone, the screen consumes more power than the CPU (>3x), so the power advantage of the ARM over Intel chips gets diluted, even taking into account that differences in use between users are huge, rendering power consumption characterization impossible (see Exhausting battery statistics). That ARM chips are so energy efficient it’s a history of unintended consequences and path-dependence: the packaging of the first ARM chips were made in plastic to keep costs as low as possible, instead of using the more common ceramic packaging, as in Intel chips, so they had to keep the power dissipation below a watt. And now, it’s also path-dependence what keeps Intel outside the mobile world: everyone will keep on using ARM chips, even if the power efficiency advantage gets irrelevant.

Will Intel dare to change from being a vertical integrated manufacturer to an open licensor, just to beat ARM, even if that means lower profit margins? Or will they risk seeing their ISA get less executed all over the world?

Symbian: New Tools, Lost Horizons

Symbian C++ programming has the steepest learning curve ever. Just before Stephen Elop burns the platforms, or not, let’s remember the tools introduced by Nokia that tried to reduce it, with mixed results:

  • fshell is simply the most useful multi-purpose tool for the Symbian environment: the equivalent of bash + telnet + rlogin + a POSIX-like set of command-line tools. It will drastically reduce your compile-upload-debug cycle.
  • Flowella will help you to quickly create mock-up prototypes for market research purposes.
  • Qt Creator is Nokia’s biggest bet to save Symbian. Best suited for applications in which 80% of the code involves GUI tasks, to speed up development efforts. Unfortunately, few are the smartphones that have pre-installed support for it and Ovi isn’t distributing Qt apps for Symbian^3.
  • Start with Open C/C++ if you are not proficient on Symbian C++ and don’t want to know why there are dozens of classes for strictly the same things.
  • Symbian’s source code, which was the biggest open-sourced project ever. Huge but very well commented: if your application keeps on crashing and you think it should work, trust yourself, the bug it’s in the kernel and the source code will help you to track it down.