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I have advanced degrees, Master’s (S. M.) and Doctoral (Sc. D.), in Materials Engineering from the Massachusetts Institute of Technology, Cambridge, MA, USA and Bachelor's and Master's degree in Mechanical Engineering, from the University of Poona (now Pune) and the Indian Institute of Science,... More
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  • Trust Me, The Financial World Will Change Forever If Wall Street Starts Analyzing Financial Data Like We Do Baseball Statistics: Miguel Cabrera 2 comments
    May 26, 2013 12:00 PM

    The Detroit Tigers' star player Miguel Cabrera's baseball batting stats (he was in the news couple days ago) is discussed here to illustrate the meaning of Einstein's idea of a "work function", outside physics. Cabrera's four game stretch from May 19, 2013 to May 23, 2013, has been the topic of discussion in the baseball world, and also the subject of an interesting video clip (home run GIF).

    It is shown here that an understanding of the significance of the high batting average in this four game stretch will also lead to a better understand of many other complex problems in the business world, and in the so-called "soft sciences", where we now use simple y/x ratios to make sense of our (x, y) observations. However, this focus of the behavior of the y/x ratio has led to a general lack of appreciation of the nature of the underlying x-y relation, which can be either linear (of the type y= hx +c, as in many commonly observed in many problems) or nonlinear (y = m*x^n*exp(-ax) as in the traffic fatality problems). The reason for the often bewildering variation in the y/x ratio can be understood if we pay attention to the nonzero intercept c which appears in many problems, as we can appreciate from an analysis of the baseball batting stats. This nonzero intercept is shown to be related to the missing hits in baseball and is also related to the work function conceived by Einstein to explain the phenomenon known as photoelectricity.

    For full article, please see http://www.scribd.com/doc/143727444/Trust-Me-The-Financial-World-will-Change-Forever-if-Wall-Street-Starts-Analyzing-Financial-Data-like-we-do-Baseball-Stats-Miguel-Cabrera?post_id=1189058830_10200472544754685#_=_

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  • vlaxmanan
    , contributor
    Comments (9) | Send Message
    Author’s reply » Instead of a table of At Bats and Hits, imagine a table of revenues and profits We should be analyzing the financial data, exactly as described here with the batting stats. Instead, correct me if I am wrong, all I see is a focus on the ratio y/x = profits/revenues with no attempt being made to determine the nature of the x-y relation. This has been discussed in other articles that can be found at the same website. The appearance of a maximum point on the profits-revenues graph for several leading companies (such as Ford Motor Company, South West Airlines, Yahoo, Air Tran to name a few), in particular, has escaped the attention of all business leaders, Wall Street financial analysts, and even teh CEOs of the companies just mentioned.
    26 May 2013, 12:19 PM Reply Like
  • vlaxmanan
    , contributor
    Comments (9) | Send Message
    Author’s reply » In the updated version (uploaded today), I have provided additional calculations illustrating who the Cabrera's Hits "jump" from one parallel to another in the At-Bats-Hits diagram. This "jump" between parallels is a manifestation of the changing work function, which in turn means a slowing down of the rate of increase of the batting average. The "jump" between parallels occurs whenever the player goes through zero hits. Besides the opening game of the season (5, 0), Cabrera went through other games with zero hits: (4, 0) on April 7 and April 13, for example, which lead to a "sidewise" movement on the At Bats-Hits diagram. These "missing hits" change the work function and therefore reduce the batting average.


    The ideas can be extended to the analysis of many other problem, notably the profits-revenues problem of interest to Wall Street, the traffic fatality problem (of interest to all of us) and so on.


    Here's the link to the updated version: ww.scribd.com/doc/1437...
    27 May 2013, 02:27 PM Reply Like
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