Re: Gauge theories in economics and physics

From: Paul Danaher (watwinc_at_verizon.net)
Date: 08/27/04 

Date: 27 Aug 2004 07:10:22 -0400

Franz Heymann wrote:
> "Eric A. Forgy" <forgy@uiuc.edu> wrote in message
> news:3fa8470f.0408260841.52ce3477@posting.google.com...
>
> [snip]
>
>> Now, a "portfolio" of stuff can be thought of as an abstract vector
>> whose magnitude is the "value" of the portfolio. Each item in the
>> portfolio has it's own value and you can think of them as components
>> of a vector.
>
> This sounds remarkably like nonsense. The components of a vector are
> all orthogonal to one another. What does the concept of
> "orthogonality" mean in the present context?
> The magnitude of a vector can be determined from a knowledge of its
> components. How is this concept handles quantitatively in the
> presentcontext?

Well, orthogonality here would mean that the prices of the individual assets
are unrelated, i.e. a change in the price of one asset wouldn't affect the
price of another. However, there's no reason to assume this, and it would
typically be wrong anyway. The magnitude of the vector would be the value of
the portfolio, expressed in a given currency at a given date (showing the
present value of assets maturing in the future). Something I haven't seen in
the papers I've read so far in this collection is discussion of present
value where there are (a) multiple interest rates and (b) negative interest
rates - if anybody's seen that, I'd be grateful for a pointer.

Relevant Pages

  • Re: portfolio of options
    ... > price vs price of the assets? ... There's a chapter in the Financial Toolbox documentation titled "Portfolio ...
    (comp.soft-sys.matlab)
  • Mugabes mortuary of dead assets
    ... Mugabe's mortuary of dead assets ... SINCE government launched the current war on prices, ... the Cabinet Taskforce on Price Monitoring decreed that it had ... cancelled licences for all abattoirs, ...
    (soc.culture.zimbabwe)
  • Re: Best Way to Import Multple Return Series?
    ... > Hi, this is pretty basic, but I am a brand new Matlab user. ... > have a portfolio of 12 different assets, ... > Does the Excel file need to have special formatting? ...
    (comp.soft-sys.matlab)
  • Re: Fine work by our new Nobelist
    ... > estimated the value of such assets by some indirect method. ... profits). ... The valuation is the price of its ... tangible assets and intangible assets. ...
    (sci.econ)
  • Best Way to Import Multple Return Series?
    ... have a portfolio of 12 different assets, ...
    (comp.soft-sys.matlab)