The easiest way to understand noise is by thinking about measurements. The variability of the error is noise – and that's important. In the mathematics of accuracy, the expression for total error is very simple and quite compelling. It is bias-squared plus noise-squared.

This problem originated in the most sophisticated and advanced financial markets because those are the markets where leverage was the greatest and people took the most advantage of it.

Failure is an important tool with which one can reassess and reconstruct an idea or process, it is an essential element of the feedback loop. Failure should be used to step back and question your method and weaknesses. To recognize failure early can ultimately make one much stronger down the road.

I personally think that it's only the ignorant and populism pandering politicians who treat the hedge fund industry as a scapegoat for the financial crisis. It was the extremely heavily regulated investment banks who, risking their shareholders' money, levered their firms up to 40:1!

The average pay, inflation adjusted, has dropped more than 40% – yet the Gretchen Morgenson's of the world want to write that it's going up and up… that's just wrong.