According to Quantum Finance, asset valuations are unknowable until fixed by a market transation

CorporateNature No 151

The world of finance bears a striking resemblance to the quantum world, which has led to the emergence of a new discipline: Quantum Finance. Here are three examples:

A) CONTINUOUS VS. DISCRETE

A beam of light may seem continuous but is actually a stream of photons, which are discrete packets of energy. Similarly, an organisation's cash flows appear to be a constant trickle but each payment forms a distinct chunk.

B) CHANGE THROGH MEASUREMENT

Just like the position of a particle in quantum uncertainty is unknown until the moment of measuring it, the real price of an asset is unknowable until it is measured through a market transaction. Yet, this very transaction changes the valuation, just like pinning down the particle to measure it changes its characteristics.

C) UNCERTAINTY IN THE SYSTEM 

Uncertainty in the quantum world and Risk in the finance world are not a peripheral source of error, but are a fundamental feature of the system.

---

Canadian mathematician and writer David Orrell has a forthcoming book on this subject: “Money, Magic, and How to Dismantle a Financial Bomb” in which he models markets using the toolbox of quantum mechanics. A summary has been published in The Economist ("A quantum walk down Wall Street")

Charts of the most probable locations of finding an electron in a hydrogen atom

(Source: Wikipedia)

Walking on lake ice is like navigating corporate culture: slippery and occasionally sinking

Clear ice is stronger than white non-transparent ice on a frozen lake; Transparent companies are safer to work for or work with than murky ones.

CorporateNature Metaphor Series, No 119

When walking on a frozen lake, you should step on the stronger clear ice and avoid the weaker white ice. Choosing the company to work for or work with has analogous parallels. 

1) CLEAR ICE: 

Companies with transparent employment practices are like clear ice.

Clear ice is formed when still water freezes directly. There are few air bubbles, which results in solid ice, so even though he surface is slippery, it is firm under your feet. Similarly, companies with transparent employment practices have fewer undefined “air pockets” in the corporate structure and provide a well-charted course for career development. The same metaphor also holds for dealing with or investing in companies. A “clear ice” company has transparent financing and is less likely to suddenly spring a hole and sink. 

2) WHITE ICE: 

Companies with “murky” nepotistic employment practices are like white ice.

White ice contains air bubbles and impurities which compromise the integrity of its structure and make it more fragile and unreliable to support your weight on your journey across the lake. In a similar way, a company with nepotistic employment practices ("air pockets") offers an uncertain future: you would not have a clear roadmap since career advancement is not entirely determined by performance. And when dealing with a "white ice" company as a supplier or a customer, you constantly have to be on the lookout for concealed financial information or quality-cutting practices.

Whether you are seeking employment or a corporate partnership, consider the risks of taking a step off the clear ice and onto the white ice on the frozen surface of the "corporate lake".

Frozen lake in Canada
(image source: Wikipedia)