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DynaRack, 13 Sigma, and Legal Information


Nicole Hemsoth, HPC Wire, Intel Hits Refresh on Datacenter Vision, here. I want my Broker Dealer all over this.

This week we were on hand for Intel’s “Rearchitecting the Datacenter” event, which offered a glimpse into how the company imagines its future path along both low power and high performance server routes.

 KWRegan, GLL, Thirteen Sigma, here.

Today I want to talk about the meaning of high-sigma confidence in areas where the results may not be verifiable.

“Six Sigma” refers to the normal distribution curve, whose major properties were established by Carl Gauss. Gauss and others discovered that deviations in scientific measurements followed this distribution, and the Central Limit Theorem provided an explanation of its universality. Thus magnitudes of deviations of many kinds can be expressed as multiples of the standard deviation {\sigma} of this distribution, which then estimates the frequency of such a deviation or larger. The goal in manufacturing is to make the process so reliable that its {\sigma} is below {1/6} of the magnitude of deviations that would cause components to fail at point of creation. When only one side of deviations matters, this puts the failure rate below the tail-error function value {Q(6)}, which is almost exactly two parts per billion. By the end of assembly the tolerance is raised to {Q(4.5)}, so it is really “Four Point Five Sigma” that sets the end-product goal to failure of less than 3.4 parts per million.

Matt Levine, DealBreaker, Push To Make Insider Trading Legal Comes a Bit Too Late For SAC Capital, here. SAC is the lightening rod  – Ren Tech, Tower, Citadel, etc. slip by. This is worth deconstructing somewhat carefully.

But the interesting what-should-the-law-be question is, where should that inflection point beBethany McLean has the best description of where it is right now:

But the line between what’s insider trading and what isn’t is most definitely not the line between what information an average investor can access, and what information a hardworking hedge fund manager who can spend thousands of dollars and hundreds of hours on expert research can access. “I shudder to think how much of my alpha comes from failed individual investors,” one hedge fund manager tells me. The group of analysts could have done almost everything short of getting a source inside Dell. They could have worked Dell’s investor relations department, used sources at other companies, called customers to do so-called “channel checks” — research on what’s selling — set up meetings with management and industry analysts and pooled all their information. That’s all legal. “Edge,” as they call it in the hedge fund community, can refer to inside information, but it can also be that little bit of knowledge gleaned from incredibly hard work. And within those circles, “edge” gets shared — but not with you.


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