The Predictors: How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street
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The Predictors: How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street

by Thomas A. Bass
     
 

Excerpted in The New Yorker and hailed by the business press, The Predictors is destined to become a classic of its generation--an antic, subversive odyssey into a universe defined by the mystical convergence of physics and finance.

How could a couple of rumpled physicists in sandals and Eat-the-Rich T-shirts, piling computers into an adobe house in

Overview

Excerpted in The New Yorker and hailed by the business press, The Predictors is destined to become a classic of its generation--an antic, subversive odyssey into a universe defined by the mystical convergence of physics and finance.

How could a couple of rumpled physicists in sandals and Eat-the-Rich T-shirts, piling computers into an adobe house in Santa Fe, hope to take on the masters of the universe from Morgan Stanley? Doyne Farmer and Norman Packard may never have read The Wall Street Journal, but they happen to be among the founders of the new sciences of chaos and complexity. Who better to try to find order in the apparently unreasoned chaos of the global financial markets? Thomas A. Bass takes us inside their start-up company, following it from its inception as a motley collection of longhaired Ph.D.s to its passage into the centers of financial power, where "the predictors" find investors and finally go live with real money. The Predictors is a dizzying, often hilarious tale of genius and greed.

Editorial Reviews

From the Publisher

“His narrative [teaches] readers about chaos theory as it relates to economics, about the increasingly recondite instruments of investment in the age of derivatives and, perhaps most important, about the evolution of financial markets toward automation.” —The New York Times

“One of the best books ever written about commodities, currency and derivatives trading.” —David Lazarus, San Francisco Chronicle

Library Journal
In this sequel to The Eudaemonic Pie, which introduced physicists Doyne Farmer and Norman Packard, Wired contributor Bass explains how Farmer and Packard used chaos theory (which they helped originate) to conquer the chaos of global financial markets. Copyright 1999 Cahners Business Information.
Kirkus Reviews
A business tale that takes a different path from start-up to success. Chaos theory has been a hot topic in science for decades but until now has had little to do with business. Here chaos theory, a "branch of knowledge good at finding order within disorder," is exploited to develop an ambitious stock-trading tool. This intellectual quest is undertaken by a pair of physicists—Doyne Farmer and Norman Packard—in Santa Fe who had gained acclaim in academia for their endeavors, though their practical experience had been limited to a hobbyist-type effort. To beat the odds at roulette tables, they programmed a hidden computer to analyze patterns in the movement of roulette balls, an experience with positive results and the basis for Bass's previous book The Eudaemonic Pie (1985). Moving from gambling to the stock market, they are tempted by the potential of stock trading, because, as one of the founders states, "even a small advantage can allow you to make a huge amount of money." First, though, they have to wrestle with the usual hardships of business start-ups, including raising money and attracting a staff of expert programmers. Along the way, this story is illustrated with brief background explanations about chaos theory, as well as the workings of the stock market. Readers will not gain any practical information about how the resulting product works; this isn't a how-to manual for harnessing the market. Yet it is educational in another way, as an inside look at an unusual collusion between science and commerce. In the end, the fledgling enterprise is backed by a large corporation, rewarding the founders amply for their efforts, even before their programming output hasproven itself. One criticism: Most of the action takes place in Santa Fe, and local color such as architecture and culture frequently intrudes on the main theme. A fascinating story that suggests a wider future for one branch of physics and bigger rewards for businesses that support theoretical concepts.

Product Details

ISBN-13:
9780805057577
Publisher:
Holt, Henry & Company, Inc.
Publication date:
11/28/2000
Series:
Business/Science Series
Edition description:
First Edition
Pages:
320
Sales rank:
424,145
Product dimensions:
5.50(w) x 8.50(h) x 0.71(d)

Meet the Author

Thomas A. Bass is the author of The Eudaemonic Pie and several other books. He writes for Wired, The New Yorker, and many other magazines. He lives in Clinton, New York.

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