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

Bass, Thomas A.

Softcover

ISBN 10: 0805057579 ISBN 13: 9780805057577

Publisher: Holt Paperbacks, 2000

Synopsis

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.

About this title

Review:

Using a computer to beat Wall Street from afar is, arguably, the new American dream. While it will remain just that for most of us, an offbeat gang of academics turned financial wizards is showing it can be done. Led by acclaimed physicists Doyne Farmer and Norman Packard, the Santa Fe-based Prediction Company has proven since its 1991 founding in an adobe bungalow furnished with plastic lawn chairs and top-of-the-line Sun workstations that it is indeed possible to make millions in the world's financial markets by anticipating trends and developing software that automatically capitalizes on them. In The Predictors, Thomas A. Bass colorfully relates their tale of fiscal triumph--and reveals in the process how even an unorthodox group of antibusiness intellectuals in far-off New Mexico can make the world's biggest institutions sit up and take notice.

Long esteemed in the scientific community, Farmer and Packard have become legendary in hacker circles since their failed attempt to beat the roulette tables in Las Vegas with toe-operated computers was chronicled in Bass's well-regarded 1985 book called The Eudaemonic Pie. This time, though, the two hit the jackpot with their cutting-edge computer programs and the company they created to trade German marks, Chicago commodities, Japanese treasury bonds, Texas oil futures, and New York securities. Bass's prose is a bit flowery at times, but his perceptive you-are-there account is nonetheless entertaining and sure to cement the pair's reputation as today's ultimate masters of "phynance," the successful, and now oft-copied, merger of physics and finance. --Howard Rothman

From the Inside Flap:

The idea of using chaos theory as a predictive tool had long intrigued the Chaos Cabal. They asked themselves, what nearby phenomena look random but actually contain hidden structure? the smoke curling up from an ashtray? the vortex formed around a sugar cube dropped in a cup of coffee? the stock data listed in the newspaper lying on the table?

In this deceptively simple question lay the roots of a great adventure in the world of money, an antic, frantic odyssey into a universe defined by the mystical convergence of physics and finance.

It never dawned on Doyne Farmer and Norman Packard--not when growing up together in the Southwest, not during their hippie grad-school days, not even when applying their collective genius in physics and mathematics to winning at roulette in Las Vegas--that someday they would end up as players, beating the Masters of the Universe from Morgan Stanley and Goldman Sachs at their own game. But of course it's only natural that these accomplished theorists, counted among the founders of the new science of chaos, would eventually turn their attention to what may be the most uncontrolled and chaotic phenomena of all--the global financial markets.

The Predictors is Thomas Bass's engrossing and often hilarious chronicle of how these two scientists--along with their team of T-shirted and ponytailed Ph.D.'s, and with the help of some very savvy financial gurus-attempted to decode and model the complex patterns underlying the apparently random movements of commodities, currency, and equities markets. On the dizzying ride from the Prediction Company's dusty offices above a Santa Fe fortune-teller to the glittering towers of Wall Street, Farmer and Packard find themselves in the company of virtually every cowboy trader and rogue millionaire who ever tackled the market. Bass brilliantly spins a tale of genius and greed, power brokers and rebels, all the while providing a brisk education in chaos, complexity, and the world financial markets.

For anyone who has ever dreamed of finding a way to outguess the wizards of Wall Street, The Predictors will be a ride as thrilling as a big market surge

About this edition

• Publisher: Holt Paperbacks
• Publication date: 2000
• ISBN 10: 0805057579
• ISBN 13: 9780805057577
• Binding: Paperback
• Edition number: 1
• Number of pages: 320