From Amazon.com
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
--This text refers to the
Hardcover
edition.
From Library Journal
In 1991, physicists Doyne Farmer, Norman Packard, and Jim McGill established the Prediction Company in Santa Fe, NM, intending to use their knowledge of chaos theory (the study of complex systems) to develop predictive models and automated black-box systems for beating financial markets worldwide. That they succeeded is only part of the story, the more interesting part of this tale being its human side. In Wired contributor Bass's account, we see the primary characters deal with a broad array of charlatans and geniuses, learn from their successes and failures, grow to appreciate the problems inherent in traditional economic theory, and become adept businessmen and managers. Useful as a primer in chaos theory as well as the various challenges that face start-up firms and the complexity of financial markets, this marvelous story should interest readers in both public and academic libraries.
-ANorman B. Hutcherson, Kern Cty. Lib., Bakersfield, CA Copyright 1999 Reed Business Information, Inc.
--This text refers to the
Hardcover
edition.
From Booklist
Exciting and remarkable applications for the emerging chaos and complexity theory are being investigated in fields as diverse as population studies, climatology, traffic, and financial markets, fields in which scientists hope to understand and predict events on the basis of past patterns of occurrence. In an amusing example, Doyne Farmer and Norman Packard, who were physics graduate students at the time, used computers hidden in their shoes to gather data at Las Vegas roulette tables so that they could develop a mathematical model to beat the house. Bass described their effort in an entertaining book,
The Eudaemonic Pie (1985). Now Farmer and Packard have moved on to bigger challenges. They started a company, Prediction, to analyze and invest in foreign exchange, interest rate, and stock and commodity markets. Bass revisits his former subjects and tells their story here. Bass, the author of
Reinventing the Future: Conversations with the World's Leading Scientists (1994), excels at making science alive and complicated ideas accessible. An excerpt appeared in the
New Yorker last spring.
David Rouse
--This text refers to the
Hardcover
edition.
From 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 physicistsDoyne Farmer and Norman Packardin 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 Basss 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 isnt 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 has proven 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. --
Copyright ©1999, Kirkus Associates, LP. All rights reserved.
--This text refers to the
Hardcover
edition.
David Lazarus, San Francisco Chronicle
"One of the best books ever written about commodities, currency and derivatives trading."
Review
"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
Product Description
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.
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
--This text refers to the
Hardcover
edition.
About 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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