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117 of 122 people found the following review helpful:
2.0 out of 5 stars
You had to be there, March 22, 2000
By A Customer
This review is from: The Predictors: How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street (Hardcover)
I met Doyne Farmer at his office near the Aztec Cafe in 93 and spent a pleasant hour with him at a nearby park comparing worldviews. At the time I felt the effort to "predict" financial behaviors was, to put it kindly, a misnomer. The book did not change my opinion. What Farmer and his crew have accomplished is simply finding a set of adequate engineering models which can cut through the emotional fog of human traders and barely come out ahead, sometimes. It isn't chaos theory at all, and I am surprised that none of the critics or reviewers have mentioned this fact: Farmer (admitted) that his methods were simply engineering model-fitting with some trendy glue...they never got to the level of applying truely sophisticated ecological or evolutionary models to the market as a whole....You might say they made a mystery out of playing both ends against the middle, and were able to find someone to pay to see them do it. The real problem of modelling real world systems was swept under the rug by the author with a throw-away reference to "the monster of dimensionality". The complexity of models increases geometrically or hypergeometrically with the addition of each variable, depending on how richly connected the model is. A model of the financial world running a few hundred variables would not come close to processing in real time--the reason that massively parallel supercomputers can render navier-stokes equations for the weather or hydrodynamic turbulence at all is because the node inputs do not require real world data...they keep riffing on data feed back from neighbors played against fairly simple transfer functions. To do a state space diagram with half a dozen variables defies the capabilities of any visualization method known to science at this time...and it takes more than science to distill the behavior of the world's financial community into fewer than two or three variables. It simply can't be done. For the technically curious, the technologies that Farmer used were variants of methods that Hebbs set forth in the seventies and eighties which are capable of doing set-theoretical analysis of directed networks state changes using fairly basic logical inference. THe output is given in a few rules of if-then and probabilites, which must be tested against common sense. The book does mention this in some casual comments which can get away from the uninitiated pretty easily. There are probably 10,000 living engineers with the savvy to adapt some algorithyms Byte Magazine published in the 80s as well as Farmer. Farmer was The Chosen One (with apologies to the Matrix) simply because he was famous, and he was famous because he had no problem taking credit for a field of novelty that dozens or hundreds of others had made viable (and he was the star of a readable book by a familiar author). Just for fun I went back and found an Omni magazine from 1990 with a big feature article on Chaos theory. It never mentioned the Chaos cabal, but this book leads you to believe that there was no Chaos before, or without, them...only chaos. Reading the book brought back intense memories of the discomfort I felt in Santa Fe, where the divide between the haves and the have-nots was wide enough to swallow up the whole history of technically advanced invaders scamming their native victims. SOme kind of fractal symmetry here...but since I am asking Doyne for money now don't make me spell it out. On the plus side, I really enjoyed the story telling ability of the author, his idiosyncratic interests were not too far removed from my own. On the plus plus side, I actually finished the book, which I am not wont to do these days given the chaos of my interests and commitments. I hoped, with many other readers, to find some order in the turbulence, but I only found a good story of a benign scam with colorful casting, something that Redford and Newman would have starred in in their heyday. I got the book for half price. It was worth the money to me. But maybe you had to be there.
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77 of 90 people found the following review helpful:
1.0 out of 5 stars
Swindled, February 14, 2000
This review is from: The Predictors: How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street (Hardcover)
This book is all fluff and no substance. The subtitle, "How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street," is a deceit. Aside from telling us that the physicists used nonlinear equations with live data streams to build computer models of different markets, e.g., gold prices, oil prices, T-bonds, stocks, and various currency exchange rates, and that these models were then used successfully for trading purposes, the author tells us nothing. There are no specifics, not even any general descriptions, of how the models were built, what data were used, or what refinements were made along the way. There are no specifics on how much money was made and by whom. The author treats us to much irrelevant minutiae such as who ate what at specific moments during various dinner conversations. But the author made no attempt to explain how these supposedly successful trading models were created. If the author didn't understand the science well enough to report it, then he shouldn't have written the book. If he did understand the science but the scientists refused to reveal details to him, he should have done some research. He could have read their published papers on chaos and complex systems with respect to topics other than financial markets. He could have interviewed people who would be able to make educated guesses as to how it is done. As it is, he gives us no clues as to how the models were built or what data were used. After wasting my time reading this book, I felt I had been swindled. There really ought to be a way to get one's money back. All I can do is say to the author (Thomas Bass) and the publisher (Henry Holt), "Fool me once, shame on you. Fool me twice, shame on me." And that's the way markets work.
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20 of 21 people found the following review helpful:
2.0 out of 5 stars
Could have been interesting, October 18, 1999
This review is from: The Predictors: How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street (Hardcover)
The main problem with this account of Doyne Farmer and Norman Packard's attempt to predict the price of stock and commodity prices is that there is no meat on the bones. Bass touches only superficially on what it is the Prediction Company is doing out there in Santa Fe and instead choses to focus on the fledgling firm's struggle to become a player in the world of finance. I understand that this is a complex subject, but perhaps if Bass had embellished his text with some illustrations and examples I would have come away with a better understanding of exactly wht this "new phynance" is all about. Bass makes reference to some of Farmer's work, but never goes any deeper then telling us the title. Another problem is Bass' portrayl of the main characters. Unfortunately, they don't come across as a very colorful lot. This is no 'predators ball" for the nineties. I learned next to nothing about what is going on. Overall, I was very let down
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