Name: The Predictors
ISBN: 9780805057577

The Predictors

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.

What Hacker News says

osullivjJun 2016

I see they've got Packard from Prediction Company as well. Bass, Thomas A., The Predictors, 1999, gives a good account of Packard & Doyne Farmer's work on market prediction.

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jackgaviganMay 2015

I was CTO of a dot-com in 2000 when the Bubble first. We had to close the company down and I ended up taking a contract setting up web servers and application servers and doing the security for online trading systems at Deutsche Bank. I discovered that investment banks are very quick to embrace new technologies that give them a competitive edge over their competitors. At the time, that included techology and software that was coming out of the Internet sector - I personally deployed Red Hat Linux, Apache/Stronghold, Netscape web server, Tomcat, Weblogic and nCipher during the 2000-'02 timeframe.

So, there's no doubt in my mind that a significant chunk of revenues found its way from the investment banks to companies like Red Hat and Netscape. Whether that was a "make or break" contribution is another question. They may have contributed to the success of a company like Red Hat but I think it would be a stretch to say that Red Hat would not have been successful without orders from the financial sector.

As well as financial innovation (i.e. creating CDS, CDOs, etc.), the investment banks and hedge funds also do technology innovation. They were crunching "Big Data" more than a decade before it became a buzzword, and using clusters and grid computing, graphics cards and FPGAs long before Bitcoin arrived on the scene. Go read The Predictors by Thomas A Bass, to read how a group of chaos scientists made a killing in the futures markets.

Some of those technologies end upo making their way into wider use but, while their contribution to the world's tech stack is significant, I think it's dwarfed by the new technologies that are created by non-financial-focused companies, like Apple and Tesla.

On the second question, I would question your assumption. One of the ways the financial system could shrink in size is through technology.

But, going with your assumption, my answer would be "Probably."

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jackgaviganSep 2014

If you're interested in reading some more about the collapse of LTCM, I recommend When Genius Failed by Roger Lowenstein (for a fuller appreciation, read Liar's Poker by Michael Lewis first).

If you're interested in reading an excellent account of a startup HFT/hedge fund, it's worth ordering a secondhand copy of The Predictors by Thomas Bass (for a fuller appreciation, read Chaos by James Gleick first).

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jackgaviganMay 2016

The Predictors by Thomas A Bass

https://www.amazon.co.uk/Predictors-Thomas-Bass/dp/080505757...

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mikecaneApr 2013

I was giving this some more thought. Anyone else here familiar with the cast of characters from the book The Predictors ? http://www.amazon.com/Predictors-Maverick-Physicists-Theory-...

Is there any possibility of their involvement?

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lesterbuckOct 2010

The book about that group, The Eudaemonic Pie, is a great read:

http://www.amazon.com/Eudaemonic-Pie-Thomas-Bass/dp/05951423...

Recently I ran across another book about the same group, "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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