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  1. #91
    Ultimate Member JKtheMac's Avatar
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    We certainly seem to be into a new chapter for this book now, and it is certain to start escalating from here. If it is structured as a medium length story we are into rising action and would expect a climax in four or so issues by my gut feeling, so 12 still looks likely given the density of material.

  2. #92

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    Here's something else that I just came across: Gaddis realizes before he gets eaten that the one outlying crash (the one Mammon didn't cause) was in 1987. According to Wikipedia, IRL that particular crash is also the one that is primarily referred to by the nickname "Black Monday." It also remains, "the largest one-day percentage decline in the DJIA [Dow Jones]." So if we didn't already realize that this particular crash is key, well...it looks like the series is named after it.

  3. #93
    Astonishing Member Abe's Avatar
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    Black Monday : 19th of October 1987 - 30 years today!

  4. #94
    Ultimate Member JKtheMac's Avatar
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    I guess on one level the use of magic in this book could be seen as a critique of how algorithms have slowly but surely taken over the market. Indeed many think Black Monday was partly an accident caused by the automated 'portfolio insurance' algorithm which was designed to offset losses in large investment portfolios in a time of 'sell-off'. In other words the computer algorithms designed to protect the largest investors perpetuated and exacerbated the drop in price to cause the biggest one-day drop in history.

    The algorithm was designed to sell futures as an offset, but smaller investors could see no reason to buy low price stock when the futures market was also depressed. For a short while it looked to everyone like a depression. The market had actually fully recovered within a year, and people could have made a lot of money buying stock, but nobody could perceive this possibility and for short and medium term investment selling now was better than selling twenty minutes later when the price had gone down, and potentially (according to the futures market) showed no sign of recovery.

    If you then overlay a conspiracy theory onto this you could posit that this computer algorithm actually accelerated the use of computer algorithms in the market. Many computerised systems were put in place to stop this kind of sudden and relentless drop in price. Mainly pausing and then stopping the trade in stock. However stock can now be traded much faster now, and is very often done using algorithms.

    Numerology is a good analogy for algorithmic systems.

    Add to this that 'games theory' which has some serious flaws in its methodology, dominates economic thinking and therefore the algorithms that are used in the market, and one could make a claim that algorithms are artificially controlling the market.

    The idea that the 'market gods' can no longer see the actions of their followers also mirrors the way that the algorithms used by traders are naturally trade secrets. Algorithms represent an added layer of abstraction overlaying the already rarified world of the economic theories of the stock market. A world that does indeed tend to think of money and its value in the abstract rather than as a collective will of real people taking very real human risks.
    Last edited by JKtheMac; 10-20-2017 at 06:15 AM.

  5. #95
    Astonishing Member Abe's Avatar
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    That's very interesting JK. Thanks to share your thoughts!

  6. #96
    Ultimate Member JKtheMac's Avatar
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    Quote Originally Posted by Abe View Post
    That's very interesting JK. Thanks to share your thoughts!
    You know me, I can't resist a theory.
    Last edited by JKtheMac; 10-21-2017 at 05:58 AM.

  7. #97

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    Yeah, thanks JK. I'm not too educated where high finance is concerned, so those were some interesting new points to ponder.

  8. #98

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    Good stuff JK! I don't have any insights myself regarding algorithms in finance, since most stock-market terms sound like magic spells to me, but I feel like I've learned a bit from your post.

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