Stick a probe into running water at the top end of a pipe and predict the spatter of droplets and spume farther down. Where traditional scientists saw random turbulence, beyond the scope of ''linear'' Newtonian analysis, the Chaos Cabal saw intriguing patterns. Measles epidemics - even Italian politics. Part of an avant-garde of physicists called the Chaos Cabal, Farmer and Packard had studied the helter-skelter of cascading rapids, falling snowflakes, They knew next to nothing about the stock and bond markets, but they knew a great deal about chaos theory. At one strategy session, Packard remarked, ''Talking about cash flow, how are Before they could incorporate, they held agonized discussions with the staff about the morality of capitalism. Packard had never ownedĪ house or a new car. Both in their 40's, they had few personal assets to draw on. The central characters, Doyne Farmer and Norman Packard, abandoned comfortable jobs (Packard at a university, Farmer at a research lab) to start Prediction in 1991. Have risked sizable sums on this quirky enterprise in the desert says a lot about what's happening on the frontier of finance. The computer is programmed to make serious financial bets, with cash provided by a large and once stodgy Swiss bank. Sandals and T-shirts, who baby-sit a computer in Santa Fe, N.M. Bass has written an engaging account of the short life (so far) of the Prediction Company, owned and operated by maverick physicists in rafting How a handful of scientists tried to outsmart the stock market.
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