Readers reviews of The Predictors
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This is not supposed to be a comedy but that is the way it reads. Take a group of
skilled physicists working in the early days of chaos theory. Let them believe they can
build a computer model to predict the market. Use an author who, like the physicists,
knows nothing about the market, technical analysis, or charting. The result is that their
prediction models always seem to fail because of unpredictable events. When they go live
they discover they cannot predict the markets. They spend years on research before they
discover the impact of spreads and slippage on trading outcomes.
They discover " The rules keep changing, as if markets reinvent themselves and
start playing a new game every day."
The part that makes me cry is that these novices are able to convince SBC Bank to give
them millions of dollars to fund research and trading. Yes, they do come up with
successful software. Experienced traders will recognise it as software for hedging - a
trading technique that assumes we cannot ever predict the market so we develop trades
which will prosper no matter which way the market goes. This is a little ironic
considering the title of the book and unfortunately the author does not know enough about
financial markets to be able to recognise the irony. He still thinks that the software
predicts the market.
The most useful information in the book shows how a black box only works for a while
because future events are unpredictable.
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