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The Fear Index – a novel about LSCITS

I read the Fear Index by Robert Harris on holiday last week.  Harris states in an afterword that ‘I would like to write a new version of Nineteen Eight-Four, based on the idea that it was the modern corporation, strengthened by computer technology, that had supplanted the state as the greatest threat to individual liberty’.

In a nutshell, the book is about algorithmic trading and a trading program created by a reclusive physicist that uses machine learning to predict the market and make trades on that basis. Its premise is that the market is affected by fear – as indicated by the use of certain words in the news, websites etc. as well as future trading indexes and that this information is a predictor of future stock prices.  So far, so good. Then it gets silly – in Harris’s scenario the machine learning creates a ubiquitous ‘super intelligent machine’ that builds its own data centers to ensure its survivability, tries to kill its creator (for reasons that are never clear and using a stupidly obscure approach) and manipulates not just the market but world events that will change the market.  The novel ends with the Flash Crash which is supposedly created by this machine to hide its actions.

I like Harris’s novels but like Woody Allen films, the earlier ones were the best. Fatherland and Enigma were, I thought, excellent and his novels of classical Rome were pretty good. I wasn’t impressed by the Ghost – reflecting Harris’s dislike of Tony Blair and this one was really pretty grim.

I think it’s great that popular novelists write about technology and no-one expects them to do anything but simplify and exaggerate for effect.  This could have been an excellent book about the dangers of algorithmic trading and complex systems – we are creating systems whose operation we don’t understand. But Harris’s ignorance of the technology means that he has written a book that is anti-technology and which grossly exaggerates the dangers.  He is absolutely right about the risks of algorithmic trading but exaggerating these means that his message will simply not get through.

Harris is an excellent writer but he should stick to history – this is a bad book.

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Filed under Book review, LSCITS