May 10, 2012
Mysterious Math Fuels Financial Markets
The stock market is on a downward jag, reminding us that financial events and products not in our control often determine our well-being. Thriller writer Robert Harris calls the markets an “alien force that slips human control.”
In today’s featured video, a California entrepreneur discusses how complex math, beyond our ability to comprehend, increasingly shapes the financial markets. He’s referring to various developments on Wall Street: the rise of computerized trading; Wall Street firms hiring math and engineering PhDs to design investing strategies; and institutional investors that use formulas to break multibillion-dollar stock trades into smaller transactions to evade detection by their competitors.
These are accomplished using “algorithms,” which are a bit like formulas but are far more complex mathematical progressions. Nobody really understands it, including narrator, Kevin Slavin, an independent tech consultant. And that’s the point.
He explains the mysteries of Wall Street’s “black box” in an simplified and elegant way that will wow viewers as he educates them.
“We’re writing these things we can no longer read,” Slavin said. “We’ve lost the sense of what’s actually happening in this world that we’ve made.” He adds, we are “only starting to make our way” to understanding it.