Enter the fast moving world of chaos, complexity and financial derivatives as a group of physicists strive for the modern Holy Grail, the prediction of financial futures. This is one of those books that promise much but never quite manages to deliver. We want to know what chaos theory is and how it can be used to predict the prices of financial futures, but we never quite get to know. We learn a lot about what it is like to live and work in Santa Fe, to be part of a team of what are basically enthusiastic amateurs struggling to get to grips with a world which is not their own; physicists adrift in a sea of options and interest rate futures. This book is not a technical work, it is almost anthropological in style, but if you are more interested in the intricacies of human relationships than those of quarks, and neural networks, then you will probably quite enjoy it.
Thomas Bass delves into the world of the Prediction Company - formed by Chaos physicists, who decide that they can predict the financial markets and thus beat them! The book follows the would-be Gordon Gekko's as they learn about the markets and attempt to reconcile their sense of adventure with the harsh practicalities of the modern world. This book is a must read for anyone connected with the derivatives world and is written in an easy relaxed style that helps the reader to enjoy and feel a part of the adventure, as well as explaining Chaos theory and it's applications in the market place.
This is an excellent book, yet I feel the author wanders off the plot into pointless detail about Santa Fe and even what the Science Hut's wives are wearing. Provided you skim over these paragraphs there is some interesting information here - especially if you are thinking of creating a start-up.
The book is well-written but not very general about finance. You really don't learn very much about what they actually did, except for negotiating, programming, testing... I was personally very disappointed