FAITH IN CHAOS
Max Cohen, the story's main character and occasional narrator is a number theorist who believes that everything in nature can be understood through numbers, and that if you graph the numbers properly patterns will emerge. He is working on finding predictable patterns within the stock market, using its many variables as his data set with the assistance of his homemade supercomputer, Euclid.—Pi, 1998* 1
- "The banking system, for 12 years, has been building risks on things we don't understand based on bogus economic models—financial economic risk management tools—that were unacceptable."—Nassim Nicholas Taleb, 2008 3
In the course of his work, Max begins making stock predictions based on Euclid's calculations. In the middle of printing out the picks, Euclid suddenly crashes, but first spits out a 216-digit number that appears to be nothing more than a random string, as well as a single pick at one-tenth its current value. Disgusted, Max tosses out the printout of the number. The next morning, Max checks the financial pages and sees that the few picks Euclid made before crashing were accurate following a huge tech stock plunge. He searches desperately for the printout but cannot find it."1
- "I worked for a long time as a trader, and my fight was with people who claimed they could understand the probability of a rare event happening, particularly when they know economic theories."3
Max is also being pursued by agents of a Wall Street firm, who are interested in his work for financial reasons. They had found the original printout and were trying to use it to manipulate the stock market to their own ends; however, their lack of comprehension regarding the number had led them to unwittingly crash the stock market.1
- "The banks, comforted by these bogus measures of risk, were taking a huge amount of risks betting against rare events saying, 'our quantitative risk manager, our scientist, is telling us that we are safe.'"3
In the film, Max periodically plays Go with his mentor, Sol. This game has historically stimulated the study of mathematics and features a simple set of rules that results in a complex game strategy. The two characters each use the game as a model for their view of the universe; Sol says that the game is a microcosm of an infinitely complex and chaotic world, while Max asserts that patterns can be found in the complexity of its variations.1
- π Faith in Chaos; 1998
- The Black Swan; 2007
- Nassim Nicholas Taleb; 2008-10-10 (video)
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