Using genetic algorithms to find and improve upon technical trading rules and patterns is very interesting.
Yes, let's destroy the man who started the largest independent philanthropic organization in the world...that's a great idea.
Dave Bowman: Where the hell'd you get that idea, HAL? HAL: Dave, although you took thorough precautions in the pod against my hearing you, I could see your lips move. I knew you wanted to short 25,000 shares of Dendreon, Dave. I can't let you do that, as it is inconsistent with algorithmic patterns now.
I think this ties in to what the unabomber's manifesto ranted about. http://www.wired.com/wired/archive/8.04/joy.html THE NEW LUDDITE CHALLENGE First let us postulate that the computer scientists succeed in developing intelligent machines that can do all things better than human beings can do them. In that case presumably all work will be done by vast, highly organized systems of machines and no human effort will be necessary. Either of two cases might occur. The machines might be permitted to make all of their own decisions without human oversight, or else human control over the machines might be retained. If the machines are permitted to make all their own decisions, we can't make any conjectures as to the results, because it is impossible to guess how such machines might behave. We only point out that the fate of the human race would be at the mercy of the machines. It might be argued that the human race would never be foolish enough to hand over all the power to the machines. But we are suggesting neither that the human race would voluntarily turn power over to the machines nor that the machines would willfully seize power. What we do suggest is that the human race might easily permit itself to drift into a position of such dependence on the machines that it would have no practical choice but to accept all of the machines' decisions. As society and the problems that face it become more and more complex and machines become more and more intelligent, people will let machines make more of their decisions for them, simply because machine-made decisions will bring better results than man-made ones. Eventually a stage may be reached at which the decisions necessary to keep the system running will be so complex that human beings will be incapable of making them intelligently. At that stage the machines will be in effective control. People won't be able to just turn the machines off, because they will be so dependent on them that turning them off would amount to suicide. On the other hand it is possible that human control over the machines may be retained. In that case the average man may have control over certain private machines of his own, such as his car or his personal computer, but control over large systems of machines will be in the hands of a tiny elite - just as it is today, but with two differences. Due to improved techniques the elite will have greater control over the masses; and because human work will no longer be necessary the masses will be superfluous, a useless burden on the system. If the elite is ruthless they may simply decide to exterminate the mass of humanity. If they are humane they may use propaganda or other psychological or biological techniques to reduce the birth rate until the mass of humanity becomes extinct, leaving the world to the elite. Or, if the elite consists of soft-hearted liberals, they may decide to play the role of good shepherds to the rest of the human race. They will see to it that everyone's physical needs are satisfied, that all children are raised under psychologically hygienic conditions, that everyone has a wholesome hobby to keep him busy, and that anyone who may become dissatisfied undergoes "treatment" to cure his "problem." Of course, life will be so purposeless that people will have to be biologically or psychologically engineered either to remove their need for the power process or make them "sublimate" their drive for power into some harmless hobby. These engineered human beings may be happy in such a society, but they will most certainly not be free. They will have been reduced to the status of domestic animals
"Quants seek to strip human emotions such as fear and greed out of investing." Then what is left? They are digging their own graves, funny, yet sad.
Somewhere around here is a thread about the new systems that will read and analyze and trade on economic releases before us mere mortals can even figure out what the "number" was. When I first read about this I found the concept fairly pathetic, because if it actually worked and traders felt that computers had the initial edge after an economic release, then who would take the other side of the trade? Markets would just go completely illiquid following an economic release until the humans could catch up to the machines and decide what price to trade. In the old days this is exactly what happened in the US Treasury market. Markets would go "subject" just prior to a release, and all bids and offers would be removed from the screens. But an even more obvious problem with these computer-analyzing-news-release algorithms came out Friday. One of these news reading programs got hold of the employment release and somehow read the nonfarm employment figure as +188,000 instead of 88,000 and executed the sale of several thousand note contracts. CBOT financial futures plunged before the error was noted and unwound. Exactly who screwed up and how much they lost has not yet been determined. Unfortunately the electronic markets preserve anonymity.