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Wednesday, May 13, 2009

I find this approach weirdly appealing.

I am frankly shocked that the Orgtheory boys haven't spotted this yet in their all-inclusive radar for financial news, but apparently someone has come up with a fascinating new innovation in investment speculation. See, trading requires a nearly autistic level of obsessive focus on minute details of one particular area of knowledge. Moreover, not only must one be focused, but one must have the patience to remain that way throughout the period of trading. This is, of course, why the best traders receive years of advanced training and education- so that they understand the market and can predict with lightning speed and flawless accuracy what the market will do.

Well, that's the traditional idea, anyway. Turns out a new company thinks they can do as well or better by dispensing with the advanced education, the huge bonuses, and the titanic egos and draw their investment counselors from a previously untapped source: rodents. Ladies and gentlemen, I give you Rattraders, the only investment advice company that uses trained rats rather than people:

Our program is a professional service to the financial industry; rats are being trained to become superior traders in the financial markets. Using our own methodology in accordance with well-established animal training techniques, our subjects learn to recognize pattens in historical stock and futures data as well as generating trading signals. We provide solutions for tick based trading data and day based data. RATTRADERS rats can be trained exclusively for any financial market segment. They outperform most human traders and represent a much more economic solution for your trading desk.


The idea, allegedly, is that rats are trained using skinner boxes to predict market movements. Market data is given to them using musical tones and the rats press on one of two levers to indicate what they think the market will do next. If they're right, they receive a small food reward. If they're incorrect, they receive an electric shock. Check out the methodology section of the site for the full scoop. So is this for real? Well, the site is entirely deadpan and even includes an interview with the CEO of rattraders, Michael Marcovici:





On the other hand, Michael Marcovici is not quite what you would expect. He's not a psychologist or a financial analyst. He is, instead, an artist. You can see an article about him here and check out his website here. His work is nothing if not unusual and seems to include several works that are a tad ambivalent about consumerism and money. On the other hand, he is apparently no stranger to the financial area and so far seems entirely serious about rattraders. And this despite the fact that he apparently has some programming experience and therefore knows you could doubtless get the same or better performance out of a computer.

So what's my conclusion? Is this a hoax? I'm going to tentatively say "yes, but I hope not." Yeah, I know, real certain. On the one hand, I think there's something beautifully artistic in this whole bit. A sort of concept piece that attacks our pretensions and makes us think about myopic decisions. And on those levels, it's a beautiful hoax.

But on the other hand this would certainly be a step up from the filthy varmints that currently handle the investment market.


I should probably note that the "best" rat trader's accuracy (One "Ms. Kleinworth Morgan") is only about 56.8%. I don't know what a typical human trader can achieve, but basically you're only marginally better off trusting the rat rather than a simple coin flip. And most of the rats don't even appear to be as accurate as that.

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