May 26, 2017
In his new book, Adaptive Markets: Financial Evolution at the Speed of Thought, M.I.T. finance professor Andrew Lo attempts to account for the messier, more feeling realities of human behavior. A key premise is that markets evolve, like species, but much faster: “evolution at the speed of thought.” And that this evolution happens in fits and starts, in response to changes in the environment—hence, what he calls the “adaptive” markets hypothesis. It’s during these times of change that human emotions play their biggest role. Lo believes we are in one of those times now and, in his book, he applies biology, psychology, neuroscience, and history toward the goal of improving on the efficient markets hypothesis—which, Lo says, is not only flawed but is becoming increasingly so as the financial environment continues to change. ... The efficient markets hypothesis is a special case of adaptive markets. Markets are efficient if the environment is stable and investors interact with each other and natural selection operates over a long period of time.
In recent years, nut theft has exploded into a statewide problem. More than 35 loads, worth at least $10 million, have gone missing since 2013. The number and style of the thefts—quick and professional, as if the characters from Ocean’s Eleven had descended on the Central Valley—have drawn the attention of federal organized-crime investigators and prompted the creation of a regional task force. ... California grows the majority of the world’s almonds and is the second-largest producer of pistachios and walnuts. Many environmentalists blame their cultivation for exacerbating California’s drought—nut trees are thirsty plants. ... The man tasked with finding missing nuts in Tulare County is sheriff Mike Boudreaux, and in 2015 he faced a growing problem. That year, thieves had stolen six shipments, valued at $1.6 million, from area processors ... food and beverages overtook electronics as the most commonly stolen cargo in 2010. ... food is the easiest target in an ocean of easy targets. A private investigator and transit-company owner from California named Sam Wadhwani said that he had tracked cargo thefts of tires, Xboxes, computer equipment earmarked for the military, baby formula, tampons, and iPhones. Inventing a fake trucking company is easy, he said, as is impersonating a legitimate one. The only people in the shipping industry responsible for verifying truckers are brokers, who connect customers with trucking companies. ... the situation is further complicated by the fact that many nut processors have avoided contacting the police, worried that reporting thefts could jeopardize future business.
Whatever the truth of actual brainwashing incidents, the battle for people’s minds loomed large in the late 1950s, and was the subject of serious Pentagon discussions. The US and the Soviet Union were engaged in an ideological – and psychological – battle. Eager to exploit the science of human behaviour as it had physics and chemistry, the Pentagon commissioned a high-level panel at the Smithsonian Institution to recommend the best course of action. ... Psychology during the Cold War had fast become a darling of the military. ... That recommendation was translated by Pentagon officials into two separate assignments handed down to ARPA: one in the behavioural sciences, which would include everything from the psychology of brainwashing to quantitative modelling of society, and a second in command-and-control, to focus on computers. ... Licklider envisioned the modern conception of interactive computing: a future where people worked on personal consoles at their desks, rather than having to walk into a large room and feed punch cards into machines to crunch numbers. ... Licklider wanted people to understand that, more than any specific application, what he was describing was an entire metamorphosis of man and machine interaction. Personal consoles, time-sharing, and networking – the article essentially spelled out all the underpinnings of the modern internet.
S.L. Benfica—Portugal's top football team and one of the best teams in the world—makes as much money from carefully nurturing, training, and selling players as actually playing football. Football teams have always sold and traded players, of course, but Sport Lisboa e Benfica has turned it into an art form: buying young talent; using advanced technology, data science, and training to improve their health and performance; and then selling them for tens of millions of pounds—sometimes as much as 10 or 20 times the original fee. ... All told, S.L. Benfica raised more than £270 million (€320m) from player transfers over the last six years. ... How much they eat and sleep, how fast they run, tire, and recover, their mental health—everything is ingested into a giant data lake. ... each player receives a personalised training regime where weaknesses are ironed out, strengths enhanced, and the chance of injury significantly reduced. ... Benfica uses a custom middleware layer that sanitises the output from each sensor into a single format ... The sanitised data is then ingested into a giant SQL data lake hosted on the team's own data centre.
The men and women who are trying to bring down cancer are starting to join forces rather than work alone. Together, they are winning a few of the battles against the world's fiercest disease. ... It's not like you don't have cancer and then one day you just do. Cancer—or, really, cancers, because cancer is not a single disease—happens when glitches in genes cause cells to grow out of control until they overtake the body, like a kudzu plant. Genes develop glitches all the time: There are roughly twenty thousand genes in the human body, any of which can get misspelled or chopped up. Bits can be inserted or deleted. Whole copies of genes can appear and disappear, or combine to form mutants. ... Cancer is not an ordinary disease. Cancer is the disease—a phenomenon that contains the whole of genetics and biology and human life in a single cell. It will take an army of researchers to defeat it.
Above a certain temperature, a cell will collapse and die. One of the most straightforward explanations for this lack of heat hardiness is that the proteins essential to life — the ones that extract energy from food or sunlight, fend off invaders, destroy waste products and so on — often have beautifully precise shapes. They start as long strands, then fold into helixes, hairpins and other configurations, as dictated by the sequence of their components. These shapes play a huge role in what they do. Yet when things start to heat up, the bonds that keep protein structures together break: first the weaker ones, and then, as the temperature mounts, the stronger ones. It makes sense that a pervasive loss of protein structure would be lethal, but until recently, the details of how, or if, this kills overheated cells were unknown. ... One of the clearest observations was that in each species, the proteins did not unfold en masse with a temperature boost. Instead, “we saw that only a small subset of proteins collapses very early,” Picotti said, “and these are key proteins.” ... This paradox — that some of the most important proteins seem to be the most delicate — may reflect how evolution has shaped them to do their jobs. ... The more copies the cell made, they reported, the more heat it took to break a protein down.