The stock market is an echo chamber for those who think they’ve figured it out. There were the antiquarians, who invested based on intuition and what they heard by word of mouth or on the news. Operating on a higher level were the wonks, those who put daily price trends into complex models and squeezed them through constraints and parameters of incredible variety. What Neil had realized was that the written word and the mathematical formula actually had a way of responding to each other.

Each word in the English language had a frequency with which it occurred in usage, and Neil’s sophisticated mining of the online dictionaries and Wikipedia had yielded a treasure trove of these word associations. So when CNBC reported that a stock had ‘soared’, Neil could now predict which other stock would also rise. When @wsj declared that a stock had ‘crashed’, he could also tell with certainty which other stock would fall.

***

Of course, others had tried this algorithm and failed. Neil’s algorithm would not, because Neil had added another wrinkle to it – his algorithm would react differently to a ‘plummet’ from a ‘dip’, and he had done it all for free!

In two weeks, Neil was beginning to see results. His portfolio had been aggressive to start with – the stock market was also a casino, and like a casino, it had its own watchdogs in a decrepit part of the DHS called the SEC. Once he reached his initial goal of a million dollars in profit, Neil dialed down his investments, so as not to rouse the watchdogs. The income kept steadily rising over the next few weeks, and Neil found himself sleeping and waking at his workstation, making minor adjustments and tweaks so he could maximize his profits and minimize the risk of being caught. The algorithm, which had steadily taken over his life, showed no sign of easing up. He had become a shut-in ever since he started work on it, and now even the twitter news alerts had no interest for him anymore.

***
To be continued…

Part I | Part III