Chapter 132 22.2 The Other Side of Chaos

The prevailing view is that chaos theory demonstrates that these high-dimensional complex systems—such as weather, the economy, army ants, and, of course, stock prices—are inherently unpredictable.This assumption is so unbreakable that it is generally considered that any design to predict the output of these complex systems is either naive or insane. However, people have greatly misunderstood chaos theory.It has another face.Don Farmer, a "baby boomer" born in 1952, used the analogy of vinyl records: Chaos, he points out, is like a hit record with music on both sides. The positive lyrics are this: According to the law of chaos, the initial order can be broken down into the original unpredictability.You can't make long-term predictions.

The other side is this: According to the law of chaos, things that seem to be completely disordered can be predicted in the short term.You can make near-term forecasts. In other words, the nature of chaos carries both good news and bad news.The bad news: there is little, if any, of long-term forecasting.The good news, the flip side of chaos, is that, in the short term, there is much more that may be more predictable than it first appears.Whether it is the long-term unpredictability of high-dimensional systems or the short-term predictability of low-dimensional systems, they all come from the same fact, that is to say, "chaos" and "randomness" are two different things. "In chaos there is order," Farmer said.

Farmer sure knew.He was a pioneer in exploring this dark realm long before chaos formed a scientific theory and became a fashionable field of study.In the trendy California town of Santa Cruz in the 1970s, Don Farmer and his friend Norman Packard founded a commune of computer geek hippies to practice collective science.They live together, eat together, cook together, find solutions to problems together, and share the honor of scientific papers together.As the Chaos Society, the group studies the wacky physics of dripping faucets and other seemingly randomly generated devices.Farmer was particularly fascinated by the roulette wheel.He firmly believes that there must be some kind of order hidden in the apparently random rotation of the roulette.If anyone could find a hidden order in this swirling chaos, well... well, he'd be rich... rich.

In 1977, long before commercial microcomputers like the Apple Macintosh were born, the Chaos Society of Santa Cruz built a set of small, manually programmable microcomputers that fit into the bottoms of three ordinary leather shoes.These computers key in information with their toes; their function is to predict the direction of the ball in the roulette wheel.Farmer's team bought used roulette racks from Las Vegas and studied them in the commune's overcrowded bedrooms.This homemade computer runs code written by Farmer based on the team's research.Farmer's computer algorithm is not based on the mathematical laws of roulette, but on the physical laws of the wheel.Basically, Chaos Society's code simulates the entire roulette wheel spinning and bouncing balls inside the chip in the shoe.It did this simulation with a paltry 4K of RAM in an era when computers were giant monsters that required 24-hour air conditioning and dedicated staff to take care of them.

This scientific commune has turned the other side of chaos more than once. The scene is roughly like this: a person (usually Farmer) puts on a pair of magic shoes to measure the elasticity of the roulette operator on the line in a casino. The speed of the shot, the bounce of the ball, and the inclination of the roulette swing.Nearby, a member of the same agency was wearing a third magic shoe connected by a radio signal, and actually placed bets on the table.Before that, Farmer had already toe-tweaked his algorithm to imitate a casino roulette machine.At this time, in the short period of about 15 seconds between when the ball fell and finally stopped, his shoe computer simulated the entire chaotic running process of the ball.Farmer taps the predictor with the big toe of his right foot, generating a signal of where the ball will land in the future about a million times faster than a real ball would fall into a numbered cup.With a flick of his left big toe, Farmer conveyed the message to his accomplice, who "heard" it from the sole of his own foot, and then, primly, placed his chips in the pre-determined position before the ball settled. in the grid.

If all goes well, the bet pays off.However, the system never predicts the exact number that will win the bet; members of Chaos are some realists.Their predictor predicts a small patch of adjacent numbers—a small sector of the roulette wheel—as the destination area for the ball on the table.The betting partners will spread chips all over this area while the ball stops spinning.In the end one of them wins the bet.Although the chips placed next to it lose, the small area as a whole tends to win, often enough to beat the odds.Thereby earning money. Later, because the system's hardware was unreliable, the group sold the entire system to other gamblers.From this adventure, though, Farmer learned three things that are important for predicting the future:

First, you can extract the inherent patterns inherent in chaotic systems and get good predictions. Second, you don't have to look too far ahead to make a useful forecast. Third, even a little information about the future is extremely valuable.