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-Through my eyes-

26 November 2005

Stock Market Prediction

Suppose someone creates a software that can predict the stock market. That is, stocks of individual companies.

Suppose the creator of this software is also a publically traded company, traded in the same stock market it's software makes predictions about.

Suppose the software is sold to every company out there in the market. And is accessible to everyone who can trade in the market.

Suppose every trading company can buy stocks of every other trading company.

Now you have a system where each component is aware of the outcome of every other component.

How would the stock market play out?
This is mind-boggling.

But what's the bigger concept here?

Consider Conway's Game of Life. The elements do not know the outcome of the whole. They don't know anything. What if they start knowing the behaviour of other elements? If a dot knows that the other dot will die, what kind of move can it make? Can it migrate to a better neighbourhood?



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