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Bacteria Behaviour Can Shed Light On How Financial Markets Work
notscientific writes "Bacteria invest in proteins in an attempt to reduce stress or increase energy intake, while humans invest in cash. In both cases, better tradeoffs pay off. The similarities in tradeoffs faced by both bacteria and humans during investment are actually quite similar. Now, using synthetic biology, a group of scientists has shown that the outcomes of investment decisions in bacteria can be precisely defined, alluding to the idea that human investment activities, such as financial markets, can be thoroughly understood as well, and even modelled."
It makes perfect sense. Both activities involve the same types of selective process that guides evolution in general, be it biological evolution or financial.
or is that called cancer?
What's insightful about realizing that one can use disease-causing parasites to model disease-causing parasites?
...and modeled badly (e.g., anything quants have done in the last, well, ever). Even Oracle of Omaha has an implicit model when buying conservative stock that society needs (e.g., toothpaste). Models are everywhere... What an odd thing to assert about financial markets from interesting article on bacterial protein synthesis.
High finance assholes see the rest of us as bacteria. Imagine that.
...that investment bankers and stockbrokers are a form of infectious disease?
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Wait, wait, work through this with me. Are you saying you're the only fountain of abuse on Slashdot? It was just you the whole time? This changes everything.
Bio questions? Ask me to start a Q&A journal. Computer analogies available for most topics!
> boom and bust cycles
and
> It explains why a single-celled, fat cat investor or Darwinian demon (a hypothetical organism) didn’t win out long ago.
We know why already -- these, along with predator-prey relationships, are all subsets of supply and demand. Differential equation modelling of predator-prey showed stability was, in fact, not possible. Like a breeze across the water, the relative ratios distort a bit, say, the prey become more numerous. The predators increase because the supply of food increases, and they overshoot, causing it to crash. This in turn causes predator populations to crash, allowing the prey to rebound.
The important thing was this cyclic up and down was the norm, not the exception. Any steady state immediately begins destabilizing .
The same for economic cycles, as born out by people putting housing or car purchases on hold.
And now the observation that investors getting the crap scared out of them by talk of huge tax increases doesn't seem so unlikely anymore, does it?
(Insert picture of Morhpeus here) What if I told you this outweighed government investment to spend out of a recession by an order of magnitude?
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
Ruthless greed until the host is dead, short term profit and manipulation of the "hosts" to get more profit. The only thing missing in the model is HFT
I was promised a flying car. Where is my flying car?
Actually, high frequency trading is a cancer on the economy.
That's too simplistic a model. Think something like the bacteria in your gut. We need bacteria there to help our body digest food. However, if you get too many of the wrong sort (lets call these "greedy" bacteria) or they get out of your gut and into other parts of your body then they can make you really ill or even kill you. In the same way our financial markets and services are needed to make our economy work well. However get too many greedy financial people or have them start infecting other areas of our society - like, say, government - and just like our bodies our society will get very ill.
Two points
First slashdot summary tells about financial markets, TFA talks about businesses. I understand that businesses are dwarfs in financial markets, that vast majority of transactions being financial products non based on real economy.
Second, financial markets are more like lemmings than bacterias. They have nasty group behavior that cause all actors to jump into the sea at the same time. Surprisingly, bacterias look to fit neoclassic economy models better than humans, as their decisions seem more rationals.