Financial Science Fiction

People are peddling fiction in the finance industry day in day out.

Many thousands of us put food on the table by weaving silly little stories while selling silly little investment products and services. All the while, promising the cutting edge.

Why then, hasn't anyone written the financial science fiction? Professionally.

Science fiction explores futuristic worlds. Exquisite utopias built by the physical sciences framed by inky shadows.

Sometimes the evil isn't even that subtle. Many science fiction universes are all-out-apocalyptic.

All good science fiction however is about ideas and understanding the logical conclusions.

Time travel; AI; first contact with alien or apes; assured destruction of ourselves or another alien race.

Neuromancer. Far ahead of its time; many of the internet lingo used today is derived from the book!

Ironically, the main character still had to lug wads of paper and tapes around though.

Science fiction is powerful. Sometimes it correctly presages the future; most of the time it probes the morality of development. Something which scientists often ignore.

For example, Lexicon explores the power of words over minds. Fantastic read.

How about financial science fiction?

Everyone knows money is not only power, but a superpower.

No need to tell a story about another Lex Luther, Tony Stark or Bruce Wayne.

We need something a little more subtle...

How about utopian financial markets?

Frictionless spreads.

Options with limitless expiries, strikes and underliers.

Correlation products of any combination of anything you could dream of.

Perhaps skewness and kurtosis products are actively traded.

Collateralised everything.

Overflowing liquidity.

Standards rule.

Everything's available to buy on an exchange.

No point in dodgy OTC deals anymore.

Every market is complete. We can trade in everything.

Imagine Bachelier logging into a Bloomberg console today - that feeling is how we'd feel 100 years from now.

Information is still asymmetric. No mind reading yet. Cannot tell the future (a la Asimov).

Quantum computers du jour. We can make more simultaneous calculations than there are atoms in the universe - calculating NPVs for long dated option embedded bonds are not an issue anymore.

Everyone can trade like a HFT if they care to.

The upshot of our financial sci-fi is that we can understand more than ever before about how our societies work now. Right now. Right at this very moment.

But not a moment more.

Our protagonists are 'nowcogs'. They live in a universe called 'now'.

Of course the 'now' is a relativistic universe.

Everyone can get closer to an event horizon but never quite reaches it.

In order to get closer, people take risks, they leave the incontrovertible 'now' ever so slightly and extrapolate from their present onto the edge of an abyss.

Why?

Even though the average soul will be ten to a hundred times richer than people in 2015; people still want a smarter partner than everyone else (cosmetic gene surgery is ubiquitous).

They risk it to make a lot of money.

Our chief character ('Case') pushes - gets burned - pushes - gets burned - until he's got nothing left to lose.

He's broke.

His husband left him because he's addicted to algorithms (and broke). Like Feynman's wife.

He didn't like him much anyway, there's smarter fish in the sea.

He keeps noodling with the maths.

Until he realises there's a pattern.

A drop in an ocean of anti-patterns.

A mathematical expression in chaos; which will rip apart the markets; the fabric of society; and 'now' itself.