An investment fund that makes trades based on superstitious beliefs

Shing-Tat Chung says:

Would you trust a superstitious robot with your money? Can technology operate with human characteristics, interpreting data and information with basic human behaviors. The Superstitious Fund Project is an investment Fund that is run by a superstitious autonomous Algorithm. As a one year experiment it operates and trades purely on superstitious beliefs. Buying or Selling on Numerology and in accordance to Lunar Phases. For example it has the fear of the number 13 and a full moon. It also develops its own lucky ad unlucky values, just as we do all the time. We are hardwired to imagine patterns that give us the illusion of control. Win a tennis match, and we've got lucky socks. The Algorithm creates these patterns throughout the year, ranking and deranking superstitions. They are then used as a new logic in trading.

As a one year experiment, £4828.88 was invested from participants over 50 cities around the world. After the one year, the balance will be returned at either a profit or a loss.

The project provides an alternate viewpoint on how technology can operate, highlighting issues on algorithms in our world. The flash crash of 2010 is a good example of where we create these algorithms and soon become less privy to their following actions. The Crash was caused by trading algorithms - but we don't know why or how. There is a world in which a new world of algorithms exist that becomes less accessible to. The Fund also comments on our increasing irrational behaviors. Contrary to belief, we are actually becoming more superstitious due to a number of reasons, and as a result our world is shaping and has shaped around our irrationalities.

A Superstitious Fund

Mark Frauenfelder is the founder of Boing Boing and the editor-in-chief of MAKE and Cool Tools. Twitter: @frauenfelder. Come and hear Mark speak at the ALA conference in Chicago on July 1.

More at Boing Boing

Ants and Stars: Bruce Sterling and Jasmina Tesanovic visit the Sardinia Radio Telescope in Italy

The Snowden Principle

silkox

Seems legit!
Eark_the_Bunny

Gee, this is how I always thought those rich bankers invested people’s money.
Ben Gruagach

It would be more interesting if they based the rules list on already established superstitions — the full moon one given as an example doesn’t coincide with common beliefs about the full moon for instance. Full moons are seen as a sign of abundance so it doesn’t make sense to avoid them in a moneymaking scheme based on superstitions.

To be more valid as a lunar phase superstition rule list they should consult an astrological gardening guide, such as one of the many almanacs commonly sold, and base buying and selling on times that are recommended for planting and harvesting.
- Gimlet_eye
  
  Another issue is: how do you balance between different superstitions? What if a lucky number falls on an unlucky day?
  
  What would be really funny is if this fund actually did really well, confirming (or just seeming to confirm) one superstition or another. The ensuing uproar would be lol-worthy.
  - http://twitter.com/chriscoreline chris coreline
    
    remember kids, Correlation does not imply causation, but it does imply hours of hilarious drama :D
- Lilah
  
  Lunar superstitions vary by culture. As an American, I am most familiar with negative connotations of a full moon – for example, I work in healthcare and emergency care employees often fear a full moon as a sign of a busy night, due to an unusually high number of accidents and assaults (I don’t know if such a trend has been scientifically demonstrated). Hence the terms “lunacy” and “lunatic”.
  - Purplecat
    
    http://www.ncbi.nlm.nih.gov/pubmed/8924138
    
    Here you go. It has been studied, and there’s absolutely no evidence of a link with a full moon.
  - http://www.nathanhornby.com/ Nathan Hornby
    
    If it were true, it wouldn’t be a superstition :)
Boundegar

I don’t care how Chinese you are, that last sentence is one of the worst-crafted sentences I have ever seen. It is almost 100% meaning-free.
- ldobe
  
  Contrary to belief, we are actually becoming more superstitious due to a number of reasons, and as a result our world is shaping and has shaped around our irrationalities.
  
  In the words of Sheldon Cooper: “That’s a semantically null sentence”
  - http://www.creaturesoflight.com dagfooyo
    
    Oh, come on, the sentence has plenty of meaning, it just can’t divulge the meaning because of superstitions. For example, it says “a number of reasons” instead of telling us what the reasons are or even how many reasons, because there are, in fact, 13 reasons why and the author doesn’t want to risk being unlucky.
  - WhyBother
    
    It could be better expressed as two separate sentences, with a little grammatical correction. “Contrary to [popular] belief, we are actually becoming more superstitious due to a number of reason. As a result, our world is shaping and has [been] shaped around our irrationalities.” For whatever reason, people seem to have developed an aversion recently to ending a sentence. Maybe it’s fear of being misread as “simple”. Say what you want, finish a complete thought, then get out and move on.
    
    That said, much of it is semantically null. A less wishy-washy version would be: “We are actually becoming more superstitious, and our world is being shaped around our irrationalities.” Still no support for the claims, of course.
    - http://twitter.com/chriscoreline chris coreline
      
      another suggestion would be to add more comas and claim its a poem.
- marilove
  
  I know someone who talks like this, hahahaha.
Chuck

Throw in a few stock picks by a crow or a squid, and I’m in.
- malindrome
  
  I hear that squid has a brother in the C-suite at Goldman Sachs who can get some hot tips for you.
http://www.jjsaul.com Jim Saul

It wouldn’t be at all surprising if this works, briefly. You’re not betting on an objective event, you’re betting on the actions of other bettors, timing the irrationality of others.

Hell, look at the price of gold right now. Someone’s going to harvest the assets of those fruitcakes pretty soon.
- voiceinthedistance
  
  Excellent tip. I’m going to sink my life savings into fruitcake futures ASAP.
  
  Oops, I forgot: no life savings anymore to invest.
- cservant
  
  I’d short/options on gold futures then this.
  
  Invest 1 year algorithm based on Numerology vs. shorting 1-YR gold prices.
  Hmmm…gold price is still high compared to 80s peak…yup yup definitely safe to short gold prices.
  
  I’d be surprised if this algorithm does better then balanced index funds.
http://twitter.com/dailyrev Brian Donohue

I know a few folks who’ve done pretty well for years using the I Ching (yijing in pinyin) for investing. I’ve used it in the context of a psychotherapy practice and have found it reliable for its insight. Most Westerners would call the I Ching superstition or New Age hoohah; and if you approach it the wrong way, it is. It’s not a divination system, that is: since there’s no such thing as a predetermined future that one can read. But it can read the current moment and its tendencies so that it appears to say something about the future. My experience, at any rate, has been that the I Ching is, at a minimum, at least as reliable as probability theory:
http://briandonohue.org/dailyrev/index-23428.html
- Boundegar
  
  That author blows the math in the first paragraph.
  - http://www.edmstudio.com futnuh
    
    I stopped reading at the chance of getting two consecutive hexagrams as being 1 in 4096. (A hexagram is essentially a 64-sided die. )
    - EvilTerran
      
      Yeah, pretty sure that would be…
      
      odds of one-in-a-row: guaranteed; 1 in 1
      odds of two-in-a-row: 64x less likely; 1 in 64
      odds of three-in-a-row: 64x less likely again: 1 in 4096.
      
      So, as is the usual for people who find deep meanings in random data, the author completely screws up basic probability.
      
      That would explain why “the I Ching is, at a minimum, at least as reliable as probability theory” for him — neither is reliable at all if you’re doing probability wrong.
      - http://twitter.com/sqlrob Rob
        
        That’s not true. Odds are more than 1/64 for a dupe. Rather, the posterior odds are 1/64, the prior odds are higher, since you didn’t specify the first one.
    - ahecht
      
      I kept going, but stopped at the probability of getting 3 pairs of consecutive numbers over 14 days as being 4,096^3 / 14. There aren’t 14 permutations, there are 13!/(13-3)!3! =286 (since the first day doesn’t count). So instead of his odds being 1 in 4.9 billion, it’s more like 1 in 917, assuming a perfectly random method.
- Wreckrob8
  
  The I Ching is about learning to discover an intuitive instinct for co-operation which is universally valid and sees meaning where there is as yet only the possibility of meaning – it is only one means to a particular end. Probability is concerned with the creation of safe parameters for manipulation but can be disingenuous in claiming scientific objectivity when it is short-sighted and oblivious of ultimate intent.
darkjayson

You know if this experiment produces massive returns we will see the beginning of another bubble a superstitious based one soon.
http://noctilucent-studios.blogspot.com/ Noctilucent Studios

As someone who just won some $ in the lottery using the number 13, I am getting a kick out of these replies. Also, iching is online!

http://www.ichingonline.net/index.php
http://twitter.com/sqlrob Rob

Using a random event to pick random events. I don’t think this is much worse than any other strategy.
Daemonworks

“Contrary to belief, we are actually becoming more superstitious due to a number of reasons”

Of course, I haven’t actually verified this assertion, and can only guess at the reasons, but trust me, it’s true.
http://twitter.com/rvitelli Romeo Vitelli

A lot of existing funds trade on the name and reputation of the superstar financial wizard who is supposed to be in charge (and typically isn’t). The idea is that the fund will continue to bring in spectacular results to match the marvelous performance of previous years, despite the fact that it was likely a fluke the first time round. If that isn’t superstition, what is?
10xor01

Thanks, but I’ll stick with monkeys throwing darts at the business pages.
- ImmutableMichael
  
  More information please. What star sign is the monkey?
  - Wreckrob8
    
    Is it a Chinese monkey?
    - ImmutableMichael
      
      and if so, does the placement of the monkey promote positive feng shui?
      - Wreckrob8
        
        No. But it does get its own TV series.
Tom McCann

This intrigued me so much that I asked what kind of returns I could expect. They said it would be bad luck to disclose that.
http://magicalthinkingbook.com/ Matthew Hutson

“negative superstitious events (i.e. eclipses) are associated with lower than average U.S. stock returns, where the marginal effect is approximately 10 basis points per day over a three-day window around the event”

From: “Dark Omens in the Sky: Do Superstitious Beliefs Affect Investment Decisions?” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428792
monitorhead

say… if you need an annual/semiannual/prospectus report, i’ve got some exerpeince on that.. and i promise not to break any mirors. LOL
dragonfrog

Contrary to belief, we are actually becoming more superstitious…

True that – why, at last week’s witch burning, I was talking to a mother who had abandoned no fewer than three of her children in the woods, figuring they were changelings.

Oh, right, that’s nonsense.

That kind of statement drives me mental – just like with the familiar counter-factual assertions that the danger of all sorts of violence and crime is increasing, despite every statistic showing that we’ve probably never been safer since humans climbed down from the trees.
robuluz

“We are hardwired to imagine patterns that give us the illusion of control. Win a tennis match, and we’ve got lucky socks. The Algorithm creates these patterns throughout the year, ranking and deranking superstitions. They are then used as a new logic in trading.”

Isn’t that just learning? I mean without some kind of referential framework within which you can discount ‘superstitious’ patterns, the software could simply be uncovering legitimate successful practices.

How does it know that it’s tennis socks can’t possibly be affecting it’s game? Why is it playing tennis anyway, shouldn’t it be looking after my investments?
bolamig

I have been told that the word rational behaviors are those which are both accurate and goal supporting. If your goal is to learn something about investing it seems pretty clear that the simpleminded algorithms here will accurately do their job.

I don’t understand why their website says several times that superstition based investing is not rational.
http://jayarava.blogspot.com Jayarava

typo 1st para: “lucky ad unlucky values” should read “lucky and unlucky values”
serpent

Caution: Superstition brings bad luck.
GawainLavers

Superstitious Fund must be bailed out by the government. It’s too big to fail!
E T

It’s “The Algorithm” – maybe it’s the only algorithm needed anywhere, anytime.