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The Fear Index by Robert Harris
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The Fear Index (original 2011; edition 2012)

by Robert Harris (Author)

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Member:alanteder
Title:The Fear Index
Authors:Robert Harris (Author)
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Rating:****
Tags:In English language, fiction, novel, suspense fiction, thriller fiction, hedge fund fiction, stock market fiction, artificial intelligence fiction

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The Fear Index by Robert Harris (2011)

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Showing 1-5 of 24 (next | show all)
I'm still not sure what a Hedge Fund is except a sign of common sense, as in hedging one's bets, not putting all your eggs into one basket, and so on and so forth. When a hedge fund starts making returns of 86% when the market is down 24% even a money moron like me would suspect something was not kosher.

Brilliant physicist Alexander Hoffman designs a programme which predicts where to invest and becomes a multi-zillionaire. His company VIXAL is a triumph of digital mastery with the computer making all the choices and somehow, in the face of all logic, making a killing as well - sometimes all too literally. The human factor is ignored by AI and Hoffman realises VIXAL is engineering a world-wide crash.

His creation is also trying to kill him, having stolen his identity to set up a series of transactions that ruin his marriage and pairs him with a killer from one of the darker corners of the internet. Then there's his party, the smarmy and indescribably greedy Hugo Quarry who is ruthless in his pursuit of the almighty dollar. Or pound or Euro, take your pick. Pretty standard stuff but very readable and exciting.

Fear Index is definitely a pot boiler, not anywhere near the excellence of Archangel, Lustrum, Fatherland or many other of his books: as a quick read, with some insights into the hither-to unknown to me world of private banks, the stock market and the financial world, this financial thriller is highly recommended.
  adpaton | Mar 24, 2014 |
A decently written book. Spoiler alert -- really wasn't that difficult to deduce that VIXAL was sending out the emails rather than Hoffman being mentally unstable. Not sure if the intent was to craft VIXAL as HAL, but would have been better if had some better insight there or more technical aspects of troubleshooting when it went rouge. That seemed to me to be something that was just glossed over. That and the fact that emails were found for the building of the second data center, but curious that VIXAL still lives somewhere else now after it was destroyed? Yeah, sure... ( )
  skraft001 | Mar 19, 2014 |
Update: 8/3/2012 This article related to an automatic trading algorithm run a-muck is pertinent to this book. http://dealbook.nytimes.com/2012/08/02/trying-to-be-nimble-knight-capital-stumbl... A larger question is whether this kind of trading benefits capitalism, in the sense it helps supply capital for businesses to grow, or whether it serves only the financial industry in its quest for making huge amounts of money without making anything.

The best thrillers and horror stories don’t involve chain saws or mutated snakes. They take something prosaic, something we are all familiar with, something we trust, and then tweak it.

That’s the premise of a wonderful book I read years ago called[b:Adolescence of P-1|1414021|Adolescence of P-1 (R)|Thomas J. Ryan|http://photo.goodreads.com/books/1298183243s/1414021.jpg|1404364] by Thomas Ryan. An algorithm created to seek out knowledge learns and soon desires to protect itself. Read it.

What separates humans from other animals is language. That used to be the case. It’s no longer true. Computers can now assimilate, translate, and communicate. Not to mention that they are all connected and have access to virtually all of human knowledge. So can they learn and adapt?

The other thread that surfaced while reading Fear Index is what happened to Long Term Capital Management in 2000. A hedge fund founded by a brilliant economist, the premise was that if you get enough smart people together you can write some brilliant computer algorithms that will permit outperformance of the market. They collapsed spectacularly in 2000 requiring a bailout.

Combine those two events and ideas and you have Fear Index.

Alex Hoffman is a brilliant physicist who founds a hedge fund which does spectacularly well bring returns of 80% to its investors. Constantly tweaking its algorithms to provide even better returns, they are poised to add even more money to their fund. But some weird things are beginning to happen. Alex gets a rare book in the mail with no indication who might have sent it. Investigation reveals it was purchased using an account in the Caymans he owned but was not aware of. All the transactions happened over the Internet. Then his house is broken into by someone who had all the key codes.

The algorithm Hoffman’s company created uses sophisticated analysis of human fear to determine market positions. All of a sudden the company finds itself taking huge short positions that pay off when companies they were shorting suffered some form of catastrophe. They reap immense profits, but how could the algorithm have foreseen those seemingly random events? And how did the notes of Alex’s therapy get on the web. And who installed the surveillance cameras and built the server farm? In the meantime, Hugo’s algorithm is learning and doing things on its own. Really good story. 4.5 stars. Less than 5 only because it’s so similar in concept to Ryan’s book.

As an aside, Harris has a very nice explanation of what a hedge fund does and how hedges work. Let’s say, as in his example, that you make a bet with someone for $1,000,000 that the girl across the hall is wearing black knickers. Whether she is or not really isn’t relevant to the bet because you’re going to bet someone else $950,000 that her knickers are NOT black, so your maximum exposure is $50,000. You can, of course, hedge your other bet even further as will all the other betters. There will be winners and losers each time the knickers are revealed but the maximum exposure should be relatively small and if you make enough bets over a period of time it doesn’t matter if you are wrong some of the time, because you’ll win enough times to come out ahead. In theory. That’s what hedge funds do and it explains why there are trillions of dollars being bet on trivialities and when things go wrong, as in Corzine’s little escapade, billions can be lost, or in his case, disappear. (Did the accountants make off with it, perhaps?) In the meantime, I’m making a side bet that the fried, fat encrusted ribs and whipped-cream-covered chocolate chip ice cream I just ate won’t kill me before I get this review up. ( )
  ecw0647 | Sep 30, 2013 |
Very enjoyable thriller - a real page turner. A great holiday read. ( )
  cazfrancis | Jun 10, 2013 |
Tightly written thriller - hope this could never happen but given the antics of the banks it probably can. Too much financial detail but this can be skipped over. ( )
  sianpr | May 7, 2013 |
Showing 1-5 of 24 (next | show all)
Humans have emerged as the top predators of the biosphere, but Harris warns that a new life form, brilliant and brutal, could be emerging from our algorithms, silicon chips and fiber-optic lines. Corporations aren’t people, he tells us, but they will be alive. Will we survive the rise of the machines? Lovers of the “Terminator” and “Matrix” films know the answer. In evolution, as with a prospectus, past performance is no guarantee of future results.
 
Is “The Fear Index” fearmongering? Possibly. Like most dystopian novels, it taps into anxieties - about the mysterious workings of computers in this case. Like the best novels of this genre, it offers something to chew on - and it’s entertaining.'
 
When the reason behind the eerie incidents becomes apparent, the effect is chilling—and, for some characters, fatal. Only when the plot's smoke clears will certain fussy readers feel their suspension of disbelief plummeting and say: Now, wait a minute. That's another kind of flash crash.
 
“. . . the premise of The Fear Index by Robert Harris is seriously creepy. . . . The Fear Index is a solid, competent techno-thriller, carefully researched and intelligently executed. If you enjoy this genre—and who doesn’t now and then?—put this one on your to-be-read list.”

 
Foreboding runs through the system of The Fear Index like an IV drip. But if the novel sells itself short anywhere, it's in the author's clearly conscious decision to sacrifice character development for the sake of story pace. Still, it doesn't take a super-computer to know The Fear Index is a worthwhile investment of your time.
added by geocroc | editUSA Today, James Endrst (Jan 30, 2012)
 

» Add other authors (4 possible)

Author nameRoleType of authorWork?Status
Robert Harrisprimary authorall editionsconfirmed
Rekiaro, IlkkaTranslatorsecondary authorsome editionsconfirmed
Zwart, JannekeTranslatorsecondary authorsome editionsconfirmed
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Dr Alexander Hoffmann sat by the fire in his study in Geneva, a half-smoked cigar lying cold in the ashtray beside him, an anglepoise lamp pulled low over his shoulder, turing the pages of a first edition of The Expression of the Emotions in Man and Animal by Charles Darwin.
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Dr. Alex Hoffmann’s name is carefully guarded from the general public, but within the secretive inner circles of the ultrarich, he is a legend. He has developed a revolutionary form of artificial intelligence that predicts movements in the financial markets with uncanny accuracy. His hedge fund, based in Geneva, makes billions. But one morning before dawn, a sinister intruder breaches the elaborate security of his lakeside mansion, and so begins a waking nightmare of paranoia and violence as Hoffmann attempts, with increasing desperation, to discover who is trying to destroy him.
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"A visionary scientist creates a revolutionary form of artificial intelligence that predicts movements in the financial markets with uncanny accuracy. His hedge fund, based in Geneva, makes billions. But after an intruder breaks into his home, he has to try to discover who is trying to destroy him"--… (more)

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