| Winton Capital founder David Harding |
Can Albert Einstein tell us anything about financial markets?
“Einstein had an idea that if you keep examining questions eventually things would be figured out,” said E. L. Doctorow. Financial researchers, not unlike theoretical physicists and other scientists, are always looking for more definitive answers about what might happen in the markets tomorrow. That was reason enough for the famous novelist to be sitting on a stage Thursday night at the Cooper Union for the Advancement of Science and Art in New York, pondering how science fits into the art of writing and vice versa at the behest of Winton Capital Management founder David Harding’s foundation.
Harding, who studied theoretical physics himself as an undergraduate at Cambridge University, employs more than 100 researchers, many with science degrees, at his London-based, $24.7 billion firm, a commodity trading adviser. Harding prefers to call Winton Capital a scientific research organization rather than a hedge fund.
Much of Harding’s philanthropy is a reflection of his early leanings: Winton is in the fourth year of a five-year commitment to sponsor the Royal Society Winton Prize for Science Books, which comes from the national academy of science for the U.K. and Commonwealth and is considered the world’s most prestigious prize for popular science writing. The Winton Prize sponsored the panel on Thursday, called “Science and Story: The Write Angle,” a featured program in the World Science Festival that took place in New York May 28 through June 1. James Simons, founder of Renaissance Technologies, the firm Harding has said he most seeks to emulate, is a founding benefactor of the World Science Festival through the Simons Foundation.
Public radio and TV journalist John Hockenberry, the panel moderator, was a bit gaga over the panel’s high-profile speakers. “I had a dream that I was at the Strand,” he said, referring to a popular second-hand bookstore in downtown Manhattan, “and all of these famous authors walked in.” At that moment, theoretical physicist Sean Carroll, Doctorow, novelist Joyce Carol Oates, science journalist Jo Marchant and psychologist and author Steven Pinker walked onto the stage. Carroll, of the California Institute of Technology, won the 2013 Winton Prize for his book, The Particle at the End of the Universe.
While the conversation adhered to the subjects of science and story-telling, the panelists touched on various themes that can also be a worry to portfolio managers. Oates has a new novel coming out in 2016 about a neuroscientist, and it delves into memory loss — as in, those who forget market crashes are doomed to repeat them. Pinker posed the question of whether a robot or android can be considered conscious, and that led to a discussion of artificial intelligence and its infinite potential uses.
Asked later what might happen if artificial intelligence were used to invest in financial markets, Oates said, “I think it would be a good idea.” It might make sense because an artificial brain would make decisions that weren’t colored by emotion, she added — and it might work well in political decision-making too.
In passing, Doctorow offered a bit of wisdom from his own daily routine. “A real writer is someone who thinks writing is hard,” he said.
Certainly at Winton, which has offices devoted to research at a science park in Oxford and in Zurich, there is a similar view about investing. Winton’s researchers and portfolio managers have to constantly reexamine why prices do what they do, and back their market views with the kind of rigor that science demands. Explains Matthew Beddall, Winton’s chief investment officer, “Through the application of scientific principles, where opinions have to be backed up with evidence, we think it just gives us a less subjective view where we will be less likely to be influenced by our own emotions.”
