Fiction warning. This story is fiction, but the mathematical and scientific aspects are accurate.
People have commented on things like market evaluation, Nobel winning economics, stock market theory, and the like. What does all this mean? We heard it from our broker first.
Well, we did some digging among the vast expertise of stock market experts. Numerous phone calls, newspaper visits, and internet searches produced much interesting information. First, we learned that we had not attended Stanford and so the ultra-prestigious Black Scholes theory would have to take a pass. That's for the really smart guys. Only they can understand that.
We were hoping that there could be something we could understand about the stock market without being among the nation's aristocratic elite.
By mysterious and serendipidous coincidence, some of the local bars and taverns helped out. We were worried about how police detect when "you've had too much", and we learned one way to tell is to walk a straight line. If you wabble all around, then this is a sign of being "under the influence". So we at FEREGO became very interested in helping the police by writing or developing some kind of algorithm or computer program to help detect when "high levels of intoxication" are shown in walking behavior. With all the fine Italian wine that FEREGO consumes, our expert management concluded this would be a topic of exceedingly high importance.
When drinking brown wine one evening, Mr. FEREGO spilled some wine. It diffused quickly into the carpet, and now an expensive carpet is stained. The carpet stain bothered Mr. Ferego, so he did some internet searches on brown stain removal -- good thing for the internet. And we came up with some interesting items like Willie Brown (San Francisco mayor - never heard a bad word said about him), brown house, Miss Brown, Browne and Browne, brown bagging a free lunch, Chris Browne Linux financial links, and Albert Einstein. This last one got our attention. Was Albert Einstein a rug cleaner? What did that famous inventor of TV sets have to do with this? And so we followed this link; click, click; ah hah, brownian motion. Then we had to call in FEREGO's very own Falston Lastnaf to help us read some of this esoteric math. And Falston helped explain to our internet team that Brownian motion was how molecules wiggled around, and the theory of this was developed by Albert Einstein. Further, Mr. Lastnaf explained that brownian motion is a lot like a random walk, which is how a drunk walks down the street. So now, all of this bar action finally paid off. This all sounded crazy to me, and after saying "what, what" to Mr. Lastnaf several times in disbelief, I asked a nearby neighbor, who works at the nearby Lawrence Livermore Laboratory, about this. He said, yes, what you heard about Albert Einstein is no Lie. He did other things besides invent the TV set.
So once again, Italian wine drinking seems to have paid off. Now Mr. FEREGO was very excited because if he could understand this brownian wiggle, then maybe he could fool the police. And this would make all of his dealings in smoke filled Italian bars in San Francisco much less risky. And so FEREGO's team of programmers, internet experts, writers, media artists, along with the very difficult mathematician Falston Lastnaf set out to find a computer program that we could sell that would detect drunks on the street.
And years of painstaking work, research, failed algorithms, more research, more coding, more media sketches finally found something interesting. A FEREGO scientist used a walk-o-meter to record the motions of Mr. FEREGO's motion and we then collected data when Mr. FEREGO was whealing and dealing at bars.
And the prodigious Falston found a method for detecting when a walk was not on a straight line. If you didn't walk the straight line, then you were drunk. And Falston did the theory and guided the programmers developing the codes. (Falston has never touched a computer - he exclaims that he's far to good to ever even touch a computer, so he gets the programmers to do this.)
And Falston also tried applying this to stock market data. And he found that the stock market was usually drunker, always under the influence, and never walked the straight line. It should not drive on the street.
Technical details. Ironically, the algorithm processes the data. And if the data when plotted falls on a straight line, then that is a sign of being drunk. A pure random walk gives a straight line.
FEREGO's programming team tried this on some stock market data and they found that - even worse than Mr. Ferego - the stock market is not walking a straight line, and with this level of intoxication, it should not drive on the street. The plot below shows the results of the FEREGO algorithm when applied to a pure random walk and to some stock market data. The blue arrow shows the result of the algorithm on the random walk, and the red arrow shows the result of the algorithm on actual stock market data.
FEREGO straight line algorithm output for random walk and stock market data
So when they say "get that big drunk off the street" you can think of Mr. Ferego.
Once again wine and beer has saved Mr. Ferego's reputation. We owe it all to the brown wine.
Copyright @2002 FEREGO. All rights reserved.
FEREGO's straight line algorithm is a proprietary algorithm (mathematical techniques plus software) researched and developed at FEREGO.