Chaos Hits Wall Street

An investment firm is ready to bet hundreds of millions that arcane mathematics can give the bulls and bears a run for the money.

By David Berreby
Mar 1, 1993 6:00 AMNov 12, 2019 6:41 AM

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Somebody made our lunch reservation under the name Prediction Company, and waiters and busboys at Santa Fe’s Escalera Cafe have been puzzling this one out all morning. Prophets of the new millennium? Loose nuts that rolled up against the Rockies and settled here in New Mexico?

As soon as I walk in with Doyne Farmer, Norman Packard, and James McGill, the hostess is after them: What do you guys predict? Is it, like, the weather? Or horse races? We thought maybe you were a family of Gypsies.

No one answers right away. The reticence is a little surprising. Smiling and blinking in his sweat clothes, Farmer looks to be the most guileless and unguarded guy in town, except maybe for Packard, who’s standing next to him in grad-student duds and shoulder-length hair. But appearances can be deceptive. The last time the two men were in business together, in the late 1970s, they led a sneak attack on Nevada casino roulette. Disguised as out-of-town yokels, they carefully tracked the racing balls around the roulette wheels, tapping measurements into tiny computers hidden in their shoes. The computers analyzed patterns of ball movements, came up with predictions for the next spot where the ball would drop, and tapped back. Then the men placed their bets.

Farmer still gets informal royalty checks from cloak-and-dagger gamblers who have adapted his equipment, but the casinos got the laws changed to make this kind of thing illegal. They also employ a lot of beefy, suspicious men to prevent it. That Farmer has lived to age 40 and Packard to 38 is proof that they can play it close to the vest.

Still, here’s the hostess, blinking expectantly.

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