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To: Lee Fredrickson who wrote (23059)	5/29/1998 11:07:00 PM
From: jbe	Respond to of 95453

*OFF TOPIC* Re: Chaos Theory & The Market Thanks for looking into this, Lee. I gather that "chaos" is not always "chaotic," or at least it is not just "chaotic." Apparently, "chaos" has its "deterministic" components as well as its "random" components. And chaos theory, when applied to financial markets, is supposed to help you predict what might seem essentially unpredictable -- that is, the short-term movement of stock prices. ("Chaoticians" -- yes, there is such a word -- apparently deny that long-term price movements are predictable.) But to get it, you must know all about "nonlinear mathematics." Nonlinear? I don't even remember any linear mathematics -- if I ever knew any in the first place. Perhaps some of the less mathematically challenged among us can check this chaos theory out, and let us know what, if anything, is really going on here! I say that because one source I read (after following in your footsteps to Altavista, Lee), maintains that "Wall Street is spending millions to develop chaos theory-based trading and investing systems." If these guys are on to something, then traditional TA may get left in the dust, back in the horse-and-buggy age. Anyway, if anyone is interested, here are a few more links. (But bear in mind that the chaos theory people are better mathematicians than they are writers.) 1) The home page of the "Advanced Investment Technologies" library. Lists books, software programs, etc. dealing with "state of the art" chaos theory techniques/technologies: fractal analysis (?), neural networks (?), artificial intelligence, etc., as applied to trading, stock selection, and stock market prediction. sigma-research.com 2) An attempt to provide a concise explanation of chaos theory, as applied to financial markets (only two pages long): falconasset.com 3) A skeptical view of chaos theory, as expounded on the web page of a Vanderbilt grad student. It's quite funny, and the specific criticism sounds fairly devastating to me (but then I am not an initiate): ftp.ec.vanderbilt.edu Any math whizzes out there ready to take up the challenge? jbe