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ALONG with catalogues for enticingly photographed garbage, my mailbox is stuffed with pitches for foolproof computerized “investing” systems. “Investing,” in this context, means speculating in stocks or commodities. The systems are all different in some respects, but all similar in the most important ways. For $399.95 or $179.99 or whatever, you get a bunch of disks for an application program that, when you crank in price data from some service, identifies trends. Since the trend is always your friend, you then just bet that it goes on–up (generally), or down. The bet takes the form of buying options or futures or even actual stocks.

The first tip that things might not be that simple should be the price of the system. After all, why should hedge funds or other successful investors need anything more than one of these programs? The second is the observable phenomenon that trees don’t grow to the sky. That seems like a laughably obvious point, and yet, in the first week of May, there were some very big institutions and some very rich people who learned the lesson all over again when the one-way bet on the dollar against the yen suddenly turned into a two-way bet.

JD

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John Dizard

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ALONG with catalogues for enticingly photographed garbage, my mailbox is stuffed with pitches for foolproof computerized “investing” systems. “Investing,” in this context, means speculating in stocks or commodities. The systems are all different in some respects, but all similar in the most important ways. For $399.95 or $179.99 or whatever, you get a bunch of disks for an application program that, when you crank in price data from some service, identifies trends. Since the trend is always your friend, you then just bet that it goes on–up (generally), or down. The bet takes the form of buying options or futures or even actual stocks.

The first tip that things might not be that simple should be the price of the system. After all, why should hedge funds or other successful investors need anything more than one of these programs? The second is the observable phenomenon that trees don’t grow to the sky. That seems like a laughably obvious point, and yet, in the first week of May, there were some very big institutions and some very rich people who learned the lesson all over again when the one-way bet on the dollar against the yen suddenly turned into a two-way bet.