Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy

by Cathy O'Neil

Now, if this were a tiny anomaly in financial markets, and not a commuter train, a quant at a hedge fund—someone like me—could zero in on it. It would involve going through years of data, even decades, and then training an algorithm to predict this one recurring error—a fifty-cent swing in price—and to place bets on it. Even the smallest patterns can bring in millions to the first investor who unearths them. And they’ll keep churning out profits until one of two things happens: either the phenomenon comes to an end or the rest of the market catches on to it, and the opportunity vanishes. By that point, a good quant will be hot on the trail of dozens of other tiny wrinkles. The quest for what quants call market inefficiencies is like a treasure hunt. It can be fun.