"Sir, you mean that these are signs of a big swing in the stock market?" asked Kelly Hicks in shock as she looked at the articles.

Chen Geng nodded: "The stock market is like a particularly large earthquake, when those 8.0 or more earthquakes are about to appear, there are usually some signs, such as animals will show particularly uneasy emotions, such as groundwater will become turbid...... In fact, the stock market is the same, such as the Dow Jones, the S&P 500 and other indices have fallen sharply, indicating that the market itself has begun to be unstable, just like the earth's crust before the start of the earthquake, it has begun to brew explosive energy, and you look here, what do you see?"

Looking at the words "computer program trading", "profit", "crazy" and other words on Chen Geng's fingers, Kelly Hicks looked puzzled: "This ...... Any questions?"

"This illustrates people's mentality," Chen Geng said: "There is a classic saying in the financial world, saying that 'if even the cleaners are also speculating in stocks, the stock market will be at the most dangerous time, you should consider leaving', and now this is also the case, you see, the so-called 'market confidence' optimism has almost become a general consensus, everyone feels that as long as they come to the stock market, they will make money, no one will tell others that 'stocks are risky, investment needs to be cautious', people give the risk warning to the computer program,"

Speaking of this, Chen Geng sighed: "You must know that the risk of the market itself is not the biggest risk, but the selective indifference to the risk is the most fatal of all risks." ”

But Kelly Hicks obviously didn't agree with Chen Geng's words, she hesitated, but still plucked up the courage to say to Chen Geng: "Boss, I admit that what you said has some truth, but the computer will not make mistakes, relying on the computer's calculation of the accurate model, you can calculate all the potential risks in advance, and you can use automatic trading to avoid the risk before it happens......"

Chen Geng sighed secretly.

It doesn't take 20 years, as long as it takes more than 10 years, "there is no more stupid behavior than handing everything over to the computer" will become the consensus of all the general public, including the financial community, but today, in 1987, "computers are infallible, relying on the computer's calculation of accurate models, you can calculate all potential risks in advance, and you can use automated trading to avoid risks before they occur" is the common view of the whole society, because in people's eyes, only "0" and "and" will be recognizedThe "1" computer will always have only two options, "correct" and "wrong", which is naturally much more reliable than the traditional way of stock trading.

In the past, the traditional stock market was written down in order on the trading board of the exchange by specialized personnel, but with the speed of computer computing is getting faster and faster, the traditional trading mode has been changed by the computer, and the financial institutions and major exchanges in the United States and even the world have been equipped with computing power far beyond human beings. The error rate is much lower than that of human mainframe computers, and stocks are bought and sold through specially designed computer trading software.

Investors can also obtain information through the computer themselves, and then make the decision to buy and sell, and financial institutions active in the financial markets such as stocks and futures are generally using computer programs for quantitative trading, it can be said that in the stock market trading link, the process of replacing the human brain has begun.

In the 80s, it was the era of the deification of the computer, in addition to the general belief that the computer would not make mistakes, another reason is that during this period, index funds became the most popular fund method, this kind of portfolio usually contains at least 300 stocks in the S&P 500 index, because the index fund's portfolio includes a large number of stocks, so compared with the more accidental stocks, the index rises and falls are obviously more regular.

As major institutions and analysts are generally optimistic about the economic trend and the stock market, index funds have become the mainstream option of institutional investment, and one of the most common forms of index funds is portfolio insurance, the so-called portfolio insurance, simply put, this kind of portfolio will be allocated assets with a number of stock portfolios according to the proportion of risk level, among which an important indicator used to adjust and avoid risk is stock index options.

The asset portfolio of portfolio insurance is more complex, and the requirements for timely hedging are quite high. It is easier to be mathematically modeled, which determines that index funds are more suitable for computer program trading, because of the characteristics of index funds, those institutional investors who are keen to buy index funds, generally use computer trading programs to replace manpower, because as long as the computer program analyzes the next trend of the market, it will automatically make the decision to sell or buy stocks for profit or risk aversion, and the scale of this kind of trading is usually very considerable.

And to give so much money, so much trading volume, to the computer......

It's scary to think about.

According to the statistics released by the Federal Reserve Bank of the United States at the beginning of this year, before 1987, the total assets covered by various portfolio insurance were between 60 billion and 100 billion US dollars, and the institutions that provide portfolio insurance include large commercial banks, stock brokerage companies, insurance companies, etc., and the largest buyer is the United States pension fund.

People firmly believe that computers cannot make mistakes, but the reality is cruel, theory is theory, reality is reality, the actual price of index options does not always correspond to the results of computer theoretical calculations, and computer trading programs still have the risk of valuation errors. Once there is a small error in the computer calculation, it is very easy to produce a domino effect, and then trigger an avalanche of selling orders, from institutions to individual investors will be implicated, but the cost of this calculation error does not need to be borne by the computer itself, it is really ......

Fuck batch.

After saying this to Kelly Hicks, Chen Geng said: "The emergence of computer viruses has increased this danger exponentially, you can imagine if someone quietly dropped a virus in the computer of the New York Stock Exchange......

"Hiss......"

Kelly Hicks gasped, and her face turned pale!

Ordinary people may not know the dangers of computer viruses, but who is Chen Geng? He is the world's largest manufacturer and manufacturer of personal computer hardware, and at the same time the largest supplier of personal computer operating systems: the boss of a data research company, as the personal assistant of the boss of a data research company, even if Kelly Hicks froze a little knowledge and common sense in the computer field at the beginning, but after such a long time, he can smoke a little.

As he spoke, Chen Geng's mobile phone rang, and it was his own private number, which only a few people knew.

Chen Geng did not hesitate and immediately picked it up.

As soon as the phone was connected, before Chen Geng could speak, the person inside whispered, "It's me, Howard." ”

Who?

The most trusted person around Reagan is the White House chief of staff and the public chief of staff of the president, Howard Baker.

Chen Geng also lowered his voice: "I'm listening." ”

"The Federal Statistical Office has just sent in last year's statistical report," Howard Baker whispered: "The U.S. economy is growing at a rate of 1.78 percent, consumption is growing at a rate of 5.6 percent, residential fixed asset investment is growing at a rate of 12.7 percent, and federal government spending is growing at an annual rate of 8.2 percent, and state and local government spending is growing at an annual rate of 5.1 percent."

However, these are all internal real data, and the next publicly available data are 2.5%, 4%, 10%, 7% and 4% respectively. ”

Chen Geng was not surprised to hear it, data falsification and adulteration?

What's so strange about this, I really think that the United States, which boils and nourishes oil, will not falsify data?

What he cares about is the three key messages behind the string of key data that Howard Baker told himself:

The economic growth rate is lower than the growth rate of consumption and the fixed asset investment of residential buildings, indicating that the economic growth cannot keep up with the rise of consumption and prices, and also cannot catch up with the growth of real estate investment.

The rise in federal spending suggests that the current growth of the US economy is largely driven by debt and government spending, in other words, the current stock market boom is actually the result of this paper boom.

It is entirely conceivable that once the federal government releases this economic data, which is still not satisfactory, the market will react: the market will be disappointed and worried about whether the dollar will depreciate as a result, and the fear of a weaker dollar will make people worry about inflation.

In this case, the stock market will inevitably weaken, and according to the current administration's usual response, the government will definitely raise interest rates in order to preserve the price of the dollar after the market weakness, and once the government announces an increase in interest rates, it is not surprising that the stock market will see a price correction.

"Thank you. ”

Chen Geng whispered to Howard Baker.

The information that Howard Baker told himself at this time was too important.

"No thanks," Howard Baker said softly, "you'll find out sooner or later, anyway, as long as you don't forget my share." ”

"Of course. ”

"Also, Mr. Rosenkowski, chairman of the House Ways and Means Committee, communicated with the President about the idea of introducing a bill to tax mergers and acquisitions," Howard Baker continued, "Your Excellency the President has agreed in principle, and you should understand what that means." ”