Model Markets

Fuller, Joseph. “The Terminator Comes to Wall Street.” The American Scholar. The American Scholar, 2009. Web. 4 March. 2010.

In the article “Terminator Comes to Wall Street” Joseph Fuller questions how technology has affected the stock market in its recent problems. He places the blame on one specific factor. That is the use of computer generated models to perceive the stock market as well as using technology to execute trades. He brings up several problems with the use of computer generated models on the stock market. They include: the models are independent of one another, model makers don’t understand the market, executives don’t understand how to use the models, and the models can’t predict abnormal behavior. Fuller uses a metaphor from the terminator movie that the problem “will be back” however he does list several ways to help control future problems with models. The first is that companies must understand the models they are looking at fully so they can realize the rewards and risk involved with a particular investment. Next companies need to manage the model makers and understand the details of their work when producing these models. Lastly there has to be some sort of regulations that hold board members more accountable for actions taken on their watch. Fuller closes by stating that models could help us understand market patterns better in the future but we have to make sure we use better oversight in using them.

With the recent stock market crash Joseph Fuller has written an article describing how computer generated models is one of the reasons behind the recent recession. While some would not agree with his argument he makes an argument and then provides answers to the problem at hand. If Fuller would’ve left the article with only questions his argument would be diminished, but because Fuller tries to solve the problem it gets the reader to think about how we might fix the problem in the future. His goal to get people to understand how and why models have hurt us in the past but can provide a great resource in the future is achieved. His argument is echoed in almost every “new” scientific use that we must use caution and learn from mistakes before finally realizing its potential for good.