Kapitoil_ A Novel Part 3

5. Therefore, if I can collect enough data like this, I can gain a major advantage over others who are merely using obvious data that are front-page news. Therefore, if I can collect enough data like this, I can gain a major advantage over others who are merely using obvious data that are front-page news.

Because this central idea is truly an a.n.a.log to scanning un.o.bserved part.i.tions of a Pollock painting, I am able to piggyback it onto my previous program. I also link it to the newspaper search engine. It is taxing (although it takes less time because of the previous program), but it is the cla.s.s of labor I enjoy.

The nighttime janitor cleans as I program, and when I give her my trash bin, it is the solitary time I look away from my monitor.

In fact, only when I am nearly finished and my cursor is on the word "casualties" do I evaluate the big picture of what I am creating. When violence occurs, especially in the Middle East, my program will attempt to leverage it for financial gain. But this violence will happen with or without my program. Therefore, by making money, the program produces at least some positives from a very negative situation. It turns the violence into a zero-sum game, because the money and violence cancel each other out, instead of producing exclusively a negative game.

I decide to complete the program.

I finally stop near 3:30 a.m., and I notice I have been alone for several hours and I have not eaten dinner. I am not even that hungry, but I purchase an apple from a vending machine. Typically when I am programming like this at home, Zahira forces me to consume food because I forget.

My program is finally functional, although I do not know how accurate it is until it sifts historical data. I direct it to use data from the last six months and to make oil futures predictions on each day as if it were truly that day.

It will have to number-crunch overnight, so I leave my computer on but turn my monitor off and open a spreadsheet so others will not identify the true labor of the computer, and then I go home and wait until the morning to discover if my program is successful.

backwater = an unimportant or unsophisticated locationincinerate = burn downjack up = inflate pricesjacka.s.s = stupid person; Danmajor-league favor = significant favor

JOURNAL DATE RECORDED: OCTOBER 20.

I do not sleep the entire night. At 6:00 a.m. I get out of bed and decide to go to a mosque, as that is a profitable destination when my brain is overstimulated, and my program at work will not be ready until probably 8:30 a.m. The other mosques near my office and apartment are adequate, but it is time for me to visit the chief mosque in New York.

I take the subway to the Islamic Cultural Center on the Upper East Side. It is as attractive as I have read, with a dome and Turkish architecture that resembles the Hagia Sophia with sharper lines.

The prayer hall has tall gla.s.s windows and pure white walls and hanging cords creating a circle with lights attached to the end, like an inverted birthday cake with candles. There are no columns inside, and the dome is simple but elegant, and the patterns on the carpet have a complex repeating pattern. This is what I want my programming to have: mathematical precision that is also beautiful. As a parallel, Jackson Pollock's paintings are beautiful even though they are not precise, but by being so imprecise they are also in a way precise.

Half of the men are black, and in one corner men in robes read the Koran together. I consider partnering with them, but I want to be alone with my prayers now.

Once I begin praying I do forget about my program. It is as if saying words to Allah mutes all the calculations and ideas that are making noise inside my head and transports me to the spiritual world that is non-numbered, and performing the actions I have performed thousands of times reminds me of my body, which is also non-numbered, which is why I also enjoy racquetball.

After an hour I am recharged. On the subway to work I observe all the businessmen reading The Wall Street Journal The Wall Street Journal who are trying to find ways to decipher the stock market. Maybe I have done so with oil futures. who are trying to find ways to decipher the stock market. Maybe I have done so with oil futures.

Jefferson said Schrub's programs yield 34% above market returns for yearly returns. So I hope to gain 5% above market returns on oil futures based on historical data, with minimal risk. This will mean a minimal average daily return above market, approximately 0.02%, but it is like the way a child becomes taller: You do not observe daily growth.

My podmates are not in yet. My hands vibrate slightly as I approach my desk and power on my monitor.

I close the spreadsheet window above my program. There are many numbers on the monitor, and I still need to do some calculations to receive the final results.

For overnight predictions, which means the user trades immediately in the morning and trades again at the end of the workday, my program correctly predicts the converted price of oil futures on that day within a 12% error, e.g., if oil rises $1, then 68% of the time my program predicts that prices will rise between 88 cents and $1.12. On the historical data, this means its average daily profit on oil futures is 1.1%.

There must be an error, so I reenter the calculations.

It is again 1.1%.

I try to sit very still although I am vibrating even more. I will not say anything about this yet before I know it truly works. I cannot risk humiliating myself again.

Dan enters the pod, so I reopen the spreadsheet window in case he sees the program, although he will not understand what it is. He turns on his monitor. His computer has been downloading music overnight without paying for it. He does that frequently, which is not only illegal normally but is even more illegal to do at work. The current song is t.i.tled "Mashup-Livin' La Beasta Burden (Livin' La Vida Loca vs. Beast of Burden)."

An error range of 12% is impressive, but I must refine the program to gain even higher average returns and minimize risk. I cannot resist, and I start recoding a section.

"What are you slaving away at?" Rebecca asks.

I am so focused on my work that I did not hear her enter and I left the program observable. Rebecca might understand it more than Dan and Jefferson do.

I consider revealing my project to her. But there is no way to do it quietly without Dan and Jefferson hearing, and they would understand the idea when translated to English.

In addition I am afraid she will again think I am interested exclusively in money.

"It is only some number-crunching," I say, and close the windows.

Later in the day Rebecca strikes her hand on her keyboard. "f.u.c.king machine," she says quietly.

"Are you having a technical issue?" I ask.

"Yes, I'm having a technical issue. How'd you guess, Karim?" she says. Then she adds, "Ignore me. It's not your fault. I'm just having a hard time dealing right now."

She explains that there is a virus in a spreadsheet she has been working on for several hours which prevents her from accessing it.

"I have some experience with viruses," I say.

First I quarantine the doc.u.ment in our pod's recycle bin, which is stored on a separate drive, so that it cannot impact any other important doc.u.ments. It is a cla.s.s of virus I am familiar with, so I approximately know how to proceed.

But as I fix it, I notice a doc.u.ment in the recycle bin: "market prediction.doc." It must be Jefferson's refined version of my first program proposal. I open it.

The doc.u.ment looks similar to what I gave Jefferson although with slightly enhanced language, but the end does not include my name, as I originally wrote. In fact, it does not include anyone's name.

I define two possible theories: (1) (1) At Schrub New York it is considered unprofessional to include your name at the bottom of a proposal, and Jefferson told the higher-up (whose name I read is George Ray) that I was the programmer, or At Schrub New York it is considered unprofessional to include your name at the bottom of a proposal, and Jefferson told the higher-up (whose name I read is George Ray) that I was the programmer, or (2) (2) Jefferson claimed responsibility for my program and pretended it was his. Jefferson claimed responsibility for my program and pretended it was his.

I decide it is the first, as ultimately Jefferson could not claim responsibility because he would have to come to me for the program, unless he was skilled enough to decipher and recreate it from my proposal, but I do not think he possesses sufficient skills.

After several minutes I heal the virus and return it to Rebecca. Healing a virus is a delightful feeling, especially when you do it for someone else, because they previously thought their file was corrupt and lost but now it is healthy and accessible.

"It's funny how you only seem to lose data that you really need, and not, like, idiotic joke emails your mom forwards you," she says. "I owe you big-time."

"You do not owe me anything," I say. "We are coworkers, and coworkers are parallel to family members in that you do not incur debts."

She looks at me with a strange expression. Then she says, "Okay. You're a lifesaver, though. Thanks." She contacts my shoulder as she says this, and then she retracts her hand as if she touched a hot stove. This is the first time she has contacted me.

I want to tell her that I do not 100% agree with all rules of Islam, and that some of them are in fact impossible to fulfill while in a modern workplace, e.g., technically Rebecca and I are not permitted to be alone, and the only conversation we are allowed to have must be humorless (which is not difficult for me, because I am always humorless, but Rebecca enjoys producing jokes).

But I do not know how to explain this without making us both more uncomfortable, so I merely say, "You are welcome."

At home I refine my program until it attains 8% error range. On historical data, it averages daily profits of approximately 1.3%.

This does not sound like much, but over 20 business days 1.3% daily profits means that investing $1,000 in a futures contract on the first day, then using that new money to invest in another futures contract the next day, will yield by the end of the month $1,295. Of course, you are not guaranteed to make money each day, but this is a potential outcome: 29.5% monthly profits.

And Schrub can invest much more than $1,000.

I rewrite my proposal to incorporate the new data, which takes a few hours. It is still not perfect English. I am about to shoot Jefferson an email again for help, but I stop. What if he did try to take responsibility before? This new idea is more secretive to boot. I could ask Rebecca, but I do not think she has access to the right people in quants.

Therefore, I decide to contact George Ray myself, except I am still uncertain if the program works, and I may look foolish again. But now I see my first program was too safe and conventional, and even if my program does not function, it is an ambitious idea, and I would prefer to fail with a big-picture idea than succeed on a small scale.

I email him: Sender: Karim Issar Recipient: George B. Ray Date: Tue, 19 Oct 1999 22:23:06 Subject: 2nd proposalMr. Ray, I understand the previous quants program I created that Jefferson Smithfield showed you as a favor for me was not robust enough to risk investment. I have a new program that I believe works more efficiently. It is yielding 1.30% daily profits in tests. My proposal is attached.

Then I begin the copyright process for my program with the Library of Congress.

I do not expect to hear from him for at least a few days, but one hour later I receive a reply: You mean 0.13% daily profits?

I write: No, it is 1.30%.

He replies once more: Meet me in the conference room on 89 tomorrow at 8:30.

I reread that sentence five times. It is the happiest I have been so far in New York.

have a hard time dealing = have difficulty managing lifelifesaver = someone who helps another person in a significant modeslave away at = labor diligently for

JOURNAL DATE RECORDED: OCTOBER 21.

The layout of floor 89 is equivalent to 88, and the receptionist who wears makeup that looks like mud on her cheeks guides me to the conference room. Then she exits, and I sit alone in the room, which has dark blue walls and a projection monitor that is powered off and a long rectangular black table that feels like ice from the air-conditioning even though it is the middle of fall.

In a few minutes Mr. Ray enters. His hair is partially black and partially white and his skin is very pale. His fingernails have some dirt underneath and his armpits have small ovals of perspiration, but most people would not observe these things because he otherwise looks like an actor in an advertis.e.m.e.nt and his teeth are so white I can almost see myself mirrored in them, and I am also very aware of other people's hygiene, e.g., Dan requires shaving twice daily and Jefferson's ears contain wax. Rebecca veils the odor of cigarettes with perfume and gum, but she does not always succeed.

After he introduces himself, he holds up a printout and says, "Your proposal was a little vague on how accurate the program will be in the future."

I intentionally did not include these data because I wanted to explain it in person, in case he thought it was too risky, and I also did not want to send any specific information about the algorithms over email.

"It currently functions for historical data retrieving back six months. It utilizes a signal that was present in that time period. Signals can convert over time. Therefore, this algorithm will not work as efficiently in the future, although the programmer can continue modifying the algorithm," I say.

He scans the front page again. "I've read this three times over. These are absurd numbers-so absurd I can't believe it'll work. But if this program does even a quarter of what you say it will, we have something very special on our hands," he says.

"It is extremely difficult to 100% predict the future, but this is a new way that I do not believe anyone has thought of, and that is the critical idea, to do something no one else is doing so you have an advantage," I say.

"I want to get this going immediately, so I'll green-light you for a trial run the rest of the week," Mr. Ray says.

My muscles relax for the first time all morning. I hope three days is enough time to prove its merit and that I have enough liquidity to make significant gains, even though the percentage gain is all that is important. The futures contracts trade at a minimum of 1,000 barrels, and the current price is approximately $22 per barrel, so I will need at least approximately $22,000.

"Is $300,000 enough?" he asks.

I pretend to be calm, although it is difficult, because I smile instinctively when I receive optimal news. "Yes, that should be sufficient," I say.

We discuss how to set up a fund for me to use, which will use legal offsh.o.r.e accounts so that Schrub remains anonymous and does not create market disturbances. "By the way, what do you call your program?" he asks.

I had not considered this. Jackson Pollock did not name his paintings, but gave them numbers because he did not want people to have preformed thoughts before observing the painting. But my program is already about numbers, so it should have a t.i.tle. I search my brain, and all I can think of is that my program capitalizes on oil prices, and it makes me think of the blended t.i.tle of the song Dan was downloading.

"Capitoil," I say. But if I am not going to get public kudos for my program, I want others to remember that it is Karim-esque. "K-A-P-I-T-O-I-L."

"Kapitoil," Mr. Ray says. "Nice play on words."

I believe it is the first time I have played on words in English.

"Mr. Ray, may I request you do not reveal this to my podmates yet?" I ask before we leave.

"Yes. It's highly privileged information," he says. I do not say that that is not the primary reason I do not want him to reveal it.

In my pod I set Kapitoil to aggregate recent newspaper searches, and it predicts oil futures will rise 21 cents total by the end of the day. This is only a 0.95% change, but that is still a good amount, and it is more critical to show that the program works. I immediately enter an anonymous order for 5,000 barrels at the current price of $22.17.

For the first two hours the oil price rises slowly as Kapitoil predicted. I watch it, although I do not focus well on my work.

Then at 11:45 a.m. the price drops. I hope this is temporary turbulence, and monitor the prices more closely.

At lunch Dan and Jefferson make a wager for $200 that Dan cannot eat 12 donuts in five minutes. The rules are he may have one gla.s.s of milk and may not eject the donuts during the consumption, although he may afterward. He eats six ASAP, then slows down. He eats the tenth donut very slowly, and he has one minute to finish the final two.

"Dan, you don't have to do this," Rebecca says.

"Yeah, let's call it even," says Jefferson, who looks slightly nervous.

Dan shakes his head and eats his 11th donut. "30 seconds left," Jefferson says. Dan shifts back and holds his desk for stability. He eats half the donut, then looks at the remaining half. With 15 seconds left, he puts the donut in his mouth and intakes it. His throat broadens as if it is a snake consuming a bird. Then he runs to the restroom and remains there for 20 minutes.

I review my monitor. Oil futures are now lower than the original $22.17.

The price continues falling through the afternoon, and at the end of open outcry at 2:30 p.m. it is 23 cents below the original price. I am interested exclusively in short-term gains and do not want to invest more money in this contract, so I sell it to someone at $21.94 and lose $1,150 on the sale.

Mr. Ray emails me: We'll try it out again tomorrow. These things don't always work right away. Am withdrawing 100K from your account.