The Cosmopolis Effect

Cosmopolis
Cosmopolis

I had high hopes for Don DeLillo’s novel and David Cronenberg’s film adaptation Cosmopolis. On 30th October 2012, I wrote Australian publisher/editor Ashley Crawford the following reflection:

 

I finally finished DeLillo’s Cosmopolis last night. It has three problems: background research; the characters; and the final narrative arc (a weakness in Point Omega, too). I’ve not yet seen Cronenberg’s film.

DeLillo had a potentially interesting story idea. Eric Packer’s rise-and-fall was very much like how Victor Niederhoffer ‘blew up‘. Packer like Niederhoffer is interested in how abstract systems can be used to chart financial markets using technical analysis. Apart from Niederhoffer the real life equivalent to this was probably Richard D. Wyckoff who had a model based on Pythagorean geometry. But DeLillo’s trader — like the defence intellectual in Point Omega — is a media stereotype. Real traders do use the Yen “carry trade” a lot and currency speculation is very popular in Japan — the Japanese magazines are more sophisticated than their US or Australian counterparts. But sophisticated traders wouldn’t necessarily make the money or risk management errors that Packer makes in the book that destroys his personal fortune (what about diversification, hedging market risks, and testing assumptions?).

This makes the characters a little unbelievable — they are there as style and to personify the moral points that DeLillo wants to make (which resonate more after the 2008 global financial crisis). They don’t really develop emotionally despite what happens in the plot. The characters around Eric Packer are like little portraits or set pieces that are incidental.

The final third of the book is a series of fairly disconnected scenes. The finale with the nemesis ex-employee had potential but seems half-realised.

Looking forward to reading White NoiseMao IILibra and Underworld.

 

This morning I read that Brazil’s Eike Batista has lost $US34.5 billion; and hedge fund manager Bill Ackman lost $US2 billion on his Herbalife and JC Penney trades. There’s also the FBI’s takedown of the alleged Dread Pirate Roberts and Silk Road black market. The DeLillo’s Cosmopolis still reads as a postmodernist idea of millionaire currency speculation rather than how good traders actually deal with market volatility. But maybe the Cosmopolis Effect — the fallout of self-destructive hubris, cognitive biases and decision heuristics — has crossed from DeLillo’s fiction into the financial elite. Risk on?