How can extraterrestrials know more advanced math, and use it, to systematically beat the USA stock market? [closed]

Question

In one of the later episodes (I can't remember which, just edit this post pls if you do) on The Event, an NBC TV series from 2010 to 2011, someone (I can't remember their name) asks Thomas (acted by Clifton Collins Jr.) how his extraterrestrial species — who crash landed in Alaska in 1944 — could afford to live in the USA while hiding, sometimes in plain sight.

Thomas replies that the extraterrestrials have achieved math more powerful, developed than humans' math, and used it to consistently outperform the USA stock market. But the show never expounded how, or what this math is? How would you fill these details?

Assume Thomas is telling the truth. Few humans can do what Thomas alleges — exceptions are quants like James Simons's Renaissance Technologies. Most humans fail to pick systematically winning stocks — we would all be MULTImillionaires had we longed and held on to S&P 500, NASDAQ, Apple, M&T, Microsoft or Berkshire Hathaway stock at their commencement dates!

Answer 1

Easily - for an Alien with immense computer power.

A truly alien civilisation may have resources unfathomable to us. It is entirely possible (in fact some would argue, more likely) that they may have evolved technological intelligence billions of years ago relative to us and not be on a similar technological level. Try to imagine our civilisation a billion years into the future - it is so incomprehensible to consider what prowess we may be able to command.

Any limit then is only bound by physical limits of our universe (if even these are true).

So perhaps then the alien civilisation are so incredibly intelligent that they could predict to almost 100% certainty the decisions of every person that invests in the stock market. Perhaps they:

• Have instruments that allow them to perceive all senses and input of all individuals on Earth
• Have computers that can accurately predict every persons decision based on every such input. The accuracy only needs to go so far as to determine when and what they buy and would sell.
• Have AI programmes that consider all permutations of events and possible inputs that may affect everyone's decision - including predicting random environmental events that may alter any such decision.

Of course, when you say 'beat' the stock market, interacting with it changes it, so such a civilisation could easily command it quickly, with no one on Earth knowing or even if they do they can't do anything about it.

It is conceivable that within a few days or months it may be possible to 'beat' the stock market, and from then on it can be manipulated at the alien civilisations discretion.

This is of course, to an alien, a 'child's plaything', much like a boy who stirs up the red and black ants to fight each other, or perhaps more like a scientist looking through a microscope at an amoeba and predicting where it goes based on experimental criteria, such as temperature or food sources. Easily done - although not sure of the motivation.

Answer 2

math more powerful, developed than humans' math, and used it to consistently outperform the USA stock market

This is, of course, deceptive marketing intended to divert attention away from what they're actually doing. It just looks like ultra-sophisticated mathematics. Creating impenetrable bafflegab that works on humans is of course very sophisticated in itself, but the real magic is elsewhere.

What the aliens have really done is simply had their equivalents of stock markets for much longer than humans have, and as a result have come up with a whole range of highly sophisticated scams and tricks and grifts and clever ways to identify vulnerable organisations, individuals and legal structures.

Like taking a modern antibiotic resistant disease back to the dawn of modern antibiotics, or present-day hacking, cryptanalysis and reverse-engineering techniques back 30 years to an infant internet lacking any kind of defenses, things that we'd consider background noise nowadays would be devastating in their new environment. Scams that alien children wouldn't fall for are absolutely devoured by captains of industry and heads of state. Its almost too easy.

But the show never expounded how, or what this math is? How would you fill these details?

You won't believe this one simple trick that humans always fall for. Have you heard the good news about our lord and saviour, bitcoin? Watch in amazement as the humans voluntarily incinerate their own biosphere in exchange for building a new framework for extorting each other!

Answer 3

Most of current stock market trades are done by algorithms, not by people. Of course the algorithms were programmed by people but the people thought of patterns and then taught the algorithm to buy or sell whenever the conditions match. If you know how an algorithm works you can predict how it will act and manipulate it. If you have access to significantly better machine learning/ AI software you can trick the current software to do your bidding.

Simple example, I, as a normal human make a trading algorithm that will look at last years reported earnings and the current stock price. Whenever a company evaluation is below 20 years of earning I will buy, if it is above I will sell. Now once you, as the alien know this, you can predict which stocks I will try to buy or sell. If you or some third party buys or sell a stock and thus moves the price, you know how I will react. This is enough to bet against me and make money out it.

This general idea is described in the book 'The Peripheral' by William Gibson where he gives the concept the fitting name of 'algorithm herding'.

Answer 4

I'm pretty sure maths and maths alone can't consistently and meaningfully beat the market. However, other mechanisms cross into my mind:

Humans are primitive and thus predictable

These aliens are more developed and more advanced. Humans, to them, are comparably primitive, and therefore, predictable. As an analogy, consider an adult vs a child. The adult may often find the child's behavior simple and predictable.

In the civilization scale, perhaps they themselves have gone through similar routes of development as humans in societal, financial, and technological advancements. Using their relative maturity, they judge what actions are beneficial on Earth right now by extrapolating their own homeworld's history/experience.

Not pure math, but hindsight.

When they arrive on Earth, they find Earth's society and tech several hundred years behind their homeworld. They practically know what will come up and down for the next decades. As an analogy, consider this is like us (21st century humans) living in 17th century. You'd know things that others -- and society at large -- don't.

What we haven't experienced, it's already well-known to them. In the long run, the aliens are well within investing/trading with the full benefit of hindsight. They know roughly what to invest in, when to invest in, what will go down and thus can be shorted, so on and so forth. Because in their homeworld, such stuffs have happened in the past.