Note: “Short” is relating to the concept of running a short position where a financial instrument is borrowed and sold. It is mostly a metaphor here.

Apocalypse Short

The deal was in the bag, they hung on his every word. Money would flow from the decision maker and from not the pen pushing, policy making, aides that sat at either side. James had a good feeling about this one. He was feeling smug that he had ignored their local customs and sense of fashion but still managed to sign the deal. Almost sign the deal, he corrected himself. Their fashion of shirt and tie which is considered old school on James’s planet, it hadn’t been used for at least a hundred years. Sure, ties were popular once, James didn’t deny that and admitted that they carried an air of old wealth in his part of the galaxy but they are less practical and less functional than today’s one piece bodysuits.

  The hover lanes were packed with cars, as they were every day at lunch time, the hustle and bustle distracted James from listening to his clients. The coffee hadn’t been strong enough either. Who made it? They needed a lesson in preparing the good stuff. Was weak coffee another tradition of this backwater planet?

  How old is that tie style anyway? James had completely zoned out from what the female aide was saying. Something about policy documentation for transfer of public funds. Yawn. His mind fondly wandered back to the holo-image on his desk, it was taken his grandfather’s house when he was a young boy wearing a suit to his own great grandfather’s funeral. A sombre image, no doubt, yet a peaceful one that kindled a warm feeling of familiarity and comfort. That was a long time ago when his planet still wore ties.

  “…and yes the returns are impressive.” James’s attention came back into the conversation. Returns, someone said returns. Money, investment, profit, returns, oh yes lovely returns. Steak for lunch? He bit his knuckle to prevent from yawning again, he thought he got away with it the first time. Why didn’t they wear name badges? How was he supposed to remember their names?

 “Mr Swannick?” her voice was soft, mesmerizing.

 “Yes? Sorry, what? Oh, and please, call me James.”

 “We were just saying that while your evidence is compelling, and your arguments are convincing, we still need more time before we can reach a decision.”

 “I see, but otherwise you are ready to sign the documents?” James asked.

 “I think we are ready but the decision has to go to the cabinet,” the decision maker spoke up. This is the one James needed to work on.

 “Well, as I’ve shown in my presentation, our company has demonstrated considerably returns on all investments with steady profits every year… and of course when I say steady I mean steady growth. Chart 31, as you probably remember, showed the increase of profit per year on the last planet where we sold our proprietary investment solutions. We were aiming to replicate the same strategy on this planet, we’ve contacted your government first, but we’d be willing to work with any government. Given the size of your nation versus the others, it makes sense to pitch our products to the largest first. Charts 36 and 37 showed the projections of revenues and profits that we expect for your pension pot based upon our models. We’ve never failed.”

  “Yet.” Her voice was smooth yet feisty, James wished that she had forgone wearing a business suit.

 “What was this on page 53 about fee structure, I didn’t quite understand the statement ‘typical fee structure of five-fifty’. What does that mean?” the third delegate spoke up, this one was the smart quiet type, he might be harder to convince. His voice was quieter than the others and yet his gaze was more penetrating. James felt intimidated. Did this one even blink?

 “Oh that,” James almost laughed,”it is off-world talk for how we apply fees to your investment. Unfortunately our services are not free, we are not but humble yet gifted off-worlders who have come in search of opportunities. Fortunately, the profit will easily cover the fees as you saw in the projection graphs. It does not matter if the markets are up, down or sideways; we will make money whatever the conditions and, therefore, so will you.” James smiled.

 “Yes, you said,” the female interjected again, “but we’ve never seen such strategies before so we are hesitant about investing our nation’s pension pot into an untested scheme.”

 James looked back to the man sat in the middle, the decision maker, “let’s talk investment sizes, what do you think would be a fair amount?”

 “Well we don’t have an exact figure-”

 “But something? What is it roughly going to be?”

 “I-I coul- couldn’t give… an exact amount, no, it would be something around… well, I don’t know-”

 “Around?” James pushed.

 “Perhaps a trillion notes or so.”

 “So about one percent of the total pension pot?” James asked.

 “Closer to two percent,” the female aide said, “which is a lot more than I am comfortable with.”

 “I think two percent sounds like a perfectly reasonable start,” James countered.

 “Mr Swann… uh, James, sorry, you didn’t clarify the fee structure well enough,” the quiet aide spoke this time.

 “Five percent up front then fifty percent of the profit each year. It might seem steep but it keeps our programmers incentivized to do well… you know how they are, they speak to each other in computer riddles and don’t always shower…” James drifted off and then realised he probably shouldn’t have said that,”but they do a fantastic job and you won’t find a better product in the galaxy, probably not even in the next galaxy over either,”

 “Fifty percent? That’s far too high,” the female responded.

 “I’d say we deliver good value for money, no company will provide the returns we do. Our company has the best off-world technology combined with our proprietary trading software, it will literally blow your socks off.” James smiled although feared the conversation was slipping into dangerous territory again. It was safe, it was secured, all he needed was a signature. “Perhaps you’d like to see our server room? Ok, not really, only joking, no one wants to see a grey room full of boxes but I would like a signature on this document I prepared.” James brought out a computer pad and showed it to the man in the middle.

 “Can we meet your team?” the quieter male asked.

 James felt stuck for words. The programmers weren’t the most polished group of people, there was no telling if they had even groomed themselves this morning.

 “Oh, not a problem, let’s send around some messages later this week after I’ve had time to check our calendar. I’m sure we can schedule something…” after the documents have been signed, James wanted to say the last part but shut his mouth in time. He remembered to smile again. He knew his lips looked like plastic but it was better to smile than frown. Make sure they never doubt. Keep smiling. Don’t let them see doubt. Make them believe. He continued to recite sales aphorisms to himself.

 “How about now? We have spare time, the cabinet won’t meet until late afternoon,” the quiet one spoke up. James looked at him and then the female on the other side. The pair of them, the two aides, were the bane of the conversation. Adding only the most unnecessary prattle; questions upon questions upon questions, and that was before and after the complaints.

 “Uh… well… I, y’know… I wouldn’t recommend that.” James nodded to agree with himself, “they stare at graphs all day, not really the most extroverted group of people. I mean these guys look at graphs just for fun, can you believe it? They bring me graphs all day long but I tell them ‘guys, this has to stop, you can’t just come into my office every time the green line crosses the blue line, after crossing the red line and the black line,’ you catch my drift? They once brought me a graph of computer power consumption, they tried to tell me that the power usage of our servers had a significant pattern to it. Look, their conversation is dry, but you might get lucky and they might talk about opportunities in the new commodity markets that we are bringing to your world but don’t hold your breath for much else. Did I mention the new market that we would bring here? The Ferro-plasti compounds from Vost?”

 “You did, perhaps an hour ago,” the female informed him.

 “Yes, of course, how silly of me to forget. I mentioned the new electronic currencies too? Proof-of-work, it is all the rage off-world.”

 “The legislation came in the same bill.”

 “Meeting the investment team sounds exciting,” the deal maker said.

 “More of a programming team than an investment team,” James corrected,”I shall inform them to tidy up be we arrive.” James sighed and lead the three politicians out of his office and towards the elevators.

  “In this office we have our product designers and analysts, they also do lots of programming but less so than our strategy team.”

 “Let’s meet the programmers shall we?” the decision maker asked.

 “Yes, let’s,” James feigned happiness, the elevator ride was paradoxically too short to prevent the politicians meeting the team yet far too long to listen to their annoying voices. “As a reminder we cover every market; all the old ones that your world already had, plus some new alternatives based upon the existing infrastructure, such as high frequency permit option trading and collateralized future-policy structured insurance products. Then there are the wide range of cryptocurrencies, cyptobonds plus a whole set of options, futures and forwards priced in the new myriad currencies.”

 “What is it that options provide?”

 “Optionality,” James replied, “and this is our programming team. We had best not stay long, their work is invaluable and they don’t need the distraction.” James lead the politicians into the programmers’ office.

 “Is that a graph of power consumption?” the decision maker asked, he looked at the nearest computer screen and directed his question to the seated user.

James could tell that a little knowledge could be dangerous here. The question sounded naive, but just naive enough that he would sign the documents.

 “No, that’s the distribution of arrival times of all the mag-trains that run on local tracks.”

 “Does that affect price?”

 “Not really, I just wanted to see what the probability was of making it home for prime-time tv,” the programmer said.

 “Well… the power distribution on the grid can affect prices,”  a voice piped up from across the room, “the power distribution across the national grid is far more erratic than predicted and the trains have quite a large effect locally. At peak times it can affect our power availability. We run a lot of computers so a steady power supply is necessary. In the end, that can affect price.”

 “I’m not sure I understand what that means,” the decision maker chuckled.

 “It means that our team of experts have considered all the angles and that you shouldn’t worry. In fact, the let me in on a little secret earlier. They are going to create new products based upon the energy distribution network and monetize it in the financial markets. Don’t worry, it will be priced to sell. Whenever energy is used it will move around the grid at different but predictable rates. This is where our learning algorithms come into play, we will be able to take advantage of the price patterns.”

 This was going better than expected, the office was tidy and so far nothing had caused the politicians to leave. Perhaps meeting the programming team would build confidence in their decision to invest with the company.

 “Of the 21 major nations with developed markets we aim to provide 12 products for every nation,” one of the programmers instructed the decision maker. This is going to be the deal signed. The graphs looked convincing, James thought.

 “How do you like our programming team? Ready to sign yet?”

 “Yes we can sign your document but with the proviso that it is ratified by the government cabinet,” the deal maker replied.

 “Great, so sometime later this afternoon?”

200 days in.

  “The fund is running well, we discover new correlations all the time. It matters not so much the direction but rather we let the computers follow what’s happening in the market,” James discussed the fund’s activities with a prospective client. They, too, had insisted on meeting the programming team. The suggestion that energy consumption was important lead to many questions. The team had designed and created a new product that was based on energy consumption.

 The conversation was more complicated than the previous time. The product had been created and had evolved with the energy market. It seemed that there was a self-correcting relationship between the prices and the creation of energy. Sometimes self-reinforcing and at other times self-correcting. The programmer had explained it to James before but it wasn’t the easiest concept to grasp nor was it explained in a manner that anyone could understand. Programmers did that, they spoke in riddles.

 Absolute numbers can disagree but we should be looking at percentages rather than absolute numbers when dealing with populations of different sizes. Ok, that was simple statistics as far as James understood it. A larger population used more energy but the energy per person could be the same. Then came the harder part, the energy per person may decrease with population size, and therefore lower than expected due to systematic efficiencies as populations increased. However, what if the population was aware of a fluctuating energy price and that their own actions could affect the price?

 That’s where James’s understanding started to fade. The arguments made sense up to that point but he struggled to fully imagine the causal relation between the two.

355 days in.

  “What’s the instrument code you’re looking at?”

  “20121221,” came the reply.

An entire planet gone in an instant. Nothing. Nada. Gone. The unforeseen death of billions from a glitch in the electrical supplies had a knock-on chaotic effect causing a melt-down all the planet with a single miscalculation.