[HN Gopher] The stock market speaks: How Dr. Alchian learned to ...
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The stock market speaks: How Dr. Alchian learned to build the bomb
(2014)
Author : mmarq
Score : 74 points
Date : 2021-07-01 09:52 UTC (4 days ago)
(HTM) web link (www.sciencedirect.com)
(TXT) w3m dump (www.sciencedirect.com)
| URSpider94 wrote:
| This reminds me of Neal Stephenson's "Cryptonomicon". One of the
| themes, and I have no idea if it really happened, is that
| mathematicians worked with the Allied armed forces to bury the
| signals of their future actions. They end up doing things like
| launching fake paratrooper landings in Norway to cover the signs
| of the impending D-Day attack - all mathematically calculated to
| generate maximum entropy.
|
| My second thought : I'm a little surprised that the use of
| lithium in nuclear weapons represented enough of an increase in
| the total demand to boost the stock price that much.
| wolfram74 wrote:
| neal stephenson is no slouch, a lot of cryptonomicon is non-
| fiction
| https://en.wikipedia.org/wiki/Ultra#Safeguarding_of_sources
| zitterbewegung wrote:
| At that time lithium could have been rarely used and expensive
| to mine. Although right now lithium I has high demand so it
| could have gone under the radar due to volume of transactions.
| thedudeabides5 wrote:
| Love how the sophisticated mathematical test was "oh man, that
| lithium stock is roofing"
|
| Sometimes it's takes a human looking at a chart to see what a
| million tables of data can't
| pedrocr wrote:
| The recent Pfizer phase 3 data was like that:
|
| https://xkcd.com/2400/
| MarkusWandel wrote:
| I don't get it. If there's a blanket of total secrecy, then why
| does the company who makes the secret fuel have its stock price
| boosted so much? Obviously the information already leaked - to
| the people buying the stock! - before the increase of the stock
| price caused further attention.
| dboreham wrote:
| This is the subject of the paper. People were clearly "insider
| trading" although probably they didn't have to leak much
| information just "based on defense purchasing I think it would
| be a good idea for you to buy stock xxx".
| cs702 wrote:
| Worth the read. The quote from Dr. Alchian, as he relates the
| story of his 1954 paper, is priceless:
|
| "We knew they were developing this H-bomb, but we wanted to know,
| what's in it? What's the fissile material? Well there's thorium,
| thallium, beryllium, and something else, and we asked Herman Kahn
| and he said, 'Can't tell you'... I said, 'I'll find out', so I
| went down to the RAND library and had them get for me the US
| Government's Dept. of Commerce Yearbook which has items on every
| industry by product, so I went through and looked up thorium, who
| makes it, looked up beryllium, who makes it, looked them all up,
| took me about 10 minutes to do it, and got them. There were about
| five companies, five of these things, and then I called Dean
| Witter... they had the names of the companies also making these
| things, 'Look up for me the price of these companies...' and here
| were these four or five stocks going like this, and then about, I
| think it was September, this was now around October, one of them
| started to go like that, from $2 to around $10, the rest were
| going like this, so I thought 'Well, that's interesting'... I
| wrote it up and distributed it around the social science group
| the next day. I got a phone call from the head of RAND calling me
| in, nice guy, knew him well, he said 'Armen, we've got to
| suppress this'... I said 'Yes, sir', and I took it and put it
| away, and that was the first event study. Anyway, it made my
| reputation among a lot of the engineers at RAND."
| sandworm101 wrote:
| This is from the early days of modern operational security.
| This would be far more difficult today. If only the bomb makers
| had talked to the ketchup people at Heinz. Rumor has it that
| Heinz regularly purchases extra ingredients, disposing of the
| extra bits on site, so that nobody can infer their secret
| recipes by counting what goes into the factory. Given the
| security budget for protecting nukes, it should have been
| simple to double-order both lithium and thorium.
| mcguire wrote:
| Are you saying modern defense contractors artificially
| depress their stock prices in the name of opsec?
| trhway wrote:
| no. what he seems to be saying is that modern defense
| contractors waste a lot in order to hide their true
| activity/product.
| sandworm101 wrote:
| No. If your magic superweapon needs a small amount of red
| fairy dust and there is only one person making the red
| dust, it is a good idea to also buy some blue dust to
| conceal which type is the necessary ingredient. Nobody
| depresses any stock price, rather you give some false
| business to another source too.
| dkarl wrote:
| Cold War business idea, half a century too late:
| manufacture a cheap, unremarkable substance and sell it
| at an extremely high price to the U.S. government, to
| confuse Soviet intelligence. Shroud the production in
| secrecy and compartmentalize knowledge of the
| manufacturing process, so that everybody involved in
| production thinks that in a different section of the
| plant something secret is being done to create an end
| product that is special and useful in some way, but in
| reality you're creating exactly the cheap, boring stuff
| you say you are. The government could drive truckloads of
| it into nuclear weapons production facilities, shuffle it
| around from one warehouse to another, and eventually
| relabel it as waste.
| secfirstmd wrote:
| Woah IBM would be perfect for this kind of thing... :)
| gwern wrote:
| Sounds more or less like red mercury.
| whall6 wrote:
| Putting a target on your back for some lucre
| mannykannot wrote:
| This certainly looks like good practice to me, but it
| could be undone by insider trading, which could ignore
| the blue dust supply chain. The article flirts with the
| possibility of there having been insider trading here,
| but does not seem to come to any definite conclusions.
| Given the weaker reporting rules of those days, it may be
| impossible to say.
| secfirstmd wrote:
| I've always felt the F-35 would be the perfect program is
| hide away a few extra black projects. Obviously their is a
| known black budget but let's be honest, that's not
| everything.
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