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Pop wisdom says that chaos theory proves that these high-dimensional complex systems -- such as the weather, the economy, army ants, and, of course, stock prices -- are intrinsically no-way-around-it-unpredictable. So ironclad is the assumption, that in common perception any design for predicting the outcome of a complex system is considered naive or mad.

But chaos theory is vastly misunderstood. It has another face. Doyne Farmer, a boomer born in 1952, illustrates this with a metaphor from the age when music came on vinyl:

Chaos is like a hit record with two sides, he suggests.

• The lyrics to the hit side go: By the laws of chaos, initial order can unravel into raw unpredictability. You can't predict far.

• But the flip side goes: By the laws of chaos, things that look completely disordered may be predictable over the short term. You can predict short.

In other words, the character of chaos carries both good news and bad news. The bad news is that very little, if anything, is predictable far into the future. The good news -- the flip side of chaos -- is that in the short term, more may be more predictable than it first seems. Both the long-term, unpredictable nature of the high-dimensional systems, and the short-term, predictable nature of low-dimensional systems, derive from the fact that "chaos" is not the same thing as "randomness." "There is order in chaos," Farmer says.

Farmer should know. He was an original pioneer into the dark frontier of chaos before it gelled into a scientific theory and faddish field of study. In the hip California town of Santa Cruz of the 1970s, Doyne Farmer and friend Norm Packard cofounded a commune of nerd hippies who practiced collective science. They shared a house, meals, cooking, and credit on scientific papers. As the "Chaos Cabal," the band investigated the weird physics of dripping faucets and other seemingly random generating devices. Farmer in particular was obsessed with the roulette wheel. He was convinced that there must be hidden order in the apparently random spinning of the wheel. If one could discern secret order among the spinning chaos, then...why, one could get rich...very rich.

In 1977, long before the birth of commercial microcomputers such as the Apple, the Santa Cruz Chaos Cabal built a set of handcrafted programmable tiny microcomputers into the bottoms of three ordinary leather shoes. The computers were keyboarded with toes; their function was to predict the toss of a roulette ball. The home-brew computers ran code devised by Farmer based on the group's study of a purchased second-hand Las Vegas roulette wheel set up in one of the commune's crowded bedrooms. Farmer's computer algorithm was based not on the mathematics of roulette but on the physics of the wheel. In essence, the Cabal's code simulated the entire rotating roulette wheel and bouncing ball inside the chip in the shoe. And it did this in a miniscule 4K of memory, in an era when computers were behemoths demanding 24-hour air-conditioning and an attendant priesthood.

On more than one occasion the science commune played out the flip side of chaos in the scene like this: Wired-up at the casino, one person (usually Farmer) wore a pair of magic shoes to calibrate the roulette operator's flick of the wheel, the speed of the bouncing ball, and the tilt of the wheel's wobble. Nearby, a Cabal cohort wore the third magic shoe linked by radio signals, and placed the actual bet on the table. Earlier, using his toes, Farmer had tuned his algorithm to the idiosyncrasies of a particular wheel in the casino. Now, in the mere 15 seconds or so between the drop of the ball and its decisive stop, his shoe-computer simulated the full chaotic run of the ball. About a million times faster than it took the real ball to land in a numbered cup, Farmer's prediction machinery buzzed out the ball's future destination on his right big toe. Typing with his left big toe, Farmer transmitted that information to his partner, who "heard" it on the bottom of his feet, and then, with a poker face, pushed the chips onto the predetermined squares before the ball stopped.

When everything worked, the chips won. The system never predicted the exact winning number; the Cabal were realists. Their prediction machinery forecasted a small neighborhood of numbers -- one octave section of the wheel -- as the bettable destination of the ball. The gambling partner spread the bets over this neighborhood as the ball finished spinning. Out of the bunch, one won. While the companion bets lost, the neighborhood as a whole would win often enough to beat the odds. And make money.

The group sold the system to other gamblers because of unreliability in the hardware. But Farmer learned three important things about predicting the future from this adventure:

• First, you can milk underlying patterns inherent in chaotic systems to make good predictions.
  

• Second, you don't need to look very far ahead to make a useful prediction.
  

• And third, even a little bit of information about the future can be valuable.