World End Economica episode 1: Quantitative Analysis 101

WORLD END ECONOMICA
A long time ago, I was searching for news about the newest Kishida Kyodan and the Akeboshi Rockets album, POPSENSE. POPSENSE came with a bunch of these funny little blue-haired faces, one of which was the album cover. One of these faces was noticeably different, having black hair and red eyes. It turns out that was supposed to be Hagana, one of the main characters from World End Economica and it turned out that the OP track was on this album.

That’s how I found out about World End Economica, which was a weird-sounding title and surely couldn’t have had anything to do with economics. But I was wrong, because it so happened that it was written by a certain Isuna Hasekura, who was responsible for everyone’s favourite wolf goddess medieval mercantile adventure. This was exciting to learn about until I realized that it was never going to be translated because it was a doujin visual novel. I shouted into the wind on twitter and magically received a response:

So now it’s been almost a year later and finally available for purchase with my hard earned yencoins so I can actually read it. Is there anything to it beyond economics on the moon? Why, yes, in fact, there is.

World End Economica is about quantitative analysis.

Our story begins in the grand moon city with a young vagrant, Yoshiharu, who’s pretty good at trading and has an intuition for it. At this point I’m wondering how the hell human civilization managed to build a financial centre on the moon but it’s still possible for someone to succeed at trading manually. And the story answered with Hagana, an incredibly socially awkward girl whose only skill is being amazing at math and is distraught because math is actually totally useless in the real world.

You might be able to see where this is going. Quantitative analysis is what we call the application of mathematics to finance. The idea is to take into account all of the data on the market and somehow model it so that you can predict and optimize when you buy and sell various stocks, how much of each stock, and at what rate. And of course, when you’re dealing with this much data and this many calculations, you’ll need to get a computer to do all of this for you and you can get computers to automate trading for you. This automation is what’s called algorithmic trading, where you essentially rely on computers and algorithms to figure out and do stuff automatically.

Because of how well it’s able to optimize profits and how quickly it gets data and processes it, it’s how a significant amount of trading goes on today. As a result, the market becomes a giant feedback loop of inputs going into these algorithms. The algorithms process this stuff and make decisions and take actions and generates a whole new set of data to be fed back into the algorithms again.

Now, this is great for all the mathematicians and computer scientists out there because all of a sudden, there’s another career track that’s opened up that’s willing lure us away from academia with large bags of money. But then the question is that once algorithms are doing all the trading, what do the traders do? This is something that I don’t have an answer to because I don’t really know that much about finance.

This also turns out to be a question that our MC asks himself too. He’s managed to help this girl discover that her talents aren’t a waste and that she can use them to help people. But in the course of using and developing her skills, she’s basically making bank and obsoleted him out of nowhere. So, is there a role for people in trading and finance if computers can do it all?

And that could be a pretty frightening question if you think about it. We’re used to robots replacing people for menial labour because they’re stronger or more efficient and better at doing rote tasks. But now, we’re able to replace traders with computers. And if you think about that for a bit, you realize that these algorithms fighting it out on the market are responsible for a huge chunk of wealth in the world right now.

And that brings us to the other question, which is can we trust the computer? Obviously, someone has to know how to transform the processes and data so that it can be shoved into a computer, but once we have something complex enough, it kind of morphs into a magical box. There’s no way to verify that this thing you’re feeding a ton of data is doing the right thing. So when your gut and the box are in conflict, which do you trust when you have tons of peoples’ money on the line?

Unfortunately, this is only episode 1 so I have to wait an unspecified amount of time before Spicy Tails decides to translate and release the next installment to find out where this is going. So far, it’s been intriguing enough for me to stick around, even though the art and music are fairly sparse and the editing could use some work. I guess the answer to getting my attention is to write a story about math.

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