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Wall Street is flush with precocious 20-somethings filled
with the sense of their own shattering brilliance, but if old
Street hands are right, three Harvard- and MIT-educated
millennials whove never come within a states throw
of a Friday night midtown Manhattan happy hour may be on the
cusp of engineering a genuine revolution in financial
technology. And theyve arrived at this point,
appropriately enough, because of a bet.
A couple of years ago, Daniel Nadler, 29, told his friend
Peter Kruskall, 26, that it was possible to model equity
markets to show that individual stocks move in highly
predictable cyclical and seasonal patterns. Nadler, who is
completing a Ph.D. in political economy at Harvard University,
had recently taken up residency as a visiting scholar at the
Boston Federal Reserve, where his work focuses on tracking the
asset allocation strategies of the 300 largest U.S.
institutional investment funds. Kruskall had graduated from the
Massachusetts Institute of Technology with a masters in
computer science and was employed, at the time, as a software
engineer with Google.
The two, Nadler says, had become acquainted during
Kruskalls time at MIT over their shared interest in Zen
Buddhism. Kruskalls reply to Nadlers claim about
financial market modeling was very un-Zen-like. He said,
Thats garbage, Nadler recalls.
A challenge was born. I said to him, Give me one
model that I can test locally myself with programming, give me
a day to test it, and if it works out well, we can go from
there, says Kruskall.
|Top to bottom: Peter Kruskall, Daniel Nadler,
& Brandon Liu of Kenshō Technologies
What the pair very quickly discovered was that there was no
way for Kruskall to evaluate Nadlers claims. It was
difficult to get access to the data needed and, more
importantly, the software to model markets simply didnt
exist for anyone outside the financial industry. More easily
distracted minds might have given up there. But for Nadler and
Kruskall, these two children of what Nadler terms the
Facebook effect the thriving culture of
technological entrepreneurship that has emerged at Harvard and
MIT in the wake of Mark Zuckerbergs success the
aborted bet set them on a more ambitious path: Kruskall began
to build out a software environment that would allow them to
model and test Nadler's boast.