Wormholes Exist!

This is what The Economist says in its latest issue regarding last week´s market mayhem: “According to Goldman Sachs, the latest jump in the Vix took it eight standard deviations from its average. If conventional models are correct, such an event should not have happened in the history of the known universe. Then again, the move in energy prices that caused the collapse last year of Amaranth, the hedge fund, was a nine standard-deviation event. Perhaps modellers do not know the universe as well as they would like to think”.

I ain´t no physicist but I think this analysis by the indispensable London-based publication hints on something revolutionary when it comes to the science mastered by Einstein, Feynman and the like. Thanks to wild market movements such as those witnessed a few days ago and thanks to conventional finance theory we are in on a very important secret. An earth-shattering revelation. Possibly the biggest discovery by humankind ever. Now, indisputably, we know. Wormholes do exist.

You are probably asking how dare I make such a daring statement, especially when it comes from a physics-illiterate individual. What allows me to display such inexcusable boldness? Where is my proof?.

I just said it. Real-world market movements and finance theory, that´s my proof. I mean, only the existence of wormholes that allow convenient travel between different universes can explain the fact that certain beings currently present on earth would produce models that assume that the markets behave Normally. Clearly, those beings must be from a different universe. That´s the only possible explanation for their reticence to admit the obvious about our universe, namely that rare events take place so often that perhaps they shouldn´t be dubbed rare anymore (“peculiar” perhaps?). These modellers have to have come from another, wildly dissimilar universe, where apparently Normality does truly rule supreme. Having been raised in such a placid environment it seems only reasonable that they find it very hard to accept the harshly chaotic realities of our world. Rather than adapt to the new universal circumstances, they keep their unwordly assumptions intact, producing models that stubbornly resemble only the realities that they left behind many stars ago. In a way, then, they are like guests who refuse to behave according to the customs of the host.

In the movie Contact, the character played by Judie Foster travels through a wormhole and upon reaching her final unknown destination is greeted by a mysterious alien figure disguised as her beloved father. Once she is back on earth, no one believes her story. No one buys that wormhole stuff. She is almost treated as a lunatic. And yet, after contrasting market realities with conventional market theory, one is very tempted to conclude that that female astronaut was not misleading anyone after all. It certainly looks as if some of today´s finance theorists may have arrived here using the same method of transport that allowed the fictional Dr Ellie Arroway to enjoy one last grasp of her deceased parent.