Foreign exchange guru: Richard Olsen

In the pre-radio and telephony days, information about markets moved by post, horses and even by carrier pigeons. Investors with information in one market would send their instructions to other markets and success was often an outcome of the speed of transferring the messages.

Today's global environment also puts a premium on speed, but it is not measured in days or hours but nanoseconds. Currency-trading departments are decentralized so that individuals, usually young, nimble and quick, can make massive decisions on their own. The trading rooms of major institutions trading currencies for their own accounts often contain no one over the age of 35, none with bonus possibilities less than multiple millions and all eager to take risks to achieve personal gain.

It is perhaps not surprising that currency markets trading in hundreds of billion dollars a day, open 24 hours and with information moving so fast that there is always the chance of an information advantage, would attract speculative attention. And not surprising either that the value of speed and ability to grasp all the markets' information at once would attract academics building new models. One of these, and one of the best, is Richard Olsen of Olsen and Associates (O&A), a high-frequency data processing firm in Zurich in which Dean LeBaron has personally invested.

A visit to O&A, in a refurbished flour mill alongside Zurichsee is like a visit to Silicon Valley. Attire is California casual, tee shirts and jeans, though Olsen does wear a tie to see clients. Dogs and bikes sit outside offices while their owners are huddled over computer keyboards. Conversation is usually in English though it is hardly the first language for the majority. Academic disciplines are mathematics, economics or almost anything else. The common characteristic of the people is smart, very smart.

Olsen and his colleagues are the best at acquiring and analyzing high-frequency data, using very advanced mathematical techniques to forecast currency movements. By high frequency, they mean second by second, and forecasting might be for an hour or so ahead, perhaps even a week if long-term the value of high-frequency forecasts decay rapidly as the information that produced it is disseminated.