The Fear Index

Acknowledgements

    I WISH TO thank all those whose expertise, generously given, has made this book possible: first and foremost Neville Quie of Citi, who made many helpful suggestions and introductions and who, along with Cameron Small, patiently helped me through the labyrinth of shorts and out-of-the-money puts; Charles Scott, formerly of Morgan Stanley, who discussed the concept, read the manuscript and introduced me to Andre Stern of Oxford Asset Management, Eli Lederman, former CEO of Turquoise, and David Keetly and John Mansell of Polar Capital Alva Fund, all of whom provided useful insights; Leda Braga, Mike Platt, Pawel Lewicki and the algorithmic team at BlueCrest for their hospitality and for letting me spend a day watching them in action; Christian Holzer for his advice on the VIX; Lucie Chaumeton for fact-checking; Philippe Jabre of Jabre Capital Partners SA for sharing his knowledge of the financial markets; Dr Ian Bird, head of the Large Hadron Collider Computing Grid Project, for two conducted tours and insights into CERN in the 1990s; Ariane Koek, James Gillies, Christine Sutton and Barbara Warmbein of the CERN Press Office; Dr Bryan Lynn, an academic physicist who worked at both Merrill Lynch and CERN and who kindly described his experiences of moving between these different worlds; Jean-Philippe Brandt of the Geneva Police Department for giving me a tour of the city and answering my queries about police procedure; Dr Stephen Golding, Consultant Radiologist at the John Radcliffe Hospital in Oxford, for advising me on brain scans and putting me in touch with Professor Christoph Becker and Dr Minerva Becker who in turn helpfully arranged a tour of the Radiological Department of the University Hospital in Geneva. None of these, of course, is responsible for the errors of fact, misguided opinions and Gothic flights of fantasy that follow.
    Finally a special word of thanks to Angela Palmer, who selflessly allowed me to borrow the concept of her stunning art works and bestow them on Gabrielle Hoffmann (the originals can be seen at angelaspalmer.com ), and also to Paul Greengrass, for wise advice, good friendship and the sharing of numerous Liquidity Replenishment Points along the way.

    Robert Harris

    11.7.11

1

    Learn from me, if not by my precepts, at least by my example, how dangerous is the acquirement of knowledge, and how much happier that man is who believes his native town to be the world, than he who aspires to become greater than his nature will allow .

    MARY SHELLEY, Frankenstein (1818)

    DR ALEXANDER HOFFMANN SAT BY the fire in his study in Geneva, a half-smoked cigar lying cold in the ashtray beside him, an anglepoise lamp pulled low over his shoulder, turning the pages of a first edition of The Expression of the Emotions in Man and Animals by Charles Darwin. The Victorian grandfather clock in the hall was striking midnight but Hoffmann did not hear it. Nor did he notice that the fire was almost out. All his formidable powers of attention were directed on to his book.
    He knew it had been published in London in 1872 by John Murray & Co. in an edition of seven thousand copies, printed in two runs. He knew also that the second run had introduced a misprint – ‘htat’ – on page 208. As the volume in his hands contained no such error, he presumed it must have come from the first run, thus greatly increasing its value. He turned it round and inspected the spine. The binding was in the original green cloth with gilt lettering, the spine-ends only slightly frayed. It was what was known in the book trade as ‘a fine copy’, worth perhaps $15,000. He had found it waiting for him when he returned home from his office that evening, as soon as the New York markets had closed, a little after ten o’clock. Yet the strange thing was, even though he collected scientific first editions and had browsed the book online and had in fact been meaning to buy it, he had not actually ordered it.
    His immediate thought had been that it must have come from his wife, but she had denied it. He had refused to believe her at first, following her around the kitchen as she set the table, holding out the book for her inspection.
    ‘You’re really telling me you didn’t buy it for me?’
    ‘Yes, Alex. Sorry. It wasn’t me. What can I say? Perhaps you have a secret admirer.’
    ‘You are totally sure about this? It’s not our anniversary or anything? I haven’t forgotten to give you something?’
    ‘For