Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.

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04/01/2004
Magic Numbers in Chemistry and Finance   

There are magic numbers in the composition of the nucleus and electrons in all elements. The magic numbers are 2, 8, 20,28, 82, and 126. Of either protons or neutrons  within the nucleus, the shells like to be complete just the same way the electron shells tend to be completed in reactions. Isotopes (with the nucleus  varying only in terms of neutrons) tend to be stable when they have the magic numbers, even numbers, equal numbers of protons and neutrons, and odd numbers  of neutrons, and  64 neutrons in descending order of preference.  Such relatively new knowledge relating to the nucleus led to the discovery of the elements with atomic number 113 and 115 recently and are covered in the elementary chapters on nuclear chemistry in most modern chemistry books available in spades on Google. 

The importance is that the magic numbers appear in much larger concentrations, are much more prevalent and long lived. Shades of Osborne. are their certain numbers that occur much too often in the distribution of stocks. Do stocks tend to gravitate back to these numbers and do they act as barriers. A recent article in the Journal of Futures Markets, "Clustering in the Futures Market: Evidence from S&P 500 Futures Contracts by Adam Schwartz and Bonnie Van Ness and Robert Van Ness talks about prevalence at round numbers. Can it be profitable by buying and selling the unstable and stable numbers between and within days? If it can lead to discovery  of two new elements, it seems worth a recap and modernization of the work that Osborne and I did 100 years ago.
-- Victor Niederhofer

Mike Ott replies:

I have a couple things to add-

 A molecule wants to revert to its preferred state, which is the number of electrons held by the noble gas closest to it.  That is why O has 6 outer (valence) electrons, and wants to add 2 to get to the magic number of 8. That's why water is H2O, not H3O.  As a corollary, sodium has 9 electrons, and wants to give one away to get back to 8.  This is easily modeled in stock actions near a round number, it wants to rise to 100, but if it goes too far past, it will give some back.

You can add electrons willy-nilly to any element, and only the charge will change.  If you add or subtract protons, the substance is changed immutably. The nucleus is an inherently unstable area, with all the positive charges compacted in a very small space.  Neutrons stabilize the nucleus, in a 1:1 ratio for most of the small elements.  As the nucleus grows, more neutrons are required for stability.  You're correct in noting that different numbers of neutrons cause the formation of isotopes.

 Newly created elements only exist for fractions of a second, so rational design is needed to insure that they exist long enough to react with something.  I'm all for science for science's sake, but this is a very expensive endeavor without a near term application.  Perhaps the search for the Higgs boson will tell us more about the structure of the atom, and therefore the universe.