Investment special: Be very afraid

In The Fear Index, the latest thriller by Robert Harris, now heading for the Christmas bestseller lists, a brainbox hedge fund manager with little in the way of interpersonal skills discovers that his computer-driven trading system has flown out of control and threatens to send the world’s stock markets into a tailspin. Anyone familiar with Mary Shelley’s Dr Frankenstein will recognise the genre of the oddball genius consumed by his own creation — populist fiction at its best.

But is it fiction? Not so fast, reader. As Harris makes clear in a footnote near the end of his novel, the market meltdown which Dr Alex Hoffmann’s trading system appears to have prompted in The Fear Index is one that actually happened. A ‘flash crash’ on 6 May 2010 sent US stockmarket indices tumbling by more than 9 per cent in 15 minutes, causing short-term panic. One blue-chip company, Proctor & Gamble, saw its shares fall 37 per cent before they — and the market — eventually recovered.