Chocolate Chip Cookies & Financial Markets

Forrest Gump famously said, “Life is like a box of chocolates.”

Rocky Humbert counters, “Life is like a rack of homemade chocolate-chip cookies.”

To celebrate the first snowfall of the season, Rocky baked three racks of chocolate-chip cookies using the Nestle Toll House Recipe. A trained scientist, Rocky weighed the ingredients precisely; he used an ice-cream scoop to size each cookie; he timed each tray’s bake time to the nano-second. The oven and rack temperatures were kept constant and carefully monitored.

Nonetheless, the cookies had a mean size of 6.93 cm with a standard deviation of 0.93 cm. The smallest cookie diameter was 5.5cm and the largest cookie diameter was 8.5cm.

This is a statistically improbable dispersion — and it jibes with Rocky’s view of the apparent randomness of markets.

[Disclosure: Rocky’s only explanation for the size dispersion is the cookie dough temperature as it entered the oven. Rocky’s daughter offered a mathematical explanation that uses fractals. Any reader who offers a better hypothesis will win a unique prize of dubious monetary value. The Blackberry model (as shown above) did not go in the oven.]