Inside Investment: Voodoo analysis

At the start of Dan Brown’s The Da Vinci Code, a museum curator, Jacques Saunire, lies dead in the Louvre, Paris. His corpse is spread-eagled like Leonardo DaVinci’s Vitruvian Man and in Saunire’s own blood there is scrawled a pentacle and a Fibonacci sequence. It turns out the Fibonacci sequence, a series of numbers formed by adding the sum of the previous two numbers (1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, etc) is key to finding the hidden meaning in DaVinci’s paintings and cracking the code.

Brown is by no means the first person to instill the Fibonacci sequence with quasi-mystical significance. A number divided by its predecessor in the sequence always approximates to 1.618, or phi. The golden ratio, as it is known, recurs in nature, in architecture and, of course, in art. In finance,...