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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Meme of the Past: Meme of the Future, by Kim Zussman

After the 2003 bull stampede which followed quick victory in Iraq, 2004 started strong in January. The consensus was "good through the election", ostensibly an extension of the human tendency to postpone risk and pain. However if one sold at the election they would have missed out on most of 2004 gains in the form of post-election rally to the new year.

Then there was the small-stock version of the January effect meme, which we won't discuss. Next came end-of-January Iraq election worries. These fears are now revealed to be unfounded since unlike prior millennia, Shia, Sunnis and Kurds will live happily together now under democracy. It's easy to lose count of all the assumptions which prove wrong as future becomes past.

Beyond the objective statistical studies of price pattern behavior, is there alpha from positioning for what is not assumed to be risk? Qualitative and quantitative estimation of the current consensus to determine positions which are assumed to be true and bet against truth. This is a painful hike, however, since one is shorting rallies and buying sell-offs. Perhaps the analog of Soros's back-ache, the feeling that it is being done right, is chronic anxiety and upset with a Costco bottle of Tums. No wonder few do this well.