Tennis talk is a common theme on this site, one the chair himself often engages in, and we often do so with an eye towards market parallels.

Yesterday, at the Australian open Nadal beat Federer (commonly thought of these days as the greatest player of all time, but who is now 32 years old, extremely old for a professional tennis player at that level) in straight sets 7-6, 6-3, 6-3 I believe.

At one time, this was a great rivalry, but it was quite evident yesterday that Federer may not quite be what he was a few years ago.

Craig's reference was to the notion that perhaps Federer should have hung it up rather than embarrassing himself. My reference was to Nadal, who, with a dozen or so major victories to his credit, out to be conscious of an exit date for himself, rather than the pathetic decline we see with so many athletes, who so often seem to be the last to see it in themselves.

Perhaps Mr. Manning (who, in my mind is the greatest quarterback I've ever seen) should certainly make net Sunday be his last pro game, win or lose.

That's another of my two cents now I am broke like the Ex Governor of Virginia.

Craig Mee writes: 

The fed deserved the very best after his career and being the absolute gentlemen he is, he took the risk of playing on and having his name tarnished by a defeat like he saw Friday. He was comprehensively outplayed and was at a loss for words really in the post match interview. It is unfortunate some will view this as oranges and oranges. I give credit to him for pushing his limits, but now the tougher question arises of whether to hang up his racquet now or play on for potential further pain. Ralph is quite correct. As for market parallels, it makes me think about when to give a strategy away after it being successful for years.



Like the 5 minute mile, I'm wondering if upsets in the first 4 rounds of a tennis tournament create a greater instance of upsets in the back end, like Thomas the Tank Engine's "I think I can". If so, could this effect market pricing in the same way?



Of all the big stock rallies or market moves, which ones were centered on an encircling macro development that was able to sustain them for years to come? For example, is the push into internet based activity freeing up global trade and other undercurrents that are less obvious (3D printing) something which has to be taken into account when comparing price earnings and others now or at anytime, i.e shouldn't every separate movement be put into context of a valuation including up upward drift + economic drivers specific to this new distribution. 



 David Attenborough did an interesting AMA (Ask Me Anything) on Reddit. Nature, it seems, is full of lies, murder and downright meanness.

What has been your most distressing/upsetting moment in your career?

Seeing chimpanzees kill monkeys, they do this to eat them. They chase them, set an ambush, catch them, and tear them apart…

A chimpanzee does in fact tell lies. If you can believe that. Also, when some Colobus monkeys find a very precious piece of food, it calls the alarm call that it would make if a snake were to arrive, and all the other monkeys run away and it gets the food.



Mini crashes might serve to stabilize things in the larger picture if they clean out accumulations of stop orders and discourage their use and the use of over-leveraging. I am not sure why nanex thinks every event like this is news - is there really evidence that they are more common, or is it just that they happen over a compressed time frame? Back when some of the electronic contacts were fairly new, one of the first strategies I used was to set scale limit orders below swing points since little stop runs were often not fully followed by the big contract and tended to reverse quickly.

Craig Mee writes: 

It reminds me of arm wrestling. If there is a stale mate on even ground, you can feign weakness quickly in order to hit the opponent with even greater force when he is not expecting it.



 In light of Manchester United's current predicament, Sir Alex's old words should be revisited for current managers and punters alike.

"Only through success can a manager become master of his own destiny," Ferguson wrote. "Success unlocks all the doors. Set against a background of two or three trophies, decisions can be made with a ring of conviction, players accept what you are saying without doubting, supporters sustain their belief through the inevitable setbacks and you become a figure of authority without the need to look over your shoulder. Success achieves all these things as well as giving a manager security at home, knowing his job is safe."

They have been overachieving the last few years only because of Sir Alex. He hand picked his successor to ensure his legacy remains intact by setting up his successor for failure. Moyes walked right into the shiv.

United will be getting everything they deserve and more in the coming years. The potential cascading financial effects of not qualifying for the Champions League will be massive. What goes up must come down. It looks like Government Motors invested at just the right time.

Shirt sponsorships and future stock performance is worthy of a study in its own right.



 It would be interesting if the all seeing eye could see the reasoning behind all the typical reactions to a number like ISM manufacturing or employment. Let's say it's like 57.4 up versus 57.6 like today's number. First a rise in S&P because it's down. That means the Fed is less likely to taper. Second, a rise because it's only down 0.4 and it's still way above 50. Third, a decline because it means that the economy isn't strong. Fourth, a rise as the flexions cover their short. They were told the number was going to be down but most of them didn't get the exact number and it's only down a little. Fifth, a decline as the economic forecasters alert their readers that the number was down. Sixth, a further decline because Germany is down a tremendous amount more than the US. Many other cross currents also. All ephemeral and designed to unleash the weak from their chips.

Gary Rogan writes: 

It seems like reacting to any news of that nature in any way is counterproductive unless you had the information in advance. And yet 'everybody does it'. Why do people feel compelled to act on information even if they don't know what it means (relative to the reaction that has already occurred by the time they can act)?

Craig Mee writes: 

There was an ex deputy treasure secretary on CNBC Asia yesterday, (he may have held the top job for 4 days and I missed his name). His insights were little better than the rhetoric from a standard middle range company CEO, however he did appear straight down the line. Possibly the government at the highest levels is not necessarily implicit in the flexionic behavior of others. Many may not quite understand what they have available to them or that lower ranks are happy to take cut deals for peanuts on partial info. Big business, on the other hand, is able to squeeze every ounce of juice from all and sundry to create the beast that marches forward to all others' misfortune.



 This article illustrates a classic case of buyer beware. If it sounds too good to be true, it probably is, and why there will always be enough for everyone to go round in the markets. Fortunately and unfortunately. Many can't resist a good gamble, illustrated so well here by a punters club on the nags with no checks or balances and up to 200 million disappearing.

"Investors count the cost as Bill Vlahos' racing bets club collapses":

"If anyone is promoting a 20-25% return on your punting, then it should send `red flags' immediately,'' V'Landys said."

"…Earlier this year, Mr Vlahos told his members he had a betting bank of more than $90 million. Fraud squad detectives are now trying to figure out how much money is gone"



 There is a serious game of cricket happening at the moment between England and Australia. A test match which goes for 5 days. In that 5 days fortunes are made and lost and reversed on a daily basis.

The comment section of most papers following the action gives one a good indication of herd mentality. If this is the same representation of those trading markets news and announcements, then it is little wonder most are caught off guard. A day ago it was all pro England comments and the Aussies were toast, and today it's…. "Doomed, we're all doomed, I tell you. Well played Australia. England haven't a hope in hell of saving this Test."



 Here is some HFT fun for the whole family: The Wall Street Code.

This is the basic wrap about how flexions (all related at the big end of town, seats on exchange boards, shareholders, etc) have a fast track ticket entry to the front of the order queue.

If retail investors only knew this was the very least of what is against them.

Buy and Hold on monthly reset is looking more and more appealing.



 This man is worthy of a movie, which would very much unfold as dailyspec readers would expect, as he made fatal errors on the way up, including, it seems, expecting that the bull market wouldn't pop, and indulging his record cash outflow with much initial hubris. It's not over yet. He can still pull himself back from the brink.

"Boganaire - The Rise and Fall of Nathan Tinkler."

What strikes you about the tale of Tinkler is that he made two fortunes in his lifetime but never made a profit. Loss makers all: from his companies and coal mines to the Newcastle Knights, the Newcastle Jets and the Patinack Farm horse stud.

The other thing is the sheer velocity of the man's spending - the mansions, the cars, the planes, the bloodstock - and his unrelenting battles with creditors. Manning has totted up some 50 actions against Tinkler, mostly for not paying his creditors.

Tinkler made his first fortune scraping together $1 million and buying the unsung Middlemount coal deposit in Queensland. That was in 2006. A year later he sold it to his mentor, Ken Talbot, for $265 million worth of shares in Talbot's rampaging Macarthur Coal.

The timing was exquisite. He cashed out of Macarthur for $442 million in May 2008, then embarked on what must be the biggest spending spree in this country's history. By the time he came to his second ''deal of a lifetime'', he was out of cash, Manning says.

After a reckless spending spree of its own, and crippled by the global financial crisis, the mining giant Rio Tinto was dumping assets. It was early 2009 when Rio put its Maules Creek coal deposit up for sale.

Again, Tinkler saw the potential. He paid $480 million - almost all of it borrowed from US hedge fund Farallon.

All he put down was a 5 per cent deposit, but he didn't even have that. Talbot had tipped in $15 million in a short-term loan.

Aston Resources and Farallon and their lawyers were poised to sign off on the deal in the Brisbane offices of Freehills when Tinkler sent the Aston boys a text message.

He was down at the nearest pub, the Pig 'n' Whistle, in his shorts and thongs. You better come down, he said. Tinkler confessed that he hadn't been able to refinance Talbot. Farallon was about to fund Tinkler into a half a billion dollar deal when they found out his 5 per cent deposit wasn't all his.



Parallel Problem Solving from Nature 2014:

Natural Computing is the study of computational systems that use ideas and get inspiration from natural systems, including biological, ecological, physical, chemical, and social systems. It is a fast‐growing interdisciplinary field in which a range of techniques and methods are studied for dealing with large, complex, and dynamic problems with various sources of potential uncertainties."



 Once again the sensibilities of the centrals and sovereigns and flexions galore who buy the bonds at the auction were not discommoded.

Gary Rogan writes: 

I have maintained for many months that they will not let the rates run away for as long as they can help it because they just can't afford it. Those who thought that the employment report would provide some cover for the would-be taperers and sold everything in sight wrongly believed that the supposedly taperers needed cover. Their only real job is to delay the death spiral of higher interest payments => higher borrowing to make those payments => higher rates => still higher payments for as long as possible. Well, OK and to keep the big banks permanently on the dole. How can they ever do anything deliberately that will signal higher rates? Only mistakenly as Ben did in May, a mistake he tried hard to correct but not enough to even think about tapering.

But the good news according to Ms. Yellen that the stock market isn't in any kind of bubble either, so it's safe to buy. To infinity and beyond! Abby Joseph Cohen a noted expert on value in the market still sees some so it's all good.

Craig Mee writes: 

So many fake outs, levels of deception, noise, and price runs come to mind, but just a few take away from that trade that you look back on and think to yourself, "how easy should that have been, all I had to do was hold".

Gary Rogan adds: 

A few days ago Goldman's Hatzius found two Fed economist studies that support lowering the unemployment threshold for tapering. Of course that's only to help unemployment as all of the Fed's goals are ultrapure. How often do we see Fed studies that permanent money printing on this scale isn't something that has a precedent and these projections are on the level of "climate science"? Once again, to the man who only has a hammer everything looks like a nail.



 Some time ago Mr. Jovanovich posted an anecdote about old man Mellon to the effect that his kids never let him pay for a bill at a restaurant because the old man felt that prices should be the same as they were when he was a young man and that they were too high today. This is a common thing one runs into in certain people of age. They are accustomed to the old p/e, the average of the last 10 years, on those rare occasions in the 1930s when Ben Graham wasn't chasing the skirts, when you could buy companies at below their liquid cash, assuming incorrectly as he did that any shares were available and they weren't losing so much that the previous balance sheets were meaningless.

Galton had a way of dealing with such things, and he was the most revered man of his age, commanding universal respect, and heading all the leading scientific and geographic societies. "Let the bygones be bygones". Don't fret about bad things that happened, or look to take back the things that you could have done that would have made you so much better off. The woman you didn't marry. The stock you didn't pick. The limit order that wasn't filled.

I recently ran into this in a business meeting where I was trying to sell a company. When negotiations started the earnings of the company were half what they were when the negotiations resumed. The buyer was stuck on the old price and old earnings. The buyer consequently missed an opportunity to make a tremendous profit, of about 10 times his investment of millions in several years.

One often makes this mistake in the market. You try to catch a falling star and you miss it. And then it goes in the direction you had hoped. But you never come in again because you are trying to catch it at the bygone price. Anatoly once mentioned that he was trained in checkers by the KGB to learn to be an amnesiac so he wouldn't regret moves that he should have made on the board, and would look to the future.

In chess, the good players always say forget about the prices that have been taken and concentrate on the pieces that are on the board. I believe this is a common mistake in life and markets, and would be interested in the scientific and empirical and life and market lessons that you all have learned from similar ruminations.

Richard Owen adds: 

 Ted Turner believes a large component of his success is attributable to the fact he readily accommodated and cared not much about what had past. The Buddhist concept of acceptance and Kabbalahist idea of cause and effect are similar.

Compare Germany and Silicon Valley. In Silicon Valley ones past mistakes accrue as experience. In Germany there have been many internet start ups but also inevitably failures. Speaking to German friends, a failure there is carried like a deadweight around ones neck.

Society is destablising somewhat as the record of evidence of one's past peccadiloes becomes more extensive. Nobody can get into office or past congressional approval unless they lived a prude life of Cromwellian perfection. And its not clear one is best led by a Cromwellian prude.

Ralph Vince comments: 

There's two ways we learn things, the easy way, and the hard way.

If we learn things the hard way the FIRST time we climb up off of the pavement — that is the definition of a windfall.

Learning things the easy way is to accept facts like an obedient database. The only payoff to learning things the easy way happens when our perspective on the matter at hand altered such that we see it in its proper light and thus actually understand it, rather than merely as data.

To convey ideas to other human beings, we must amend their perspective, their point of reference on the matter, to see it anew from an entry point that they will understand it. To spare them the inevitable beatings of otherwise learning it the hard way is such a gift.

Stefan Jovanovich comments: 

In our misbegotten adventures in L.A. we had minor and almost all indirect dealings with the mouth of the South. Mr. Turner was so acutely aware of his father's defeat and death that even in casual dealings outsiders learned how determined he was to avenge/outpace/overcome his family legacy. He also was notorious, even in Hollywood, for accumulating personal grudges.

A great deal of individual success in Silicon Valley has come from the fact that the U.S. income tax code allows the tax-free pyramiding of gains through (1) buying and selling of principal residences and (2) exchanges of corporate interests. When you add the glories of carried interest, the result is a society of the well-connected in which there are very, very few failures who haven't held on to at least a respectable amount of the OPM. From the little I know of the German tax code, none of these opportunities to do a heads I win/tails you lose coin toss has ever existed in that country.

 Cromwell was many things, some of them awful; but he was never a prude. He and Elizabeth Bourchier had 9 children; and he and his wife were both, by religion, Independents. That meant they were those rarest of people who believed that Jews and (from the point of view of their Anglican, Presbyterian and Puritan contemporaries, even worse) Catholics were entitled to political and religious liberty.

What Richard may have meant is that Cromwell, as a military commander, was as piously single-minded as Joan of Arc. Like hers, his army never lost a battle once they had received proper inspiration; and each soldier literally believed in him and "the cause" for which they had a clear catechism. This was not ever going to be good news for anyone (Catholic Irish; Scots Presbyterian) who opposed him just as the Hussites (as dissidents from the true Catholic faith) would not have much mercy from St. Joan.

P.S. I find the history of Cromwell's catechism fascinating. If one were to ever come up for auction, the 1643 edition might be priced at a figure that even lovers of Bacon (the recently mentioned artist, not the writer) would respect.

For the American sequel to the story, check out The American Tract Society.

Victor Niederhoffer adds: 

One notes the Chinese proverb on a similar theme: "don't carry your hatreds into the new year" or the English variant, "you can't run a mill with water that's past". All languages seem to have a proverb similar to "let the bygones be bygones". The Jewish custom of asking forgiveness at the new year for all the harms that you have inflicted on other in the past year, and sharing a torte and tea is from a similar vein. 

Jeff Watson adds: 

One of my proverbs is to take the hit, forget about it, and move on. But then again I don't mind small losses as they are just part of my business, and I take many small losses of a couple of cents when I smell that the trade is going to be wrong. Just like surfing, where there will always be another good wave, in trading, there will always be another good trade.

Alan Millhone writes in: 

Dear Chair,

A grudge is a difficult thing to dismiss.

My Mother used to say, " I can forgive — perhaps not forget "



Gyve Bones writes: 

Oliver Cromwell was an unmitigated bastard and I find no evidence he believed that Catholics were entitled to religious liberty. To the contrary, his raping and pillaging and wholesale theft of Ireland, which was clinging tenaciously to the Catholic faith, and the Penal Laws enacted for the suppression of the faith and Gaelic language starting then and continuing for a couple of hundred years was an attempt, largely successful at cultural and racial genocide.

His puritanism certainly enforced a prudery on England. Within 50 years of Shakespeare's death, his plays could not be performed. And prudery is not the same thing as having a fruitful but chaste (no roaming to other bedsteads) relationship with one's wife.

— G.B.

Show me a Puritan, and I'll show you a son-of-a-bitch. -H.L. Mencken

The President of the Old Speculator's Club writes: 

 Though Dailyspec seems to be a great repository of Mencken fans, there were a few voices which, although agreeing with him on many items, diverged on others. One such notable was G.K Chesterton. The two quotes which follow immediately demonstrate some common ground.

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." —H. L. Mencken

"We are perpetually being told that what is wanted is a strong man who will do things. What is really wanted is a strong man who will undo things; and that will be the real test of strength." —G.K. Chesterton

On the issues of science and religion, however, Chesterton suggested that Mencken was equally skeptical:

I have already noted that, if there is such a thing as religious mania, there is also such a thing as irreligious mania. Just recently, perhaps, it has been the commoner of the two. But a very interesting study of the matter comes from a country in which we may say, without injustice, that both are fairly common. I had occasion to remark recently, in this place, that an American paper had accused me of being an anti-American writer; and I commented on the curious irony that the American paper was itself an anti-American paper. But, though I may be permitted thus to parry a purely personal charge, and a highly preposterous one, I should not like anyone to suppose that I do not both enjoy and value the magazine in question.

I am quite well aware that Mr. Mencken, the editor of the American Mercury, is really doing his duty as an American citizen in being an anti-American critic. I myself have been regarded often enough as an Anti-English critic, when I regarded myself as a patriot. In short, there are immense internal evils for Mr. Mencken to attack, and he is perfectly right to attack them. All is well so long as the good citizen abuses his own city. The trouble begins when the foreigner abuses it—or, almost as often, when the foreigner admires it. But, anyhow, the chief efforts of the American Mercury have to be directed towards this howling wilderness of sectarian sensationalism.

The popular science, that rages in the American Press and local government, is simply a dance of lunacy more ghastly than a dance of death. And an exceedingly valuable and important protest against it can be found in the same number of the Mercury from which I have picked the examples of theological hysteria. The protest is all the better because it is not the sort of protest that I should write, or that any person of my beliefs would write. The critic is writing entirely in the interests of Science, and is perfectly indifferent to the interests of Religion. And he enters a virile and telling protest against that science, which is his only religion, being dragged through the mire as a degrading superstition.

From a great article: "Religion in American History: I
Hate Methodism; and G. K. Chesterton vs. H. L. Mencken: Battle of the
Monogrammed Dudes. Surprising or Otherwise Interesting Primary Sources,
Pt IV"

Richard Owen writes: 

This is fascinating stuff. The modern day argo in British English of referring to something as Cromwellian is along the lines Gibbons indicates, although at one step removed perhaps.

Cromwell instilled the Protestant Work Ethic in puritanical fashion. That still pervades much of British psyche today, and is captured in popular imagination, for example, in the writings of the Daily Mail and the books of Tom Bower, Britain's foremost hatchet biographer of businessmen (I say this with great respect; his books are well written and I suspect Mr. Bower would be glad to acknowledge his genre bias).

Thus the Protestant Ethic mentality is to be rich and industrious. But with the emphasis on the latter. As Martin Sosnoff said of his Dad, something like: *"he never thought he'd earn an easy dollar, and he never did".*

The one thing that really irritates the Cromwellian mentality is to find out, after slogging ones guts up to Vice President and exiting to early retirement with a Carriage Clock and blue chip pension, is to find out the reason for corporate downsizing was because a kid from the JFS, assorted Anglo Norman public school boys, or an Asian immigrant rustled up a grub stake into Forbes Four Hundredism. And possibly even had some good sex, bad drugs, and hella fun in the process.

Not to make light. These are complex neuroses and threaded reasonable sense given each parties bias.

Craig Mee writes: 

Victor, the point can also be made that although a potential lost opportunity arises and there are fewer pieces on the board, the situation is then more clear. Although you may not establish the solid position you initially hoped for, many more tighter risk reward opportunities now present themselves, sometimes allowing you a defiant win on the move all the same. However, this outcome may be related to your initial and ongoing foresight about what's unfolding.



 The advice of Art Bisguier comes to mind when considering the Australian's post on turning off the lights. "Schtalll," he always said. "Sit on your hands and write your move down before you move the piece." I always say if you waited a day or two or hour or two on every trade, or definitely to the end of the day on every trade, you'd do much better. We live in a web of deception.

Anatoly Veltman writes: 

With due respect to everyone quoted, I'm not sure. Just like in board games there is time limit, so in any market contract, there is window of opportunity to cease a favorable price. Have recent tests shown that reversals occur between sessions, as opposed to intra-session?

I agree that was the case in yesteryear, because participants who over-leveraged during the day had to liquidate on the close, amplifying the riot. But these days, the pre-set electronic limits prevent such intra-day indiscretion. So it's just as likely to hit major pinnacle or nadir any time in the session.

Craig Mee writes: 

 Wouldn't it make sense to take all the bright lights, and colored up and down arrows, and green and red charts off your screens and replace them with blacks and greys. The flickering of the table creates undue excitement in one's mind and drives one to "play" when they probably should sit. 

Pitt T. Maner III writes: 

Funny, I was just reading something along the same lines but related to gambling. Best not to confuse the exciting red cherries and the appearance of green as being indicative of possible success.

"How Slot Machines Trick Your Brains":

"A reel on a virtual slot machine may seem to be cycling between 22 positions, but the machine powering it could have 64. This means you're seeing those cherries moving by way more than the odds that they will stop. Schull cites a study by Kevin Harrigan, an expert in algorithms, which says that if this type of machine were to pay off according to what people are seeing, players would win 297 percent of the time."



 At what stage do you try and fade the elephant in the room. What is a leading indicator that the government will introduce a policy change that could change this ferocious bid, with a lot more fire power on its way, if no changes are made?

"Investors Become Like Bulls in a China Shop":

A Sydney property developer who is working with Chinese investors told me that if Chinese stopped buying in areas that are popular with Chinese home buyers, the value of these local markets would fall by about 25 per cent.

These local bubbles are having a ripple effect, pushing buyers into other areas of the Sydney market.The impact of immigration is also considerable and cumulative. More than 400,000 people born in China or Hong Kong have become permanent residents in Australia. The number of immigrants from China continues to exceed 30,000 a year. The number of Australians who speak Mandarin or Cantonese is more than 600,000. The number of people in Sydney who identify as having Chinese heritage is now more than 360,000, or 8 per cent of the population.

The Foreign Investment Review Board looks carefully at the culturally sensitive areas of farming and housing. If changes being made by Chinese governments to cool their property markets are causing market heating to spread to Sydney and Melbourne, it shows just how integrated Australia is becoming with China and the Chinese, which brings a new set of complications - the complications of intimacy.

Stefan Jovanovich writes:

Both of Thomas Mellon's sons, Andrew and Richard, remember their father the Judge being amazed and alarmed at how much the prices of Pittsburgh real estate continued to escalate as more and more of the Irish and other immigrants spent money to buy property. When they would, as young men, take their father to lunch, they would always be careful to pay the tab because, for their father, prices should always have been what they were when he first ascended to the bench "before the war".

Victor Niederhoffer writes: 

This is why the values of privately held companies always lag behind the prices of publicly held companies. The idea should be generalized perhaps into why big stock market moves in one market filter and percolate into other markets. That has been tested.



 You may never eat street food in China again after watching this video.

The last words on the video are: "In today's society, everybody tries to swindle everybody else. There's nothing we can do about it."

From the top down, vendors to markets participants, ain't that the truth.



Kiwi hit hard…batton passed to

Aussie hit hard…batton passed to

Cable hit hard



 It's bush fire season in Australia. Maybe there are some market lessons on the table as well.

"NSW Fires: If you live in the bush, build for the bush"

"Individuals who choose to live in the bush as a lifestyle or economic decision might learn from Europeans threatened by Viking raids. They responded by retreating to compact, walled, defensive townships surrounded by open killing zones. Similar principles apply against bushfires — concentrate dwellings behind a short defensive perimeter, build houses that survive fire, and avoid, at all costs, dispersed housing that is vulnerable and costly to defend"

My market lessons are as follows:

Concentrate dwellings behind a short defensive perimeter = tight stop

Build houses that survive fire = trading account with solid management and plan

And avoid, at all costs, dispersed housing that is vulnerable and costly to defend = wide stops, in a high volatility environment that has not been back tested and uncorrelated to your main trading strategy. 



 You may have heard of the term "soft hands" in reference to horse riding. I found these explanations of the terms on a forum:

"Having soft hands is all about what the horse feels
in his mouth. Being able to feel even the smallest amount of pressure
you are exerting and being able to adjust it every moment of every ride
to ensure the horse's comfort and
responsiveness. Not being so quick with your hands that you bump him in
the mouth and having the proper timing to release the moment that they
give to pressure is also a big part of having soft hands."

"Generally when referring to soft hands… its not about how tight you
hold the reins. But more how tight you hold the horses head with the
reins if that makes since. Being soft handed also means having quiet
hands so not bumping the horses mouth when working. Basically…. soft
handed people use very little pressure of the reins to direct the

We should strive for soft hands in trading as well, and in all sports. To snatch and grab and hold on too tight for any outcome can spell nerves, caution and anxiety. This should never be the case when trading.



 Susan just went to a conscious capitalism conference that she supports and heard this story from Nick about how a letter to customers admitting his failures and asking for help saved his business. I believe there are many lessons here, including the importance of keeping in touch and honoring your customers. Every business should treat their customers as good friends, I think. What do you think?

Craig Mee writes: 

I found this article about ten attributes of a good friend. Maybe these are good ideas for keeping in mind when building your relationship with the markets as well.

1. Keeps your secrets (unless you are about to harm yourself)
2. Defends you
3. Gives you good advice
4. Listens to you
5. Cares about your well-being
6. Does not change how they treat you based on other people's feelings about you
7. Tries to help you when you need it
8. Shares personal things about themselves with you
9. Tells you when you are wrong
10. Gets over disagreements without getting crazy revenge

It also makes me think about how sometimes Mr. Market talks to you as a friend and you don't listen. Most of us treat him as an enemy. What if he is, in fact, a friend, but our insecurities and weaknesses let us down in building a strong relationship with him.



One interesting thing about markets that helps them to take from the herd is how one day, one hour, one minute, they will be the strongest price you have EVER seen, and then the next, the polar opposite. Draw them in and spit them out all day every day is the name of the game for Mr. Market. Any one involved is fighting that and their own deficiencies from the get go.



The volatility in many markets over the last 10 years I believe has created a desire in us to crave more action and to crave and indulge in childlike activities, like climbing trees or playing football. Does this negatively condition us to over trade? As we get older and lose natural energy, could this actually make a positive difference in our trading?



Possibly the most major inhibitor of short term trading is not reacting enough to fundamental changes in the environment of changing cycles and inter-market relationships that you're not privy too until long after the flexions and insiders have pushed their boat into the pond. Discipline is the only way to combat this. The more the deception, the greater the chance of failure.

Gary Phillips writes: 

I try to think of myself as simply an observer, not a trader, but an opportunist, which means I do not initiate arbitrary trades that inevitably degrade my P&L. This entails allowing questionable trades to go uninitiated, while waiting for trades that are well defined and have a proven edge, and levering up when a real opportunity is presented.



Doug Bollinger on trying to get back to the Australian Wallabies Rugby Union Test team: ''You hear people saying you need to do this and that but what I have realised is you need to get out there, grab the ball and just get on with it.''



Could it be said that flexionic involvement is high at the initial or embryonic stage of particular markets, depending on the ruling ideology of the governing country only to flatten out as a market's liquidity and usefulness as a risk tool becomes greater, and then moving again to greater insider activity as the market becomes larger than life, and a driver rather than a passenger.

Also, what are the purest exchange markets to trade?



 You have to admit that it's amazing to see gold go up 4 1 /2 % or $ 63 in 3 1/2 hours on a delay of the tapering by a few months. Since gold has been around for thousands of years, and is a store of value, a useful commodity, and an inflation hedge, you would think it had more of a base of operations that it seems to have.

Craig Mee writes: 

Is this Fed move a culmination of all the bailouts since '97, a pinnacle of their "success"? Can their position be deeper or more all in. Is it a total disruption of market ebbs and flow or just another ebb and flow? Along with major bank or other insider plays (has this got larger in itself over the period?), where is it going for asset prices from here? Is gold up large with equities a vote of confidence for equity traders or just the opposite…



 When leasing villas it has been my experience of late that the new ones built for a song, with little attention to detail but with a swimming pool and the latest trendy look, go for greater money, even when the land is smaller which usually entails higher perimeter walls with minimal outlook and next to no seabreeze. However if you get a house with no pool, you can usually get very good value for your money, larger land, outlooks seabreezes, etc.

I would say the same may be true in different market sectors. The stars may be the attention getting companies with the largest bright lights, but greater value may be in the old school where you have to look past the latest bells and whistles and the hype.



 Riding my motorbike today, I had that feeling I get occasionally of the bike being propelled by itself going a little too quick and a little too easily and feeling a little bit too free, some might say almost traveling seperately from the bike.

I get the feeling in the swimming pool too occasionally, very occasionally, or running off but doing it a little too easily.

On a bike that's the moment you know you must pull your head in and regain control (though it's just the opposite for sports) because danger lurks, just like after having a good series of trades in the market.



 My wife informs me, and from what I have witnessed at the local markets, that when she is buying local produce depending on what skirt she wears, how she does her hair, and which expression she wears upon entering negotiations, the goods will be priced accordingly.

Of course, any sign of our children will push prices through the roof. At a local doctor recently, when I printed my name in pen on the card, prices of medication went up 10 fold and the doctor's fee quadrupled.

It's best for me to show signs of limited knowledge if I can to stop the outflow. Even better, have others outside of your family purchase an item for you. But even then bills and receipts are doctored with dealers and slippage ensures. There is no end to how you can get hauled over the coals. Bit like taking on the Fed for the last 20 years.



 The fact that the Dax was up 3 ratio points against the US markets shows that the largesse of the flexions on our numbers is not withheld from those who make recipes for the bernaise and bechamel sauces in Brussels .

Alan Millhone writes: 

Dear Chair,

Am afraid the bernaisacky sauce might upset my stomach.

Note Dow was below 15. That is upsetting enough to many without adding any sauces.



Kim Zussman writes:

It was dyspepsia from absence of Bernanke sauce.

Peter St. Andre writes: 

I really need to write a little poem that starts with "Ben Bernanke makes me cranky"…

Gary Rogan contributes: 

There once was a man named Bernanke

Engaged in some bad hanky panky 

But he went AWOL

and skipped Jackson Hole 

And now the markets are cranky.

Craig Mee adds: 

Bernanke the captain of Fed
Resembles Titanic's, Smith Ed
Evades all bergs, engines full out
Bond infinity, no damnable doubt
"Untapered, untwisted, now screwed", he said.



 Selfies: in line with a 200 year old trend of selfishness in our language:

"The 'selfie' is just the tip of online narcissism's iceberg"

How does this effect or has this effected the market? Possibly deception becomes greater as does flexionic behaviour as people happily "stitch" one another up without batting a eyelid.






 Sports are selling a dream to the kids of one day making it.

People watch sports because we mirror the players' motions in our heads. People imagine they did what the stars did, despite the impossibility of it. But you throw drugs into it and most will reject the idea that they mirror substance abuse. You put drugs into it and it is like finding out the secret ingredient to your favorite restaurant is small dose of poison or that their bakery is rat infested and did not pass the health inspection. It has to be dealt with harshly once exposed, or it is like a player shaving points for the bookies, it can and will destroy the brand.

Body building was still a sport when Arnold did it because it was not known they all took roids. Now it is like pro wrestling, a freak show. Nobody want their kids to become a bodybuilder, except bodybuilders. Finally, it is cheating, nothing to be admired, anymore than messing with accounting to get your bonus while ruining the company. If you had lost money to a drug cheat, it is easier to comprehend. For runners EPO is like playing Russian roulette. Your heart can literally explode, as you dehydrate. Now this is like World com executive cheating and knowing that it could destroy them in the process. Or a Ponzi scheme, wanting the good life at least while it last, despite the misallocation and destruction of wealth that goes well beyond their millions.

Craig Mee writes: 

That's true, Russell, excellent points. What I'm thinking is that sports may in fact drive advances in clean drug and herb technology that benefits the human body more than it wrecks it, or advances other sciences where they need to push limits like space travel. I, too, worry about the children. I wonder what will happen to trying to improve your performance and competition–the very nature of sports. But hopefully what started out a bit dark may lead to good things. 

Chris Cooper writes: 

There already is plenty of overlap between drugs that make you healthier (when taken in moderate doses) and drugs that improve performance. Look at the list of drugs taken by Lance Armstrong, for example: testosterone, hGH, EPO. All of them make you healthier when used moderately. But elite athletes have the motivation to increase dosages to potentially unsafe levels, which is where concerns about safety spring from. I have no problem with the use of PEDs, but I abhor the lying and cheating that normally accompanies it.



 The Brits are making excuses for their poor showing at the swimming world championships by blaming their "fast pool" training venue:

"It seems to have the perfect depth at Ponds Forge [olympic pool] of three metres, because it's all to do with the resistance in the water," he said. "Also, there is the consistency of the water. Because it's got ozone and oxygen in there it's very buoyant, so that allows people to swim faster as well."

"All our swimmers who go there post really fast times," he said. "They then can't replicate it later in the year, and they think that is working against them.

What is the symbolic ozone and oxygen in a market that makes it
sustainable and allows consistency? It's probably another reason not to
over trade across many markets because it's quite difficult to get the
ideal market balance…and then when you have great success you may
think that is the new norm and hamper further progress.



I'm watching a documentary on the execution of a young 22 year old Australian boy in Singapore for heroin trafficking and hearing his lawyer say, "we have to represent him because he's young and stupid" or words to that effect made me think (besides the thinking I was doing about the poor young bloke's doomed plight) how markets behave the same way and how to quantify the stupidity and mistakes a kid makes and compare that to mistakes of an immature and reckless market. There are

many more similarities no doubt. Should we forgive them, what do they need to show to gain our respect and when should older ones lose it? 

At the same time, it made me wonder if there is a risk in being too mature, too educated, and thirsting for too much knowledge and then not being able to turn back and live in the moment. Is there truth in the saying ignorance is bliss. Usually once the whole truth is revealed you realize you were happier being clueless. Knowledge makes you a better person and you can pass on the lessons to yourself and your family. Knowledge brings compassion, understanding and the ability to have an easier life through gaining edges. But it can lead to a blinkered existence for some, striving for goals that do nothing for mankind. The goal becomes cloudy and the initial gains are clearly lost. Ignorance, for some, helps you focus on family and community and the right basic values, while those with knowledge often fail and become confused on their journey.



 Darwin's relationship with Australia started out a little edgy, but all was forgiven…

Extracts below taken from "Darwin, Wallace and the princess in the south"

Trading lesson: Do not stare too long at the screens without having a cup of tea clarity will come with comparison, debate and time.

"Farewell, Australia! you are a rising child, and doubtless some day will reign a great princess in the south: but you are too great and ambitious for affection, yet not great enough for respect. I leave your shores without sorrow or regret."

New Zealand came out far worse, Darwin finding it neither pleasant nor attractive and ranking its Englishmen "the very refuse of society". He was too homesick after four long years abroad to muster up much enthusiasm for new lands, and looked back more fondly on Australia in later diary entries and letters, eventually deciding that Australia was a "fine country".

The letters exchanged by the two friends show that Darwin's thinking about Australia shifted. "Yours is a fine country," he wrote Covington in 1857, "and your children will see it a very great one." The letter also refers to Darwin's dinner in England with Australian sheep-breeder Sir William Macarthur, during which he "drank some admirable" Australian wine. Some years later, feeling more despondent about his life than usual, Darwin wrote to Covington with a most unusual inquiry: "When I think of the future I very often ardently wish I was settled in one of our Colonies… Tell me how far you think a gentleman with capital would get on in New South Wales. (state Aust)

"Australia had evolved into a true princess in the south". It was a place Darwin thought might be better than England. Darwin so disliked sea travel, and was so often ill, that one can hardly imagine him boarding a ship bound for Sydney, but had he done so On the Origin of Species might have been an Australian book, and this story may have turned out very differently.

Darwin's legacy is vast. He changed for all time our picture of life on earth and our place in it. Arguing clearly and powerfully from examples drawn from all over the globe, he showed that nature and humanity are not opposing categories but part of the same flourishing of life. He provided nature with a past that explains what it is today. He did the same for us. His influence lives on in disciplines as diverse as medicine, agriculture, philosophy and psychology.

A century and a half after he gave the world his theory, Charles Darwin remains as relevant as ever.

Note: Darwin was not, as is often supposed, the first to conceive of evolution. His grandfather Erasmus was one of many before him to argue for the concept. Darwin's contribution was to identify natural selection as the mechanism that drives evolution, by recognising that many are born but only the best suited survive and reproduce. Darwin explained this in Origin.



 From The Story of Civilization by Will and Ariel Durant:

History does not tell us just when men passed from hunting to agriculture-perhaps in the Neolithic Age, and through the discovery that grain could be sown to add to the spontaneous growth of wild wheat. We may reasonably assume that the new regime demanded new virtues, and changed some old virtues into vices.

Industriousness became more vital than bravery, regularity and thrift more profitable than violence, peace more victorious than war. Children were economic assets; birth control was made immoral. On the farm the family was the unit of production under the discipline of the father and the seasons, and paternal authority had a firm economic base. Each normal son matured soon in mind and self-support; at fifteen he understood the physical tasks of life as well as he would understand them at forty; all that he needed was land, a plow, and a willing arm.

So he married early, almost as soon as nature wished; he did not fret long under the restraints placed upon premarital relations by the new order of permanent settlements and homes. As for young women, chastity was indispensable, for its loss might bring unprotected motherhood. Monogamy was demanded by the approximate numerical equality of the sexes. For fifteen hundred years this agricultural moral code of continence, early marriage, divorceless monogamy, and multiple maternity maintained itself in Christian Europe and its white colonies.It was a stern code, which produced some of the strongest characters in history.

Gradually, then rapidly and ever more widely, the Industrial Revolution changed the economic form and moral superstructure of European and American life. Men, women, and children left home and family, authority and unity, to work as individuals, individually paid, in factories built to house not men but machines. Every decade the machines multiplied and became more complex; economic maturity (the capacity to support a family) came later; children no longer were economic assets; marriage was delayed; premarital continence became more difficult to maintain. The city offered every discouragement to marriage, but it provided every stimulus and facility for sex.

Women were "emancipated"-i.e., industrialized; and contraceptives enabled them to separate intercourse from pregnancy. The authority of father and mother lost its economic base through the growing individualism of industry. The rebellious youth was no longer constrained by the surveillance of the village; he could hide his sins in the protective anonymity of the city crowd. The progress of science raised the authority of the test tube over that of the crosier; the mechanization of economic production suggested mechanistic materialistic philosophies; education spread religious doubts; morality lost more and more of its supernatural supports. The old agricultural moral code began to die.*

Interestingly, the British historian James Burke speculates humanity has now entered a period of transition, where we're trying to solve life's challenges using "archaic and out-of-date instruments".

"We live with institutions set up in the past to solve the problems of the past, with the technologies and values of the past and we wonder why they don't work too well anymore?" he says.

Peter Saint-Andre writes: 

Nice thought, except it's false. English society was individualistic in the sense described going back as far as records exist (at least to the 1200s). The classic anthropological study here is Alan Macfarlane's 1978 book The Origins of English Individualism. Here is more about Professor Macfarlane.

Also highly recommended is a new book that builds on work by Macfarlane and others, entitled America 3.0.



Dutch Boyd reminisces over what might have been at the epic 2003 World Series of Poker:

It still hurts, thinking about how close I came. When you're deep in the Main Event, it's almost like you're living a dream. It feels like fate. It's predetermined, and you're going to win it, and nothing's going to stand in your way. The universe wants you to win. It wasn't until I was out the door that I realised the universe doesn't care.



A consideration to buy in the aussie equities on the next pullback in price (they had a strong week) as a hedge on rising U.S 10 yields… More learned stock pickers may be able to offer a more detailed analysis. This is just to showcase its potential exposure and potential for upside on this changing market condition.

Based on its current short-duration investment portfolio of almost $32 billion, the reduction in global interest rates compared with four years ago has crimped QBE's annual pre-tax profit by more than $1 billion. But with the Fed flagging to the market and the prospect of interest rates reversing and bonds falling, QBE's earnings are set to benefit significantly. To put this in context, the company delivered a 57 percent jump in investment income in 2012 to $1.2 billion ($809 million from policyholders' money and rest from shareholders' money), dwarfing the $453 million insurance underwriting profit for the year. This was generated from a near $32 billion investment portfolio, comprising mostly cash and short-duration money market instruments (i.e US Bonds).



 Modern cockroaches have been around since the early Cretaceous period (about 150 million years ago) so they obviously have something going for them. I know at the University of Florida entomology school students were known in the 80s to take Madagascar Hissing Cockroaches home to study and appreciate –  But more recently we have the following:


"For decades, people have been getting rid of cockroaches by setting out bait mixed with poison. But in the late 1980s, in an apartment test kitchen in Florida, something went very wrong.

A killer product stopped working. Cockroach populations there kept rising. Mystified researchers tested and discarded theory after theory until they finally hit on the explanation: In a remarkably rapid display of evolution at work, many of the cockroaches had lost their sweet tooth, rejecting the corn syrup meant to attract them."


Dylan Grice, an analyst formerly with Societe Generale, has written about cockroaches and discussed a simple portfolio strategy (which may be similar to others) named after them. But even he may have underestimated the evolutionary aspects of the roach "algorithm" (and its ability to avoid deadly baits).

'But what I like best about cockroaches isn't just their physical hardiness, it's the simple algorithm they use to survive. According to Richard Bookstaber, that algorithm is "singularly simple and seemingly suboptimal: it moves in the opposite direction of gusts of wind that might signal an approaching predator." And that's it. Simple, suboptimal, but spectacularly robust…'

Craig Mee writes:

Very good point, Pitt. Defense. Defense above all else keeps you in the game. Floundering in volatility and leaving yourself exposed with no control is always a bad move. As in trading so in life.

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Woodson reminds me of the trader who holds a losing position 10 days in a row until it totally ruins him. He stays with Smith despite the fact that he's a loose cannon,loses the ball by relaxing on offense, goes 1 for 6 from floor continuing his usual shooting percentage,has Anthony giving up as he unbelievably notes Smiths bad play, gives a gratuitous technical foul, and generally tries to get his game back when the season is at a precipice. Yet Woodson stays with him regardless the way a trader holds a losing position until he goes broke. Its pathetic to see this stubbornness. The worst thing that happened to Knicks aside from the sullen Ewing resonance on the team and the three point holdover from Antoni is the lucky game winning shots that smith made at the beginning of the season. One remembers the winning shots he made, two, but he lost 10 or 20 games with the same shots later in the season.

Craig Mee adds:

The cowboy really doesn't have a place in this day and age of professional sport or markets. Players are way too fit and every part of their game is looked at and tested to expose any edge the opposition can utilise. The question now is how on earth are things going to evolve in the next 10 years as the last 10? For sport or the markets … and is there a way to foresee this and be better for it, in knowledge or profit.



Isn't Flexionism part of human nature just like shouting from the rooftops to crave recognition when trade research and timing techniques pay off. People will always want to be the leading pack animal or drive the herd, under whatever or differing pretense . Does the way one speaks to his broker whether making money or not, under all market conditions tell the world really the type of person he intrisically is. Will we never be rid of the flexion, things are just more transparent now… and its just a itching parasite that begs to test us mentally…



 The bonds are down about 6 points in the last two weeks. Worse yet, those who bought at the auction a week ago, actually have a loss. There's a famous incident where a great cricketeer was up by 1 run, and then on the last pitch, he rolled the pitch to the batter instead of hurling it. The epithet "it's not cricket" is appropriate to the temporary loss that the flexions and colleagues at the bank have. One would imagine that the upside down man is persona non grata. But more important, who was the player that did the dastardly deed. One believes it was in the mid 70s the last time that the bonds discommoded the colleagues, but what was the team and the player?  

Can you top that? What is the most disgusting incident in the history of (the market) relative to Trevor Chappell rolling the ball you can recall in the market? Was it the mingling of funds without retribution by the Governor? Or the flash crash before the French Inside trading before Leeson announced? To me it was being blindsided by a high bid for bonds that I took from Michael Lewis's firm right before the flow of funds man announced his bullishness. What's yours? 

Update: A kind correspondent says it was Ian Chappell. Worse yet it was a game among the colonies, New Zealand vs. Australia. One can only analogize it to the IMF not being paid back first on account of a bad debt or a country in the EC defaulting on its debt. "It's not cricket". The rain in Brussels might preclude taking the mistress out for a fish dinner.  

Craig Mee writes: 


Ian would gasp at being associated with this (as well as most of the nation)… his equally talented brother Greg Captaino instructed the third brother Trevor to do the dastardly underarm deed to "prevent New Zealand scoring the sux they needed to tie"

wiki the "underarm bowling incident of 1981".

Anatoly Veltman writes: 

I'm afraid to say: buying a single lot of SP futures near October 16th, 1987 close. On that triple witching Friday, which followed the relentless two-week decline, the floor rumor had it that one Palindrome had accumulated an outsized long position (the whisper number I heard was over 10,000 lots). I traded Gold and Silver, which closed an hour and half before the SP. Feeling lucky from my metal profits, I decided to take my first plunge into stocks. I thought to myself: if a trading legend is compelled to accumulate that much into this close, then this must be an exceptional value. Still, the novelty of buying stocks and the discomfort of taking a Long position period, made me limit my experiment to a single lot.

Well, as history books will tell you — Black Monday's opening gap down was the largest in all of the preceding stock index futures history! And wouldn't you know it: a very rare opening signal developed by an exclusive research group of like-minded younger traders stared huge in my face that morning. The signal had three conditions, and that's why it would occur so rarely:

1. If a market dropped big into the close AND

2. If the sentiment survey diverged (I.e. went up) AND

3. If a market subsequently gapped down big against such bottom-picker sentiment

Then you must SHORT that gap-down opening!!!What made my one-lot Long the worst position I've ever taken in my trading career was that instead of executing this rare Shorting signal of mine on that Monday morning - I had to digest my damning stupidity of following somebody else's silly Long of Friday. Another younger trader, who was not burdened by any silly Long, did execute the Shorting signal and doubled his Short position once the SP opened down around 260.00 and proceeded to plunge lower. Lo'n' behold, that day ended up printing 190.00; and the younger trader has become the Robin Hood that the community admires today…

anonymous writes: 

I worked for the 'Robin Hood' you mention in your comment below for 3 years.

Although quantitative types such as I believe that he is an example of survivor bias I must say this — I have never witnessed such ferocity, focus and ability to cut losses with alacrity as I saw him demonstrate time after time. (In all fairness I was not fortunate enough to work alongside the Chair at NCZ back in the day….)

A genuine trading talent.

Anatoly Veltman replies: 

Yes, and therein another lesson: that the "survivor bias" is not entirely random. Were you part of that Liberty Plaza office that sported the sign: "Maximize size, minimize risk!"

That particular trade carried the trademark of the genius: nimble lightly to Short a potential bubble over 330.00; adding substantial Short that melted the 300.00 phantom support a month later; and finally doubling up below the 260.00 where the black hole of no bids guaranteed the break of 200.00 before the bell could save the day!



 I first saw the 'dead eyes' look of a poker player/loser when I was 13 or so. Still gives me restless nights and I know I cannot become that way.

My dad took me into the "stockman's bar" in Billings, Montana to impress upon me what degenerate, greedy people turn into.

Probably another sleepless tonight tormented by that devil.

Gary Rogan asks: 

What is the real difference between gambling and speculation (if you take drinking out of the equation)? Is it having a theory about the odds being better than even and avoiding ruin along the way?

Tim Melvin writes: 

I will leave the math side of that answer to those better qualified than I, but one real variable is the lifestyle and people with whom one associates. A speculator can choose his associates. If you have ever been a guest of the Chair you know he surrounds himself with intelligent cultured people from whom he can learn and whom he can teach. There is good music, old books, chess and fresh fruit. The same holds true for many specs I have been fortunate to know.

Contrast that to the casinos and racetracks where your companions out of necessity are drunks, desperates, pimps, thieves, shylocks, charlatans and tourists from the suburbs. Even if you found a way to beat the big, the world of a professional gambler just is not a pleasant place.

Gibbons Burke writes: 

 Here is something I posted here before on this distinction…

Being called a gambler shouldn't bother a speculator one iota. He is not a gambler; being so called merely establishes the ignorance of the caller. A gambler is one who willingly places his capital at risk in a game where the odds are ineluctably, mathematically or mechanically, set against the player by his counter-party, known as the 'house'. The house sets the odds to its own advantage, and, if, by some wrinkle of skill or fate the gambler wins consistently, the house will summarily eject him from the game as a cheat.

The payoff for gamblers is not necessarily the win, because they inevitably lose, but the play - the rush of the occasional win, the diversion, the community of like minded others. For some, it is a desire to dispose of money in a socially acceptable way without incurring the obligations and responsibilities incurred by giving the money away to others. For some, having some "skin in the game" increases their enjoyment of the event. Sadly, for many, the variable reward on a variable schedule is a form of operant conditioning which reinforces a compulsive addiction to the game.

That said, there are many 'gamblers' who are really speculators, because they participate in games where they develop real edges based on skill, or inside knowledge, and they are not booted for winning. I would include in this number blackjack counters who get away with it, or poker games, where the pot is returned to the players in full, minus a fee to the house for its hospitality*.

Speculators risk their capital in bets with other speculators in a marketplace. The odds are not foreordained by formula or design—for the most part the speculator is in full control of his own destiny, and takes full responsibility for the inevitable losses and misfortunes which he may incur. Speculators pay a 'vig' to the market; real work always involves friction. Someone must pay the light bill. However the market, unlike the casino, does not, often, kick him out of the game for winning, though others may attempt to adapt to or adopt his winning strategies, and the game may change over time requiring the speculator to suss out new rules and regimes.

That said, there are many who are engaged in the pursuit of speculative profits who, by their own lack of skill are really gambling; they are knowingly trading without an identifiable edge. Like gamblers, their utility function is not necessarily to based on growth of their capital. They willingly lose their capital for many reasons, among them: they enjoy the diversion of trading, or the society of other traders, or perhaps they have a psychological need to get rid of lucre obtained by disreputable means.

Reduced to the bare elements: Gamblers are willing losers who occasionally win; speculators are willing winners who occasionally lose.

There is no shame in being called a gambler, either, unless one has succumbed to the play as a compulsion which becomes a destructive vice. Gambling serves a worthwhile function in society: it provides an efficient means to separate valuable capital from those who have no desire to steward it into the hands of those who do, and it often provides the player excellent entertainment and fun in exchange. It's a fair and voluntary trade.

Kim Zussman writes:

One gambles that Ralph and/or Rocky will comment.

Leo Jia adds: 

From the perspective of entering trades, I wonder if one should think in this way:

speculators are willing losers who often win; gamblers are willing winners who often lose.

David Hillman adds: 

It is rare to find a successful drug lord who is also a junkie. 

Craig Mee writes: 

One possible definition might be "a gambler chases fast fixed returns based on luck, while a speculator has time on his side to let the market decide how much his edge is worth."

Bill Rafter comments: 

Perhaps the true Speculator — one who is on the front lines day after day — knows that to win big for his backers, he HAS to gamble. His only advantage is that he can choose when to play. 

 Anton Johnson writes: 

A speculator strives to be professional, honorable, intellectual, serious, analytical, calm, selective and focused.

Whereas the gambler is corrupt, distracted, moody, impulsive, excitable, desperate and superstitious.

Jeff Watson writes: 

I know quite a few gamblers who took their losses like men, gambled in a controlled (but net losing manner), paid their gambling debts before anything else, were first rate sports, family guys, and all around good characters. They just had a monkey on their back. One cannot paint with a broad brush because I have run into some sleazy speculators who make the degenerates that frequent the Jai-Alai Frontons, Dog Tracks, OTB's, etc look like choir boys. 

anonymous writes: 

Guys — this is serious, not platitudinous, and I can say it from having suffered the tragic outcomes of compulsive gambling of another — the difference between gambling and speculating is not the game, the company kept, the location, the desperation or the amounts. The only difference is that a gambler, when asked of his criterion, when asked why he is doing this, will respond with "To make money."

That's how a compulsive gambler responds.

Proper money management, at its foundation, requires the question of criteria be answered appropriately, and in doing so, a plan, a road map to achieving that criteria can be approached.

Anton Johnson writes: 

It's not the market that defines whether a participant is a Gambler or a Speculator, it's his behavior.

Gibbons Burke writes: 

That's the essence of my distinction:

"gamblers are willing losers who occasionally win"

That is, gamblers risk their capital on propositions where the odds are either:

- unknown to them
- cannot be known

- which actual experience has shown to have negative expectation
- or which they know with mathematical precision to be negative

They are rewarded for doing so on a random schedule and a random reward size, which is a pattern of stimulus-response which behavioral scientists have established as one which induces the subject to engage in the behavior the longest without a reward, and creates superstitious as well as compulsive behavior patterns. Because they have traded reason for emotion, they tend not to follow reasonable and disciplined approach to sizing their bets, and often over bet, leading to ruin.

"speculators are willing winners who occasionally lose." That is, speculators risk their capital on propositions where the odds are:

- known to have positive expectation, from (in increasing order of significance) theory, empirical testing, or actual trading experience

They occasionally get unlucky, and have losing streaks, but these players incorporate that risk into the determination of the expectation. Because their approach is reason-based rather than driven by emotion, they usually have disciplined programs for sizing their bets to get the maximum geometric growth of their capital given the characteristics of the return stream, their tolerance for drawdown.

If a player has positive expected value on a bet, then it is not a gamble at all. The house does not gamble. It builds positive expectation into its games. It is a willing winner, although it occasionally loses.

There are positive aspects of gambling, which I have pointed out earlier in the thread and won't belabor. To say that "all gambling is bad" is to take the narrowest view. Gamblers who are willing losers (by my definition all are) provide the opportunities for willing winners (i.e., speculators) to relieve gamblers of the burden of capital they clearly have no desire to hold onto, or are willing to trade in a fair exchange for the excitement of the play, to enable their alcoholic habit, to pass the time, to relieve their boredom, to indulge delusions of grandeur at the hoped-for big win, after which they will quit playing, or combinations of all of the above.

Duncan Coker writes: 

I found Trading & Exchanges by Larry Harris a good book on this topic and he defines all the participants in the exchanges and both gambler and speculators have a role to play. Here is something taken from page 6 that make sense to me: "Gamblers trade to entertain". Speculators to "trade to profit from information they have about future prices."

He divides speculators into those that are well informed versus those that are not. One profits at the expense of the other. Investors "use the markets to move money from the present into the future". Borrowers do the opposite.



 Has the DNA of the market been changed of late due to the type and nature of trading?

Has the molecular structure which provided the support in floor trading days been abolished with the whizz and bang of market maker's (never there when you need them but screaming that they're the life blood of the market) and DMA strategies that are quicker and more deceptive then a gypsy in Barcelona? Have the flash crashes of late provided the canary, signalling we are ill prepared for these new dynamics and any back-testing prior to 97 is null and void.

Smoke and mirrors, smoke and mirrors.



 It may pay to keep an eye on the Aussie dollar in the near/medium term as it appears things have been coming to a head. A recent article in the Sydney paper mentions 42 dollar fish and chips, and 10 dollar bottles of water being sold. Add this to project investment diminishing, commodity prices on the back burner, banking services employment in some sectors struggling, a government political landscape that possibly has been the worst ever, and further rate cuts on the agenda. The market has been in a yearly range of 1.02-1.06 and it looks like the lower end is about to be tested. The Titan may be now be tested.



It is good to know from the Blodget interview that 142 people including bank and public relations people get Fed releases 1 day in advance on an "embargoed basis". As Willie Sutton said when the Dodgers lost to the Giants, "makes you want to turn yourself in to headquarters". No wonder the market tends to go up the day before favorable employment releases et al.

Craig Mee writes: 

"Embargoed basis"… looks like the medicos do it too. So much room for shenanigans:

"In the case of a trial that I already know I probably want to cover, I will often ask the PR person if I can get access to the slides beforehand, and I assure them that I fully intend to respect the embargo. In most cases my request is turned down, for any number of good reasons: the company doesn't have the slides, the investigator is terrified of an embargo break, etc. But often enough the request works and I'm able to save a lot of time and effort during a busy meeting by preparing some of the work beforehand."

And from the tech stock crowd (from June 2011):

"And there's one more big problem with embargoes: newsmakers haven't been holding up their half of the bargain. Part of the gentlemen's agreement is that if a reporter or a news organization deliberately breaks an embargo, there will retribution. The company or PR firm whose embargo got flouted is supposed to exclude the offending reporter or organization from future embargo offers and pre-briefings. But I don't see that happening any more. TechCrunch, in particular, breaks embargoes with total impunity. Like codependent spouses, companies and their PR reps always seem to rationalize away the breach and go back to Arrington's crew with the next confidential story.

You can't fix the embargo system with more embargoes. It's time—for me, at least—to walk away from the whole bankrupt system."



 Okay, the 142 bank pres and public relations people have the minutes already to be released to public in 10 minutes. Bonds are up and stocks are down. Germany is getting killed. Which way will the release to the non-flexions affect bonds stocks and gold. I've been buying gold whenever it drops as I believe that the bank deposit confiscation has to be bullish for gold as are the trend followers short.

Anatoly Veltman writes: 

Rocky is patient at $1390, getting ready to pull trigger on test of $1320.

Victor Niederhoffer writes: 

Rocky a lot more astute than me perhaps because he has a bit of the idea that has the world in its grip in him from his days at the 'Bank' and his love of trend following. One passed their headquarters near the scene of the crime yesterday evening and it was replete with canine k9 4 footed operatives.

anonymous writes: 

One can imagine the scene:

Fed: Honey, I would love to be with you but we have to lay low a few days after the press got pictures of us together.

Banker responds: If that is the case, you and the D. C. boys have fun by yourselves. Give me the checkbook and I will go home to L.A. to shop. Call me when you decide you need the markets to go up again.

Rocky Humbert writes: 

For the record: I am flat gold. If Cyprus (or any other country) could cure their ills simply by selling gold, there would be no ills. My recollection is that the Korean housewives were selling their gold wedding bands to support the Won … during the 1997 financial crisis over there. Korean bonds were yielding 15% at the time. And I bought a few as an investment. That worked out ok. I am not buying the bonds of Cyprus, Greece or those other places. The wealth of a nation is in its land, its laws, and its work ethic. Everything else is a speculation.

Gary Rogan writes: 

"The wealth of a nation is in its land, its laws, and its work ethic."

Brilliant! I would add "respect for its just laws" to the list. May those who want to reward millions of those who broke the laws of this country by giving them the very object of their law-breaking and by making them a part of this nation give this some thought.

George Parkanyi writes: 

This is not scientific, but my feeling on gold is that given government interventions (manipulation is such a strong word) in markets these days, they can't exactly let that turn into a complete rout either. Fear is fear. Gold was supposed to be the haven of last resort. If people see that collapsing then there is the sense that there's nowhere to hide. The panic could transfer to other markets. It's not behaving as it "should" under the circumstances, which further calls into question in people's minds what the hell IS going on? And what is this action discounting - massive deflation? Governments sure want that idea to spread. This is one of the reasons I'm still holding fast to the core position - though I've taken stop-outs on portions. Not large enough portions to avoid a big hit. But it is what it is. The gold stocks are really getting creamed as well. Solid producers trading like penny stocks. Unless deflation IS ultimately our lot, I'm smelling blood in the streets (some of which is mine) and screaming bargains.

I think the odds are good for a sharp reversal rally. If things go really bad in other markets, that's where they'll be looking to cash out rather really pounded down precious metals. And gold is an international commodity - still highly valued in many cultures. This crowded-trade unwinding behaviour I think could reverse very quickly, very soon.

A commenter adds: 

Was the fall in Gold the result of some bigger thing that I am unaware of, and did someone smell a canary that has been dead for a few months and was the first to find out triggering the selling?

David Lilienfeld writes: 

Let's take a look at what's known:

1. Europe was weak going into 2013, but the dimensions of that weakness are becoming evident. The collapse of auto sales in the EU, the episode with the Cypriot banks (which I still don't understand why the Cypriot government didn't say, "Fine, Germany, we're leaving the euro, we have all these euros in our banks, our new exchange rate is X, and now you have a big mess on your hands, much as we do on ours; don't like that? Fund us!), the coming episode with Slovenia, followed by Spain, Italy (if it can figure out who is the government) and France. Then there's the farce previously known as DC. There's the leader of North Korea trying to demonstrate that there is testosterone flowing throughout his veins. The dimensions of many of these has become evident recently. The degree to which China is slowing down and the degree to which the US housing "recovery" might slow down have also started to clarify recently. I won't get into the potential for a repeat of a SARS-like outbreak in East Asia.

I don't think the canary's been dead for a few months as much as it had a massive stroke, followed by resuscitation from cardiac arrest a few times (OK, OK, it was many times), and it's now brain dead and being maintained by artificial life support, ie, it's dead but it doesn't know it. Or the canary's been dead for much longer than a few months.

There's a lot of bad stuff that's gone on the last few months, and the extent to which the market in the US is near its all-time highs is a wonderful gauge of nothing so much as the power of denial. How there could be as much complacency as there's been (a topic of recent interest on this list) is something I don't understand.

Craig Mee writes:

If you haven't noticed, the first stop for gold was the width of the consolidation. I bring you information on laying of track to take into account expansion and contraction. We must work out what size volatility or influences allows for temperature rises and falls.


1611. In laying track, provision must be made for expansion and contraction of the rails, due to changes of temperature. As the temperature rises the rail lengthens, and unless sufficient space is left between the ends of the rails to allow for the expansion, the ends of the rails abut one against another with such force as to cause the rails to kink or buckle, marring the appearance of the track and rendering it unsafe for trains, especially those running at high speeds. If, on the other hand, too much space is left between the rails, the contraction or shortening of the rails due to severe cold may do equally great harm by shearing off the bolts from the splice bars, leaving the joints loose and unprotected. The coefficient of expansion, i.e., the amount of the change in the length of an iron bar due to an increase or decrease of 1 degree F. is taken at .00000686 per degree per unit of length. 



 Before work I drink two double espressos. I wouldn't have the courage to leave the house otherwise and go to work. I just rely on jitters to move me uncontrollably and eventually I bounce out the door. An espresso around my house/work costs approximately $3.00. That's $6.00 a day. I drink these on weekends as well, so, that would be around $42 a week and there are two of us in the house. $84 a week. We go through around $10 beans per week. We also need to factor in cleaner for the machine, but I bought industrial bulk cleaner for $20…it'll last a year or two even with weekly double cleans. We also give others a coffee when they come around. I'll ignore that, however.

I bought the coffee machine for around $800 on special and it makes a very tasty cup. We've had it since late 2007. So, we've been drinking $4,368 per year for four years, so $17,472 for the life of the machine. Only $2,080 for the beans over four years. All up, I think we're ahead. There are power costs and so on, but, they're minor. We've probably saved, conservatively, around $13,000 in the last four years.

Here is a good article reviewing the best home coffee machines.

Jeff Watson writes:

I drink a lot of Cuban Coffee, which is espresso, and is very sweet. My pot cost $12 at Target and I've had mine for at least 15 years.

I buy Cafe Pilon which is priced at 4 bricks for $22 and that's a 2 month supply, figuring 4 cups a day.

It takes less than 5 minutes to knock out the coffee.

Dylan Distasio writes: 

My company recently eliminated the free Green Mountain brewed coffee as part of a bean counter initiative and switched over to Flavia packets which is a very poor substitute. I have been going downstairs to buy a large cup of coffee a day for $2.67 but am looking for a cheaper alternative.

I am about to order one of these aeropresses based on the reviews I've read of the device and the coffee it makes. It is essentially a gentle one cup espresso maker which can then be turned in a cup of Americano if desired simply by adding additional hot water.


 So I got my Aeropress and wanted to report back my coffee findings to the group. I am a huge fan of this device and believes it consistently brews a delicious cup of coffee quickly and easily. The only downside I see is that it can only brew one cup at a time. For me, this is a non-issue though since I am using it at work and not for a group. Even if I used it at home (I am considering getting a 2nd one for that purpose), my wife does not drink coffee. I have a Keurig I had bought for convenience at home in case I wanted a quick cup of joe on the weekends. There is no comparison between the two not surprisingly; the Aeropress blows the Keurig with its k-cups out of the water.

Just a little additional background on my coffee habits…I drink my coffee black with a few exceptions…I generally don't like SBUX brew. I am with the folks who call them Charbucks. I prefer McDonald's or Dunkin Donuts coffee, but will drink the SBUX Blonde or an Americano (espresso plus hot water) there under duress. I am not a coffee snob (at least not yet) so you will not be hearing me talk about brewing beans picked out of civet droppings or $1000 burr grinders.

I picked up a bag of whole bean Jamaican Blue Mountain coffee from Costco for my first brews with the Aeropress. I am using a burr grinder versus a bladed one but it is a relatively inexpensive Mr Coffee one I bought years ago when I was experimenting with a Braun Espresso maker. I am grinding relatively fine somewhere between espresso and french press.

Once the coffee is ground, it is a very quick, simple process to brew a tremendous cup of coffee. The Aeropress comes with a measuring scoop which I use to scoop around 2 - 3 scoopfuls into the device after placing a fresh filter disc at the bottom. I then pour relatively hot water obtained from the dreaded Flavia machine onto the grounds and stir with an included stirrer for approximately 30 seconds (they recommend 10 seconds). I then insert the plunger piece into the waiting grounds and with some elbow grease slowly press the coffee down through the filter leaving the grounds behind. After that, I add additional hot water to my coffee mug to craft an Americano. I have tasted it undiluted and it is also delicious. I'm not really sure it would replace an expensive espresso machine since it is not applying the same pressure, but for me, it is a nice cup of what the Aeropress folks call espresso.

Clean up is simple. You just unlock the piece that holds the filter in place, and plunge the grounds into the trash. After that, it's a breeze to rinse off.

One of these would also be great for travel and camping/backpacking. It is pretty small and easy to carry.

In case you didn't notice, I am sold on the Aeropress. I'd highly recommend checking it out if it sounds like a good fit for your purposes. I'm looking forward to experimenting with the grind settings and some different coffee beans in it.

Just to continue this discussion, does anyone have any whole bean coffee recommendations to try?

For those of you interested in debating how many angels can dance on a java bean, check out coffeegeek.com also. The minutiae available for coffee lovers there may blow your mind.



 Pulled into a local gas station or "servo" as we call it here in Australia…and a particularly chatty attendant told me (twice in as many visits) to fill up because the price was going up the next day… It never has. But he did shed one light, he said not many people are getting out for easter and filling up the cars, only 20 bucks here, 20 bucks there. If you could attach a measure on the pump, and see how many full "extractions" there are compared to how many small "tops up" there are…we might have a leading indicator of sorts, local specific. 



What inter markets are easier to drive to spoof speculators into thinking that something is about to happen in another market which is harder to manipulate…only since when the main market does follow, they can offload size and get the biggest bang for their buck.

Manipulate product to product.

Manipulate Asia time zone to set up a U.S reversal.

Flexions manipulate a figure release in order to drive the reversal, rather than being ahead of the curve?



In fx of late, particularly of dollar yen, it's like taking Mrs. Watanabe over the coals. One week of ok trading, with risk contained, ending in one weekend of 5x allocated risk blown out. Ouch. It's funny how most retail fx platforms open long after interbank market, with even fx futures on CME not opening until 10am Sydney, (and shut every morning for an hour from 9-10 am). What fun can be had by the men in grey to screw down the retail just a wee bit more.



 Have you ever had to deal with a stalker? It could just as easily be the Market Mistress.

And to understand the market mistress we must better understand each of the

Common Stalker Characteristics

   - Jealous
   - Manipulative
   - Narcissistic
   - Deceptive
   - Obsessive and compulsive
   - Falls instantly in love
   - Socially awkward or uncomfortable
   - Needs to be in control
   - Depends on others for sense of self
   - Unable to cope with rejection
   - Sense of entitlement (you owe me!)
   - Unable to take NO for an answer
   - Does not take responsibility for own feelings or actions.



 It's amazing how the general public, mostly low risk takers and even those who are relatively well off, will swoon around those that are perceived to be in another stratosphere in wealth, no matter their line of business.

Glamour and dreaming allows people to escape, and it would seem the swooning is some selfishness on the publics behalf, allowing them to ponder a life less worked.

It makes sense that the man devoting his life to others allows for a lot less interest unfortunately.

This human trait probably allows traders to gain an edge, as the public wash from one latest craze to another, and nobody likes the doormat, on its lows, going nowhere fast.



 The locals are ingrained to take on this sort of borrowing, to get a start and try to move ahead, at considerable vig.

But it's catch
twenty two for the banks. It's easy pickings early, but would they do better long term by easing the compatriots up the
ladder instead of putting grease on it?

For what markets in what locations is price determined by such ingrained processes by the national players?

"World’s Most Profitable Banks in Indonesia Double U.S. Returns":

Borrowers like Suryadi have helped make Indonesian lenders
the most profitable among the 20 biggest economies in the world,
according to data compiled by Bloomberg. The average return on equity, a
measure of how well shareholder money is reinvested, is 23 percent for
the country's five banks with a market value more than $5 billion, the
data show.



 1. Serena Williams was 1.01 at the table running into yesterdays match… she lost.

The fact that she injured her ankle earlier in the tournament and had played a two hour + doubles match with her sister the day before, may of been canaries for value betters for her protege.

What markets get hurt and then try to keep up, push even harder and spread their wings further, only to be exposed, their previous strength and formidable durability becoming more of a hindrance than a help in present decision making.

2. With the champions of tennis, like trees, having the ability to be flexible and be thinkers when it gets tight, you would think David "the Machine" Ferrer would be a good sell tonight, since a man of his absolute focus and steam engine mind set will struggle to ever win a major, as the versatility does not seem to be with him, although no one would want any other right hand man next to them when going over the trenches in the heat of battle.

The ability to take away risks and ease them back on when needed, massaging your position, in changing market conditions, need a similar flexible mindset to Novak. 



 Like a good trading system or profit and loss curve, a champion tennis player (or other great sportsperson), will have maximum allowance for upside, but any downside sees a fast reversion to the mean.

Down 15 -40 on their serve…. ACE ACE, = Deuce… Noticeable by its speed and brutality, they have the means to get back on top or at least equal footing quickly, with any edge that dissipates being quickly regained, or found elsewhere…fast.

Victor Niederhoffer writes: 

Craig's idea about a bull market quickly reversing any losses from tennis results must be tested in the market with numbers. How to define such an ability to bounce back quickly? And is it predictive.



Some may find ever changing cycles easier to comprehend from the comfort of their couch.

In life you crave different things at different times (just like you crave different things in your diet at different times). Some months it may be freedom and warm weather, other years a good bean bag and sitting by the fire with friends, family and dog. At times it seems the longer you're in one position, the more you wish for what you find appealing in the other.

Then should it be so surprising that markets do the same– they crave movement, they crave stability. One minute trend following, the next mean reversion.

What does science tell us about what percentage of the population is truly stable, and does this change with weather and geopolitical instability as it appears?



 I've watched a fair bit of the Aussie tennis open in week one, and it is amazing to watch the amount of drop shots that are getting played, with the net effect of approximately 30 played and 3 winning points against player 27 in the matches I've watched. Not good odds, some may say.

Is it that players are tired? And going for the easy out, or some 3 dimensional hiccup in the brain, which makes them think that it's a percentage play, with the opponent right down the far end of the court, even if it is rebound ace. Do they just want to mix up their game, knowing they will lose this point but provide unsurety in their opponent for the following points? Or is the RIO trade alive and well, i.e they just can't help themselves to go for the "get out of jail free" shot.

I'm not sure… I wish I knew the answer.

It seems unforced errors is possibly the most major stat to take interest in, along with 1st serve percentage. Winning, doesn't mean a great deal, if one has the same unforced errors, and in this day and age one needs a 70%+ 1st serve in, to give them some space.

If one doesn't following their trading plan suitably and manage risk appropriately, then winning a slam becomes a distant thought.

Victor Niederhoffer writes: 

The same thing about the drop shot being non-percentage could be said about the lob. Both become even more non-percentage as the game wears on. It's almost as bad as trying to take a few ticks out of them near the close of a market. The mouse with one hole is quickly taken. The one thing that could be said is that the weak players don't have coaches who count. And the hard surface makes drop shots even less effective than usual. But of course, it does tire the opponent out, and set him up for when you need a point. And of course it is like the penguins jumping into the whale first in social learning, as the one shot that you hit with non-percentage makes the vast majority of your " colleagues" , the subsequent shots, that much more effective.

Jim Lackey writes: 

 One that knows nothing about racquets, sees something similar in dirt bikes. We take the extreme inside line in a tight corner vs. the outside berm rim shot, it's much faster. It's about the line or exit of the corner. If you dive bomb on the inside you can cut off the exit of your opponent. This forces him to either take an inside line or a tighter line on the outside, thus slowing him down.

The wear out your opponent is a funny thing. Everyone that does count knows every single move and limit of the other riders… If towards the end of a race I know a guy gets "arm pump", which is literally your forearms swell up and it's hard to hand on the bikes, we use or force those boys to inside. One needs to stand on the brakes very hard to take the inside line. When you have arm pump it's very difficult to let go of throttle and put a couple fingers on the front brake to slam on. I'll put it another way… like tennis looks, it seems much easier to stand back in one box and hit it as hard as you can when you're exhausted vs. running around and using your touch. Same with MX. It's so much easier to stand on the gas and take the outside and go as fast as you can vs modulate.

I am doing BMX now here, it's a short 400 meter spring and to pedal. It's similar but a different training sport, but the counting goes on. I made a comment off the cuff to a 14 year old expert about changing a gear ratio 0.1-T or we use decimal gearing since it's single speed bikes. IT pinch ratio you can have the same gear ratio in a chart book. IE 41-18 X 24" circumference tire. At the big races towards end of day I would lose power. So I'd go down to a 40.9-t custom gear. It's still a 41T sprocket but the circumference of the gear is small, so it's a lower ration shorter roll out IE I crank revolution 2.277 vs. a 2.72222. t changes it just a tick and its enough to help.

Our friend, an MIT grad and racer, picked up on our questions to why the same gears felt a tick different on other bikes and he'd always say, "it's not same ratio," it's tire diameter or pinch in gear brands. So he invented a new business. Guys ask me if it works and I burst out laughing. I been doing that for 30 years. (Yet dad didn't have CNC machine so we have to mess with combinations IE got from 41-18 to 36-16 but we measured and charted ever, single combination on every race every track every time.)

Bottom line for MX, BMX, or any other sport. I never ran a 4.5 40' and can't run under a 22 minute 5k so I was always stuck in the middle and never a great athlete. The only reason I ever won a national event racing was counting, everything. Yet in baseball or the A pro level of all racing… "everyone does that".

Anatoly Veltman writes: 

Drop shots are akin to those who try to "provide liquidity" against an Elliott Wave impulse (offering against the third wave, or early on against the fifth).

Jeff Watson writes: 

 Just exactly what is an Elliott wave???? Has anyone ever seen one, or do they only exist in hindsight?



 New Years eve brought the biggest best waves of the year to Kona. In the morning it was triple over head, clear blue sky, perfect shape, completely glass on the water without a breath of wind, and only a handful of friends out. It doesn't get any better. That afternoon the waves got even bigger. Just before I went out a huge wave cleaned out the entire line up and washed people on to the rocks. They got out with white faces and minor injuries. I had a perfect day where I did not fall once, did not get caught inside and caught each wave perfectly and rode it to the end. All in all a very rare day, one to remember for a lifetime.

Lack recently wrote about not making any errors. My son used to play Mortal Kombat video game as a kid and when he beat the opponent without suffering a single injury it was a perfect fight. It's the kind of day when you enter perfectly at the bottom tick and your bid is taken in size, and it immediately starts up, you ride it all the way and exit right at the top. For some reason it's not the kind of thing you can do at will, nor does it happen all the time. I had been training so felt strong, and there had been waves for the prior two weeks. Mentally I felt good. I wish I knew the secret to achieving such good results with more consistency.

Jeff Watson comments:

The key sentences, "I had been training, so felt strong, and there had been waves for the prior two weeks. Mentally I felt good. I wish I knew the secret to achieving such good results with more consistency."

Well played Sogi San. And you answered your own question.

Meanwhile our waves have been thigh to waist high and the SUP has been getting the workout, not my 9'6" or fish or any other board in between. It's really a drag living on the pond of the Gulf of Mexico.

Craig Mee writes:

Sounds great Jim, good job indeed.

Having a consistent plan before you paddled out, and it seems conditions were relatively steady, probably allowed for a strong take off with commitment each time. Finally, as you felt comfortable, you were probably more likely to squeeze each wave for everything it was worth. Your day, your market, your result– excellent.



 Maybe the most appropriate phrase to mention when talking about markets (over the last 15 years at a minimum) is "Time heals all wounds".

From the Asian crisis to long term capital to Y2k to Sept 11th to 08…it seemed every one was going to be the last…and the end of the world. (I remember sitting at the desk in London, as some one came through the headset in the midst of the '08 panic shouting, no cash in any ATM in the square mile). Rumours or truth, who knows, but panic it was.

How many fortunes were put on hold, as economists and managers argued the toss, how this would be it, and it was difficult not to get involved while struggling to believe that all would be well. How many talking heads said they were was absolutely right, (but took 3 years and 20% rally in the meantime that they let slip before they got thier reward). How many smart men have also under performed due to this (Hussman is in the back of my thoughts, obviously many more).

It now appears the Euro currency is looking sweet as a nut, and all is in order.

I don't know if the cheese can continue to be plugged, but it looks like it certainly has paid to bet that way (while those holding a few short end rate futures in the top pocket from the outset seem to have done well to boot).

Maybe those that have seen this from the 60s and 70s caught on early, and saw every problem for what it was… opportunity… the Cane's hobbling down to Wall Street as the chair mentions.

As many of you have pointed out, with so many now with a vested interest to keep this robot, underpinned, possibly it will continue to surprise as dips kick in into the future.



 Driving a motor car or motor bike is probably the best analogy I can think of for trading.

Start, Stop, traffic lights, dogs and cats on the road, cows, give way signs, t intersections, signs saying "kangaroos for next 50 kilometres ahead–and that is just in the first few 100 metres of leaving home– and then when you hit the express way, and consider yourself in the clear, there may be road works, or fog, and unsighted hazards ahead.

It's very rare you can enter an express way…of start to finish, or finish a journey uninterrupted.

It is our jobs as traders to close down all risks as they appear, in whatever form, to cause minimal bumps and bruises to ourselves. Problematic situations will appear when you expect OR when you least expect them, and when you do get uninterrupted runs, you appreciate them, since it is what you have planned for, but see less often than one may hope for.

Be flexible, bend like the tree, always give way when on the road, and when you hear the sirens move top the left and beware of trouble ahead.

Peter Tep writes: 

"Be like water" - Bruce Lee

Nice post Craig. I liken trading to Bruce's Jeet June Do methodology– using all the skills we have to move forward and strike the opponent down.

What worked yesterday may not work tomorrow. Especially with the presence of HFT, SMSF, central bank presence.

Chris Tucker adds: 

If one were to "always give way when on the road" in NYC, one would never get anywhere. Cabbies will eat you alive if you let them, they will try to force their way in front of you and then look at you as if you are a criminal when you fail to yield.

Yes, always giving way is a much less stressful way to navigate, but there is no victory in it!

Jeff Sasmor writes: 

Depends on how aggressive you want to be and what sort of car you are driving. If you are driving a beat up car and honk and go, they give way. I speak from personal experience on both sides of that transaction.

Jim Lackey adds:

Look where you want to go. Do not look where you don't want to end up. In a slide, if you look at the wall, you'll run right into it. If you look ahead down the race track it's amazing, you'll auto steer and correct your way out of the spin. In a crash, hold on, and do your best not to get hurt and head for the pits for repairs.

Last night during the 200 MI trip from the hill outside of Birmingham, AL, the transmission cooler lines on my BMX van broke. It must have been a sight as trans fluid was all over the engine trans and back of van in a cloud of smoke. Good thing we didn't have a fire. You know what I did? I eased it back to the pits. I exited, dumped some fluid into the trans and made it home. This AM all fixed.

I froze my tail off shooting weapons for 12 hours in the Bama country with my Sisters family. They have more weapons than anyone I know. My son did the walk balk with the AK-47 and I burst out laughing as another teenager was taking some hot brass as they ejected from the chamber. I told the kid to move. Good fun safe day. I can still hit a 300 meter tager with a .22 rifle 2nd shot after 20 years of no practice. Okay, it wasn't 300, but simulated as a 4" target X meters away…bing…

My nephew made the comment, all these weapons are so easy to use it's ridiculous. Yeah, that is how and why there are 10 year olds in the militia in Africa. The only reason I shot at all was the current news flow. I really have no interest in firearms. After shooting the 150MM main gun and killing tanks at 4,000 meters on the move, with F-15's as cover and the Apache on my 6 and MLRS destroying 1k by 1k boxes at a time… real war is reprehensible. All the arm chair warriors really need to tone it down a bit. The only comment I agree in the past 4 weeks of talk was Professor Stefan with his Bellini. If you want to put on the show of defense, that is the smartest idea I have ever read. Those shot guns are world class and perhaps I'd buy it from him. I own no weapons.

I am still thawing out after 13 hours outdoors then the 3 hour drive home then the work this am. My water heaters theromcouple died.. Lowes and HD are useless! Ugh, Ace hardware has all the parts they are amazing, but after inspection my buy American just bit me… Standard brands, made here in TN, has a special thermocouple. I asked the local heater man if he'd be kind enough to drop one off in my mailbox. He said sure, but the clerks said they have to charge me 69 bucks for the Sunday trip. I can wait a day. The part is 14.99. I can do it myself. It's already apart.

I am a man. The ladies must have hot water now. Ill sacrifice my McDonalds budget for Jan and have my man stop by. Perhaps he will find another problem as well.

Back to Carz racing and trading… it's not the one big edge that makes a champion…it's the 10,000 little things all done perfect that adds up to a big edge. The biggest edge of all is the drift over 100 years. After two crashes and a dozen panics the past 12 years, I find it hard to believe that buying every panic with prudence over the next decade will not produce a fine profit. 



 I found this article about the nocebo effect quite interesting on a number of fronts. It made me think about religion and applications to trading, as well as what sort of trader you are and what you may be affected by. There may be a scientific basis as to why you should turn off the tv and not read any one's views of what you're looking to invest in:

"Most experienced the placebo effect and their pain decreased. But to
the doctors astonishment, 15 per cent got worse… They suffered the
nocebo effect."

"I think if you are told something from someone who has the authority, whether it's a witch doctor or physician and you take that in, then I think your entire physiology starts to play around with that belief."

I think about people's susceptibility to salesmen and how salesmen often risk being prosecuted for losing investments simply due to an individual's biological make up.



 I have a question for Jeff Watson and Jim Sogi, our two surfing experts. Do you think Kelly Slater been able to dominate surfing for the last decade plus partly due to the conditions in surfing being so variable…so nobody gets "set" ? Not to diminish his obvious ability to take new younger opponents and their fresh techniques apart piece by piece…

I am reminded of this article I recently read from the world of cricket… Michael Vaughan (England) was commenting on when Sachin (India) (arguably, or maybe not, the second best ever batsmen in the world) should retire:

"Sachin could still eke out a few runs for another 12 months but he is not batting at the levels he used to. Look at the way he was out in the second innings in Kolkata. It was a good ball from Graeme Swann but he was just prodding at it.

He got 76 in the first innings but the man at the crease was not the Sachin Tendulkar I know. He was not playing the free-flowing way we have loved down the years. He is having to think and really work out where he can score every single run but in the past it came naturally."

… once you have a solid start, the middle order feels more comfortable and is coming in with the game already set up."

Jeff Watson replies: 

Slater is smart, is a complete waterman, and a great competitor who knows how to win. Pro surfing contests are a game, and Slater plays it better than anyone. That being said, he is an animal, a freak of nature, a surfer like one has ever seen before (and we might never see one like him again). Slater is arguably the best surfer in any and all conditions, from the slop in New Jersey to big gnarly Teahupoo in Tahiti. Slater has that uncanny ability to predict what the wave is going to do just like the best chess grandmasters are able to look 10 moves into the future.

I don't know of any other athlete in any other sport that has dominated like Kelly and been the best in the world with a 22 year run. It simply has never happened before, so there's no data to compare it too. Furthermore, whenever the naysayers say Slater has lost his mojo, he wins another title…..and the naysayers have been saying this since 1996-1998……One could argue they thought he lost it in 1991 when he was on the TV series Baywatch, and was dating Pamela Anderson . And I think that was around 10 titles ago. 

Jim Sogi adds:

Kelly was the youngest world champ and is now the oldest. He is in phenomenal shape and has muscles on his muscles in his calves. He trains constantly and scientifically down to what he eats. He has a fierce and competitive attitude. The mental part is probably the biggest factor. Many younger guys have athletic ability or gifts, but the road around the world to the competitions is tough. Kelly cherry picks the contests to which he is seeded, so doesn't have to work his way up or qualify, saving him valuable mental and physical energy. He can travel with style. He loves what he does, and this is the most important thing.

Craig Mee says:

Thanks for your thoughts gentlemen. And now a few words from Slater himself while at this years concluding event where a few points separated Slater and another world championship):

"Slater played guitar and sang at a concert at the Turtle Bay Resort while the event went on hold this week. Golf has been high on the agenda. The stress does not appear to be killing him.

'We've had enough time to think about it,' he said.

'We're trying to put it out of our heads as much as possible because when you're out in the water, if you're thinking about a world title, it's taking away from what you need your mind to be on.

It's Pipe. You have to be on your toes. Which way are the waves going? Do you have to paddle deep? How's the lineup look? How far in on the reef are you? How big is this set going to be? Where's the guy you're surfing against?

'You have to be clear-minded enough to make good decisions every time there's a peak coming at you.

'There's enough to think about in the present moment without worrying too much about the bigger picture.'



 "Senior Cherishes Australian Open Win":

The 53-year-old Peter Senior overcame galeforce winds and a three-hour delay at the windswept Lakes course to become golf's oldest Australian Open champion.

'God, golf is such a funny game. One minute you think you're down, the next minute you're up.

'I didn't play particularly well this week, but I got it up and down out of some places all week and today was no exception.'

Sounds like something else I know…. the old boy holding his nerve (and assessing the situation and his options at each exact time to the best of his abilities, I'm sure), when he needed it most… and took all his tools out of the box… 



I may say that this is the greatest factor—the way in which the expedition is equipped—the way in which every difficulty is foreseen, and precautions taken for meeting or avoiding it. Victory awaits him who has everything in order — luck, people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck.

— from The South Pole, by Roald Amundsen"



 Going to the chemist, known locally as the Apotik, down here in Indonesia, normally located in tourist areas, there are two or three relatively attractive girls who man the doors and ask you what you need as you enter. This puts them right between you and where you want to go, which is the pharmacist at the counter at the back of the shop. So you answer politely you have a cold, or whatever may be the case, and the girls walk you over to the most expensive "solution or non solution" to your problem there is in the shop. Finally if you can duck and weave by this interruption and  get to the counter, there are pill strips you can buy for normally 3-4 dollars to solve the problem though it pays to google your need first and present the "pharmacist" with your drug of choice.

If the girls nail you at the front of the shop, (as they would many tourists, thinking they were being well advised, not used to what is available in country) the products they flog you are marked up sufficiently that the pharmacist doesn't care what you buy since they still get a cut, and the girls, no doubt on commission only, get a hefty slice of the action, so all are happy.

Sounds like some investment banks around town….

No doubt, also, it may be similar to some execution tricks played by some , that guide you, on the other side, in the wrong direction, due to your need to get a fill quickly (due to health reasons:-) only to find out with a bit more effort and patience and knowing what you need, you could of saved much money.



 Whether it's politicians or bankers or previously highly regarded journalism i.e the BBC, it seems no amount of cutting sacrificial heads will vary the course of the ship. The culture has changed, and whether it's due to changes in morals, etiquette, the transfer of private to public companies, or an attitude of extreme competitiveness, I'm not sure. Listening to an interview I believe on the BBC the other day, they mentioned something they could have been sued for, and said something like, "yes we overstepped the mark yadda yadda", all the while staying very business like…. The interview finished with the memorable last line of "we got away with it!", which showed their true colors of course.

I don't have an answer, but I know that the BBC has been inviting problems for years in its transfer from high end to mass appeal, and as one paper editor mentioned recently in West Australia, words to the effect of "after all the masses are not that bright", they want more goss than substance….maybe that is the conundrum across the board.

Market wise…well…the need of most to think about themselves first and foremost, especially in times of chaos, will always provide the cane swinger with opportunities.

Richard Owen writes:

Like so many things perceived to be a linear spectrum (eg. left wing / right wing), at the extremes it bends round in a circle. In an attempt to achieve equality of opportunity, the world is now bending round to extreme disparity from that.

If you allow people access on a meritocratic basis, you need measurement. But all reasonable measurement systems exceed the patience of the professionals concerned.

It is everywhere, from employee measurement systems within General Electric a-la Jack Welch; political voting structures; the index measurement of asset classes. The aspiring middle class has become subject to as much whipsaw as Ed Seykota's SPU contracts.

In politics, you have 10 year duration policy being set in response to sentiment on 2 hour rotation news bulletins. Churchill used to read and paint in the afternoons to give him perspective during the war — can you come close to imagining that for a PM now?

This means the well held canes of family capitalism are stronger than ever.

Add in the fact that branded education and prime property is on the way to being repriced only for that family elite, and you have something quite pernicious in effect. If you look at where Hittlerite Germany really took off, the legitimacy came not through working class populism, but when the aspiring middle class goat soaked by currency default. It's when the 80-95-%tile (who have worked their asses off to always get grade B+) get their hands slapped down that things get really ugly. They are smart enough to create real havoc.

And I think what Craig points out is another symptom of this development.

Anton Johnson writes:

It is human robustness that is undergoing what could be termed reverse-evolution. Numerous historically attenuated genes, ranging from those coding for hemophilia to astigmatism, are now proliferating. Consequently, as a species, we may well morph into that frail, technology dependent brain-vessel depicted in the advanced alien species of science-fiction.



An article excerpt is talking about the lawyers' argument on an unsolved persons case. I find it interesting from a position of how to quantify a tradeable market.

"Mr Evenden admitted police had uncovered some inconsistencies in the evidence, but he told the Deputy State Coroner Sharon Freund this was not enough to prove the family was involved in a ''cover-up''.

''Some of them provide a basis for suspicion - but even if one put them all together, they don't raise that suspicion above speculation,'' Mr Evenden said.

I'm wondering, what allows suspicion to be raised above speculation and beyond reasonable doubt?



It seems in the market there are times when participants come into the auction and in doing so present worthwhile opportunities for more astute traders. Maybe this is after lunch, after a big ball game, after a holiday period, and the market has whipped around somewhat over this time period. Traders watching the screens through this period will see a market totally different to the johnnie come latelies. They will have seen the mine/ yours already played out and a market potentially in equilibrium. The latecomer will see a market which needs to be stopped out of, leveraged up on, faded…you name it, an interpretation will be there, due to a lack of "vibratory sense". (new term)

This presents an opportunity to trade value for the astute cane toting old timer, who will quite happily make a market for the new flow.

John·ny-come-late·lies or John·nies-come-late·ly (jnz-) Informal

1)A newcomer or latecomer, especially a recent adherent to a cause or trend.

2)a brash newcomer, novice, or recruiit



 Should you find yourself in need of a kite for kite flying this weekend, I highly recommend a foil kite over traditional framed kites. A foil kite has a stitched honey comb design which inflates expanding the canvass to catch wind. They require no cross bars or frame. They are lighter, pack much smaller, require less wind to fly and can be stored in a backpack to be near when the kiting urge takes over. Premier is a good brand. Find a field, some wind, a small child, or child-like mood and enjoy the day.

Jeff Watson writes: 

I fly a lot of kites and use this purveyor Into the Wind. They have my good seal of housekeeping. 

Craig Mee adds:

The Tao of Kiteflying: the dynamics of the tethered flight by Harm van Veenmuch is quite a good little book with a great foreword: "dedicated to all those who have not yet unlearned their sense of wonder about reality in general and the phenomena of kites in particular". 

Easy enjoyment and also market lessons for all.



 The below article which talks about Australian cricket spin bowlers and gives advice from an ex world best to keep it simple, brings up certain good points in trading about focusing on what comes naturally first and foremost. Get that right and the numbers will play out, (as soon as you dilute the edge and get too fancy with new things that you haven't crunched the numbers on, your performance will suffer.)

"Warne's Back to Basics Approach": 

"The emergence of so-called mystery spinners such as Saeed Ajmal, Sunil Narine and Ajantha Mendis has ignited debate about coaching methods, after Muttiah Muralitharan said Australian spinners had the creativity beaten out of them by perfectionist coaches early in their careers. But Warne takes a different view, cautioning against teaching young spinners to push the boundaries of legal actions. He believes Lyon will be best served with his stock ball.

''Graeme Swann does OK, he bowls an off-break and a straight one. So I think Nathan Lyon has done very well, too, and if he can just concentrate on his off-break and the straight one, I'm sure he will be fine,'' the Melbourne Stars captain said. ''Don't try too much stuff, just bowl well, and over a period of time you'll have better games than not. We're traditional [in Australia]. If someone comes along who is unique you'll embrace it and encourage it but you're not going to go and teach doosras and all those sorts of things.''



 I have been wondering, is there any strategy for slots? I know there is a lot of strategy for blackjack and other casino games that is applicable to trading but I've never really read about/considered slots. My quick online searches returned nothing very scientific. I assume slots have a routine (low) payout ratio. I wonder how random the results are (the conspiracy theorist in me is highly skeptical, especially of video slots).

It seems the time to play would be after a string of losses as the payouts do need to come. Sort of like counting in blackjack, you could watch other players on machines, wait for them to lose a lot and potentially assume the odds were going up. It also seems (much like old horse racers) the best recipe would be to bet a consistent amount. Watching players I see bet sizes swinging all over and a lot of loss. Usually it is bet big, lose, reduce size, win, up size, lose, repeat until broke.

Bets could vary but only as a constant function of capital (I.e. 1 with 10 in capital, 2 with 20, etc). This would be subject to casino limits but would probably beat changing size due to martingale risk. I also figure different machines would have different odds. Best to play the machines with the highest odds. The scratch lotto for example publishes the odds of their games in ny, I imagine one could find similar publications with slot odds.

Next I wonder how stop losses could be tied in. Would it be best to use a set number of losses to move to the next machine. When playing with house money should you let it ride or use a rolling stop. Rolling stop sounds better. Also if you had a big win it stands to reason that machine was not going to be paying out big soon so you should cash in and move on.

This all may be virtually impossible too unless there were teams working in shifts (people have to sleep) but casinos don't.

Welcome any thoughts or ideas. I know slots aren't sexy like table games but the anonymity and lack of fellow players makes them fun at times (but it would be more fun to walk away up money).

Will Weaver writes: 

If slots are random they don't have a 'quota' of payouts… and as in flipping a coin, every iteration holds the same probability. So there shouldn't be any advantage. But I know nothing about the machines other than they probably are not completely random, though closer than would generate an edge.

Sam Marx writes: 

If they are electronic slots, I believe they use some sort of random number generator. So I've had the theory that if there was some way to determine the formula used, then they might be beaten.

Craig Mee writes: 

Watching the payout numbers on a screen a long time ago when a technician was working on one– this was a poker slot– showed the payout to be approx 80% before double up, and after double up it went down to the low 60% if memory serves me correctly. When playing I took the strategy of banking all my small wins due to this, and doubled up on any large wins i.e 4 of a kind and the like. From there I would work a stop at flat after doubling the stake (if I won my doubles) and then a trailing 20% stop of total win one tripled my initial stake. It seems to let you have a plan, and walk away, rather than the guy next to you, tipping money into that feeder all night. If you must play, then having a plan of attack is the most important aspect, so you bank or your stop goes off …quickly…and you're out of there. 

Jeff Watson writes:

There s one great slot strategy that hasn't been touched on. The best way to win at slots is to not play at all. Even the places that offer 98% payouts. What they are really saying is that for every $100 you feed through the machine, you will get 98 dollars back. The vig is too tough for me, or any other sensible person, for that matter. One has noticed that the really easiest games of chance usually have the highest vig. Things like wheel of fortune, chuck-a-luck, slots, and keno all have outrageous vig and should be played by no one. Save your money and go to a great show.

Pitt T. Maner III writes: 

 Along the lines of the slots thread, here is some info about roulette strategy:

1) Under normal conditions, according to the researchers, the anticipated return on a random roulette bet is -2.7 percent. By applying their calculations to a casino-grade roulette wheel and using a simple clicker device, the researchers were able to achieve an average return of 18 percent, well above what would be expected from a random bet.

Read more

2) "There have been several popular reports of various groups exploiting the deterministic nature of the game of roulette for profit. Moreover, through its history the inherent determinism in the game of roulette has attracted the attention of many luminaries of chaos theory. In this paper we provide a short review of that history and then set out to determine to what extent that determinism can really be exploited for profit."

full article here.

Chris Cooper writes:

The most obvious and effective countermeasure is to disallow betting after the ball is released. The casinos allow betting after release because customers like it, but if they have any doubt it is a simple matter to change that practice.

Secondly, Thorp's original work (and mine) were based on finding wheels which were not quite level. After he hit a few casinos successfully, he found that the number of out-of-level wheels decreased. The paper cited in the original post details an approach for level wheels, but notes that more accurate timing is required.

Plus eV roulette did make it to book form, if not the front pages, by a group from Santa Cruz. More recently, a Hungarian was purportedly successful to the tune of over one million. My paper many years ago is lost to the ages, but in any case you can learn much more by reading the paper cited in Mr. Maner's post.



 I thought it would be fun to see who we can find at the top of any sport (or interest) that we have been involved in, who can teach us a lesson or 10.

Maybe this interview could be of some interest. It's Kelly Slater, talking about a few things, unfiltered. One highlight for me was his refreshing insistence on not selling out and going corporate…

Jeff Watson writes: 

When Slater was young, he took a year off the tour to star in the TV show, "Baywatch" with Pamela Anderson. The big guys on the tour at that time, Curren, Andino, Occy, Potter, et al all busted his chops for being a corporate sellout. Then when he did his album, "The Surfers" with Machado and Peter King, people called him a sellout. His big 7 figure yearly sponsorship, Kelly INC,….people call him a corporate sell out. His 30-40 movie appearances, the naysayers call him a sellout.

Personally, I like what they call "Sellouts." It shows that the individual is engaging in selfish behavior and that's a good thing.

Meanwhile, while they are calling him a sell out, 40 year old Slater has been steadily competing and holding his own. He's the reigning champion, and is competing and beating guys that weren't even born when he started on the tour.

If one weighs things on the balance of life, Slater has contributed so much.

Similarly, punk rocker Johnny Rotten of the infamous punk band The Sex Pistols, is under fire for doing TV commercials selling butter in the UK. The social media in the UK is abuzz with all of this, with most comments being highly critical and negative towards the ex-punker. To Mr Rotten, I say "Bravo." A man has to pay the bills sometime.



 I have wondered and hoped that he might be innocent from day 1 because I have seen hundreds of horse play things between kids and athletes when I was in my squash career and head of the association. I have not read the trial transcript however, but can only guess what the incentives to create damaging allegations are for the "victims".

URGENT: Sandusky Professes Innocence, Vows to Fight

2012-10-09 11:47:41.661 GMT

By MARK SCOLFORO Bellefonte, Pa. (AP)

Jerry Sandusky says he's innocent and vows to keep fighting in a recorded statement broadcast by a student-run radio station at Penn State. The statement was aired Monday, a day before the former assistant football coach was scheduled to be sentenced on 45 counts of child sexual abuse. One of his lawyers says he would stake his life on the legitimacy of the statement. In it, Sandusky says that in his heart, he knows he didn't do what he calls "these alleged disgusting acts." He says he's the victim of Penn State, investigators, civil attorneys, the media and others. Mike Fliegelman, student general manager of Penn State Com Radio, says the statement was recorded at the county jail in Bellefonte. Defense attorney Karl Rominger initially said he wasn't aware of the recording. Early Tuesday he confirmed to The Associated Press that it was authentic.

Craig Mee writes: 

Perhaps you are being "gaslighted".

Like 50s murderess, Barbara Graham whose last words ("good people are always so sure they're right") set off a firestorm of doubt in the public's mind about her guilt and inspired the film Gaslight with Ingrid Bergman, we now have our sociopath molester throwing in doubt at the last opportunity before his sentencing with all the urgency and fervor that happens when sociopaths are caught at their own game.

I recommend you read The Sociopath Next Door by Barbara Strout. There is some value in knowing the mindset of these types of people, supposedly 4% of the population. Sociopaths are people without the burden or restraint of a conscience. And the book dovetails into your other post about battle fatigue, where the conscience of the soldier is being forced into repression and then when his buddy is killed a straw breaks and either he lashes out at the enemy in a heroic or dangerous act or he points his emotion inwardly and commits suicidal types of behavior. I agree, financial markets are similar to war sometimes.

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