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.
Over the weekend I did a bit of research into that perennial question: inflation or deflation? That let me to look more closely at velocity of money. Depending on how you measure it (M1, M2, MZM), it seems that velocity of money has been declining pretty steadily since ~2008 (M1), ~1996 (M2), or ~1981 (MZM):
If (and I do say if) those trends continue, one could argue that deflation is in our future. (The third graph there looks an awful lot like the Japanese experience since ~1991…)
Has anyone here done more detailed research on velocity of money?
Orwell's contribution to the fight against totalitarianism can't be overstated. He's by far my favorite socialist — one of the ones that thinks more realistically. I especially like the Essays. Here is a random bit of sense:
If one harbours anywhere in one's mind a nationalistic loyalty or hatred, certain facts, although in a sense known to be true, are inadmissible. Here are just a few examples. I list below five types of nationalist, and against each I append a fact which it is impossible for that type of nationalist to accept, even in his secret thoughts:
BRITISH TORY: Britain will come out of this war with reduced power and prestige.
COMMUNIST: If she had not been aided by Britain and America, Russia would have been defeated by Germany.
IRISH NATIONALIST: Eire can only remain independent because of British protection.
TROTSKYIST: The Stalin regime is accepted by the Russian masses.
PACIFIST: Those who 'abjure' violence can only do so because others are committing violence on their behalf.
1. Evolutionary Dynamics by Martin Nowak
Wherever information replicates, wherever there is life or culture, whether in the fields of stocks, language, viruses, cancers, HIV, infections, rumors, games, there is evolution. Evolutionary Dyamics is a masterful book, the kind that you will wish to read 5 or 10 times that gives you a foundation for studying the processes involved, and then applies it to all the fields. I can't recommend the book too highly.
It starts with a discussion of how simple models can lead to extraordinarily complex behavior. The discussion of finite difference equations and how the basic equation X(t+1 ) = X(t)(1-X(t) * A can lead to all the paths that you have ever seen or imagined with time series in your life.
A discussion of the basic mathematics of how an error in replication, a mutation, can change the dynamics and lead to all sorts of ultimate outcomes from coexistence, to complete exclusion to survival of the first is also a point of departure for all topics covered.
Each chapter applies the basics to a new field. The fields covered include cancer, language, epidemics, viruses, HIV. The chapter starts with a discussion of a basic dynamic equation, how it relates to the foundation laid in previous relative to growth rates, carrying capacities, feedback effects, and equilibrias. Diagrams illustrate the main points. And summaries at the end of each chapter contain a nice review of all the main points.
The book uses differential equations as the basic building block for illuminating all the applied fields covered. A knowledge of the basic solutions is helpful. However, the layman without that training can get the gist, and with a pencil and paper, and review of each chapter can find himself marveling about how much fuzzy thinking in the field is clarified by precise counting and tracing.
If there is one suggestion I have for the book, it would have been to use difference equations more than just once or twice to illustrate the topics covered rather than using the closed form mathematical solution. It also would have been nice to see how the computer friendly reader or researcher might have simulated the conclusions and principles reached. Applications to economics would also have been appreciated.
I can't recommend the book too highly. It's set in easy to read type. And it has a great discussion of the history and development of each field in it. I intend to read it over and over as a lynchpin for understanding modern biology, disease, and meme transmission. Darwin and Galton would both have expressed keen appreciation and amazement at the clarity which this superb book brings to the many areas that they studied.
2. The search for isomorphisms, propositions of the same structure valid in two or more disciplines, was part of systems analysis as developed by Kenneth Boulding as a way of unifying the sciences, natural and social.
-Nathan Keyfitz, in a biography of Kenneth Boulding.
What isomorphisms are useful for augmenting our knowledge and profits in markets?
Peter Grieve writes:
I think that unification is the highest scientific endeavor. For me, taking two things that look completely different on the surface and demonstrating an underlying unity is as good as it gets.
The highest example of this (for me) has to be when Einstein did it with space and time. He unified them into the concept of "interval" ( although they are not quite isomorphic since time has that minus sign). He also unified electric and magnetic fields to the same degree, and they appear very different on the surface.
Gary Rogan writes:
Until we answer how the physical laws "know" to work in every part of the Universe or at least a lot of it, we won't know anything but the symptoms of the cause. There is something very strange and basic about the structure of the Universe that keeps some aspects invariant.
The current monthly issue of American Dry Cleaner had this comment from a dry cleaning plant owner:
"The advent of valet dry cleaning businesses that rely on local plants to process the work may look like a good thing for a slow plant, but they are only a Trojan horse. Enabling someone to enter the business with little to no upfront capital expense is a death knell. The services enter a market taking business away from the plant operators with the "sale" that they will bring more business to you, but the operator is getting only a fraction of the price, usually half. A route does not cost 50% to operate, but most plant owners are too lazy to start their own route. We as plant owners must stop enabling people to cannibalize our markets. If someone wants to enter the dry cleaning business, make them pay all the costs that you incurred as a plant owner, not just the cost of a van."
The idea that "capital" - i.e. money spent - deserves a rate of return seems to be an inescapable article of faith among us all. Why else would economists still be discussing "the natural rate of interest"?
BTW, If you do a full text search of the English translations of Das Kapital, you will find that the word "distribution" recurs again and again but only with regard to "capital" and "profit" , never once with regard to goods and services. The words "advertise" and "advertisement" are similarly absent. "Advertise" is found once, in a mention of a Dr. Harvey who was selling recipes for weight loss to "the bourgeoisie and aristocracy" in the 1880s; and the word "advertisement" is found once, where Marx compares child wage rates to "the advertisements" that use to appear in American newspapers" for slaves.
Peter Grieve comments:
I often see the Marxist rot in unexpected places. It seems like a very, very bad sign. Once a tumor has metastasized…
Does the orbit of the Moon trigger earthquakes ? If so then March 16 through the 22nd could be interesting. The Moon makes its closest approach Mar 19 during the new Moon.
Here is something from Nolle's web site: his March forecast.
On a more interesting note my research showed that the stock market performs better from the new Moon to the full Moon than during the waning half of the cycle.
Jon Longtin comments:
I wouldn't lose sleep over it.
The stress that the moon produces on the earth by constantly darting from one side to the other every day is orders of magnitude greater than the small variation in its distance to earth.
Put another way, high tide maybe a few thousandths of an inch higher when the moon is closest to the earth, on top of a several foot swing in sea level that day.
(But such events do make lovely fodder for the doomsayers…)
Peter Grieve writes:
The mixture of explicitly stated science with implied superstition seems to becoming an art form.
Jupiter and Saturn have a combined mass of less than .002 solar masses. And tidal effects vary like the inverse cube of distance. Which means that Jupiter's tidal effect is reduced by another factor of 1/64, since at its nearest it is 4 times further from us than the Sun is.
Putin will undoubtedly be pleased with dire predictions for the West.
Kim Zussman writes:
This kind of prediction is old news: see The Jupiter Effect .
As recalled, at the time astronomers estimated the net tidal pull of the 1982 planetary alignment on the sun (which, in turn, was to effect solar radiation and subsequently interact with earth's magnetic field) of ~1mm. The sun is about 864,000 miles in diameter.
Eventually with enough of these they'll get one right.
Pitt T. Maner III writes:
Here is a good video on "pseudo-predictions" for this weekend from down under. Multiple, vague predictions debunked by scatter graphs.
I would guess, however, that there will be a resurgence of interest in the writings of catastrophists– Velikovsky being considered one of the last of the old time breed…
Phil McDonnell comments:
Speaking of Velikovsky a version of his theory is now the most favored theory for the formation of the Moon. The exception being that he thought the Moon was formed during historical times and used Biblical references to date it. For example he claimed the parting of the Red Sea was a giant Moon tidal effect. Instead current thinking dates the Mars sized Earth impact at about 300 million years after the formation of the solar System.
More on Moon formation theory:
I also ran a test looking at all the earthquakes > 7.0M in 2010. I found that the number that were 'predicted' by Nolle's super Moon windows was 19%. But the number of days covered by the windows was only 10% of the year. On its face it seems like modest support, but the sample size of correct hits was only 4, so the jury is still out.
Without going into too much detail on the matter, there is a terrible amount of inspiration for traders in studying Hannibal's victory at Cannae, his march of 100,000 infantry, cavalry and African elephants from Spain, up through the Italian Alps (!), down the Lombard plain and spine of Italy to Cannae. Hannibal's marching and battlefield tactics are replete with examples of tenacity, perseverance, deception, offensive and defensive psychology, adaptability, everything required of today's trader. In short, Robert L. O'Connell's Ghosts of Cannae is a profoundly interesting and entertaining read.
Peter Grieve comments:
The Romans' steadfast response to Cannae and their eventual victory through Fabian tactics are worth thinking about also. And note how much gratitude "The Delayer" Quintus Fabius Maximus received for saving Rome.
Stefan Jovanovich writes:
I think traders would find more useful information in a study of Fabius Maximus (from whom we get the term "Fabian" strategy - which the NY Times and others persist in attributing to the Fabian Society ) and a reading of Dexter Hoyos' book. Hannibal's Dynasty: Power and Politics in the Western Mediterranean, 247-183 BC is a expensive ($30 for even the Kindle edition) but it will give SpecLististers the back story– how the Barca family's rise to power affected Carthage's own choices and how, even as they won all the battles, the Barcas lost all in the Second Punic War.
P.S. Denis Feney's comparison with Stalingrad is another of Times' wonderful bits of nonsense. Professor Feney has the comparison absolutely backwards. Paulus' surrender was a defeat but it was hardly a destruction of the Wehrmacht. It was the Red Army that had already suffered 3 successive Cannaes (Minsk, Smolensk and Kiev) even before Paulus' army reached the Volga. The lessons of history are useless if you insist on only reading its book back to front.
And - I hope Jay would agree - the context has to include an understanding of how much the Roman's collective arrogance was fueled by the tension between the presumed aristocrats and the nouveaus; even the "hooray for our side" accounts make it clear that Varro and Paullus were spending far more time worrying about which one of them would wear the victor's wreath than they were spending in thought about what the stupid barbarians were up to.
January 24, 2011 | Leave a Comment
Research published online Thursday in the journal Science, found that students who read a passage, then took a test asking them to recall what they had read, retained about 50 percent more of the information a week later than students who used two other methods repeatedly studying the material and drawing diagrams). One interesting paradox illuminated by this research is that struggle helps you learn but makes you feel like you're not learning.
“When you’re retrieving something out of a computer’s memory, you don’t change anything — it’s simple playback,” said Robert Bjork, a psychologist at the University of California, Los Angeles, who was not involved with the study.But “when we use our memories by retrieving things, we change our access” to that information, Dr. Bjork said. “What we recall becomes more recallable in the future. In a sense you are practicing what you are going to need to do later.”
It may also be that the struggle involved in recalling something helps reinforce it in our brains.
Maybe that is also why students who took retrieval practice tests were less confident about how they would perform a week later.
“The struggle helps you learn, but it makes you feel like you’re not learning,” said Nate Kornell, a psychologist at Williams College. “You feel like: ‘I don’t know it that well. This is hard and I’m having trouble coming up with this information.’ ”
Continue Reading in the NYT
Peter Grieve comments:
I often use exams as teaching opportunities, because that's when their minds are really open and the adrenalin is flowing. I remember plenty of exam questions from 30 years ago, but very few lecture moments.
From xxx at 13:45:17: you are rather mordant today
From Vic at 13:46:02: i didn't know it spelled with "a".
From xxx at 13:49:37: M O R D A N T
American Heritage® Dictionary adj. Bitingly sarcastic: mordant satire. Incisive and trenchant: an inquisitor's mordant questioning. Bitingly painful. Serving to fix colors in dyeing. n. A reagent, such as tannic acid, that fixes dyes to cells.
Peter Grieve comments:
I'm mordant today? Actually I have been feeling quite dormant. Or maybe I'm mordant thinking about the looting of Britain's dormant accounts.
Rocky Humbert explains:
Aviation Safety experts talk a lot about "The Swiss Cheese Model" of human error as described by Dr. James Reason of the University of Manchester Dept. of Psychology.
From wikipedia:: ( http://tiny.cc/ysg88 )
"James Reason hypothesizes that most accidents can be traced to one or more of four levels of failure: Organizational influences, unsafe supervision, preconditions for unsafe acts, and the unsafe acts themselves. In this model, an organization's defences against failure are modelled as a series of barriers, with individual weaknesses in individual parts of the system, and are continually varying in size and position. The system as a whole produces failures when all individual barrier weaknesses align, permitting "a trajectory of accident opportunity", so that a hazard passes through all of the holes in all of the defenses, leading to a failure."
In "Human error models and management" ( http://tiny.cc/xl25n ) James Reason criticizes the "person approach" to human error and suggests a "Systems approach": "The long-standing and widespread tradition of the person approach focuses on the unsafe acts—errors and procedural violations—of people on the front line …" ~ " It views these unsafe acts as arising primarily from aberrant mental processes such as forgetfulness, inattention, poor motivation, carelessness, negligence, and recklessness. The associated countermeasures are directed mainly at reducing unwanted variability in human behavior."
… "Another serious weakness of the person approach is that by focusing on the individual origins of error, it isolates unsafe acts from their system context. As a result, 2 important features of human error tend to be overlooked. First, it is often the best people who make the worst mistakes—error is not the monopoly of an unfortunate few. Second, far from being random, mishaps tend to fall into recurrent patterns. The same set of circumstances can provoke similar errors, regardless of the people involved. The pursuit of greater safety is seriously impeded by an approach that does not seek out and remove the error-provoking properties within the system at large."
"The basic premise in the system approach is that humans are fallible and errors are to be expected, even in the best organizations. Errors are seen as consequences rather than causes, having their origins not so much in the perversity of human nature as in “upstream” systemic factors. These include recurrent error traps in the workplace and the organizational processes that give rise to them.
Countermeasures are based on the assumption that although we cannot change the human condition, we can change the conditions under which humans work. A central idea is that of system defenses. All hazardous technologies possess barriers and safeguards. When an adverse event occurs, the important issue is not who blundered, but how and why the defenses failed."
His seminal work : "Human Error", James Reason, 1990 ( http://tiny.cc/i1q5a )
Peter Grieve comments:
This is very similar to Nigel's chess teaching - when someone makes a blunder, usually it's been set up by a position that has been deteriorating for several moves.
A friend of mine sent this very interesting link. It's about the work of Didier Sornette.
Victor Niederhoffer comments:
He's an actor always predicting the end of world, reporting one blade of scissors never expectations, like its 30% likely there will be catastrophic decline but never that it's also 40% likely that there will be an extraordinary rise. Similarities and retrospection galore and a doomsdayist.
Allen Gillespie writes:
I can't speak to that, but his book does have an interesting section regarding the implications of a zero interest environments and he references Von Neumann and other who wrote in the late 1930s the last time t-bill went to negative yields. The math is such that both U and -U can be solutions and hence jumps (up or down) like the "flash crash" and 1999 become acceptable solutions. That's the problem with ZIRP and QE because what is the value of a continuous stream of rising dividends at near zero discount rates? And what happens when QE stops like it did March 31, and on the fiscal side where the government reached is max transfer payments on April 15? Where despite rates still being near zero there was a exponential relative tightening of monetary conditions. And where did PG and others print? Why just below the last free market lows in 2009 before QE.
So, in effect, he does mention the possibility of a large rise and decline because both U and -U are solutions in a speculative bubble regime driven by ZIRP, QE, and massive explicit moral hazard. In short, things can trade anywhere and the days around the timing of when the Fed finally removes its ridiculous rates low forever language will be interesting as it will represent a 3rd non-traditional tightening. The issue is the Fed will probably need to run QE2 in the background when the debt roll doubles next year and climbs more in 2012 before falling and stabilizing thereafter by which time FNM and FRE might have run through the max losses.
I am not a quant but just a fundamental guy who also has a decent eye for politics, and I think it is relatively simple– the Fed's said "oh sh_t" after Lehman so they have tried to put Humpty Dumpty back together again by running bonds back to par and stocks back to Lehman levels (1166). Prices above that they will not artificially support, far enough below that they will so long as they are allowed to print $$$. The big risk, which cannot be quantified, is that historically it is a POLITICAL event which removes this support mechanism from the markets and that can happen in a day and stocks must fall a lot to find true cash (not bank convergence trade) buyers - those old men with canes who do exist but are becoming fewer.
Also, for the curious given current events– there was a large rise when the U.S. declared neutrality in the third quarter of 1939 only to fall a year later as this laid the ground work for its friends being run over. Isn't GM supposed to be IPOed then - TM problems real? - AIG insured Goldman? BP - the green energy firm - Yukos for the industry anyone - except we can't create a faux back tax - so we will just grab it with environmental taxes that will be coming. As to gold, its takes tighter money to kill a real bubble as 1999 and 2004-2007 showed and while on a relative basis the Fed has tightened with no QE, Europe has eased and until the U.S. can roll its 3 year average maturity debt with large origination years of 2008 and 2009, I am staying long and I bet other are too.
Peter Grieve writes:
The word "econophysicist" alone should be a danger signal, that someone is hubristically applying a certain analytical discipline outside its sphere.
One might as well say "gamophysicist" for "marriage counselor", or "hippophysicist" for the author of a horse betting pamphlet.
I bow to no man in my love of physics, but it only has power in clear cut situations.
Ralph Vince Concurs:
Gimme a break!
"…bubble markets display the tell signs of the human behavior that drives them. In particular, people tend to follow each other and this result in a kind of herding behavior that causes prices to fluctuate in a periodic fashion."
Really? Who would have guessed that!
Ah, Switzerland! Yodeley hee hoo! These guys are always in Switzerland, aren't they?
Yishen Kuik writes:
Victor may be right– some of Sornette's older (erroneous) predictions which I think appeared on his faculty UCLA website aren't around.
I don't know if someone has consolidated all his predictions to check the batting average, but he certainly may have left out his losers in recent press releases and papers. He seems to have channeled a lot of energy at bringing press attention to his work. I suppose his final objective is the lecture or consulting circuit a la the distinguished expert on derivatives and other professors.
Reading through Linchpin by Seth Godin advocates getting away from the quantified.
We measure the quantified because we can. But we should create the unquantified because it's so rare. If you can quantify it, then probably someone before you figured out a why to grind it out. And if you can grind it out, someone can grind it out cheaper than you can. On the other hand, the really valuable stuff, the stuff we pay a lot for, is unquantified. Things like creating joy or security or happiness. No easy measurements for those, thus they are art, and art is always worth more than the predicted.
Henry Gifford comments:
Similar situation with how much energy a boiler takes to heat a buildng. The quantifiable is the least important– the % efficiency while the boiler is operating (% of energy in fuel not going up the chimney, but going into heating the building).
The second most important thing is quantifiable enough to have % numbers on it, but those numbers are hopelessly inaccurate– the annual % of the energy in the fuel not going up the chimney (different from above because of the heat going up the chimney from a boiler that is hot, but not firing). Most of this loss can be avoided, but nobody bothers because the % ratings don't change with improvement.
The most important thing is so hard to quantify there is not even a unit for it– how unevenly the building is heated. The chair helped me put some units on this once, but otherwise, I have never even heard it discussed in my field. Uneven heating means overheating the whole building to satisfy the coldest room, with the overheating costing much more energy than the factors mentioned above.
So, in my field, everyone is running around measuring the least important factor, while the most important factors are not even discussed.
One solution is to focus on solving the problems, (short chimney, thermostat in every room) without being able to predict the resulting saving. But, without prediction, it's a very hard sell. Good for one's own portfolio, harder with other people's portfolios.
Peter Grieve adds:
When people are making purchasing decisions in areas in which they are not expert, there is a strong tendency to reduce things to a few numbers. These numbers are easy to compare, but present a grossly simplified picture. The simplest machine has myriad degrees of freedom, and so does the operating environment. The assessment of the interaction of these two cannot be crammed into four of five numbers.
This is especially true in government procurement, for example weapons systems. The M4A1 carbine is supposed to have an effective range of 300m. I have done a lot of shooting with the civilian version of this weapon, and I can assure you that this one number does not capture much of the essence of the range of the machine. On a hot or cold day? Shot by a master or a bumbler? Standing or prone? Against armored or unarmored targets? Shooting from sunlight or shade?
But this number is easy to compare with corresponding single numbers of other weapons.
Or take chess ratings. Chess strength is a very complicated thing, which cannot be reduced to one number. There are cases in top level chess in which A does well against B, B does well against C, and C does well against A (Nigel D. can help with examples here). Single real numbers are linearly ordered, and no three of them can satisfy A>B>C>A. Single real numbers are not adequate to encapsulate chess strength in its entirety.
When discussing today's market action with a friend, the following chat conversation took place:
me: Market's crazy again.
friend: Yep i noticed…herd mentality causing kids to run from one side of the playground to the other.
me: Fine by me. Opportunity to play sniper in the market again and take advantage of people being dumb.
friend: one of the hardest things about being a sniper is not neccearily the distance from which you shoot, or the accuracy required when you shoot, or finding that perfect location, it's probably being too focused through the sights of your scope to not notice the private that snuck away went arround you and is now standing behind you with a gun to your head.
Wise words indeed…
Ken Drees writes:
That's why snipers work in teams–to watch prey and to cover rear guard.
Bruno Ombreux comments:
I was told that the spotter is not technically needed. He is only there to share the psychological burden arising from killing too many people.
For the same reason, some Investment Banks praise teamwork, notably in their structured finance department.
Peter Grieve writes:
Not sure this is relevant, but I heard that snipers never ever make it to prisoner of war camps. When an identifiable someone has been deliberately targeting your friends as individuals, accidents always seem to happen in the prisoner-taking process.
This reminds of "The Night Of The Long Knives" also called Operation Hummingbird. It is interesting how the market was "prepared" for this event that occurs after an impressive up leg. We will see if the event will be able to trigger more volatility. It will say a lot about this market.
Peter Grieve writes:
You've got to love a keg full of musket balls through the stern windows from the forward port side carronade.
Unless the free market you revere is on the receiving end, of course.
Alston Mabry writes:
With financial regulation reform next on the agenda, it's more like Trafalgar: What better way to start a battle than to cross the T on the enemy's biggest ship and rake them with a full broadside?
Aristotle once said, "All paid jobs absorb and degrade the mind" Is there any way of quantifying this, and are there any implications in the markets, life, and trade?
Aristotle also said, "We are what we repeatedly do. Excellence then, is not an act, but a habit." Does this extol the virtue of practicing until we get it right? How does one know if they are getting it right, and if they have the proper tutor.
Aristotle wrote in his Nicomachean Ethics "It is not always the same thing to be a good man and a good citizen." I've been wringing my head trying to figure out all of the different philosophers who have borrowed this idea, and have come up with a list of at least 20. Any help in compiling a complete list would be appreciated.
He also wrote in Nichomachean Ethics, "It is possible to fail in many ways…while to succeed is possible only in one way." I would like to disprove this as there are more than one path to success.
Kim Zussman replies:
Do a twin study:
Find pairs of identical twins (same genes) with different employment histories. Best would be congressman vs. doctor. Failing that, find pairs with large differences in total hours worked to date.
Perform intelligence testing on the pairs, and use paired t-test to check for difference as a function of high vs low prior work/brain wear.
A related study could be done on the productivity effects of wearing robes and fondness for little boys.
Jim Sogi writes:
At the risk of disagreeing with Aristotle, excellence is a constant struggle. At least for me it is. Habit implies some sort of easy continuation. Constant vigilance is very very difficult. Excellence also connotes superiority over others. Thus there is a the constant pushing and straining to excel over others who try even harder.
J.T. Holley replies:
I don't think Mankind or Aristotle (all thought is a mere footnote to him in Philosophy circles) should be given a break at their points in time now that we've evolved Capitalism to the point it is today. Seems to me that the most important principle here is that what was shared by Susan Niederhoffer the other day "everyday seek out knowledge". In the agrarian society that was around in Ari's time we can certainly understand that doing some "meaningless paid job" took away from the devotion, persistence, focus and the ability that Ari had at driving forward to thought and knowledge. He is reluctant to realize though that the underlying power of Capitalism and his own mind freed him up to pursue his own thoughts and not degrade his mind.
"We are what we repeatedly do."
I happen to agree with this but not in totality. His teacher Plato spoke of to paraphrase "to know the good is to be the good". Much more objective than Aristotle's "do do the good is to know the good" of which leans towards being subjective. I think both are acceptable in "being". Case in point is Plato's "Allegory of the Cave". Being tied to the post the man competed and "repeatedly" learned to beat his peers at guessing at the shadows, but once freed and outside the cave he saw the light! The objective in this allegory trumped the subjective that was thought to be the truth. The objective with the subjective seems to be balanced though if we apply Aristotle's "golden mean" that he also mentions in Nich. Ethics. A wonderful balance of both instead of just one or the other.
"Nicomachean Ethics," he said, "It is not always the same thing to be a good man and a good citizen."
Kierkegaard found and wrote of this as well. He found great power, strength, and lessons in the paradox and hypocrisies of life. His three stages of life's way is a good example of this with the movement from aesthete to ethical to final religious. In the final stage of religious for Kierkegaard he used the Paradox of Abraham to find his strength. Being told by Gawd to go to the mountain and sacrifice his son what thoughts must have been in his mind and that of his town or family? He was either a lunatic by most or the most devout believer in Gawd's word. Kierkegaard spoke of the "fear and trembling" that must've been going on as the knife was thrust to the air to the point to where it was almost at apex to come down into his young son's chest. "good man" or "good citizen"? "religious" or "crazy"? Of course as the passage goes he didn't have to ultimately sacrifice his son but the lamb. The paradox was there though when thought and decision was made to be true to himself.
He also wrote in"Nichomachean Ethics," "It is possible to fail in many ways…while to succeed is possible only in one way"
to quote the Chair "The best way to achieve victory is to master all the rules for disaster, and then concentrate on avoiding them." Trial and error is important in life and speculation. The pain from failing can often lead us to being better individuals and profit takers.
Nigel Davies writes:
I think there are a number of problems in discussing 'ancient wisdom', for example culture, language and context. One might ask what defined paid and unpaid work in Aristotle's time? I'd argue that to really understand what he was saying one would have to be a several thousand year old Greek.
As for the internalization of excellence (i.e. habits), the valuation of such may depend on whether one prefers 'reason' to 'intuition born of vast experience (ie habits)'. Taking a different angle on this, does an inexperienced but opinionated newcomer deserve to win against an old hand? Humans value their reason, but maybe this is just vanity talking.
Peter Grieve adds:
I bow to no man in my admiration for the literature of classical Attica, but Nigel has put his finger on a weakness. The surviving philosophical writers did tend to value reason over experience. This may be why they made tremendous progress in mathematics, but were dreadful scientists and mediocre engineers (Archimedes came later, and was a Syracusean). Their mathematics was largely intended to support astrology, for heavens sake. This is in line with their feeling that people who actually produced anything were of a lower order. Apparently people were amazed when Socrates spoke to artisans in an attempt to find answers. Aristotle's attitudes about paid work may reflect this bias.
July 16, 2009 | 1 Comment
Francis says that "Now they stand ready, as occasion offers, and profit presents, to stock-job the nation, cozen the Parliament, ruffle the Bank, run up and down stocks, and put the dice upon the whole town. " The Marxist attacks were never so charming.
Jeff Watson adds:
I assembled a whole collection of around 30 of those old market related books and put them on my blog on a separate page on the sidebar. They are complete downloads and will provide much insight to the markets. For those who were too busy during college by spending their time at the track I also have another page of classical literature books that are of benefit to all, plus several books by Nock. Jeff
A study of the psychology of mirages might be a profitable line of investigation for speculators. The phenomena can be real, but the issue of interpretation can be a question of what we want to see.
A mirage is a naturally-occurring optical phenomenon, in which light rays are bent to produce a displaced image of distant objects or the sky. The word comes to English via the French mirage, from the Latin mirare, meaning 'to look at, to wonder at'. This is the same root as for mirror and to admire. Like a mirror, a mirage shows images of things which are elsewhere. The principal physical cause of a mirage, however, is refraction rather than reflection. A mirage is a real optical phenomenon that can be captured on camera, since light rays actually are refracted to form the false image at the observer's location. The interpretation of the image, however, is up to the fantasy of the human mind, and is easily mistaken for a small body of water.
Peter Grieve comments:
Long distance precision rifle shooters "read" the mirage ("heat waves" in other words) to get an idea of wind speed and direction. "Reading the mirage" sounds like a great name for a trading protocol– unfortunately I can't think of what it would actually be.
I've been thinking about guerrilla war as a result of a trip to the Custer battlefield. Everyone knows that guerillas usually shun contact with conventional forces, "evaporate like the mist". I thought this was only good for self preservation.
But now I see the obvious fact that it has an offensive component. If the men of the conventional forces become hungry for contact and their officers come under career-changing pressure actually to fight a battle, they may become less fastidious about the kind of contact they're after. And then they get the kind they want least.
Stefan Jovanovich adds:
The pressure that Custer felt was of his own making. He and his wife believed that a victory against the Sioux would reward him with enough notoriety to make him president. In retrospect that seems like a mad fantasy. But by 1876 the Republican Party had had only three candidates for President - Fremont, Lincoln, and Grant, and two of them had been U.S. Army officers.
Largely because of Mrs. Custer's relentless promotion of her husband's folly into heroism, Custer's subordinate commanders, especially Major Reno, became the fall guys. The truth is that Lt. Colonel Custer (he had been a General of Volunteers during the Civil War) would have been court-martialed if he had survived. The plan for the campaign against the Lakota had been for three columns to attack jointly.
As commander of one of the columns, Custer disobeyed his orders by not waiting for the other 2 columns and then spliting his own command in thirds. He ended up attacking with a force 11% of the planned assault force. Yet, had he shared Teddy Roosevelt's incredible good fortune at Kettle Hill and become a hero of the Indian Wars, Custer might have become President.
From Russell Sears:
This leads to the countable hypothesis that CEOs who marry/partner with someone within the company, soon cause the company to under perform.
Dean Parisian writes:
My father retired from the Bureau of Indian Affairs in Crow Agency, MT in 1985 and as a kid I spent a fair amount of time at the Battlefield there as Crow Agency adjoins the Custer Battlefield monument.
The lesson here is that when you chase returns in markets you aren’t familiar with or chase Indians in country you don’t know very well there is a good chance one can get hurt. Quick and seriously. Stick with what you know and when it looks like you are out-manned, cut your losses and run. Living to fight another day is paramount.
May 3, 2007 | 1 Comment
I have been thinking a lot about the important problem of establishing cause and effect, since Nigel Davies brought up the topic earlier in the week.
It seems like the more complicated systems become, the more difficult it is to establish cause and effect relationships between different phenomena. Physicists often say that two phenomena are "associated", when they don't dare establish a cause and effect relationship.
But the science that really has a problem with this is biology, which studies extremely complicated systems (remember that there are more cells in your body than there are stars in the Galaxy, and each cell is quite complex). Perhaps more biological thinking would do us good, rather than the physics-like thinking often used in market modeling.
In the germ theory of disease, for example, it is very difficult to establish the mechanism by which the germ actually causes the disease. And the mere presence of the germ in large numbers is not enough to establish cause and effect. The germ may be an opportunist, taking advantage of the diseased state to increase its numbers.
Anyway, around the turn of the last century an attempt was made to make criteria for establishing this kind of cause and effect. One scheme was called Koch's postulates. Here they are in their original form:
Koch's postulates are:
1. The microorganism must be found in all organisms suffering from the disease, but not in healthy organisms.
2. The microorganism must be isolated from a diseased organism and grown in pure culture.
3. The cultured microorganism should cause disease when introduced into a healthy organism.
4. The microorganism must be reisolated from the inoculated, diseased experimental host and identified as being identical to the original specific causative agent.
I'm sure my fellow Specs can find holes in this scheme. But can we establish our own postulates for cause and effect in markets? Of course we can't "introduce" and "culture" market phenomena (much as we would like to). But maybe some other kind of formal scheme would provide food for thought.
Nigel Davies adds:
This seems like such a good analogy. For example there are recurrent conditions in which the sufferer has occasional outbreaks of the disease.
In considering outbreaks of a market disease there might need to be the presence of germs plus some trigger factor such as 'stress'. Even then there are no guarantees.
Bill Egan writes:
Tylenol (acetaminophen or paracetamol) is the #1 cause of fatal liver failure. It produces minor effects on the liver at the recommended dosage levels (4 grams per day in adults). Fatal liver damage (zone 3 necrosis) can happen with as little as 10 grams per day. The safety margin is a mere 2.5x between pain relief and death.
Most drugs are metabolized by enzymes in your liver, so that they can be excreted more easily. Acetaminophen is not an exception. Five percent of acetaminophen is converted to a reactive metabolite that will bind to liver cells and kill them. This is normally prevented by the body's anti-oxidant defense system, a molecule called glutathione, which binds to reactive molecules and thus prevents them from causing damage. Should your glutathione levels be low (not eating right, alcoholic, sick, etc.) you will be more susceptable to damage caused by the reactive metabolite of acetaminophen because your glutathion levels will be lower than normal. Should you ingest a bit too much acetaminophen, you rapidly exceed even the capacity of the normal levels of glutathione to prevent its damage. It is like a step function.
What market mechanisms act to prevent routine damage? What is the tolerance limit beyond which they are overwhelmed? (This is a violation of Koch's postulate #1 but it is chemical not biological.)
The sentence, "Even mathematicians don't have all the answers" is a frightening one. Mathematicians strain hard to have all practical answers. Even engineers go up a zillion blind alleys, and often don't know that the alleys are blind until they've already been announced as the answer.
"It may well turn out, of course, that what they need are more mathematicians." Heaven help IBM, and us.
The classic mid-life arc of the mathematician (esp. the pure one) goes like this:
- At 42 - Notice that some friends are getting rich.
- At 44 - Notice that zillions of "idiots" are getting rich.
- At 47 - Form company based on brilliant idea. Insist on maintaining complete control, to avoid corruption of idea by idiots.
- At 50 - Declare bankruptcy.
- Later - New buyer of company makes a success out of it, sometimes a greatone.
I must admit that the high-tech age has reduced the probability of step 4 to, say, 96%. I am not writing as an outsider.
Rich Bubb adds:
Here is an article about one of IBM's chief mathematicians, and the real-world problems her department is solving.
Kim Zussman writes:
Re: "Zillions of 'idiots' are getting rich:"
This is actually the key to everything. You will never get over how many less (intelligent/educated/motivate/ethical) people have more than you can ever hope to, and the explanations about randomness will fall on the deaf ears of all significant others.
What is much harder and more important to appreciate is how many of your betters will always live in incomprehensible hopelessness.
I suggest that learning to play a game (poker, backgammon, chess, checkers or go) might teach far more than studying game theory. The big problem with drawing boards is that there's no opponent, so ideas are never subject to quite the same level of criticism, and they do not have to be quite as relevant to the very serious matter of winning.
Adi Schnytzer comments:
Game theory is not about drawing boards. People do not study game theory to help them in their game playing, believe it or not. They study it in order to understand the process of more perceived importance than board games.
Nigel Davies adds:
Please excuse my ignorance, I am a mere player. So what exactly is 'game theory' good for? And I'm talking a usable practical application that doesn't include getting a salary for teaching it to others. Please be very specific as I am very primitive.
Adi Schnytzer replies:
I recently posted the following note, which will introduce you to game theory and comment on its uses. Since it's written by the masters, it should help you out. There's nothing I can add to their wisdom.
Bob Aumann's Nobel Prize Lecture ("War and Peace") and his piece "On the State of the Art in Game Theory" are both worth reading … He also has a piece called "Consciousness," which is rather nice. These may all be downloaded here … In my view, the least (not non-mathematical) and most intuitive text available is Luce and Raiffa.
Nigel Davies adds:
There is still the problem of practical application which is what I've been going on about from the start.
In 'A Beautiful Mind,' we see that Nash figures that he and his friends should not go for the blonde because they will block each other, and somehow or other this later got him a Nobel Prize. However, it seems that Nash thought up his 'strategy' without any knowledge of the game, and from all indications, he was a virgin at the time. This sums it up - he thought he could win without any knowledge of how the pieces moved.
In a previous discussion, I brought up a similar error by a mathematician who gave a figure on the number of possible chess games. It's obvious to anyone who actually plays and knows the rules that the number has to be infinite. The guy was so arrogant and/or naive that he didn't bother to learn the rules properly before coming up with his number.
Frankly, I have the same problem with Robart Aumann's paper. It's all very well theorizing about peace, but has he actually tried to apply this? I suggest that without knowing the territory, too many assumptions will be wrong.
If it's any consolation, it seems that Lasker had a similar problem with Einstein and the theory of relativity. In Einstein's foreword to Hannak's biography of Lasker, you see that Lasker thought that there was no justification for claiming that the velocity of light in a vacuum would be infinite, unless this had been verified in practice.
This, incidentally, was one of my few moments of agreement with the Elizabethan ghost.
Ross Miller comments:
It is worth noting that the "real" John Nash never did this, just the John Nash invented by a screenwriter who got to write this movie based on his ability to write Batman movie screenplays. The example in the movie is not a Nash equilibrium. In a Nash equilibrium, you do the best you can taking everyone else's actions as given and ignoring responses to your own actions. If everyone else goes for the inferior females, you make a beeline for the superior one in a Nash equilibrium. As stated, this game has no Nash equilibrium if everyone believes that multiple hits on the same target generates no payoff from that target, but a single hit will. Nigel is correct in pointing out that solutions to this game require thinking beyond the game theoretic formalisms.
The best reason for the Nash equilibrium to get a Nobel Prize was that it facilitated the Arrow-Debreu work on a competitive equilibrium. It was because his equilibrium is an intrinsically competitive (and not collusive) concept. The screenwriter is not to be entirely faulted since the book from which the movie was based is full of technical errors and misstatements. Of course, technical correctness does not make for bestsellers and the average moviegoer is never going to understand what Nash did anyway, nor is much of anyone for that matter.
Peter Grieve offers:
My take on game theory (based on long but elementary study) is that:
1. It's not very useful in sequential games like chess, poker, etc. In chess it might help a computer make decisions based on a look ahead tree if the branches have some evaluation number. Game theory can't, of course, actually generate these evaluations, and they are quite important.
2. It's not very useful in games in which anyone has any experience. The simplifying assumptions are too great. Once in a while it could illuminate a connection that would not otherwise be obvious. But as far as selecting a detailed strategy in a real world, complex game, it would be madness to rely on game theory.
Game theory is a lot like the rest of applied mathematics. It's really strong on the simple stuff, things where its many simplifying assumptions are valid. It can act as an initial guide when there is no experience in an area. Occasionally it can suggest something new in known areas (which must then be extensively tested by experience, and often found lacking).
The problems arise when academic folks (who mostly talk to each other) get inflated ideas about the real world strength of their ideas.
An example of a situation where game theory would be valuable is the following. Suppose you where playing a game of Rock-Scissors-Paper with a really smart, vastly superior opponent who knew a lot about your mind. How can you at least break even in this game? Game theory tells us the answer. Roll a die, if it comes up 1-2, choose Rock, if 3-4, Paper, if 5-6, Scissors (roll the die in secret, of course). You can even tell the opponent that you will use this selection method, and it doesn't help him beat you (unless he can guess the way the dice will come up). He can use this same strategy on you, making sure he breaks even, and the game is at equilibrium. This seems intuitively obvious, but what if Rock breaks Scissors wins double? What sort of die should one roll then? Game theory will tell us.
Of course if Nigel reads this, he will immediately think of several possible strategies to bamboozle game theoretically inclined, mammoth brained opponents in Rock-Scissors-Paper. But if he is to win anything, he will have to bluff the opponent out of using the above strategy (perhaps by artfully convincing the opponent that his (Nigel's) mind is "primitive").
During the Cold War, everyone wanted to hire Air Force generals with lots of nuclear war experience, but there were none (General Ripper was long gone). The think tanks used some game theory. Thank goodness we never found out how valuable it was.
Adi Schnytzer comments:
Three points only:
1. Game Theory was used successfully to win a battle in the Pacific during WW2, though I don't have the details on hand.
2. Without game theory, a simple dumb computer would never have beaten the World Chess Champion!
3. Aumann's insights on war are useful, but make sense only to those living somewhere nuts like the Middle East. Those in cocoons who believe that the problem rests in a failure to love their fellow man (read: "Liberal Europe At Large") will never understand.
Nigel Davies adds:
Without game theory, a simple dumb computer would never have beaten the World Chess Champion!
How do you come to the conclusion that 'game theory' should take the credit? Why not Faraday, Edison or Graham Bell? As far as I know, none of the programmers studied game theory, but there were a few chess players on the Deep Blue team. If game theorists are claiming this, then by the same token shouldn't one be able to claim that the big bang was only possible thanks to physics professors? Now that would really be a feather in their cap - they might get two Nobel prizes!
Aumann's insights on war are useful, but make sense only to those living somewhere nuts like the Middle East. Those in cocoons who believe that the problem rests in a failure to love their fellow man (read: "Liberal Europe At Large") will never understand.
Ghengis Khan would probably have sorted the Middle East out in no time - old Ghengis was a good player in his day. OK, I guess you're going to claim that the Mongolian hordes had their own 'game theory' which enabled them to win their battles etc. So the academics can take the credit after all …
Game Theory was used successfully to win a battle in the Pacific during WW2, though I don't have the details on hand.
As should be clear from the above, I think specifics are needed in order to see why game theorists are taking credit for this one and why it's good shooting with one's howitzers, or even luck. And how many battles were lost by the way? Or weren't these retrospectively scored?
Stefan Jovanovich adds:
There are only two reasons why the Americans had any chance in the Battle of Midway:
(1) Admiral Nimitz trusted his Navy code breakers and their analysis of the limited decryptions they had under Commander Rochefort. By translating messages and studying operational patterns, the code breakers predicted future Japanese operations. Relying on those predictions, Nimitz sent to sea the only three American carriers he had at Pearl Harbor and positioned them on the flank of the predicted Japanese line of attack.
(2) When an American scout plane sighted the Japanese fleet, Admiral Spruance put all of the American planes in the air for an all-out attack. In terms of conventional doctrine at the time, this was a highly suspect move, and its initial results were terrible. The Japanese fleet's air cover fighters and anti-aircraft gunnery annihilated the attacks by the Marine Corps scout bombers, Navy torpedo bombers, and U.S. Army Air Force torpedo-carrying "Marauder" bombers. The Army Air Force "Flying Fortress" high altitude bombers also failed but did not suffer any losses. The next attack by Navy torpedo bombers was literally wiped out; there were no planes and only one pilot survived. Only the last attack - by Navy dive bombers - succeeded.
If "game theory" includes cryptographic analysis, then its contribution to the Pacific War effort was, indeed, invaluable; but it required the willingness of Admiral Spruance to go "all in."
Adi Schnytzer replies:
Thanks Stefan. No, it wasn't the cryptography I had in mind. According to Careers in Mathematics,
Game theory, a part of operations research, was used to select a strategy for the Battle of Midway, a turning point in the Pacific arena during World War II. The U.S. Navy was on one side of Midway Island, and the Japanese Navy on the other. We calculated our probability of winning in the four cases of our going north of the island or south of it, and the same for the Japanese. Game theory was then used to select the winning strategy.
As I recall, breaking the codes told the U.S. where the Japanese fleet was going, and game theory told them how to place their limited resources optimally. But since this isn't nearly as important as winning a chess game, why are we bothering?
I only found one market open yesterday, and it was Israel, which was up 1.5%. One was also wondering what kind of predictions one could make, a la the probability that the team that scores first in a basketball game will win the game, and if this is connected. Alan Abelson says that he sees 2007 shaping up as a year like 2000, and he feels the sense of Deja Vu. He has been saying this 2002, and from 1990 to 1999, when he felt a sense of Deja Vu referring to 1987. And from 1964 to 1987, he felt a sense reminding him of 1929. It is insightful to see the techniques of the perfect lie, or propaganda that he uses to maintain his self image, presumably rather than to deceive his readers. His two favorite techniques are to say that he didn’t really expect the year to play out as favorably as it did or that his crystal ball has not been entirely accurate, and his very sagacious short selling friends who have not done too badly see the problems of our economy as discounted to an inordinate extent.
Gone is the old technique of saying that the market will go down without limit until the last excess of ebullience is gone. He also doesn’t use the technique of the Elizabethan Ghost to indicate that it is wrong to be always bullish because the up trend has a variance. The problem is the uncertainty of knowing when the mean and variance of the drift have changed. Presumably if the drift were 50% a year, rather than 10,000% a century, people would be reluctant to say that their fears over-ride it, and that they would prefer to be short.
On another note, I have received numerous letters asking me if the tendency for years ‘07 to be bearish is predictive. I point out that with the last two ’07s being 1987 and 1997, with returns of 4% and 20% respectively, and 1967 being up 20%, one should not place any reliance on a pattern with 10 observations that hasn’t worked three of the last four times. The same would be said for all the foolishness about the January Barometer. It hasn’t worked for three out of the last five years, and was random before that.
I see many year end forecasters are looking for technology spending to be up some 20% or so next year. One wonders what the best way to play this might be, given the relatively lackluster performance of technology in last year.
Finally, I am convinced that training in checkers is much better for children than chess, in that it prepares them better for the basic yes, no decisions of life that make up much of logic, electronics, and computers. It is simpler with a less confined rule base, with much more potential for generalization to the situations of life. It also has the virtue of not consuming so much time to become proficient, (now that it takes a football team and extensive technology and years of study to become even a competent chess player). As well as being better to learn, it’s also much less life threatening to eat a checkers piece rather than a chess piece.
GM Nigel Davies responds:
I believe this should be tested, and probably on a larger sample than exists on the list.
I do have one observation to add, and that is that the chess players who went on to become very successful appeared to have one thing in common. They either stopped playing altogether or relegated the game to the status of a very minor hobby, which rather confirms the chair’s hypothesis that it takes up too much time.
Vis. a vis. choking hazards, I found this prevention.
Peter Grieve comments:
The chess vs. checkers comparison brings to mind fencing vs. boxing. I’d rather that a child of mine would be a boxer, but I’d much prefer to be a fencer.
The late GM Tony Miles wrote a piece extolling the virtues of checkers, and bemoaning that the fan base wasn’t larger.
Most of the great Georgian (British) boxers were fencers also. I think this was very useful cross-fertilization.
One of the best books on hunting is “Meditations on Hunting” by the Spanish philosopher Ortega y Gasset (he likes it, by the way).
One of his amusing points is that while people speak of “defenseless” animals, every hunter knows that every animal has a great defense, that of being elsewhere.
Hunting really doesn’t fit into any categories. It’s not nature, because there are rules. It’s not a sport, because one of the participants doesn’t want to play. It’s not economic behavior (nowadays, anyway), and it’s not relaxation.
My take is that it’s a kind of controlled participation in Nature, where deeply primitive elements are combined with very noble goals.
Peter Grieve queries:
Sometimes you say that opponents who don’t care for their own safety are a different kettle of fish. I’m reminded of the writings of George Silver, a sixteenth century fencing master who bemoaned the rise of “Italianated” sword play, fit only for the salon. He said that to become a fencing master, a man should have to pass the following test: And this is the trial: They shall play with such weapons as they profess to teach withal, three bouts apiece with three of the best English masters of defence & three bouts apiece with three unskillful valiant men, and three bouts apiece with three resolute men half drunk.
GM Nigel Davies responds:
Seems very true of markets and I think the S&P is currently resolute and half drunk. Reminds me of Boris Spassky’s description of William Watson, an English GM who became a barrister: “He’s very dangerous, like a drunk machine gunner.”
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