Oct

21

What is the definitive answer as to how we can learn from the best way to catch a man about how to catch a good market move?

 Debra Belanger Kettle responds:

Well now that you put it this way.

1.) I suggest that one pays attention to the stocks that could care less if they are purchased or traded. The quiet ones. The non volatile ones.(the best, most stable women are thriving and so busy enjoying their lives they don't really worry about being snagged, they have more men in pursuit than they can usually manage or have time for.) They are the best catches. They don't dress to necessarily impress or seduce, they don't have to.

2.) If the idea of competition stirs interest, don't get seduced, investors might merely be competing with each other when they should be focused on learning about how the market moves and what she needs at the moment. The male or investor might miss something big being divulged or demonstrated when he worries about the competition. The conversation/connection with the woman or the market must be sustained fully.

3.) Men can NEVER be caught. Men fall in love first. If a woman tips her hand in this regard she is done. Men are suspect if something comes too easily. Unless he's a narcissist and imagines that he is irresistible or invincible. It doesn't hit him immediately that he has to have her. If a stock gains lots of attention it will probably lose it's momentum soon and is probably just flirting with you or using you to create competition for the man she truly wants. Real interest from a woman is steady and climbs deliberately, carefully, without much frenzy. Watch out for those stocks and when you find one commit.

Bottom line. Tell your daughters to develop their own lives. This is intoxicating to a healthy man, to a man worth having. And as far as my loving Ayn Rand. Clarification. I love her quote on femininity. Just because she can define something as clean as two plus two does not imply she is a great mathematician. Truth be told, I love Hugh Laurie, (House MD). He is brilliant, tall, not easily manipulated I hope, and has a British accent. This combination makes my knees go weak.If he were a stock he would require careful management, not wild abandon straight out of the gate. But I digress, relationships whether they be stocks or people are neck up jobs. Yes, the heart knows things the head knows nothing of. But the head must lead or stupid decisions are made. Marriages that are too emotional might last but don't thrive. Many also don't last.

In my practice I have had 5 women marry in the past 3 years following my advice to immediately start dating at least two other men when she finds one she might like to spend her life with. (something I don't apply to my own life because the thought of 3 dates a week would seriously cramp the time I need for my true loves: dancing and reading). So initially, the plan is genius to create a dating sperm war, so to speak. I will keep you posted on how these connections fare over time. Men who seem invigorated by the competition might be more interested in the game than the woman. Do investors play the stock market, each other, or both? To me it seems the best products are won by trusting the relationship and ignoring the competition or lack thereof.

My best advice to women( the stocks)………..keep busy with your owns hopes and dreams. Grow, thrive, develop. Interesting, happy women, women worthy of committment are never at a loss for male attention.My best advice to men….. Just listen. Pay attention to her more subtle moves. Like women, the market speaks softly of her secrets and will reveal them when you might least expect it.Not only will a good woman not make you feel manipulated, she might also make your life richer.

Gary Rogan writes:

The Market Mistress wasn't quite fulfilled And simply bored with the orders filled. Her soul was yearning still to feel the fire That came along with passion and desire.

And mortal fools that tried to play her game Were also boring, they were still the same While she was different and waiting to seduce A worthy challenger while tightening her noose.

She glanced at her reflection in the sky, A moving cloud. What was there to try To bring to life a plan that would attract The challenger she needed so to act?

Should she stay still or gently throw the dice, Surprise the world a little once or twice? Or steadily reward the fools until They felt they understood her steady will?

She smiled and shook the world until it screamed. It's time, she thought. It worked, or so it seemed. The crowd dispersed and to fulfill her soul

Her charming prince appeared to take the fall.

Jason Ruspini comments:

The suitor is judged against others so one answer is the fed model, which is very appropriate for the Hegelian Rand passage where the essence of femininity is defined as the worship of masculinity. But that was uncharacteristically subtle of her.. In markets and outside of tautological symbols, A is indeed not-A at the margin. Is the USD just the USD? Why would one complain that increased correlations are invalidating one's "fundamental" work on a stock when those dividends are constantly being re-discounted, not to mention developments in the whole rest of the stock universe making the suitor more or less attractive on a relative basis.

Do people who say that stocks are too volatile even have any quantitative basis for what the volatility should be given all these cross-influences?
Regarding today's action and that of the last few years, it is much easier to tell the temperature than to predict where specific particles (policy officials) will go.

Sep

25

A few of the women on the speclist, especially Debra Moon, have suggested that by analyzing the contents of this list, they could understand the market. There are many fruitful extension of this rich idea and they inspire the following.

One must start with the well known negative serial correlation of short term moves in stocks, the canes et al. Also the tendency of most comments to follow the price, with negativity increasing in relation to the past stock move down. Everything has to be adjusted for these, but leaving them aside for the moment …

One hypothesizes that the more negative the content of posts on a list, the greater the positive expectation going forward. This would be measured by the number of synonyms for good and bad in the posts, according to scales and calibrations contained in the work of Osgood. The same could be done for a column almost invariably as negative in tone as the bifurcated — let us say enigma — that came from us. Its base level is perhaps 95% negative as measured on the Osgood scale. But what about when it moves to 99%. or 91%? The former would occur in those one in three months say that the market goes down, and the latter would occur in a time when the market is at say a 9 month high, like above 1340 in the S&P when all shorts are suffering from squeezitis. So one's predictive regression would also have to take account of the past market move relative to its 90 day high or so.

Putting that aside also, one would like to test the negative content of news and reactions adjusted for past price move, the natural tendency to complacency, and the varying degrees of proneness to the overly favorable self reported evaluation of greatness biases, all as a predictor of future market moves. This could be classified by source, i.e. newspaper, email list et al. This is a nice problem in the un-tangling of hypotheses for which the confidence profile method, a method based on the multiplication of likelihoods, would be useful.

Big Al adds:

One thinks that Yahoo Finance headlines might be such an indicator. Anecdotal and imaginary, but it often seems that the day goes something like this:

By 10:30, S&P moves +5 pts
Yahoo Finance headline appears at 10:30: "Stocks gain as oil prices drop"
time to go short

By noon, S&P moves back to par
new Yahoo Finance headline appears: "Markets give up early gains on XYZ earnings"
time to go long again

At 2:00, S&P back to +6
Yahoo Finance headline: "Traders buying on positive inflation data"
time to close out

It just seems that it takes about the length of some moves for the news writers to "see" the move, write it up and get it posted.

Jim Sogi mentions:

Just as the number of trades carries more statistical significance than the sheer volume, the number of posts on various lists might carry more information than analysis of content. The content may be subjective but it has appeared that the main list, considered to be mainly bullish, is quite busy when markets are up, but at dark bottoms become almost silent and has been a good indicator for market operations. Another good experiment would be to find a list with a bearish tilt and count the number of posts at recent multi month highs and consecutive multi day highs. This is a methodology to test a contrarian indicator since the market is most bearish after numerous multi day highs, and new monthly highs, and most bullish at dark monthly lows. Underlying this method is the natural herding instinct and the reason markets tend to trend up, then down in cycles.

The May down cycle was 6 weeks and 8%, and the recent rally was about 8 weeks and 8%, and whether random or not, retrospectively creates the appearance of a cycle. The perfection and beauty of the wave over so many weeks and months as opposed to the apparent cyclic formations of a random walk , by eye at least, indicate to this observer that more is at work than random forces. If there are larger forces at work it would give a great advantage to a speculator to know by simple time measurement the time for a turn. In any case it is better to buy within a week or two of the bottom rather than buying at the top and selling at the bottom. The measurement of time might have information as distinct from the measurement of price. After 8 weeks up and 8% up do the probabilities favor another 8% move up for the next 8 weeks? Sampling methods on weekly returns might provide an antidote to the insufficient data points. Using the Professor's Fourier analysis (like his work on lunar cycles) on the random samplings versus the actual might indicate whether there are larger cyclic forces at work that might be harnessed. Does the actual have a greater degree of cycles than the random? What is the length of such cycles?

A few more ideas: Watching market depth on CME it seems that very high depth, which indicates high liquidity, suppresses price movement and variability, and that a lower amount of depth leads to greater variability. A curious thing happened the other day when Globex went down for a short period, the market had a bit of cheesecake and showed 10 levels of depth rather than the normal 5 for a while, and gave a glimpse into the inner workings normally hidden, like a quick peek behind the scenes.

Debra Belanger Kettle comments:

sheer volume and levels of hostility vs. camaraderie/politeness, even snoozeville (as in boring) seemed noteworthy when I first mentioned my observation … I was new to the list at the time and found the peace vs. conflict fluctuations of the posts quite fascinating.

I am not sure what it means though, or how to test … whether ipso facto or post facto it is something significant.

Dr. Brett Steenbarger offers:

I do think this would be a very interesting undertaking. My leaning would be to first examine grosser relationships, such as the frequency of posting vis a vis recent (and prospective) price change. I would also be tempted to examine the relative frequency of different kinds of posts (analytical ones, personal ones, etc) in that vein. Yet another measure would be the number of different threads and the extent of participation by various list members.

My preliminary hypothesis would be that people are more likely to post to the list and participate in threads during periods of heightened uncertainty. Posting, in that vein, would be seen by a psychoanalyst as a higher order mode of coping: a way of trying to make sense of ambiguity. One of the famous measures of coping styles breaks down the ways people deal with stress into three broad categories: problem-focused coping, emotion-focused coping, and avoidant coping. It would be interesting to categorize posts similarly, viewing the List as a social medium for dealing with uncertainty.

Freud postulated that, under conditions of duress, we regress to lower (developmentally earlier) forms of coping. Normal problem-based coping might regress to emotional or avoidant modes. One might expect market inefficiencies to be greatest during times of such regression.

Sep

5

The Prophet by Kahlil Gibran has always been one of my favorite reads and is recognized as one of the classics of our time. In his work, Kahlil describes the art of parenting in a way that reminds us of the beauty and responsibility of raising children that allows for our offspring to experience their own journey without being tarnished by the personal agenda of parents. Application of the gifted insights of Gibran to investing might be considered both humorous and profound.

The Prophet (original version)

And a woman who held a babe against her bosom said, Speak to us of Children.

And he said:
Your children are not your children.
They are the sons daughters of Life's longing for itself.
They come through you but not from you,
And though they are with you yet they belong not to you.

You may give them your love but not your thoughts,
For they have their own thoughts.
You may house their bodies but not their souls,
For their souls dwell in the house of tomorrow, which you cannot visit, not even in your dreams.
You may strive to be like them, but seek not to make them like you.
For life goes not backward nor tarries with yesterday.

You are the bows from which your children as living arrows are sent forth.
The archer sees the mark upon the path of the infinite, and he bends you with His might that His arrows may go swift and far.

Let your bending in the archers hand be for gladness:
For even as He loves the arrow that flies, so he loves also the bow that is stable.

The End.

I am not surprised, given the dominant male presence in the world of finance, that the stock market has often been called a mistress. I would like to offer a new, perhaps more female minded perspective, and suggest that the market is less like a mistress and more like a child. What would happen if the mistress were ultimately married and bore a child? What tenets might need to ensue to shape the outcome of this intellectual and emotional shift? I think Gibran's piece, and viewing investments as children, offers a great new metaphor.

Most would agree that a full commitment is required of parenting. Planned or unplanned, a child makes certain demands of parents that must be met in order for the child to develop and thrive. Moral implications aside, a mistress is certainly a thrilling concept. The mistress metaphor seems to play on the internal ache and frenzy that the market causes many investors. Her risk is great, she can never be fully possessed, and often she drives investors to levels of despair and ecstasy emotionally and otherwise. The mistress is often blamed whereas we miss the real culprit, the lack of emotional management. I have always held the position that parenting, like investing, when done well is a predominantly intellectual enterprise and I would like to propose the head over heart approach of parenting as a new, perhaps just as playful and heart wrenching metaphor, for investing.

We all know that a full commitment to a mistress would render her no longer a mistress. The short version is that she would be given legitimate status. Soon to follow might be the ho-hum, the status quo, the banal, the boring, the responsible, the dutiful, even quiet desperation of legitimate union. A full and honorable marriage to the market would likely bear offspring . The children, the investments, and inevitable associated responsibilities cannot hope to compete with the excitement of an illicit love affair but might ultimately prove to better serve the future. Concepts such as balance, discipline, nurturing, boundaries, and limit setting would replace reckless abandon, passion, and longing. The former concepts, however, with regard to investing, might also make for a greater long term relationship. While indulgence might make a mistress happy. An indulged child rarely thrives. Neglect, probably more so as it reflects the mistress not the child, is not a good idea either if you know what I mean. Granted, the thrill, the lack of commitment, the not being required to spend holidays, the come and go as you please nature of a mistress, may make her more desirable as a metaphor, but I am optimistic that the benefits of a metaphor with a firmer foundation might be plausible and worthy of consideration. I realize that I risk my "image" as a fun loving, risk taking, emotions drenched, liberal in writing this piece. Truth be told, I am the type to run with scissors only to put them back where they belong.

So, back to Gibran. What exactly would be required of investors if they married the mistress and bore a child? What tenets might need to ensue to shape the outcome of this emotional and intellectual shift? So Here goes: With all due to respect to the genius of Gibran, I unleash, The New Prophet. [read the rest of this post]

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