By her appointment all I see is the creation of more government.  A very bad thing.



 Dear Mr. Niederhoffer,

Bob Newell, as long as I have know him, has remained neutral on politics, etc. on his webzine, the Maven till his article today.





Alan Millhone and Lubablo KondloAll who are interested look at the blog King Me. A segment of this upcoming documentary on the game of Checkers will be submitted to the Sundance Film Festival.

Part of the movie centers around a very poor but top South African player of color named Lubabalo Kondlo from Port Elizabeth who struggles everyday.

The blog is well worth a look





 Took my daughter to Cleveland and the Browns game last night.

I told her cell phones are an epidemic observing from my seat all the texting etc. and noticed all the fans around us covered in tattoos.

Inking is expensive. Makes me ponder if the economy is really so bad.

Fireworks show after the game were unreal and made the evening complete.



Peter Earle writes:

Actually, like the market for shoes, the skin inking enterprise is a great example of the economic possibilities of a virtually unregulated market.

Typically relegated to prisons, the backs of bars/liquor stores, and other venues which the political parasites aren't wont to enter or be concerned with, the market for tattooing has seen explosive growth over the past 15 years; I personally attribute the growth to both (a) the social acceptance, later encouragement, of women to get tattoos, at least doubling the size of the market; and (b) the growth of musical and sports "gangsterism", in which an arms race for flesh adornment has led to "sleeves" and neck/head/facial tattoos to grow in prominence and, again, broadening acceptance of the undertaking.

With that explosive demand, from a fairly small number of parlors and side-venues I note the arrival of small entrepreneurs, ranging from affordable, storefront tattoo shops in malls to artist partnerships offering extremely high level quality and service: a virtually unfettered capitalism resulting in a wide range of various (sometimes bundled) services across a gamut of specialties and levels of talent, availability and differentiation resulting in a lowering of cost and huge product diversity.

Thus has arisen the inarguable ubiquity of the illustrated populace.

Marion Dreyfus comments:

My friends and I personally find tattoos artistic, executed in the main with extraordinary skill, and yet horrendous on a human being. I would not date a man with tattoos, and I avoid females who have indulged.

One always muses: What will happen in 10 years? How hideous will you find what you have done?

I surmise the followers of this unfortunate craft will subscribe to that existential philosophy: Live fast, leave a pretty corpse.

Peter Earle replies:

But from a broader perspective– the growth of tattooing is not only, in a market or business sense, a great example of the potential of free markets, but also illustrative of the social effects of what this country is in fact evolving into economically -hampered, intervention belabored, highly-regulated and increasingly socialist.

The social consequences arising of a credit-inflated, saving-disinclined, personal responsibility-defenestrated environment is/tends to be an immense high-time preference inclination of society; people thinking of the next 10 minutes, ten weeks or four years, and less of the long term picture.

In 60 years, elderly women with sagging, blotchy lower-back tattoos will crowd shorelines, and men's biceps/forearms/backs will murkily herald rock bands, songs, products and memes long since discredited and in any case extinct.

Pitt T. Maner writes:

Temporary tattoos made with henna were seen available near Manhattan east side docks where tour boats to Statue of Liberty are located. Advertised as an approximate 2-week tattoo experience. You could get the vicarious sailor tatoos around Halloween time as a good addition to your costume. Some might be allergic to henna though.

Indian bridal henna tatoos can quite elaborate and beautiful in some cases.

But I'll pass on anything permanent.

I also thought the 3-D photo images available at the docks where they holographically put your image in a block of plastic were kinda of neat if not a bit touristy. Good for a paperweight. Sort of dates the old photo booths. Evidently you can spend more on a real portrait. What tourists are being sold and what they buy is an interesting study in itself. It has to be a highly studied field.

I couldn't resist the Mexican jumping beans at JFK. Hadn't seen them in 40 years. You end up paying about a $1 a bean if you count only the alive ones! A nice markup there.

Gordon Haave writes:

A friend of mine who had tattoos and now is getting them removed says there is big competition and the laser removal guys are quick to cut rates. Apparently GE financed the purchase of the lasers the last few years and now people have defaulted and the lasers have hit the market cheap.

Just one date point, I don't know this firsthand.



Bremerton, WALately been keeping my ear to the ground and have overhead workers at three businesses discussing among themselves about their hours being cut.

One place was a 7-Eleven and two restaurants.

I don't see things improving. consider me a skeptic.



Al Corwin writes:

I'm in Bremerton, WA, sixteen miles due west of Seattle. Bremerton is a Navy town, and it has always been somewhat immune from the ups and downs of the national economy. It usually does slightly better when the military is in use (like now), and slightly worse when the need for the military seems less acute. This time is different.

The town became flush in the past decade as the one-hour ferry ride to Seattle became a pleasant option to Seattle traffic. All of this was due to the boom in housing. When things started to fall apart, they fell apart more here than closer to the city because of the relative inconvenience. Despite getting an inordinately high number of stimulus projects here, the town is hurting like never before.

Fully a third of the storefronts in town are now empty. Two restaurants closed last week, one of which was a successful business for over thirty years. The only good news I see is that my friends who are contractors are getting enough work to get by now whereas a year ago they were all working on their golf game because business was non-existent.

Another friend runs a temp agency, and his business has turned up sharply over the last three months. That's usually a sign of recovery, but he says the demand shows no signs of being long-lasting, and so far, there has been very little attempt to turn temps into permanent employees.

The only new retail businesses in town are drugstores. Rite-Aid has built a new store and Walgreen has added two. I don't really understand this. It's not like we had a shortage of drugstores before, and this is only a town of forty thousand people. Something has to give.

In fact, I do notice new drugstores everywhere I go. What is up with this?



Lubabalo Kondlo on right, Alan Millhone center

[Photo: Center, Alan Millhone as referee. Left: free style world champion Ron " Suki " King of Barbados. Right: GM Lubabalo Kondlo of Port Elizabeth, South Africa. Match of twenty games played at Medina, Ohio.]

To: Alan Millhone 

Molo Mhlekazi

I'm Luyanda Ngwenda. I studied Internal Auditing at Nelson Mandela Metropolitan University and am unemployed. I'm passionate about changing people's lives for the better hence it was easy for me to help Lubabalo because I think the game of Draughts can be applied as a metaphor for life, i.e. one good move pushes one to a win, one bad move could push one to destruction, in reality and on the Draughts board. We live in a society with plethora of underdevelopment, poverty and disease. Draughts can be used as tool to fight these ills… and of course create more world champs like Lubabalo.

Hope I answered you, Sir!


Luyanda Ngwenda

Port Elizabeth, South Africa

[Ed.'s Note:  Molo Mhlekazi in Xhosa language is roughly equivalent to "Hello Sir!"]



 Hello everyone,

Finished up a little job for an older widow lady. She makes a world class ham loaf. Took one again as part of my payment.

She paid the rest in cash and found she needed another fifty. She proceeded to her kitchen and opened her freezer door and extracted Mr. Grant.

That was surely cold cash she gave me!

Regards Alan



McChrystal Relieved of Duty; Petraeus Tapped - News Item

Old soldiers never die — they just fade away.

When politics trumps winning a war only the troops in harms way suffer.

David Hillman comments:

By exhibiting extremely poor judgment in allowing those things reserved for locker room utterance to be spoken in public and on the record by both himself and his staff, he busted the chain of command. Any professional military man/woman will tell you that simply is not to be tolerated. Period. If one questions one's superior's capabilities, orders, strategies, etc., do so in private and ask for a transfer. His transgression was egregious, especially for one of his rank and experience. This sort of behavior may play well to self-entitled Gen Y'er's, but as Boomer with 34 years of service in, he should have known better. Btw, imho and in that of many ranking generals asked to comment today, David Petraeus, the 'replacement', is not a downgrade. Consider him 'the ace of trump'. Now, can we, once and for all, adhere to the Chair's well known and oft ignored wishes and refrain from the political?

Ken Drees writes:

[Did you] ever think that he used this opportunity to get out–consciously or sub-consciously? I love how people automatically assume that it was a lapse in judgement. I love how the media plays up their own –how Rolling Stone snuck into the general's camp ala' the spy capturing the marshall in stratego–

He is a general. I am sure he ruminated day and night upon his situation the way a general would. I mean this isn't Gunnie from Heartbreak Ridge after a 12 pack of Michelob shooting his mouth off about his CO. I will give the general credit for getting himself relieved of command. Who knows what timing and or circumstances were behind the scenes to influence how this went down or why. If it was subconscious–then he got what he wanted afterall.



To show how behind I am —– till tonight I had no idea our Edison light bulb will be banned by 2014.

Also did not know there was a 10M prize for the best light bulb.

LED looks the best for now at a projected 40.00 each that will last 10 years.

Wonder if the government will offer ' coupons ' as they sent out for converter TV boxes ?

It seems current light bulbs use 22 pct of current USA electric power.

Comments ?

Nigel Davies comments:

Since January I've been living in a modern low-energy apartment and I've been shocked as to how inexpensive the running costs are compared to the previous one. That's also without considering the 'real' cost of energy, for example the price we pay doesn't include the expense of oil related military operations.

Having said that they way they seem to be going about this just stinks, it looks like they want 'control' at any cost.



 One was recently asked, how do you spot a hoodoo when you are in or dangerously close to their presence? I would say that their past record of failures is a good starting point. As is their ability to talk a much better game than they play. Also, their attempt to impress you with the trappings of success, ( a conference call with their five principals is a usual gambit). Not to be disregarded is their locus of operations, often from a ephemerally built recreational area where permanent lodgings and such things as pianos are not availalbe. The inclination to befriend you and flatter you is also a clue. But how can this be quantified, and how can we learn to avoid them? What should you do when you've met a hoodoo? I've always taken to burning my shirts, especially if they've hugged me as they ofen do. Dare I ask the question of whether there are such things as hoodoos or is it a figment of random numbers? No, that would be too mind boggling. But please help with your insights.

Alan Millhone writes:

Some years ago my late father and me were enlisted by Banque Worms to take over a failing condo project in our area.

The developer met us and after I shook his hand I could smell his pungent cologne on my hand for the rest of the day. He had a lady friend assistant who wore a see through dress with precious little underneath if the sunlight caught her profile just right. When I first met him I could see " carpetbagger " across his forehead.

He was a genuine "slicky boy" right out of South of the 38th Parallel.

People like him wear a lot of bling and cheap after shave. Usually have a woman at their side as a distraction.

They are long gone. Our crew finished the job.

Stay vigilant and wide eyed. 

Pitt T. Maner II adds: 

hoodoos at Bryce CanyonFortunately, I associate the word "hoodoos" with the past leader of my university (UF) geology field camp, Professor of Geomorphology, Dr. Robert Lindquist, who was an expert on the formation of hoodoos in the magnificent Bryce Canyon in Utah and knew of the locations of many wonders in the West–original survey markers left by Powell, dinosaur bone and gastrolith graveyards, amazonite on Crystal Peak and ancient lahars in South Park, Co. A geologist's geologist who looked like he had stepped out of the 1800s.

As for the other definition, there was a person who once recommended Enron, Freddie and Fannie, and several other long ago bankrupt companies and who was so consistently wrong for awhile that it was almost uncanny. If one had just done the opposite. It was a good education to lose money at an early age though on hoodoo picks. Better to lose and learn using your own thought processes–at least there is a sliver of hope for improvement. 

Russ Herrold writes:

I might add that to view a person's bookshelves (even ones only in public areas) or even books in the process of being read on a table, or to note the absence of such, in each case provide a window into the mind of that personis to me a 'tell'.

Alston Mabry writes:

To see something clearly, it can be helpful to study its opposite. Recent list discussion included one of my favorite anti-hoodoos, Richard Feynman– intelligence, curiosity, enthusiasm, creativity, generosity, joie de vivre.

Russ Herrold adds: 

This certainly may work for when to exit or what to avoid. My brother also seemed to have a uncanny ability to leave the party, when things were getting hot… too hot… right before the cops came and arrested everyone. His friends started following him. However, the same may not be true with when to start a party. As a kid I remember people would fight for a seat next to me during a math test. If I did not like them I would pull a Goldman synthetic and write down some wrong answers, to be corrected latter in secret. It has been my experience in investing that the surest sign of a Hoodoo is willingness to copy someone elses system or trade and yet have no idea why they should expect it to work. There seems to be floating around hundreds of billions par value of formerly AAA paper that now only worth hundreds of millions that seems to prove that these Hoodoos are extremely common, if not the most common Hoodoo around.

Nick White writes:

Perhaps the most difficult aspect of detecting hoodoo-ery is to discern the difference between the genuine actions of the bona-fide dealer versus the pretense of the hoodoo (who - come to think of it– may well be bonda fide, too, but just cursed. Let's call these poor souls benign hoodoos versus their more malignant bretheren).

I think the sure tell of a malignant hoodoo is that their most effective lies will be those very closest to the truth…yet there lies their very advantage over us, and requires some street smarts to know the difference. Perhaps the foil is to know and experience for ourselves the difference between ambition and aspiration. The Stoics made this sort of distinction to help them in their quest against self-hoodooery: Ambition was vulgar, akin to avarice, full of scheming and accompanied by a very lowbrow, keeping-up-with-the-jones mentality. These sorts of feelings were to be put to death in oneself moment-by-moment through Stoic practice. Aspiration, on the other hand, was considered more noble, civic and had the connotation of dilligence, discipline and a bent toward giving a world-class performance simply for the sake of excellence as a way of life. Therefore, perhaps we might say this kind of vulgar ambition is the giveaway quality of malignant hoodoo-ery? Applying this little rule-of-thumb might constitute the foundation of an early warning system.

However, before any of us jump on the moral high horse and consider themselves "aspriational", the Stoics further stipulated that it required very great self-knowledge to even know the difference between these two values, let alone to declare oneself in one camp or the other. Even then, the Pyrrhic victory was assured– if you felt yourself to be truly humble and aspirational, you were most likely hopelessly ambitious and required greater training to cure the very need to make such statements about oneself.

Jeff Watson adds:

Nick, you made the most erudite explanation of hoodooism I've come across in a long time. One might wish to consider the partial hoodoo which affects 95% of the population. With the exception of a few good trades and the ability to be a good father, I'm a world class hoodoo, among the best. I won.t deny this because that would be a folly, and total lie as I can make money but my personal life is a train-wreck. I won't get into the Faustian aspects of all of this, but it is there. Hoodooism comes in many ways, shapes, and forms and I've seen and done them all. Hoodooism is like the old adage that history doesn't repeat itself but it always rhymes. The hoodoo that the chair describes isn't enough, the one you have to watch out for is the one that makes money on a regular basis, he's the danger.. He might steer you onto something good, but there is always a price to be paid, and the price is not always what you expect and not the currency you wish to pay..

George Parkanyi writes:

This whole notion of hoodoos frankly I find rather uncharitable, and burning one's shirt after a tainted hug smacks far more of superstition than science.

Now not hanging around negative people I understand. Some just wear you down with their negativity, and you do have to cut your losses at some point. But to classify those who have tried and failed into their own undesirable caste is unfair and a vast oversimplification. People run into difficulty for many reasons– failed relationships, health problems, sometimes just honest mistakes. My experience has been that people have far more to offer than what appears on the surface– regardless of their circumstances.

I wander past homeless people– ostensibly life's greatest "losers"– sometimes as I go to work, and when I really think about, I'm awestruck at how they have managed to survive all this long– with absolutely nothing, through harsh winter conditions. How do they do it? Clearly, they have skills that I don't. One time I gave a not only homeless but also legless man $10. He didn't ask for it. I just walked over and gave it to him. Here he was on the front lines at the very edge of humanity, representing on my behalf one of the worst possible circumstances that I could even imagine for myself and somehow I was drawn to him. When I gave him the money, he beamed at me with this smile of pure joy, looked me straight in the eye, and cried "God bless you!" To this day I will never forget that blessing, because at that moment there was a seismic shift– I actually physically felt it– in my understanding.

In the lands of the dispossessed, I don't see hoo-doos at all. I see potential teachers.

As for people who befriend you only because they want something from you, the best I think you can do is make your own decisions on to what extent and level you wish to engage. If you enjoy their company or there is something about them that you like, go with it, but don't take risks that would seriously jeapordize your business, family, and other relationships. Not everyone is genuine, yet not everyone's on the make either– and some people are absolute gems. To be completely distrustful will cut off a lot of wonderful experiences. To expect too much of people or to be overly trusting will set you up for disappointment, or worse.

It's like trading really. If you diversify your relationships you have less risk and less volatility. If you concentrate your relationships, you have more risk and more volatility, but perhaps a bigger payoff in the intensity of love and friendship. You have to figure out the right mix for you. The interesting thing about relationships is that that while you're investing in others, they're also investing in you. The more relationship value you create, the more relationship value you (and others) will also accrue. I can't quantify it, but I think there is a real multiplier at work there.

Last point. If you're not confident enough to engage or deal with a "hoo-doo" without fearing harm to yourself, then perhaps you should worry less about the "hoo-doo" and examine your own fears. What difference should it make to you if have a conversation, dinner, or even a business deal with such a person (however defined)? In what sense would that make you a lesser person or cause you harm? It may or may not, but I think its a good question to ask.


Jeff Watson comments:

George, it would behoove you to read up exactly a hoodoo is before writing such an elegant, misguided essay. The essay was great, almost fantastic, but missed the point. I can say this because I'm a hoodoo and proud to admit it. Not all hoodoos lose money in the market and in life and divorce. Some lose through gambling drugs, going for long odds, begin too easy with short odds. I lose my money by staking unreasonable ventures, loose women, and bad ventures. Not a lot of misadventures but enough to affect 11% of my bottom line. Add that to my losing trades, my 30 dependents, and I have a big nut to make every month. Nothing like the Chair, but still significant. There should be a place in the hall of fame foe us grinders who knock it out every month for years…That's gotta count for something.

Duncan Coker writes:

On the topic of hoodoos, when I am performing a task others can either help me perform better, have no impact, or lead me to perform worse. A hoodoo would would reside in that last category. I am not so concerned about their motivation or intent, just their impact. With my favorite fishing comrade, we actual raise the level of our game so to speak, so an inverse hoodoo. We share information on the flies that are working, fish caught, good spots on the rivers, ( after a small bit of subterfuge of course for good measure). We have a good rhythm of leap frogging each other up the river, alternating the good stretches, not spoiling the water ahead for the other. Plus the general level of conversation or lack of it fits well with the day allowing us to focus on the river and landscape around us. In a pinch we can count on one another. I recall one day I slipped and snapped my fishing rod while at the same time managed to lose my fly box and all flies and watched it float away into the fast current. My friend saw it all and after a few jibes, offered to share his set up, and we took turns the rest of the day. We landed my rainbows that day.

But I have fished with hoodoos as well. One guy we nicked named Trigger. He was so nervous and jerky casting and moving around the river we thought he had an itchy trigger finger and thus the name. He could destroy a beautiful fish laden stretch of river faster than anyone I have seen, with sloppy casts, poor retrieves and a general disharmony with the environment. And he liked to talk, talked way too much. So just being around the guy brought my fishing down and took away my rhythm. Plus, he had the very real affect of spooking any fish near us. They must have known he was a hoodoo as well. One day was enough with Trigger.

Nick White comments:

Actually, I wonder if the null hypothesis is that we're all natively hoodoos…with only will, practice and a life record to help us refute it?


George Parkanyi responds:

Humanity in the aggregate, and individuals all, are - maybe flawed isn't the best term - let's say limited, at any given point, by the sum total of our experiences and our genetically born underlying capabilities and pre-dispositions. Most of us I would think have far more potential than we ever actualize. As infants and children, we start out gang-busters, absorbing everything - especially information and ability most pertinent to our survival. It is primarily a world of exploration for us at that time, underwritten by the support of those that take care of us in the early years. We're all about curiosity and imagination. As our thirst for knowledge and experience leads us to new experiences, we also begin to develop routines and habits, which enhance efficiency and conserve energy, but also help us re-experience that which we have enjoyed or that have worked in our favour before. The filtering begins, and the type and nature of recurring experiences that we seek increases. Habits take form, even at a young age. The continuously developing habits, I believe, progressively and increasingly compete with our desire and ability to pursue new experiences. At certain points in life, we even choose massively pre-packaged experiential templates (e.g. marriage, career) as well, which hugely filter and channel our future experiences. Ultimately, we (not all of us, but a large portion) reach a point where there is no further desire to seek new experiences that are outside our past experiences. Our habits completely define us. As we age, we also begin to lose the resources, particularly health and energy, with which to pursue and expand our overall life experience.

Perhaps a hoo-doo is simply a person that can or will not go to the next level, and finally settles for habit being the determinant of his/her future experiences. Perhaps they give up on the pursuit, or are ultimately distracted away from seeing or imaging that next level of experience beyond the point that they have already reached (which point would be different for each person), and never even think to look toward the horizon of their life again. All I know is that habit is a very powerful force, and ultimately I think it overwhelms us.

John Holley comments:

"Amen, JT. Sorry I made you burn a shirt that time I hugged you at the Mets game, Vic!" KD

Just to show I put my actions where my mouth is, I will share with the list that I recently have read two very important books that have shaped my life thus far. Both are shared favorites, highly insightful, and forever giving and common amongst the Spec Listers:

1) Memoires of a Superfluous Man - A.J.N. (via Vic)

2) Five Lessons: The Modern Fundamentals of Golf - Ben Hogan (via my Dad, also Kevin Depew's fav golfing book)

These books are on my top ten list. If you haven't read them then do it. In fact read them over and over again.

Other than G-man's speech in Atlas, the 1 thing I hang onto that Lack shared recently in a post regarding his Father that would get you out of being a Hoodoo is appropriately going to be number twenty six.

26) “If you saw Atlas, the giant who holds the world on his shoulders, if you saw that he stood, blood running down his chest, his knees buckling, his arms trembling but still trying to hold the world aloft with the last of his strength, and the greater his effort the heavier the world bore down on his shoulders—what would you tell him to do?” " To Shrug." Shrug, bare more. Your mind can handle it.



I just read Rocky's post and his wife's comments on her van. In 1999 I completed a big roof job for a man who just retired from a large pipeline firm he owned. In 1981 he had bought new the Ford pick up in the photo. Upon completing the roof work he told me he was going to sell this truck. I asked at what price? That was a Wednesday and he said he would quote me on Friday what he wanted. It has a 300 six and is 3/4 ton automatic. I bought it for 1,100.00. It serves my needs. The other day someone asked me when I would get another truck? I replied in jest, "three more payments and it will be mine!". They gave me a dumb-struck look.



 Hello Everyone:

Marion emailed me on my way home from the tournament and asked how I did.

I managed 12 points out of a possible 28. I earned every point this past week-end.

I noted all entrants had pad and paper to write down their games and to make notes. My oponents reminded me of the Market Mistress and the tricks she uses to bamboozle the unsuspecting trader in the market. I will review a few of my games to look for my mistakes and where better play might be had for my next tournamnet.

There isn't any Magic 8 Ball in Checkers or the Market. "Knowledge is Power" in anything!

I had a great time over seven 2 game rounds of 3-Move Restriction style of Checkers. 156 opening deck that is as vast and elusive as the Market.

Good luck to all traders on Monday.





 On my way to the yearly checker tournament I always stop at Mehlman's Cafeteria in St. Clairsville, Ohio.

They have a tremedous selection and have two serving lines.

You stand there and can choose from an array of various foods.

Today I choose a small bowl of pickled beets and mac and cheese. Then a helping of mashed taters with brown gravy and could have had chicken gravy instead. Took a dinner roll and had a choice of butter or margarine in pats. Unsweet iced tea. They serve a world class deep dish apple dumpling and I had one today.

Today for the first time I thought of the choices while in line and what appealed to me.

The Market Trader also makes choices and buys accordingly as to appetite for various stocks.

I am at my next stop on my journey: Cabelas.

That might be another story…




Errors in statistics are usefully classified as type 1 and type 2. A type 1 is a false positive or undue credulity and a type 2 error is a false negative or false skepticism. The greater you try to reduce the level of error in one the greater the likelihood of error in the other.

                                          Don't reject             reject

no effect hypothesis true       correct                type 1 error              

no effect hypothesis false      type 2 error          correct

A useful way of considering the decision making is above. Consider for example the no effect hypothesis that a pill is not healthy. if it's not healthy and you say it's healthy you make a type 1. If it's healthy and you don't say it is healthy you make a type 2.

A certain agency that regulates drugs is famous for only considering the type 1 errors, making sure with endless and ruinous double blinds that type 1 errors are minimized to the excessive making of type 2 errors and keeping off magic bullets that would extend life span and health enormously.

There are many areas where these trade-offs between errors occur. For example in spam filters. You can reject good things, that's type 1. You can accept bad things– that's type 2.

Our own field often has trade-offs like this. The hypothesis that a system or set point for a trade is random is a good null hypothesis. If you accept the system, you're just incurring churning for a worthless randomness. If you don't accept the system, and it's good, why then you've lost some good money.

The decision to expand your business or trading is another area that crops up frequently. If you expand it you might get in over the head. If you dont expand it, you might miss the gold. The movement into a new field, or the engagement of an employee or employer is another frequent trade off of type 1 and type 2, gullible reaching versus excessive caution that frequently arises.

The usual way to trade off between the two types of errors is to consider the cost of both errors, and to balance your decisions based on the relative costs. Considerations relative to randomness, and variability must also be considered. Also, the myriad psychological biases that lead us to place too much reliance on avoiding the two types of errors that the cognitives have contrived with their silly experiments on college students et al.

What other trade-offs of type 1 versus type 2 do you see that mite be of use to market people or others and what better way to consider gullibility versus skepticism do you see?

Alan Millhone writes:

This weekend I will travel to Grove City, Pa for a yearly Checker Tournament. While playing I will have choices to make. Sometimes there's only one way to move. Often times there's more than one way to move or jump. Checker players and Market players need to evaluate all moves or trades before executing. In Checkers if you touch a piece you have to move that piece– often with disastrous results. If you trade on line you need to consider your trade carefully before hitting "send". Tom said, "Move in haste— repent in leisure". 

Victor Niederhoffer adds:

Sharif KhanThe trade-off in errors in games like checkers and chess would be someone offers you a seeming advantage. Your null hypothesis is that it's not worth accepting. If you take the gambit or seeming opportunity when it's really no good you're making a type 1 error.

In checkers I've found that no opportunity that looks good, no opportunity to set a trap for example, is worthwhile against a good player, as good players never make mistakes. You were too gullible. If you don't take the opportunity when it would have been good, you're making a type 2 error. You were too skeptical. I find that in checkers the type 1 errors are much more costly than the type 2 errors, but in chess I don't know enough to say. But among the good players, I think they often are too cautious or too skeptical if they wish to win a world championships. They are too likely to go for the draws. In general, I would say if you want to be the best you have to be ready to make the type 2 errors to a greater extent. But then you always risk going belly up.

The situations are not without personal applicability to myself. It's easier in squash. I played an errorless game. Never made a type 1 error of going for broke with very risky shots. Well, it wasn't that bad. i went for about 5 years without losing a game in a match or so. But it wasn't good enough to beat the infernal Sharif Khan as much as I should. I should have played a much more errorful game, being willing to accept the risky shots and confrontations and hitting it on the rise and changing my infernal errorless slice backhand to a top spin so I could belt the ball through the Khans the way the Cubans who played Jai Lai could. In other words, I didn't make as many type 2 errors as I should have. 

Anatoly Veltman comments:

I remember grandpa coaching me at 5 or so: "always believe a man." If it turns out to be a lie, you'll find ways to extricate. But if you distrusted without good reason to begin with, you risk losing a friend– and that's an ultimate loss.

Jim Sogi adds:

Why do smart people make either type 1 or 2 mistakes? Presumably, and by definition, it is not because of stupidity, so some heuristic must be at play. In type 1, the fear and result is that you look and feel stupid. In type 2, there is less risk of looking and feeling stupid, but you end up being frustrated by the loss of opportunity. The joke around here is "which is worse" –you present a bad and a ridiculously bad alternative. Weighing the cost benefit is faulty because of proven heuristics are lopsided towards avoidance rather than gain. Add in marginal utility considerations and the difficulty is even harder. 

Bill Egan comments:

I will add a twist to the type 1 error problem. I have seen certain extremely intelligent people simply be unable to conceive they might be wrong. This is a problem that gradually gets worse. They have been right 99% of the time because they are so smart, and as time passes, they make bigger and bigger bets because, 'hey, I've been right.' This isn't quite hubris or arrogance because they really are that good. Finally the odds catch up with them.

Roger Longman writes:

Roger LongmanVic,

Love this.

So seems to me the real challenge is figuring the cost of a type 1 or 2 decision.

In the case of the FDA, the costs of a type 2 error are dramatically higher than the cost of a type 1. Those costs aren't financial, or not primarily financial. There's the substantial humiliation cost, for example, of approving a drug that turns out to have some important side-effect (or a side-effect more important to a group of influential people than its benefit to a group of less influential people) and being dragged in front of a congressional committee (Charles Grassley of Iowa has been the grandmaster of this, but he's got plenty of competition). There's the bureaucratic cost of being passed over for a more visible job, or an interesting review opportunity, if your name is associated with a controversial decision.

All of which is to say: of course the FDA errs more on type 2's. And the growing pharmacopeia (much of which is generic and therefore low- cost) only encourages this bias towards type 2 errors, particularly in regard to follow-on drugs (i.e., new molecular entities in the same class as approved drugs). If — the FDA figures, albeit not publicly
– by instinct, as it were — there is already a good drug that helps a majority of people why take the chance that a second drug in the same class will provide more incremental benefit than incremental risk, which — as I note above — comes with disproportionate institutional costs?

There's also an inherent problem with drug development divorced from serious comparative effectiveness (the current system of purchasing drugs, based as much on rebates retained by payers as medical and economic value provided to patients and employers, actually discourages the kind of comparisons common in most sectors of the consumer economy).

Victor Niederhoffer comments:

Longman was editor of Windhover Information Ventures Biomed and is very knowledgeable about the FDA. I wish he had been at Prof Tabarrok 's talk at junta where the positive case for the FDA going out of business was limned with statistics and current studies on deaths caused by lack of approval.



Photo by Dorothea LangeJust ran into a stranger driving a delivery express van out of Kentucky. He asked openly in the service station lobby if the bridge up the road was a toll bridge and one of the attendants replied it was. He then asked if the station had an ATM? I asked him if he needed bridge toll money and he said he did.

I had him follow me to my truck and gave him two toll tickets (worth .50 each). One likely would do it but I gave him two just in case his van was 3/4 ton. Looking back I should have asked him if he was hungry and if so fed him. Here was a fellow without even the spare change to pay for bridge toll. I had never been in that situation till today.





The Market took away heavily on Friday and at the last minute gave back a small portion ( like tithing ?) to string along the fray.

At least that is how a poor small town builder sees the Market.



loukoumiMy best friend is Greek and has been in Greece for a month. He always brings me back some Loukoumi (a cheap dessert to offer your company). He was told that most likely he would not be able to bring any more onto the plane. Reason? Its texture resembles C4! Anyway he brought me a small bag packed in his luggage. I can taste the Rosewater as I savor a piece. He has bought at the same shop in Athens for many years. It comes loose in pieces surrounded by powered sugar and in a paper bag. I love the taste and texture.

Dylan Distasio writes:

On the other side of the aisle, they call these Turkish Delights. When I was in Istanbul many years back, the young children would peddle these to tourists. I am a fan also.

Alan, since you like Loukoumi, I would highly recommend checking out an American variation here. They are absolutely delicious. Our relatives out in the Pacific Northwest ship them out to us as a Christmas treat. 



 In the last week I have rented two units.

I just left my last new renter. A young couple with a little girl.

They had to make deposits on gas and electric and water. A deposit to me and I pro rated this months remaining rent.

Very rough for the average person to come up with all of the above funds to rent a place.

Having lunch as I type. Vickie served me a treat today. Pickled beets at 7.00 per quart !

Note not a good day for the Dow. Good to see oil decline further.

I hope the US Dollar gets stronger.

Regards, Alan

Scott Brooks writes:

The decade that offered home ownership for no money down and then allowed you to use your house as an ATM ends with people struggling to come up with security deposits and 1st months rent.

As to Alan's comment about the dollar appreciating, maybe I'm channeling chicken little here, but the appreciation of the dollar seems less like blue skies and more like a precursor of the sky falling.

My rationale? Simple. I am of the opinion that the only reason the dollar is appreciating is because the rest of the world is: 1. printing money faster than the US and 2. while the US has a horrible case of "financial pneumonia", the rest of the world is the early stages of "financial respiratory arrest"

The world is playing musical chairs and no one is paying attention to the fact that the chairs are disappearing and being replaced with paper machete' chairs. Sure the paper being used is the American greenback, but when you get right down to it, it's all just paper.

Nothing to see here, move along.



Euro touches four-year low against dollar, recovers. The euro fell to $1.2237 in early trade on Monday, but then recovered to trade at $1.2307. News Report.

The news says Euro at a four year low. It means little to me, but I do want a super strong dollar. Not for envious reasons, or because I want to buy foreign goods, but because a strong currency goes hand in hand with a low inflation rate, as Gustav Cassel and Harry Johnson taught.



 In the parlance of checkers, the use of a preprepared line of play that corrects long established published play or is a new and innovative move that catches a player off guard is called a 'cook'. While playing you casually make your moves expecting the game to follow along well charted territory– then your opponent at a predetermined juncture springs their trap!

Does the Market Mistress lull traders into a false sense of security before pulling out the rug and she stands back and watches the dominoes tumble? In tournament checkers we use a 156 opening deck to begin our games. Three move play is like a vast ocean.

I see the market as vast and complex and constantly on the move as the tides.



the euroActually I think Europeans are happy to have a weaker Euro. Especially Germans. it will help their exports in times of low inflation.

I am not sure the fund Europe wants to establish will help. Typically, the European reaction to the Greek crisis has been slow and fragmented, with states once again moving based on individual interests rather than a collective European view. In Germany local elections weighed also in how the leadership approached the crisis. The long term issue is that in Europe the imbalances between north and south cannot be reduced without a common European policy. In Italy we know well how difficult it is to reduce gaps between different geographical areas (north and south specifically) even under the action of a centralized government and a more or less homogeneous culture within the country. You can imagine the kind of challenge when the areas involved have different history, culture, economy, social structure.

The problem of this crisis is that Europe should accept the default of Greece. Sorry for the creditors. By the way: who are the creditors? Mainly French and German banks of course, already weakened by the crisis. The PIGS are not the only problem for a risk of contagion. Eastern Europen countries do not have much space on the news these days, but you my recall that they were the first to suffer a lot in 2008 at the beginning of the crisis. Their issues are still there.

It is the social reaction to the fiscal policies around Europe that can produce the biggest changes in the next years, as peoples of Europe will blame capitalism for what happened. The risk is that a bigger role of governments in society and economy will emerge together with some sort of nationalism and protectionism. Not good for growth… Although the US in the long term may have serious issues with their deficits and debt, it is Europe which is going to be weak for several years ahead.

I was in Italy last week and listened to discussions about the state of the economy. People complain that there are no jobs and it is getting worse. Most say that "the government should do something about it"…..

Alston Mabry writes:

The EMU is adopting the drachma. They will print more €'s to pay off the debt and save the banks. The Germans will benefit from a weaker € and better ex-EU export power. And it will be clear that Portugal and Spain can be saved the same way. Gold up! 

Ken Drees writes:

I remember reading an article about the palindrome when I was just learning about speculation, it showed him sitting and playing chess outside. It was after he had broke england out of the currency band and creamed the pound. He said something to the effect that england was going to amass some large number to defend the pound–and he was prepared to sell twice that amount for starters. I think its similar to europe now as they bluster and puff about in hopes of throwing off the currency attackers. They are in a losing position as Paolo points out. Nothing gets the juices flowing like lines in the sand. They have to have a plan for the entire string of piggies–all the way up the ladder or the wolves will chase them all the way to the end. The euro is surrounded by wolves and swinging the torch around in a circle only works so long. Eventually the wolves get more and more agressive and the attacks become more brazen.

So far it looks like their best attempt to date will be their announcement today/tonight. Anything hollow or doubted will be attacked ferociously or anything a little workable may have the wolves waiting and keeping their distance, following along. And if Big Al is correct than gold wins either way–massive QE or massive breakdown–time will tell.

Alan Millhone writes:

I want to see the US Dollar become King and overshadow the Euro et all.

I am bone tired of political correctness.

I build and remodel and rent apartments. Not an easy trade but one I understand. Not for everyone to be sure. Lumber has dramatically increased of late. One learns to not quote jobs too far into the future.



census takerHello everyone.

My daughter lives on one of our apt complexes and after lunch called me. She informed me a census taker was on our property with a handful of census forms and asking my daughter lots of questions. That was 2 PM. I got onto the property at 4 and the lady was still there and showed me her ID and we chatted for some time. I was there till 5 and this lady was still in her car doing paperwork. She told me she was 76 and lives in Nelsonville (a good hour from Belpre). She told me she has a duplex she owns and rents and admits she needs to do a better background check on her renters. It was nice to compare notes with her. I casually asked her if she ever plays the Market. She said why play something about which she knows nothing! She said owning rental property was tough enough for her.





Danny AingeNoted in my morning's rag that Celtics GM Danny Ainge was fined $25,000 for tossing a towel to try and distract Cavalier forward J.J. Hickson as he shot a free throw! A really visible example of very poor sportsmanship. Perhaps the NYSE floor traders need to hire him to try and distract the sellers the last couple of days?

Kim Zussman replies:

The 1930s created a generation of retail investors who decided equities were fool's bets (and one could argue that the next unadulterated generation, coupled with a fortuitous lack of major wars, explains much of the bull market 1980-00).

One wonders how many broken hypotheses, market glitches, scams, sovereign/municipal defaults, real-estate which never drops, and government interventions it will take to persuade the 401Kaboomers who are starting to retire (often without choice) that assumptions about investment vehicles makes asses out of…



 In my travels today I noticed four vehicles loaded to the gills with furniture and mattresses. Three were pick up trucks and one was a car pulling a loaded trailer.

In renting units I always dread a person calling me and saying at months end they have to move now. This usually is a bad omen.

One couple called me today who got burned out of their unit two weeks ago and wanted to rent from me but never called me back till today. I told her I had already rented the unit. She told me they had a terrible time getting back their deposit till today. Likely their former landlord did not have the money on hand.

Victor Niederhoffer comments:

An alternate take on the i -95 bearish route.



A rare inverted jenny stamp that turned out to be a fake
Just read an update in my morning's paper on thousands of homes infested with defective Chinese drywall (sheetrock). These homes need to be stripped to the bare studs or beyond to get rid of the problems of mold, corrosion, breathing issues, etc. Should be a boon to drywall suppliers, but likely will drive upward drywall costs and create shortages.

Another problem with the Chinese is in the area of collectibles — stamps and coins, most notably. eBay et. al. are full of fakes of better stamps and scarce coins. You need to establish a good relationship with a reputable and established dealer in today's collecting world. The Chinese have taken over the US with massive loans to us. Thus we cannot say too much to them about pirated goods and fakes that flood the internet and the open market here in America.



For those of you who like baseball: go to Bob Newell's THE CHECKER MAVEN for an excellent photo of baseball great and checker player Mr. Christy Mathewson.

Stefan Jovanovich shares:

And here is The Checker Player and Mr. Cobb .



 The Sage of Lawyers. Almost 1/10 as dishonest as Mr. Burger:

Lawyer asks judge to force rival to wear nicer shoes via Boing Boing by Cory Doctorow on 7/10/09

A lawyer in Florida filed a motion to force his rival to upgrade to newer shoes, on the grounds that his homely old hush puppies gave him an unfair advantage by projecting an air of unsophisticated honesty to the jury.

3. It is well known in the legal community that Michael Robb, Esquire, wears shoes with holes in the soles when he is in trial.

4. Upon reasonable belief, Plaintiff believes that Mr. Robb wears these shoes as a ruse to impress the jury and make them believe that Mr. Robb is humble and simple without sophistication. . . .

6. Part of this strategy is to present Mr. Robb and his client as modest individuals who are so frugal that Mr. Robb has to wear shoes with holes in the soles. Mr. Robb is known to stand at sidebar with one foot crossed casually beside the other so that the holes in his shoes are readily apparent to the jury . . . .

7. Then, during argument and throughout the case Mr. Robb throws out statements like "I'm just a simple lawyer" with the obvious suggestion that Plaintiff's counsel and the Plaintiff are not as sincere and down to earth as Mr. Robb.

8. Mr. Robb should be required to wear shoes without holes in the soles at trial to avoid the unfair prejudice suggested by this conduct.

Motion to Compel Defense Counsel To Wear Appropriate Shoes

Alan Millhone comments:

My mother's father was a real Scotsman. He worked for himself most of his life. Taught himself to play the piano and collected coins. He never threw anything away and wore his clothes till threadbare. Upon his death ( I was 16) we found on the stairway ledge to the basement a tall stack of cardboard cut outs that he made to fit his shoes.

The lawyer/shoe story brought an old memory I had long forgotten. Grandpa Mac was not out to ever impress anyone. Unlike the lawyer who was out to create a false impression of being somewhat destitute. 



 I just left my local lumber yard and found the following:

With oil soaring again, and my local pump prices on the rise and $3.50 regular predicted by Memorial Day, the following was quoted to me:

Framing Lumber:

2×6x10" UP 12%

2×4x10" UP 5%

2×10x12" UP 5%

2×8x10" UP


4'x8' sheets of plywood: 1/2" CDX (construction sheathing grade) MINUS 7%

5/8" CDX (construction sheathing grade) MINUS 4%


30 year dimensional grade ( 3 bundles equals 100 Sq. Ft. of coverage)

UP 7% and more increases expected…

With oil over 80 and likely to climb this will be terrible for the upcoming construction season. I have a large garage to build and pre-bought all materials before last Winter set into my area. Glad I did this. It's hard to figure prices for upcoming jobs due to upswings in materials. I can feel those dogs nipping at my heels!



AKio ToyodaPerhaps someone can educate me, but an astute friend writes to me that Mr. Toyoda gave a very contritionate diplomatic apology to the US. It seems from the bleachers to me that the problem with making an abject monkey and whipping boy of the big Japanese auto maker is that there is retaliation. It's like raising the tariffs that started World War 1 to me. Surely there is something better to do than bash the Japanese who make cars so much safer than we do, and whose customer satisfaction is so high. Do we really think that this kind of thing helps…

Alan Millhone replies:

I'm on my second leaded Nissan and find them to be a very solid auto. My dealer says Nissans are "Bullet proof" in terms of reliability. You are likely right in your assertions concerning Mr. Toyota. All of us need to learn to get along and be supportive of each other. Likely more mortgage troubles loom and under reported unemployment figures and troubled banks to haunt all of us in the near horizon. I feel my rentals will come back from the dead like gangbusters as folks will not be able to muster required higher down payments to purchase the American dream of owning a home.

Dan Grossman writes:

I would guess the truth of the acceleration for Toyota is something like:

1. We don't know what it is.

2. It may be nothing (mostly driver's error like Audi, maybe a floor mat or two, and for the rest very minor statistical happening of 2 in a million cars, can't reproduce, can't scientifically identify).

But if Toyota said that, all hell would break loose, "The American people will not stand for this" and all kinds of Congressional and Transportation Dept posturing.

So they have to apologize again and again, and recall all the cars, and "fix" the defect that they really have not been able to identify.

I know nothing about auto mechanics, but that's my guess.

Pitt T. Maner III comments:

 So if it turns out to be electronic what would this lead to? Would the onboard computer come from another country?

Dave Gilbert, a professor at Southern Illinois University automotive technology department found a design flaw in the electronic system, which prevents the vehicles onboard computer from “detecting and stopping certain short circuits that can trigger sudden speed surges.” As a result of the onboard computers failure to detecting and stopping the short circuits, the computer does not record an error code; and doesn’t activate the system that is designed to shut off the vehicle’s power and put it into “limp home” mode. Therefore there is no way to trace back to the original issue after an incident of sudden acceleration, which has led Toyota officials to continue dismissing accusations of electronic malfunctions. A Safety Research & Strategies advocate stated, “The system is fallible, in fact, it’s got some really troubling design strategies that are employed by Toyota that appear to be outside the norm. And their system clearly has design strategy that has a very slim margin of safety.”

James Lackey writes:

Toyoda has been apologizing since he took the job.

1. Cars break.

2. All cars have defects.

3. All car makers do cost benefit to recall or not to recall and if not to recall why pay for the redesign.

4. All Toyota's problems are from truck losses. They top ticked a new truck line in 2005.

5. F and T both use the same hybrid brake tech with the same feel problems. T was based, F wasn't. Proof there is drama, but why?

6. Toyota employees– so many Americans, it's funny. They wasted trillions of Yen with GM and no one could even come up with an argument not to close the factory of the future in California. We just wondered what took so long for GM to go bust and Toy to quit.

7. See INTC keeping AMD around.

8. Japan and Korea love to argue. Hyundai and KIA are in Alabama and making and selling cars. Watch Olympic speed skaters and you'll understand the battle.

9. In the 80s the Japanese feared a traders tax so they assembled them here.

10. The pedal in question is Indiana manufactured. The Japanese pedal worked fine. Some one is in huge trouble.

11. Toyoda, if like the last Ford CEO named Ford, wasn't much of a car guy. His job is PR. Last year he spent all him time apologizing to the Japanese investors for a financial loss at #1.

Akio Toyoda?

Born May 3, 1956 (1956-05-03) (age 53) Nagoya, Japan Nationality

Japanese Education Faculty of Law, Keio University MBA, Babson College

Occupation President and CEO, Toyota Motor CorporationEnd.

It's a preannouncement silo earnings, dump all bad news and all recalls/problems at once. It's a blizzard. Notice all the car guys (GM F Chrysler/Fiat Honda KIA/Hyundai Nissan Daimler BMW) keeping their mouths shut. It's not that they are being nice and humble, they all have their problems. My dad called me today on a car electrical problem. It's hard to test over the phone. Then I thought, hey where were all the mechanics at the hearings and on the news tape? The people that work on the cars can tell you every single problem and fix per model, if they can't the dat recorders can.



 Hello Everyone:

I noted that the GOP would not meet with BHO at the U shaped table he was going to provide and finally the GOP and DEM agreed on a square table to meet!

To me a round table would make all equal when they meet for discussions? With the Market down today to 150, I look at those elected officials and feel there are more pressing matters at hand for America!

Now watching FOX while I enjoy a cup of Constant Comment tea I see the table is officially square. That makes me feel so much better.

Regards: Alan

Phil McDonnell replies:

Debating atmospherics like shape of the table and seating protocols is usually a sign that one side wishes to delay any agreement. In this case I believe it may be the Reps who wish to have the health care debate linger into the mid-term elections. Polls show most Americans are opposed to the health care bill in its recent form(s) and the Reps hope to make it their issue this fall.



 Rubber Match of the World S&P championship,

 February 22,2010. 

 Annotated by Victor Niederhoffer

The match between Bullstein and Bearivitch stood tied at 15 games each. After pulling away in the first part of the match, Bullstein fell behind 15 to 9 but with an amazing comeback so typical of him when apparently in the cellar, he pulled 6 winning rabbits out of the hat in a row to tie the score. However, in the game of Friday, Feb 19, time pressures almost overtook him, and after technical analysis showed a clear win with just one hour to go on the clock, he lost 5 pawns in a row and was left with two passed pawns against two castles. He almost allowed Bearavitch to pull out a draw when he attempted to sacrifice his two castles for the pawns. Apparently Bull didn't know whether to play for the win or just to go home quietly and settle for the draw.

1. 1106 to 1108

Bull starts with a traditional but risky opening advancing two squares up the middle. As Lasker says, "The squares in the center are the most important. And the first one to control these squares is usually the winner". As is well known, whoever wins the starting jump ball in basketball wins 58% of the Elo rated games in master play, and the same is true for markets. Moves of this nature are often vulnerable, however to a swarming attack when not supported by the junior officers, and Bear slipped through the broken lines in the rear bringing out his heavy ammunition right at the start. Contrast this with the approach favored by Bronstein and many prudent market players where their first order of business is to move their chips to the safety of the corner protecting it from loss with their junior officers

                                                                                                1….. 1108 to 1104.

Bear moves rite into the breach, apparently going for the k squares at 1100 but Bull had anticipated this, having done some cross practice at squash in the morning on the capital courts. The black squares at k 1100 have and will be the locus of many a battle between these two giants .

2.1104 to 1106.

Bull was content to hold his fire, staying the course until he can bring up the reserves to fire at the enemy's officers later in the day. He allowed much time to elapse on the clock until 1 pm hoping that he could gain sustenance from the well known fact that Vitch is vulnerable during cold days and with oil breaking the round at 80, he knew he held the initiatives. 

                                                                                                2. 1106 to 1107    

3.1107 to 1106

                                                                                               3. 1106 to 1107

As is so often the case these quiet moves mark the calm before the storm as both players jockey for position in the end game, and gather their forces and marshall their troops. Let us not forget however, as the players never do that the spectators must see fireworks at the end or else they will not pay to see or play in the next game themselves.

4. 1107 to 1110

Bull presses the advantage from the strength in oil and waits for the reinforcements and fluidity that the acquisitions in the oil and equipment field, ( einforcements that he was alerted to before the start of the game by his seconds and trainers) will provide. …..

                                                                                               4. 1110 to 1105

Throwing all his forces into the game, in a do or die attack on Bull's vulnerable remaining chips, Vitch moves to a pawn ahead in a theoretically drawish end game. Technical analysis or no after six losses in a row, he is no mood for to go down for a seventh time in succession when he has any ammunition left.

5. 1105 to 1107

With just 15 minutes to go on the time clock. Bull comes back to eke out a win at 1107 after distracting Vitch with some double entendres about "once being enough " and no fears of tightening in the near future.

"I was so distracted by all that sexy talk, that I forgot to cover my vulnerable spots at the end " Vitch told a certain reporter after the game.

While one can fear remorse for Vitch's seventh loss in a row, it would be wrong to count him out as urged on by his supporters in the media, who always crave a red win, he is double dangerous when recovering from a hair's breadth loss.

Alan Millhone comments:

I see the peaks on the chart as controlling squares 14 and 19. Difficult to do on a regular basis.



Penny BlackFeb 10 was the first "snow day" in New York in three years where kids don't have to go to school and when I was a boy, we greeted the snow days with alacrity as it meant we could hop on the subway and visit the stamp dealers on Nassau Street and spend a quarter on some rarities. Apparently there are few if any stamp collectors left among kids today because other activities crowded them out. I base this on direct testimony from Stanley Gibbons and the fact that there are no stamps offered for sale in the newspapers anymore as well as published reports from stamp magazines themselves. This is a tragedy since stamps provide so many benefits in geography, art, history, economics, categorization, collecting, and patience, foreign exchange, printing, and topical interests.

In honor of the snow day, I thought I should enumerate some trends I have noted from my reading of the literature. Dimson is seminal. There is a seminal paper on investment returns from stamps available that does for stamps what DMS and Fisher, Lorie and Ibbotsen have done for stocks. They report that the returns from stamps over the last 100 years have been about 2% a year worse than stocks and 3- 4% above bonds. Adjusted for systematic risk and standard deviation the returns are comparable to stocks. There are so many important and intriguing points covered in that paper that I must refer you to the original. However, a few that I noted are that stamps hardly have had a down year during the last 100. The cost of getting in and out is about 25%. The returns from high priced stamps are similar to those of low priced stamps. The boom years for stamps were 2008 and the late 1970s and like stocks these days they have a few 20 year periods where the returns have been flat especially during the early first and last 20 years of the 20th century. The market for collectible stamps is 10 billion a year, higher than the fine art market in total. The number of collectors is about 50 times higher in Germany per capita than in the US: 1 in 20 in Germany versus 1 in 1000. There are an estimated 20 to 50 million collectors in China. It was previously illegal to collect stamps in China under Mao so there is a surging demand especially for the old issues that none in China were allowed to buy. The price of many low priced issues in stamps has appreciated more than the high priced issues becuase people didn't take good care of them. A nice example are the first stamps issued in the US and the Columbia Expedition sets. The price to weight ratio of stamps is among the highest in the world and part of their value is their portability. The upside down fixed income "Sponsor" has bought 100 million worth of stamps and believes that their value is correlated with GNP. Dimson has a nice set of regressions showing the systematic beta of stamps about 0.2 when adjusting for various Fisher type effects in lags in pricing. (The Dimson and Spaenjarie article)

Stanley Gibbons has a nice index of the 100 rarest British stamps, which are the most collectible, as is their silver, and this correlates well with the Dimson estimates, even though there is much spurious lookback effect in it. There is general agreement that the current collectors in stamps are those who were introduced to it before the 70s and now have the income to augment their portfolios. Very few new collectors are coming in from the US and England. In view of the 25% transaction cost of buying and selling stamps, one could not recommend them as an investment. A good investor would never see his stamps because the values regrettably depend almost entirely with a range of 500% for the same stamp based on condition. Thus, only long holding periods like the 40 years that Dimson uses would seem appropriate. But in 40 years the demand from the kids of today would seem to be likely to be small because they don't collect now or even know what a letter is in many cases. If one were going to invest, one would probably confine his activities to German speaking lands and Asia, and England which still is the rule of the sea as far as collectibles goes and is likely to maintain that edge. One should not rule out the changing value of stamps as a hedge against increases in the service rate on gains and lifetime earnings. One would be interested readers' thoughts on this alternative asset.

Sam Marx comments:

Don't buy retail. Place classified ads in Linn's, bidding close to wholesale prices and/or join the NY Stamp Dealers Club and buy close to wholesale there. If you know stamps it is hard to lose money but the amount you can make is small compared to stocks. In my opinion, if you still want to get involved in this type of endeavor, coins are a better choice. Spilled coffee can destroy your stamp investment.

Alan Millhone commments:

A MMy stamp collecting began one Christmas when I was seven and my parents gave me a Coronet stamp album. I still have it and over the years have expanded my collection. Guess at heart I am a collector and the upsurge in values has been a side benefit. As in all collectibles condition is important. One never has to apologize when selling quality items. To date I have never sold anything from my collection. None of my grandsons have any interest in stamp collecting. My daughter collected some as a youth but quit. I look at stamps as little pieces of paper with bits of history printed on each stamp. Stamps are an excellent way for youngsters to learn about countries and where they are on the map. Something many youth cannot do today. As a youth I dealt by mail with HE Harris , Zenith and Garcelon stamp firms. Stamps could be used today in grade school as a teaching tool. Queen Elizabeth maintains the Royal Collection. Spink etc. has helped the Royals add to this most valuable collection since the Penny Black was introduced. I don't collect any modern stamps and the early US are beautiful esp. newspaper and periodicals. My best friend is Greek and we collect the early Hermes. I like to get out my stamps in the Winter months. I like early stampless covers of my area. Penny post cards and post cards depicting Checkers ( a cross collectible). Cut squares is another area I like and Trieste A and B and AMG-FTT. Stamps as you said is a yearly multi billion dollar business. Auction firms like Greg Manning is publicly traded and deals with collectors all over the world.

Rocky Humbert responds:

A slightly different way at looking at this is the fact that domestic postage rates have handily beaten inflation since 1958. Last February, I went "all in" and purchased a trove of USPS Forever Stamps. (My local postal clerk was perplexed, to say the least.) See: ,  Yet if one extrapolates the trend of the last fifty years, this "investment" will handily beat CPI inflation going forward. The Chair's cited paper is interesting. Yet before drawing any conclusions, one should study how stamps have performed compared with other ephemera … such as private letters from Abraham Lincoln, Ronald Reagan, and Hank Paulson. Given the rise of email and the demise of private letters, one might speculate that collecting the written letters may have a historical significance and scarcity value in the future that bests the postage stamps? Details on the forever stamp:

Russell Sears writes:

While I do not know the first thing about stamps collecting, the Chair's story reminded me of my 3rd grade winter in Titusville, PA. It was close enough to Lake Erie to get hammered by lake effect snow. I would take all the money I owned, (under 15 bucks) and go to the bank and ask for rolls of pennies, nickels or dimes. Shift through them for collectible dates.

The wheat backed pennies, were still fairly common in change. While the silver nickels and dimes quickly grew scarce. The rare one I found were treasured, more than the bought silver. I can still grab a handful of coins shake them and tell you if one is silver.

The ladies at the bank were always gracious and used the machines to re-roll them when I returned a pile of pennies to the bank. Most likely because I was the rare customer on those snowy days, and it was always evident that I walked/ran that mile to the bank on entering.

However, my interest in stamps, now is for the art work. Stamps and their press have some of the best miniature work available.

Plus the interest in special commemorative editions always catch my interest after the press have stopped.
I think the interest in the 50 states quarters and bicentennial quarters may signal that these limited edition and artist designs may be the future of trading stamps, In this large volume nearly reproductive limitless world we live, uniqueness can thrive.

Victor Niederhoffer responds: 

I would add to the erudite Floridian's remark that the vigorish of 25% that Dimson notes, which is in line with or ever too small versus the reported P&L of Gibbons, does not take into account the grading differential where if you bring a stamp in to sell it's very fine but if you buy it, the condition is perfect and flawless, adding another 25% at least to the vigorish.

Alan Millhone comments:

On grading, perhaps a discussion of "slabbed" stamps and coins is warranted on grading services in business today.

Alston Mabry comments:

Does not take into account the grading differential where if you bring a stamp in to sell it's very fine but if you buy it, the condition is perfect and flawless, adding another 25% at least to the vigorish. Certainly reminds one of:

Strong Buy




Strong Sell

and the increase in churn thus promoted.



curlingWatching curling as I type, the announcer just likened curling to Chess on ice and spoke of Pawns etc. It would be nice in competitive Chess or Checkers to have the two "sweepers" ahead of you on the board to make way for your advancing pieces so one can make a 'clean sweep'. Is there also be an application to the Market?

Nigel Davies writes:

On hearing a commentator describe snooker as chess with balls one of my more mathematically inclined colleagues produced the following:

snooker = chess + balls
chess = snooker - balls (subtracting balls from both sides)

In the same spirit may I offer the following:

curling = chess on ice
chess = curling off ice

But I guess that board game players should take these comparisons as a compliment…



I am at Panera Bread today in earshot of a table of seven men drinking coffee discussing Iraq to FDR so far. One can learn much listening to these men who are retired doctors and teachers and etc. One of them suggested we borrow more money from China and then have BHO pass another stimulus. One man spoke and said we can't stand another stimulus as the other money is not spent yet. Panera is not too busy today with the winter weather we are having. I saw two fellows walking outside this morning barehanded and had the opportunity to give them jersey gloves.



Some years ago a new bridge was built across the Ohio River where I live in Southern Ohio. The river is close to my home and so was the new span. I can still remember the barge loads of plywood that the Melbourne Brothers who built the bridge had shipped in for the floor forming of the bridge before the concrete deck was poured. That was thousands of 4X8 sheets of 3/4" plywood (oil form) type for the form work. If you have faith in our current administration and believe the stimulus money will be spent on highways, bridges, etc., then you realize that there will be demand for hundred of thousands of sheets of plywood. Also word is China is buying massive amounts of plywood. I may not be able to make a profit on plywood, but someone out there will. I don't trade the market, but the way it is falling I would certainly be looking for something else to also trade in my daily routine.



My locally owned lumber yard is feeling the recession. Normally they are open Saturday 8-12 and workers usually work 49.5 hours per week and some of that is overtime pay. Effective today they will close on Saturdays and workers are on a strict 40 hour work week. I heard some grumbling this morning from workers there. I told them to live with it and be glad they have a job.The 'stimulus' will never reach the little guys where it could really be used to stimulate and help small businesses grow and hire more workers.

James Lackey comments:

So let me get this straight. After the worst downturn since the great one.. Now they are doing layoffs? Now, when lumber prices are on the rise enough for a Home Depot upgrade today? Or did they just realize with unemployment very high there is no need to pay overtime? Or is the get the joke a bad hedge?

An example is a LETTER from a SELF MADE MERCHANT TO his SON, LORIMAR "you been in the packing business long enough to know it only takes 30 seconds for a bull to lose his hide; if you believe me when i tell you they can skin a bear just as quick on 'Change you wont have a Board of Trade Indian using your pelt for a rug during the long winter months."

"Because you are the son of a pork packer you might think you know a little more than the next fellow about paper pork. There is nothing in it. The poorest men on earth are the relations of millionaires. When I sell futures on 'Change there on hogs traveling to dry salt at the rate of one a second and if the market goes up on me I've got solid meat to deliver, but if you lose the only part of the hog you can deliver is the squeal" pp 193-94.



Many markets have declined about 10% from their January peak three weeks ago, including almost all the Europeans, and Asians and the US. One wonders whether the concept of reluctance in magnetism is relevant with the reluctance depending on permeability, cross-section, force, and length. What would a good way to quantify this be? One hypothesizes that the reluctance is inversely related to the speed of the descent and directly related to the number of times it crossed back and forth.

William Weaver Jr. writes:

Crossed prior data, or consolidation post descent?

Four or five years ago I tried defining consolidation as pressure where P=force/area, so that strength of the consolidation was equal to the number of times price crossed the range divided by the length of the range. There were many inherent problems with this such as what constitutes crossing of range, or how do you determine the boundaries of the range if there are outliers. I solved both by trimming n% of the data off both sides, but I'm not a fan of fixed parameter solutions so I dropped the research.

Add volume:

I am a fan of buying stocks that dropped on large relative volume and have since consolidated on low relative volume. I was writing that paper last year about prospect theory and asset prices (that I never submitted anywhere) and found that the most profitable stocks to buy (using the metrics discussed) are those that are down on high volume (clarification: ranking based on change in volume divided by change in price so that one buys stocks where the change in volume is much greater than the change in price; this could be a stock that has jumped higher; volume is almost always more volatile than price, so the ratio IS dominated by volume, but produces better results than using just price or volume independently or standardizing the numerator and denominator before deriving the ratio).

I think the solution should be based on three things: time based (assets mean revert; decreasing force over time - rate of change; consolidation can only occur for so long; does it matter? one can use breakouts from ranges); consolidation based - pressure? and volume based. I'm imagining substituting volume for heat and picturing any consolidation as a tin can filled with water. However, falling volume with consolidation would then be the equivalent of depressurizing, so the can should not explode, unlike many mean reversions that we have all witnessed where price violently moves back to prior areas of trading.

Pitt Maner III says:

[Reluctance is] slightly analogous to certain aspects of aquifer performance testing (i.e. recovery phase in ground water levels inside a well when the pump is turned off and water levels return to static level).

Typical type of software used for data analysis:  Acquifer Test Analysis Software .

Very important for water supply studies and determining impacts of production wells.

The Biscayne Aquifer by the way is considered one of the most prolific aquifers in the world and it is why South Florida has the water supply to support a large population.  After pumping down or slug testing a well in the Biscayne aquifer the water level will often rebound so quickly that it exceeds the static water level recorded before pumping began.

Alan Millhone comments :

Bad weather has a lot to do with people's attitudes on investing.It was nice the other day and I met two customers and sold one a new roof and the other a house of windows. Weather's bad here in Belpre, OH now and another snow coming Tuesday and my phone is silent. Also, before the last snow I rented an apartment. No one will move now with bad weather in my area. Weather has to influence many things from stocks to home improvement. This affects Lowes and Home Depot.




On "progressive visionaries", by a fellow I know:

"[The author] went to college with these people, and for a brief time 40 years ago was one of them. He recalls their thinking. They have been striving to gain real political power for all these years, and in the process have carefully taken control of the unions, public education, most big city governments, and much of the underlying federal bureaucracy. The election of 2008 was the culmination of their lifetime of strenuous effort, and it awarded them the Presidency, insurmountable majorities in both houses of Congress, the prospect of soon controlling the U.S. Supreme Court, and one or two serviceable crises by which to justify hurried and drastic action.

This is the Golden Opportunity, the one they have been working towards all their lives. They will never, ever again have such an opportunity. If they let this slip away, all is lost, possibly for generations. But more than that, their lives will have been utterly wasted, their very identities shattered."

Alan Millhone comments:

The British Navy at the dinner table is best approach to politics.

Stefan Jovanovich returns:

The sagas about the British Navy during the Napoleonic Wars are wonderful; but the notion that there was an absence of the discussion of politics at the ward room table for reasons of civility alone is a part of the fiction that has no basis in fact. The very purpose of the British Navy was political; and the men in the Navy were unambiguously candid about what the politics should be — mercantilism, not free trade — and ruthlessly dismissive of anyone who did not agree with them.

Politics was not "discussed" precisely because the only political argument of the day was about whether trade should allowed to be "free" — i.e. restricted only by tariffs and not by gunpowder; and the British Navy was, for reasons of understandable self-interest, "agin it". It very much helped their cause that most of their political opponents were no more in favor of "open" trade than Napoleon was. Instead, like the people whom Dan described in his post, they were believers in a "rational" authority that would have made a Marxists proud.

Here is how Henry Dundas, Stephen Matarin's fictional father, and First Lord of Admiralty saw the purpose of the Royal Navy:

"…be the causes of the war what they may, the primary object ought to be, by what means we can most effectually increase those resources on which depend our naval superiority, and at the same time diminish or appropriate to ourselves those which might otherwise enable the enemy to contend with us in this respect… I consider offensive operations against the colonial possessions of our enemies as the first object to be attended to in almost every war in which Great Britain can be engaged."

One interesting aspect of this is the extent to which abolitionism in Britain was an extension of mercantilism and the slavery patrols off West Africa were, in fact, a jobs program for the Royal Navy whose cannons could no longer thunder and men could no longer plunder. James Stephen is known to our age as Wilberforce's brother-in-law and as an abolitionist; but, like Dundas, his prominence came primarily from his devout support of the idea that British commerce should always be the handmaiden of the British Navy. You can detect a whiff of that nostalgia for the good old days in what James Stephen wrote in 1802:

"To impoverish our enemies used, in our former contests with France and Spain, to be a sure effect of our hostilities; and its extent was always proportionate to that of its grand instrument, our superiority at sea. We distressed their trade, we intercepted the produce of their colonies, and thus exhausted their treasuries, by cutting off their chief sources of revenue, as the philosopher proposed to dry up the sea, by draining the rivers that fed it. By the same means, their expenditure was immensely increased, and wasted in defensive purposes. They were obliged to maintain fleets in distant parts of the world, and to furnish strong convoys or the protection of their intercourse with their colonies, both on the outward and homeward voyages. Again, the frequent capture of these convoys, while it enriched our seamen, and by the increase in important duties aided our revenue, obliged our enemies, at fresh expense, to repair their loss of ships; and when a convoy outward bound, was the subject of capture, compelled them either to dispatch duplicate supplies in the same season, at the risk of new disasters, or to leave their colonies in distress, and forfeit the benefit of their crops for the year. In short, their transmarine possessions became expensive encumbrances, rather than sources of revenue; and through the iteration of such losses, more than by our naval victories, or colonial conquests, the house of Bourbon was vanquished by the masters of the sea."

James Stephen, War in Disguise of the Frauds of Neutral Flags (London, 1805)



 Checklists have been shown to reduce errors, improve accuracy, and increase profits in many fields. Most recently, a study in the New England Journal by Atul Gawande shows that use of a 19 point check by surgeons could reduce deaths by 30% and save billions. Such simple things as knowing all the names of your colleagues and being sure that an adequate supply of blood and respiratory equipment is available are useful.

When it was suggested to me that a checklist for my own trading might be useful, I originally had the same reaction as the doctors. "I've flown with the eagles, climbed the highest mountain, captured the mountain lion, been a member of all the exchanges, played 12,000 refereed matches, went to Harvard." But then I read the reaction of the Drs. "I'm from Harvard. I don't need such a list. But if I was operated on, I'd like such a list."

Here's a list I came up with for the forgotten man, the hundreds of thousands of traders in stocks, futures and options.

Before the Trade

1. Do you know the name and numbers of all your counterparts, especially if your equipment breaks down?

2. When does your market close, especially on holidays?

3. Do you have all the equipment you'll need to make the trade, including pens, computers, notebooks, order slips, in the normal course and in the event of a breakdown?

4. Did you write down your trade and check it to see for example that you didn't enter 400 contracts instead of the four that you meant to trade?

5. Why did you get into the trade?

6. Did you do a workout?

7. Was it statistically significant taking into account multiple comparisons and lookbacks?

8. Is there a prospective relation between statistical significance and predictivity?

9. Did you consider everchanging cycles?

10. And if you deigned to do a workout the way all turf handicappers do, did you take into account the within-day variability of prices, especially how this might affect your margin and being stopped out by your broker?

11. If a trade is based on information, was the information known to others before you?

12. Was there enough time for the market to adjust to that information?

13. What's your entry and exit point?

14. Are you going to use market, limit or stop orders?

15. If you don't get a fill how far will you go? And what is your quantity if you get filled on all your limits?

16. How much vig will you be paying if you use market or limit orders and how does that affect the workouts you did knowing that if you use stops you are likely to get the worst price of the day and all your workouts will be worthless because they didn't take into account the changing price action when you use stops, to say nothing of everchanging cycles?

17. Are you sure your equipment is as good and as fast as the big firms that take out 100 million a day with equipment that takes into account the difference between being 100 yards away from an exchange and the time it takes the speed of light to reach you?

18. Are you going to exit at a time or based on a goal? And did you take into account what Jack Aubrey always did which is to have an escape route in case all else fails?

19. What important announcements are scheduled? and how does this affect when and what kind of order to use? For example, a limit before employment is likely to be down a percent or two in a second. Or else you won't get filled and you'll be chasing it all day.

20. Did you test how to change your size and types of orders based on announcements?

21. What's the money management on this trade?

22. Are you in over your head?

23. Did you consider the changing margin requirements when the market gets testy or the rules committee with a position against you increases the margins against you?

24. How will a decline in price affect your margin and did you take into account what will happen when you get stopped out because of margin?

25. What will happen if you need some money for living expense or family matters during the trade? Or if you have to buy a house or lend money to a friend?

During and After the Trade

1. What's your game plan if it goes against you and threatens your survival?

2. Will you be able to get out? Did you take that into account in your workout?

3. More typically, what will you do if it goes way against you and then meanders back to give you a breakeven? Or if it immediately goes for you or aginst you?

4. Would you be willing to take a ½% profit if you get it in the first 10 minutes?

5. Did you test whether taking small opportunistic profits turns a winning system into a bad one?

6. How will unexpected cardinal events affect you like the "regrettably," or the pre-annnouncement of something you expected for the next open? And what happens if you're trading an individual stock and the market goes up or down a few percent during the day, or what's the impact of a related move in oil or interest rates?

7. Are you sure that you have to monitor the trade during the day? If you're using stops, then you probably don't have to but then your position size would have to be reduced so much that your chances of a reasonable profit taking account of vig are close to zero. If you're using 10% of your capital on a trade, they you'll have to monitor it for survival. But, but, but. Are you sure you won't be called away by phone calls, or the others?

8. Are you at equilibrium in your personal life? You're not as talented as Tiger Woods, and you probably won't be able to handle distressed calls for money or leaks on the home front. Are you sure that if you're losing you won't get hit on the head with a 7-iron, or berated until you have to give up at the worst possible time?

9. After the trade did you learn anything from the trade?

10. Are you organized sufficiently to have a record of all your trades for your accounting and learning?

11. Should you modify your existing systems based on it?

12. How does recency and frequency and value affect your future?

13. Did you fit your after activities to your mojo?

14. If you made a good profit, did you take some capital out of the fray for a rainy day?

15. Have you learned to say "fair" whenevever anyone asks you how you're doing and are you sure that you don't spend a fortune after a good trade, and dissipate your profits with non-economic activities?

16. Is there a better use for your time than monitoring the ticks or the market every minute of the day if you do, and if you don't, do those who do so and have much faster and better equipment than you have an insurmountable advantage against you?

Well, specs, that's what I come up with off the top. How would you improve or augment it?

Nick White comments:

If a position begins moving against beyond what was anticipated in the workout can one, through either contacts or acquired counting skills, figure out as fast as possible why the move against is occurring? With that information, can one then discern whether or not such a move needs to be heeded, faded, or left alone?

What legitimate information sources can one leverage to better understand a particular trade? A buddy who is a floor trader, a mentor, a high ranking friend of a friend in a central bank?

Are one's current skills commensurate with one's trading goals and ideas? Perhaps, more importantly, are one's trading skills of the same league and caliber as those one is competing gainst in a particular market? If not, surely best to wait and keep capital safe until one is sure of one's edge. This strongly accords with Chair's admonition to never get in over one's head, and to not spend inordinate amounts of time watching each tick when that time could be more profitably invested in training and developing new and existing skills — counting, programming, etc.

Make the strongest effort possible to find out whether the tail wags the dog in a particular instrument that you're trading. If it turns out that it does, does it happen with significance at a particular time, such as expiry? Or after a particular event? Can it be exploited after costs or is it better to fade it after the fact?

If one asks these questions and takes note of them in the essential lab notebook that ought to be at one's fingertips during all trading and researching activities, have those questions subsequently been answered by oneself? I have found this to be the most fertile soil for developing new insights and ideas. If you observe it, note it and question it — hypothesize about it and answer it.

Alston Mabry comments:

Here's one: Don't fool/confuse/tire yourself by making your execution more precise than your analysis. If your target is 2% within the next five trading days, then chasing two bps on the entry isn't going to make or break the trade.

Easan Katir adds:

  1. If you trade odd hours, get enough sleep and appropriate caffeine dosage.
  2. One well-known S&P pit trader advised two bowel movements in the morning before setting foot on the floor.
  3. Start the day with a centering routine — affirmations and goals. Remind oneself of one's larger purpose.
  4. List important times and dates on an online calendar with appropriate alerts: government numbers, earnings, ex-dividend dates.
  5. Rehearse successful behaviors and outcomes. And disaster recovery.
  6. Minimize other life stressors: long commutes, family arguments, risky vices, debt.
  7. Test backup equipment and systems regularly. I test my diesel backup power generator weekly.

Victor Niederhoffer responds:

I would add a small point. Trading foreign markets always seems much more difficult than domestic ones. For one, you never know what the important announcements are. For two, you get killed on the spread on your foreign exchange prices. For three, it seems to be 100 times more time-consuming to get into the queue than even the 1/100 of a second that's enough to give the domestic high frequency traders an insurmountable edge on you. For four, you have to go without sleep for at least one night, and then on the second night when you can't stay up the required 48 hours without sleep the move you expected and closed out is sure to happen.

Alan Millhone writes:

Checker master Tom Wiswell said to always keep the draw (escape) in sight.

Scott Brooks adds:

I have to disagree with Easan on the caffeine. I know there are many people that have to have their morning cup(s) of coffee to get their day going, and without it, don't feel/function right.

I do not want to go through life being so dependent on something that I have to have it to make myself feel right, let alone function right. I know this will be anathema to most (everyone?) that reads this, but I have to say it.

When I removed the caffeine addiction from my life (and don't fool yourself, it is an addiction…..if you have to have it everyday and then quit it, you will go through withdrawals……it is an addiction), my life changed so much for the better. I can think clearly. I can process information more quickly, and I can see solutions with greater clarity.

And your sleep will improve immensely. I suffered from severe insomnia for years. Kicking caffeine out of my life has lead to my being able to fall asleep, usually within minutes and being able to get up earlier and feel more refreshed!

You will find a level of "mental processing" that you never thought possible when you replace coffee and caffeine with purified water (I drink around a gallon a day) and a glass or two day of the organic juice of your choice.

But be prepared, you will likely have around two weeks of headaches when you go through caffeine withdrawals (you know, from the caffeine that you're not addicted too).

Nick White agrees:

Ditching caffeine is a good move. Best to save it for when may really need it on an overnight (or two) session. As mentioned in the past, Dr. Shinya is fervently anti-caffeine. Like many others, I found Dr. Shinya's principles promoted many positive health benefits for my wife and me.

On that note, i find that the Shinya nutritional principles — when moderated by the ideas behind the paleo diet — are a real winner; the increased "good" protein from the Paleo program does much to mitigate weight gain from increased carbohydrate consumption when kicking off on the Shinya program. There is a Paleo program for those involved in elite endurance sports.

George Parkanyi writes:

On any project or major activity, the first question I ask is how much time I have. That frames everything that is to come.

The very next thing is to build a contact list with names, phone numbers (backup phone numbers) and email addresses (and account numbers and passwords). This is also true in Scouts, where we need to have that information at our fingertips for safety reasons — in fact for every camp we have to draft an emergency plan — police, hospitals, parents, primary first aid responsibilities, etc. In a trading operation this is critical. If you have key support resources who have to act on your behalf at a moment's notice, then they need to be available, you need to able to access them, and if not, there must be a ready backup contact and plan B, even C. Chair's point about having a pen available can even be a critical detail — what if, in the heat of battle, you have to write down, say, a wire transfer number? In my case, reading glasses would be another.

Kim Zussman comments:

As a periodontal surgeon, I have found it much easier to stay composed and rational during difficult surgery than unruly trades. Chair's excellent list hints at why, in the form of the question "how do you know?".

Surgical complications follow rules of biology, and mistakes usually come when overlooking something or miscalculating the compounded risk of several factors. One can and should practice with a large margin of safety, which in almost every case is easy to determine. Biology is almost immutable, but markets morph wildly in real-time. It is very difficult to stick with a position if you are honest about your cluelessness and unwilling to go down with the ship. When the trade goes bad:

1. What was your hypothesis? How many others had your idea too? Or the opposite one? Are they right? What do they know that you don't? What is the source of your confidence that you can out-smart (or out-run) the million-mind-march?

2. Did you test properly beforehand? Did you miss something; a signal from another market, a subtle backdrop to your traded market? What is the chance this time is different, and should this doubt change your mental stop?

3. How heavily is your market being manipulated? By government? Big banks? Goldman's trading desk? Does persistent manipulation / insider trading change your hypothesis or render hypothesis formation useless?

4. How do you know whether the move is merely noise of your correct hypothesis, or part of a regime change you have not noticed?

5. Deep and abiding doubt is essential to science, but how do you incorporate doubt into market prediction when most of the movement is random?

6. Does the non-linear, mostly random reward system of trading corrupt your judgment (sleep, personal life, etc)? Do some people lead a happy, well-rested life with long periods of gut-wrenching loss alternating with gain, and are you one of them?

7. What unalterable beliefs are necessary to trade successfully? If you hold them, are you sure they are the right ones? Should some beliefs be discarded as a result of a changing world? Are there new ones you should know, and are you confident you will see them when they develop?

Steve Ellison adds:

Margin of safety is a key concept in many fields. While skiing, I put on the brakes a bit earlier than I absolutely must so that if I miss my footing or hit a patch of ice, I have another chance to avoid the hazard (e.g., other skier, tree, out of control speed). Graham and Dodd wrote about margin of safety in investing. Rather than buy a stock that is below book value, a value investor might wait for an opportunity to buy a stock below 80% of book value.

If I ski 10 times a year, even on the same mountain I am likely to encounter 10 different sets of conditions — temperature, wind, length of time since last snowfall, etc. One day last year, the fog was so thick I could not see the trees on either side of the trail. Some conditions dictate caution; others are more forgiving and allow me to be more aggressive. A warmup run is an excellent way to get a feel for conditions.

Nigel Davies proposes:

Checklists are very good whilst learning, but I believe that one should ultimately aspire to be able to do without them because everything has been internalised. In my own field I tend to believe that conscious thought of any kind can be a distraction, which is why I don't like the old Blumenfeld Rule (a checklist used before playing a move).

Ken Drees writes:

I just did an experiment with my son with one of his Christmas presents, an electronic learning kit. We have learned so far the basics of how electricity works. Resistors (series and parallel), Capacitors, etc. Each lesson has a page explaining the experiment, a schematic, a drawing of the circuit in relationship to how water moves through pipes — the water analogy for electrical flow resonates with my son. And each experiment has an electronic "wiring checklist'.

The checklist comes in handy since its easy to forget a connection, misrun a wire, or leave an extra connection from a previous experiment in the lab circuit.

I associate checklists with "must have"–high accuracy functions. Like programming, wiring, piloting, fixing a car, cooking –its all routine, but items can be omitted, done wrong and can be forgotten due to human error. The checklist is a tool, an aide that removes ego from the scenario. Used in trading it helps set the trade up, helps initiate or close the trade, and removes emotion from what needs to be done automatically. A checklist in the grey area of a trade like the middle game in chess, or an operation where the patient is being worked on really doesn't help much–you need to make gut-inferred decisions, unless your trade is so automated that you remove yourself from the trade entirely and rely upon a program.

Using trading checklists help bring focus and energy towards the trading exercise. Using checklists of some sort during the "live–life of its own phase of the trade" must be explored further. Maybe there are ways to check off your decisions, check your options, use your skills with the pressure of time taken into consideration–during this live phase.

But when your hand is on a hot stove, trade going wrong, does one need to look at a post-it-note do determine if one should remove hand from stovetop?

FYI: a 9 year old boy is understanding electricity –public school may teach a child these ideas in 7th grade. I am amazed at what can be taught to children that most think is way over their heads.

Alan Millhone adds his two cents:

I will add my two cents. Some years ago I bought an International dump truck and it has air brakes. My late father and myself drove it for use in our construction projects. Because it has air brakes you need your class B driver's license to be legal. We drove it several years without the proper license. Finally my father got the book and studied and took the written part for class B. After he took that part he gave me the book and I studied and took the test and passed. Quite a book to study.

Now the second part was an over the road test with the instructor in the truck with each of us. He said he had never given a back to back test to a father and son. Dad and myself had to back the truck then drive to the right close as we could to an orange cone– without touching the cone. Then each of us had to do a 50 point check list of our truck that we earned (I still remember the list ) and still check my truck before taking it onto the road. So checklists are valuable in many applications ranging from dump trucks to the Market.

On a side note, dad and I rode to the test center in our dump truck without the proper license. The instructor said he was not going to ask how we got there.

David Brooks comments:

All very good ideas. I wish there were some good way to test Atul's theory historically. Why? Because I am convinced that poorer outcomes in the last decade come from fragmentation of the system - shift work, decreased work-hours by house staff, the high volume being forced through the system and de-professionalation of nurses.

Alas, we can't measure the past, but I am convinced that the hospital I started in (The Peter Bent Brigham of the early to mid 70's) was a safer, more humane place with better (allowing for technological changes) outcomes.

All the same, the reason we have embraced checklists a la airlines has to do more with the aeronautical outcomes than medical outcomes. The amount of information that a pilot has to process is order of magnitudes more than what a surgeon has to process. Furthermore, when a pilot fails completely 300 lives are lost, and when a surgeon completely fails, 1 life is lost. The former is far more dramatic, of course.

It's nice to know the anesthesiologist's and scrub tech's name, but it's hard to believe that that is going to affect the outcome of a significant number of operations.

That said, I have the greatest admiration for Atul. He sits a short distance from me, and I am proud to have had even a small role in training him. He is a remarkable young man and we will being hearing from him for many years to come.

Newton Linchen comments:

Once I took an airplane pilot course, and I was amazed how everything was done with checklists. Actually, the first time I heard the word 'checklist' was there. (Even here in Brazil they keep all the terminology in English, for standard procedure). I realized how checklists can keep you out of trouble and save your life. In markets, perhaps a great deal of losses could be avoided if I followed my own trading checklists.

Russ Sears writes:

Checklists can be very useful in an emergency. I have found that a simple checklist was valuable in a race. When the going gets tough it is easy to panic. The list It went something like this 1. relax 2. pump the arms smoothly 3. breath in normal rhythm (One hard puff out, relax in). It is easy to panic on the edge of your limits. These 3 things are the first signs that you are starting to panicking, subconsciously without knowing it.

Runner, use checklist often as part of their diary. Each day you check your weight, evaluate your nights sleep and your overall mental state. You check your diet and fluid intake .

Before a race you follow your pre-race checklist from what to pack, to when and what to eat, and when and how you should be warming-up and stretching.

Then after the race you check how well you followed the plan, where the plan worked and where if failed.

Finally at the end of the year you check the philosophical underpinnings of your training. Your goals, why you are doing it all, what are the cost that you are willing pay and what is the best path to get there.

So checklist have there place, but you need to 1. put them in the right point of time in the process, 2. not let them lose their relevance and meaning . 3. keep them simple at critical points, simple enough that they are potent.

Easan Katir adds:

Thinking about checklists, and watching the Haiti disaster coverage, made me think about a checklist for emergencies. Then thought about a list of the various types of emergencies one might encounter, big and small. What came to mind:






home invasion


mistaken id

false accusation






missing person


currency replacement/devaluation

market crash

partner deceit


power outage




i suppose each needs its own checklist, though some may overlap. What did I miss?

Scott Brooks adds:

The best checklist you can have is to either be a great leader or be around a great leader.

It's been my experience that average and ordinary people need checklists (which they rarely if ever have or use…which is one of the reasons why they are average and ordinary), but smart people with leadership skills don't need a checklist when it comes time for a disaster.

Most disasters/problems rarely follow a fixed pattern. It takes a leader who is capable of thinking on his/her feet who can stand up, take charge and direct people as to what they need to do.

And this doesn't have to be right all the time, he just needs to make decisions and get people moving and be willing to take responsibility and shrug of criticism of the naysayers…..while listening to them to extract the wisdom that might be contained in their "naying" (I think I have just made up a word).

A leader has to have insight and the ability to see several moves ahead. A leader has to be able to see correlations and connections between seemingly disparate pieces of information.

A leader has to then take this data and formulate a solution and then direct people to execute the solution….and if possible, get people to see the vision of the completed project so that they can begin to work towards that goal with minimal supervision.

But most importantly, a leader has to be willing to make a decision when it comes time to make a decision even when the solution is not apparent. A course of action that fails is better than inaction that is guaranteed to fail.



 Ford E-350 Super Duty 12-passenger vanI've noticed that every time I have sold a car, the dealer told me how flooded the market is with my make and model, and that the prices are much lower than I would expect. I take the dealer's words with a grain of salt, but am still not going to beat him in his own market. The equities and futures markets are much the same (and although this is anecdotal), it seems whenever I need to pitch out a position, there is a lot of whatever I own offered for sale at that moment. Conversely, whenever I wish to buy something, there is never enough around. I usually end up paying too much and selling too cheap.

Jeff Watson, surfer, speculator, poker player and art connoisseur, blogs as MasterOfTheUniverse.

Bill Egan writes:

You need a new van. A large one. By the end of February.

Ford E-350 Super Duty 12-passenger vans look good.

Prices for 2009 models

new MSRP: $36,325

new Invoice: $32,184

new Edmund's "What Others are Paying": $30,459


Edmunds used retail price: $25,808

Kelley Blue Book used retail price: $24,710


What is the distribution of true prices? Attached is the histogram of prices of 168 used 2009 Ford E-350 vans listed on within 500 miles of my house. Yes, the same basic vehicle is selling for $16,477 to $32,995. This took about ten minutes for me to make. (Yes, some options did vary, and there were a few misclassified vehicles, but overall this is really useful)

It is even faster to look at the most useful percentiles. Just sort by price on Then go to the last page to get the total number of vehicles that actually have a price. In this case there were 168 vans with prices. Scrolling through the four web pages and quickly counting allows you to figure out the percentiles. For example, the midpoint or median is at the 84th van (168/2). That price is $21,495. The 25th percentile is at the 42nd van (168/4) priced at $19,998.

Used list price at the closest Ford dealer: $21,695 (just over 50th percentile)

Used "best price" at closest Ford dealer after we had a chat about other dealers' prices: $19,495 (18th percentile).

For a fleet vehicle manufactured in March, 2009, auctioned in October, 2009, clean CarFax, with 13,200 miles and almost all the options.

Kim Zussman replies:

Don't you think the distribution of prices attributes less to mispricing than +/- valuation factors estimated by sellers — mileage, condition, options? They ought to know the going prices, and attempt to price theirs competitively modified by their knowledge of condition.

As with romance, if condition is held constant then price should vary based on ignorance and desperation.

Gordon Haave writes:

Car selling is all about one thing: price discrimination. The good salespeople do one thing: size up the maximum that you are willing to pay and make sure that is how much you pay. They do this through a number of techniques but most notably the questions about what you do for a living, how much your current car payment is, etc.

All the confusion around pricing and monthly payments and such is just to give them wiggle room to be able to charge you the most you are willing to pay.

Alan Millhone adds:

I pass a used car lot daily in Belpre and have been noticing the strategy this fellow uses to push his lot vehicles. He calls 89,000 miles LOW mileage ! One car he lists on window as a LOCALLY owned car — So? Occasionally he puts a HOLD sign on the windshield — who cares? Across the street is a strip plaza that a man owns that I know. On the front that is not used you can set your vehicle or boat or trailer and pay him 20.00 a month for that parking spot. Lots of traffic flows by each day. You list details on your vehicle and make your own deal. One new car dealer of KIA has his own clunker program and will give you 5,000.00 on your trade. My best friend traded in his car and a van he had towed in and the dealer allowed him 4,000.00 each towards a new KIA auto. I note gas in my area creeping up again so the economy cars are selling well.



 They laughed when I bought science toys for my girls. They laughed when I arranged science lessons for them with a race car mechanic who knew how to take a hair dryer and car apart et. al. But when my daughter Kira today got into Columbia Engineering early admissions they gathered around and wanted to know about those lessons and toys.

Alan Millhone comments:

One has to be in the world yet apart from it when it comes to things that count in one's life. Anything that gives anyone an edge is most important. Your story hits home as my youngest grandson is eleven today and as I type he and his thirteen year old brother are playing Jenga with grandma at the kitchen table. My daughter at present has no Internet and a TV converter box and limits TV and video games. Studies, and going to our local library, rule the day in her home. The boys play checkers and chess and many other board games and do activities as a family unit. She lets the oldest son cook with her watching and are taught to respect others and to know right from wrong.

Michael Bonderer writes:

Cool. So how did it work with your other daughters? I get the Variety headline summary every morning and caught today’s piece on the acceptance into Sundance of a film your daughter Galt is a part of. Did some gravitate to timing-chains and fuel injection valves and others go a different direction?

Rocky Humbert adds:

Congratulations to the both of you. I hope she enjoys her journey… and is an exception to Summers’s rule.

Mark Bates recounts:

At my niece's wedding over the weekend, I couldn't help but stop and admire my own kids. The oldest girl is home from Moscow where she has entered the working world teaching and developing her diplomatic and communication skills. The next, the cheerleader, is one interview away from admission to medical school. The next with her gifts in dramatic arts and friendship will probably make it rich before the first two. The most curious one that night, though, was my handsome but shy 12 year old son who figured out how to lure numerous beautiful coeds to the dance floor… They are the only thing I've ever done right.

Victor Niederhoffer replies:

And if that's the only thing, it is very good according to selfish gene as you created much current and future fitness with just a small sacrifice.

Anet Ahern writes:

For my daughter's seventh birthday party I shunned Disney, pamper and dance themed parties and had a science experiment party instead. Twenty girls watched goo explode, plastic bottle rockets take off, and fumes turn colourful. Later in the year for career day she said she wanted to become an archeologist during the week and a rock singer (for charity mind you) on the weekends. So I'm with you on sabotaging early socialisation.



 Excelling in sports carries over to the checker board since in both you have to work hard to advance in your skill level. I see a football team working as a team on the field under the supervision and guidance of the team's coaches.

In Checkers I have a library of Checker books that I study and recently visited the Cleveland Library and got a set of games played by Andrew Anderson and James Wyllie from 1847. One can learn much from those early Champions of past years. I added those games to my manuscript.

Checker players learn from each other. As President of the American Checker Federation we put out six bulletins a year full of games played at our National Tournaments. Even some of my average games can be found. Games are annotated and serve as an excellent study tool to learn and improve.

Seems to me the Market Trader is kind of a rogue player, in that he acts alone and seldom consults others as to what to buy or sell. Is this a correct conclusion?



 Might have been my imagination yesterday, but the more BHO spoke the more the market declined.

BHO spoke of infusing money into: highways, transit, rail, energy, water, and aviation. This will all require Davis Bacon/ prevailing wage or union wages to be paid on all these areas. The small businessman will never see a penny of the stimulus money. If a little person goes to get a SBA loan the paperwork is so staggering you will walk out the door of the bank.

The way the economy is rolling along it would not surprise me to see the market drop into the nine's come New Year!

Note talk about gold. Gold and silver have always had value and will never drop to zero. Judas would not have taken grain, copper, etc. He preferred the 30 pieces of silver Denaris. One can talk against gold and silver all one wants. There will always be a large group out there who like guns, safes, precious metals and canned goods on hand. I am just a simple average person who likes to diversify.



 Personally I have had enough of Mr. Woods all over the news. We all have more pressing problems with our economy and funding two wars and a host of other problems that are dragging down our great nation. I have empty rentals and no one to fill them. Property taxes and insurance ice the cake and there is always some up keep. Yes, he is newsy, but I have more pressing problems.




Last night my Bible study group met and we shopped for a family through the local Salvation Army. This year our local SA has 100 more families in need than last year. I look at Serena's $82,500 fine and think what that much money would do for the many families in need. The SA gave us a list of gifts wanted, ages, etc. of the family we are helping. Just now I saw a fellow walking who looked down and out and gave him a pair of jersey gloves. This morning I landed a nice garage build and other work and will take part of my profit and use to help those less fortunate than I. In reality I have a warm home, clean sheets on my bed, a fridge and freezer full of food and need little other than good health.



It would take decades if ever to train Afghans, when many cannot read or write, to become soldiers. Our distorted views on political correctness will do nothing but get more of our soldiers killed or injured. Our generals if given a free hand win wars not the politicians. 

George Parkanyi comments:

I agree we (Canada is in this too) have to move in force on this. But it is a complex situation — too much force (excessive collateral damage) and you radicalize other parts of Islam; not enough and the existing infestation simply spreads like cancer. The Taliban are already destabilizing Pakistan. Giving them back free rein in Afghanistan will, I believe, seriously and rapidly exacerbate that, making India all the more nervous, never mind the rest of the world. India and Pakistan have nuclear weapons, so allowing the Taliban and their ilk to access even a small portion of these is totally unacceptable.

911 let the genie out of the bottle; the radical element in Islam has seen the possibilities and smelled blood. We don't have the appetite to go on suicide mission after suicide mission - they unfortunately do, and we're in their house. They are not going to give up and will quickly fill any void we leave behind - so withdrawing really is not an option, at least not a sensible one. In that respect we're stuck, and have to finish this thing. I don't necessarily agree that training locals to defend themselves is that futile or being done merely in the interest of political correctness. A key (but not only) element in our strategy must be to continue to embrace and support moderate Islam, help them with resources - both economic and military, and let them get fed up enough with the extremists so that THEY fight back to preserve their way of life (and have plenty in hand to fight back with). They ultimately are the only ones that can permanently resolve this - at least within the borders of Islamic countries.

Stefan Jovanovich adds:

The Pakistanis are in an unenviable position - their sworn historical enemy, the Indians, are richer, better armed and now closer to the Americans. In the past they could rely on the Cold War rivalry and the Congress Party's infatuation with Marxism to keep the Indians separate from the Americans; now, with the financial and military collapse of the Soviet Union the Pakistanis have no choice but to be at least civil towards the Americans and to hope that our desire to "get Bin Laden" will continue to blind us to our real interests in the region. The references to the Taliban are irrelevant; the "rebels" in Afghanistan are now no more political than the ones in Columbia. To the extent that there is a political issue now in Afghanistan, it is purely an ethnic civil war that has always existed between the Pashtuns and the Tajiks and the other minority tribes. There is no likelihood that the Pashtus will "destabilize" the Pakistanis, the majority of whom are not the Pashtuns from the hills but Punjabi lowlanders. Think Scotland in the 17th and early 18th century. For all of their struggles against the English, the lowland Scots never once made common cause with the Highlanders.

Alan's comment about generals also needs a rebuttal. All generals are "politicians"; what we want are ones who are smart politicians. The current bunch are disappointingly short-sighted; they are afraid to tell the truth - namely, that we can largely leave Afghanistan to the Afghans and simply maintain the kind of armed oversight that we have kept in the Balkans for over a decade now. The Punjabis in Pakistan will make certain that the Pashtun faction does not gain the kind of control of Pakistan's own borders that the Taliban once had. (The Pakistani security forces are now doing more of the fighting and dying than anyone else in the region for that very reason.) The truth is that the smaller our presence the more the Punjabis will be willing to reassert their own control over the area without having any temptation to return to flirting with Arab notions of Jihad. The Pakistani's long-term concern is that we not leave them completely at the mercy of the peaceful neighbors in Delhi, who have not forgotten their own recent experience with terrorist bombings or who was behind them. But, it is impossible to imagine that any of our current masters of the Pentagon would be shrewd enough to come to these conclusions. For one thing, there wallets argue otherwise. For years the Democrats have been arguing that "the real enemy" was in Afghanistan; our current generals can't say we have already won. That would risk losing what few appropriations they still hope to get from a Democratic Congress. After all, big money for a pseudo-war is better than small money for an intelligent strategy. What our country needs is to have some 4-stripers put their careers on the line about the real strategic threats (the revolt of the Admirals that occurred in the Truman Administration would be my model), but I doubt very much we will see anything of the sort. On the contrary, the present crop of egg salad warriors are sufficiently dim-witted politically and militarily that they will probably be in favor of bringing back the draft in the name of economy and "national service".



My late father retired after 38 years with Ma Bell. Over the years he served on many employee related accident committees. He told me 99 percent of the accidents were from backing. I remember on his own truck a sticker was affixed on the driver's door ; SU I SIDE. This was on it where the door glass recesses into the door panel in plain view. I make a habit when in my pick up to back slowly. On the job site in my dump I never back unless a worker is watching and directing me while I back.



 In my area was a revered real estate man named Walter J. McCarthy. His business still survives and run by his two sons. The title of this post was his quote as a Realtor.

You can build and tear down many times on a piece of land, and the land remains. A friend I know worked for the B&O Railroad all his life and he always said that the railroad owned from Heaven to Hell along their track lines.

You can build in many layers over the centuries on the same piece of ground. A few years ago I visited the Roman ruins under Bath, England. I have been deep below the street of Paris and visited the catacombs. King Solomon's Temple is supposed to be under structures built over the centuries in Jerusalem. The list is endless and I give a few examples of the same real estate being used over and over and the land is always there.

Notably today we see buildings dropped in Las Vegas and new structures rise on the same piece of real estate. Prices rise as well over the decades.



At our local Bob Evan's Restaurant I note on occasion a waiter dressed in all black with a high button collar — resembling the workers of old in the dining car on a train, who wore all white and were usually people of color.

At our Bob Evan's table-servers make a flat $2.13 per hour and have to hustle to make the rest on tips. What does tip mean? "To Insure Promptness"? It could come from old English "Tip of the hat". Jimmy Hatlo used that phrase in his comic strips some years ago.

In hard times people eat out less, which means less tipping. The table-servers thus suffer economically. I have one favorite waitress at Bob's. She knows what I drink when I sit down and knows I like real butter with my rolls. She is pleasant and takes very good care of me. I always leave her a nice tip. Many will say that Bob's and others should pay more so patrons will not have to tip.

Gregory Rehmke writes:

Tipping varies by country and culture. I was surprised when spending some weeks in Buenos Aires and regularly taking taxis, that tips were neither expected nor welcome. My only explanation was that taxi service was highly elastic, so if tips came to be expected that would push down quantity demanded enough to hurt the industry. It makes sense. If you are expected to tip, that figures into your decision to take a taxi. Plus tips don’t make for better taxi rides as they can with restaurant service.

I would have liked, however, to have been able to pay a “headlight fee” so taxi drivers would use their headlights at night. It seemed a strange custom to drive at night with headlights off, only flashing them at approaching cars. But maybe in an earlier time headlight lamps were expensive or alternators faulty. On a long nighttime drive through the countryside, in a small rental car, a bank of bright lights suddenly flashed on behind us. A large truck driving without headlights had caught up with us on a two-lane highway. Scary.

Dr. Rehmke is the author of The Complete Idiot's Guide to Global Economics, Alpha, 2008



 Just got in from a basketball game at Ohio University vs. Lamar. Noticed the basketball coaches wear suit and tie. The baseball managers wear the team uniform. The majority of football coaches dress casually (except Tom Landry). I wondered why the difference in dress among these three sports?

Victor Niederhoffer adds:

And what is significance of the terrible millhonian fact that 99% of the people in any mid-level restaurant these days are wearing black? Is it the consequence of a lagging response to a recession — a harbinger of a deep pessimism, of a boat about to capsize, a conventicle of worship for the higher blackness in our midst, a signal that stocks are still not invested with much of a risk premium, or whatever cultural straws in the wind are you seeing of this subdued nature? And what does it mean?

Dan Grossman replies:

1. On the coaches, it's much colder outside on the football field and easier to dress warmly in casual clothes. A suit and overcoat would look ridiculous.

2. In the restaurants, dressing all in black signals the maitre'd and staff you are someone not to be trifled with. You are more likely to get a table without a reservation, or a faster/better table with one. Black says you are from town, perhaps even an artist, writer or in the fashion industry, not from the sticks or the burbs.

Dean Davis writes:

Supposedly black is a slimming color. Perhaps those that frequent comfort food restaurants like those found at the mid-price level have something to hide. I have heard that the quality of diets slide in poor economic times.

David Wren-Hardin writes:

Baseball has a longer, and more recent, history of player-managers. Pete Rose was, I think, the last one. Football seems to reflect the average dress of the time. Back in the fifties, all men wore suits. It may look formal to us now, but the suits were probably pretty standard, not the same as Pat Riley's Armani suits, for example.

As our culture has become more casual, so has the football coaches' dress, especially since they are outside. I think they may even be prohibitied from wearing suits. I recall a coach last year (Jack Del Rio?) who wanted to wear a suit to honor his father, and either had to get a waiver, or paid fines.

You can see similar dress cultures in trading. Traders associated with banks tend to dress more formally than traders in hedge funds. In my current firm, wearing jeans and t-shirts is an expression of pride. If I wear khakis, everyone wonders where I'm going after work. At my last firm, a European owned group, we never wore jeans, and if the bosses from Amsterdam were in town, we wore suits.

Essentially, it seems to have settled out where if you deal with customers, you wear a suit, and if you are a trader, you dress down. The more powerful/profitable you are (or think you are) the more you dress down.

To make it more personal, does how we dress affect how we trade? If I'm more formal, am I less prone to risk-taking? If I'm dressing down, am I more relaxed and making better decisions?

Steve Ellison shares:

That has been the case at MIT for years. From Fred Hapgood's 1993 book Up the Infinite Corridor: MIT and the Technical Imagination:

In his time Ernesto Blanco has designed robot arms, a lens for cataract operations, steerable catheters (that can navigate inside arterial branches), a microstapler for eye surgery, a stair-climbing wheelchair, a forklift truck, film-processing equipment, high-voltage transmission line connectors, a helium pump, and a raft of devices for the textile industry — from pile stitchers to faulty needle sensors. So he has earned the right, which he exercises, to dress his barrel chest and ramrod carriage in rich blue blazers and snowy shirt linens, silk ties, Italian leathers, and flawlessly crease flannels. In this he faces against the winds of fashion at MIT, where an Armani suit suggests not success or achievement but a serious problem with self-esteem, a lack of confidence that the product, the work, will be adequate to win the desired rewards. The psychology expresses itself as a fashion paradox: at MIT you dress up, you dress for success, by dressing down. So in this sense Blanco is like a banker who wears jeans to work; he is good enough to wear what he likes, and what he likes is Fifth Avenue.

Phil McDonnell comments:

The black-is-slimming meme has been around for several years. The older Seattle Grunge look may have spawned an idea that casual is good and, perhaps more importantly, colors that blend in are good. Some time ago I ate at one of the nice Google restaurants and did a quick Galtonesque count of the number wearing black. It was nearly 100%. I was the exception. Many of these young people are from India, China, Russia and elsewhere so it is not just California. In some circles they say that gray is the 'new black'.

Dr. McDonnell is the author of Optimal Portfolio Modeling, Wiley, 2008



PawnJust drove by a local pawn shop and the parking lot was full. I suspect some had guns pawned and need them now for hunting season. Many likely need money so they can feed the family for Thanksgiving. Some need cash for utilities or gas for their vehicles. I am sure these people could care less about the DOW today. Likely would sell their gold if they had any. Some will read my comments and smugly say those people should have prepared better or should not smoke or buy beer. I try not to judge anyone and strive to keep my own house in order.

Russell Sears remarks:

I bought a few items at a pawn shop Oklahoma last weekends and the parking lot was full, as were the registers. Some were at the gun counter, but others, like me, got some below melt-value deals on silver and gold jewelry and coins. The art work was picked over — little to be had. There were plenty of power tools and saddles to be had and not a browser near them. But all appeared to me to be buyers browsing for a discount, not sellers.



 Drove to Louisville and a checker wedding this past week end. Coming back on my route I visited Serpent Mound (in southern Ohio) built around 1,000 AD. My photo is from a high elevation platform I ascended for the purpose. While up there I thought how this long ago massive earth works resembling a slithering snake also reminded me of the Market Mistress and her sly moves. I could see the many ' snakes in the grass' insiders waiting to strike the unsuspecting from their elevated vantage point. Also difficult to cleanly shave in this environment without getting a ' nic '. Thus hard to find that perfect Aqua Velva shave.



In Vegas over the years I used to play a little roulette. Odd or even or red or black and you have a 50/50 chance of winning on your bet. Reminds a novice like me of the market yesterday and today. Yesterday I would have been a hero and today a heel if playing. No thanks!

Steve Ellison notes:

Because the 0 and 00 are neither red nor black, your chance of winning on either red or black is only 18/38=47%, in the U.S. at least. That's a 5%-plus vig, which is why I never play roulette. In craps, a pass line bet with double odds has only about 0.6% vig, but beware of the suckers' bets such as field and hardways that have more than 10% vig.

Allan Millhone replies:

Still looks like roulette stands a better chance with an average guy like me. Odds are in favor of the house. But with insider trading deals to me it appears the market is heavily weighted towards the Big Boys with the inside track.



A M'honeI note oil up today 2.55 getting pump prices ready for holiday travelers. 3.00 gas will kill the holiday shopping retailers. Better enjoy the Dow's being up 200 today. I wonder what group of insiders is driving the Market Mistress? Gold is courting the Mistress as the Dollar trails. In my area the local economy is in the tank. I converse with other rental owners and all find slow rent payments and increased evictions. This afternoon I noted four storage garages being emptied onto trucks and trailers. Tomorrow is the 31st. I call the storage unit owner and was told those people were behind on their rental unit payments and were told to empty out their contents before the first. So did the Market move up today due to government stimulus or due to something legit?



Recently I made two trips to Medina, Ohio to watch current 3-Move Restriction Checker Champion Alexander Moiseyev of Dublin, Ohio duke it out over a 40 game match with Ronald " Suki" King of Barbados. Match ended in a tie of 4-4-32 drawn games. Steve Holliday of Ohio was match referee and Steve brought along some Checker items that I purchased. On the last evening of the match he had a large box full of Checker books. I ended up buying the lot and have been going over each book. I found one of interest authored by Julius D' Orio in 1922 and titled "Mysteries of Dama ". In his introduction his last paragraph caught my attention.

He wrote, " Being true to life let it be your guide in adopting a business course along sound principles, and remember, when a gain is made without balance it reacts. "



What would a weekend be without my noting that Mr. Dow crosses back and forth over magic 10000 gravitational level six times on Friday, as was guaranteed to happen.

Allan Millhone comments:

I note a different Isaac Newton effect as pump prices rise in the last ten days. I read in morning's paper an inside trader hedgie arrested. I feel as a sheer novice it is scoundrels like him who moved the Market to ten thousand and not a solid economy; as to foreclosures we have yet to see the true picture. This coming Winter will be a very cold one and demands will be made on natural gas and ole Reddy Kilowatt. People will use their cash for food and fuel and home utilities and holiday retailers will suffer.

Alston Mabry takes out pencil and paper:

The Dow first crossed 10,000 on 12 March, 1999. The first open above 10,000 was 19 March, and the first close above was 29 March.

Looking at all Dow days from 29 March, 1999, to present and calculating how far in points each close is to its nearest round thousand, produces the following stats:

Total days: 2657

Mean distance in Dow points from nearest round thousand: 265.46

Histogram (using 25 point bins):


0-25 112 4.22%
50 122 4.59%
75 104 3.91%
100 119 4.48%
125 132 4.97%
150 135 5.08%
175 105 3.95%
200 124 4.67%
225 144 5.42%
250 115 4.33%
275 126 4.74%
300 135 5.08%
325 140 5.27%
350 116 4.37%
375 131 4.93%
400 156 5.87%
425 168 6.32%
450 156 5.87%
475 157 5.91%
500 160 6.02%

Looking again at this histogram, one can total the bin %'s in different ways:

distfromround / %totaldays

.   0-250 45.6%
250-500 54.4%

.   0-125  22.2%
125-250  23.4%
250-375  24.4%
375-500  30.0%

We are honored to receive this communication from Prof. Charles Pennington:

Benford's Law gives expectation frequencies for the first digit of a numerical quantity that's thought to be uniformly distributed logorithmically over several orders of magnitude. The Dow has varied by about 2 orders of magnitude since 1928. Here's its distribution along with the Benford's Law prediction:

first digit / frequency of occurrence in daily Dow 30 prices /
expected frequency from Benford's Law

1 35.0% 30.1%
2 12.5% 17.6%
3 6.3% 12.5%
4 4.7% 9.7%
5 3.7% 7.9%
6 5.5% 6.7%
7 6.1% 5.8%
8 14.2% 5.1%
9 11.9% 4.6%

(There were 20,352 observations.)

So there are "too many" 1s, 8s, and 9s, and not enough 2s, 3s, 4s, and 5s. Because of the serial correlation in the daily prices, it's not obvious (to me) whether this is statistically significant, but over history the Dow has spent some extra time hanging around near the powers of 10.

Victor Niederhoffer bypasses Benford's Law in his evaluation:

Yes, it seems significant. There were 45% within 250 points and the standard error expectation was 25. So the deficiency of 130 is five standard errors from expectation.

Alston Mabry follows up:

I broke the Dow into non-overlapping 250-day segments and counted the number of times within each segment that the Dow had an 8- or 9- handle. Chart of the results (click on All Sizes [magnifying glass] to see large version).

Conclusion: the big skew is there from the mid 1960s into the early 1980s.



I hypothesize that there is a fulcrum in markets at six months from the lows. The idea comes to me from the well known fact (well known to divorce lawyers, at least) that hostility within couples reaches a maximum in February. I hypothesize that as the circular distance from February/from the low increases, the hostility recedes to harmony and back again and that a similar phenomenon occurs in markets. How to test?

Alan Millhone has some predictions:

A MIt is predicted holiday sales will be down this year, isn't it? Also I think many couples will stick it out for now as they can share one roof and different bedrooms! Also many are too financially strapped to file and pay for a divorce. I hypothesize a fall in the divorce rate. I have a couple who live together and have rented from me for ten years. Both draw SSI. She would like to get rid of him but he pays half the rent, so he is still there. This shopping season should be interesting. On another note I bought and moved a very large safe today from a customer of mine. My locksmith re-comboed it and said safes like this are scarce. Demand for safes will be strong, but I did not buy it for price appreciation — I have always liked safes!



A MillhoneEnd of the nightly news tonight had a segment about a fellow who used to own a NYC nightclub and realized there was more to his life. He now raises money to drill water wells in remote areas of the globe. It is estimated that 4,500 children die each day due to lack of safe drinking water.

Made me think back to my overseas duty in Korea in the Army. Every barracks on base had 'houseboys' and one day I visited Mr. Yee's hut in the village. Sanitation was about nil and the outside privy had next to it their water spigot protruding out of the ground right beside of the outhouse! The Land of the Morning Calm was a filthy third world country while I was stationed there. I am sure Seoul has progressed but oft wonder about other countries and the small villages that make up most of Asia.

Americans have much to be thankful for and clean drinking water is one of those things we are blessed with.

Legacy Daily writes:

Every morning when I drive against traffic on Route 128 in Massachusetts, I cannot help but notice the thousands of cars lined with thousands of people rushing to go to work and improve this country in their own meaningful ways. When I hear 10% unemployment, I remind myself that 90% of the workers get up every day and go to work hard, to do something useful, to create something, to maintain something, to help someone. In one or two weeks a major section of Rt. 2 was repaved for a very smooth ride with nice straight white lines and reflectors, at night. This gives me great hope about the future of this country. Thank you for the reminder to not take it all for granted.



ClunkersOne of many interesting things about the 'Kash for Klunkers' program is that a quick estimation of the average MPG for the replacement vehicles shows that they barely meet the current government mileage standards and fail to meet those that go into effect for the 2011 model year, which is just one year away.

According to the WSJ [preview only, subscription required for full article], nine of the top ten vehicles are considered passenger cars and they average 29.67 MPG, and that number is biased upward by the Toyota Prius, which is number four on the list at 46 MPG. By comparison, the new standard is 30.2 MPG. The only non-car on the top ten is the Ford Escape, which gets a pitiful 23 MPG, which is less than the 24.1 MPG. While this is an imperfect estimate of either the Top 10 sales or those of the entire K for K program, there are no statistics available on actual sales and unless the sales for the top four vehicles are approximately equal, there is little likelihood that the average mileage of the Top 10 meets next year's standards.

Allan Millhone sees an investment angle:

Companies in the parts business: NAPA, AutoZone, et. al., may benefit in increased sales over time if the "Cash for Clunkers" program continues. Salvage yards are required to keep the clunkers in another area and cannot sell the motors and other parts as they customarily do with the rest of their yard. In time this will create a shortage for many parts that one may now purchase from salvage yards. Aftermarket parts will become scarce and the part stores will benefit while the consumer regrettably will have to pay higher prices.



Merit BadgeBoy Scouts started in 1908 in Britain and soon thereafter came to the US. One hundred years!

I fondly remember my Cub Scout and Boy Scout days and summers spent at Camp Kootaga, WV. I still have my Scout manuals and uniform and other Scouting items. I value highly those days and what I learned from my den mothers and scoutmasters.



Most sports games are fought to win early and decisively, given a choice. This painfully obvious comment alludes to the fact that the middle game and end game can thereby be played with less risk for the winning side. However, this must be measured against the opening winners desire to play all out throughout, just with less overextension, not merely maintaining the advantage. Don't let up on your capacity or talent. Some games and teams will require a full force stance, depending on the point lead and in order to play well. What I suggest is not to rest on a gain. I only suggest to reconfigure the risk/reward ratio. Otherwise, playing a completely defensive strategy will destroy the advantage. Further, risk/reward can allow a highly aggressive stance and be defensive by inducing your opponent to expend more than usual amounts of energy and exasperation trying to defend offputting attacks. Inducing is aggressive. These attacks will accompany random, not constant defensive moves on the aggressor's part, allowing just enough of a hedge and freeing up energy from an overly or hardened defensive posture to a game of overall nimbleness, less probabilistic and freeing up energy to explode at will. Thus, the risk/reward ratio is not all about chasing points, but allows for a game whereby opposing points can be thwarted. This alleviates the need and obvious static (stasis?) energy of a defense only strategy, thereby giving the opponent one's game plan.

Entice your opponent to play your game: To play drunken martial arts, which requires enticing your opponent to engage on your terms, running out the clock, angering your opponent, retreating or advancing to entice your opponent to your strengths, or limiting your opponent's moves, , while maintaining full force and adaptability in maintaining a defensive posture also come to mind. (Ali trained to take many a pounding to train for an otherwise superior Foreman in '74 or whatever). One's tactics are freed from having to score. Let the opponent, out of sorts and off their game score for you, in which you make easier points, thus conserving one's energy. The corollary, making one's opponent pay big to even get a point or taking a hit is very offensive. But these are only for the very proficient. These tactics under an overall strategy require or expect the deemed defense having to move, not always true in stocks. (Though Buffet said one can swing when one wants; 4 balls will not get you to first in the stockmarket). An exceptional opponent will not take the bait, but circumstances can force their hand. These thoughts touch on defense as offense. We all know the opposite axiom. As one aside, I'd like to see the drunken martial opponent, and this takes on many variations, in boxing, fencing, racing and war, in which the opponent is enticed to overexthend themselves to the winner's advantage, not move in such a fashion into the opponent's traps. Others may have specific games in mind. I am having the problem of analogizing a specific game; a discrete event compared to the market moves over a term. However, the market moves comprise many a game.

Some of what I consider the more continuous sports are soccer, lacrosse, basketball, hockey, fencing, boxing and tennis, in which one can morph from an aggressive stance, to a defensive one on the fly. Of course, this applies to all sports on a limited degree, like baseball and football where a meeting is called prior to a play. I like the former because the action is more often in play than other games, and therefore the strategy and tactics can be applied with more facilty in real time, of course given prior strategizing. Maybe it's like a free form jazz requiring excellent individual talent that understands the other players, compared to an orchestra with a conductor playing 30 second songs cumulatively. Both comprise professionals. We know the market does both as well.

This writing has suggested employing defensive offense, for example keeping the accent on making high percentage shots that tire your opponent mentally and physically. Do not take undue risks in shooting (offense)and upgrade one's focus on preventing the rival from scoring (defense), rather than setting up your next shot. An advantage within or from a game is anticipating further moves or a later game. This allows for other strategies/tactics to surprise, accumulate to disorient, and induce the opponent to weaken lines in order to defend against all possible attacks. Continuing the earlier discrete game, the early winner can devote more resources to defending the perceived advantage with the above considerations in mind. In fact, the simplistic notion of games is not to take undue risks (this assumes a lifetime of understanding) once victory is achieved, while of course playing all out under revised risk/reward calculations. To confuse things, a good winner will continue to play all out, as that is their best game for cadence and alertness. As a warning, many have lost sitting on a win, confusing defense with merely running out the clock. Resting can beckon atrophy, thereby inviting ineptness.

Another is offensive defense. A penny saved is a penny earned. I would submit that a penny saved costs less than a penny earned oftentimes. Drive to the utmost, but how many feet or seconds does another pit stop cost? Can it be skipped with good preparation and execution being the same car, or is it better to plan for a stop in order to have your best car on the track? A lot of movement in life, like mechanics, etc., has exponential costs, like a rocket liftoff compared to cruising, and the same for other bursts requiring torque, like moving onto the beltway. Make your opponent use torque that require more energy and force pit stops that cost time.

Unlike the stock market, in discrete games, a 2 point win is equivalent to a 50 point win. Can we say that if the 2 point wins accumulate, they will become 50 points and be, just a little little bit easier, to come by?

Defensive offense and offensive defense: do they exits, does it matter, is it semantics? It was just a way to make a point and hint that things occur simultaneously.

In sum, winning big early, frees up an added dimension of facileness, controlling time and moves of your opponent, while increasing one's own efforts to thrive and grow toward an increasing advantage. Maybe all games should be played this way throughout, but an early advantage seems to change the risk/reward analysis. The predators are able to employ this. A good follow up would be to depict what the purported prey would do to become the eventual winner. —Maybe the same? but they seem to have less reward in creating a win from behind by just maintaining the stasis. Advisors often suggest that increased risk is not the answer, until Hail Mary time - at least in a discrete game.

Allan Millhone looks at it from the Checkers perspective:

I am packing and getting ready to head to Grove City, Pa. for a yearly tournament there. There will be plenty of stiff competition with our Three-Move Restriction World's Champion and other top Masters. In tournaments my eyes scan the board akin to surfing and try to find a safe line of play. Like a good wave to ride safely to the King row (water's edge at the beach) . The surface of the Checker board at times can be very smooth as you coast towards an easy draw . Other times the ride is bumpy and can be quite turbulent as your opponent( like the waves) can force you off into uncharted waters. The Market trader needs to be wary and look ahead at all times for ever changing Market conditions much like the waves for the Surfer endlessly shift back and forth. The Checker board starts out even for both sides with twelve pieces each, but soon after the calm subsides and the waters of the board begin to swell . The Surfer tries to Master the wave as the Market trader tries to tame the Market Mistress and gain the upper hand.

Tommy Wiswell said: "Look twice before you move."

Steve Ellison writes:

In many competitive endeavors, simply making fewer mistakes wins many games. Mistakes I have made in the markets include:

- Failing to be aware of changes in trading hours

- Using a limit order to try to save a few dollars when I really did want to enter the trade regardless

- Failing to be fully prepared (with orders placed in advance when feasible) for any events that might set up a favorable trading opportunity

- Entering a trade without knowing exactly what I would do if price moved up, down, or sideways

- Deviating from my trading plan

- Using too much leverage

Roy Longstreet wrote in 1967 in Viewpoints of a Commodity Trader:

Did you watch the Packers whip Kansas City in the Super Bowl? I did and was much impressed by the professional way in which they performed. They did not beat themselves by making mistakes.

A professional makes fewer mistakes than others. That is why he is a professional. He may not have more ability than another but he is superior because he has trained himself not to make mistakes.

I was particularly impressed in watching the Packers throughout the season as they seldom were penalized for infraction of the rules.

On Mr. Longstreet's last point, the Detroit Red Wings have similarly avoided penalties in the Stanley Cup finals. Conversely, the Pittsburgh Penguins, who have probably by now surpassed the aging Red Wings in talent, took a string of penalties in the fifth game after the Red Wings took an early lead. As a result, the Red Wings scored three power play goals and put the game out of reach.

Allen Gillespie adds:

Hawks v Supersonics game I went to years ago - 67-66 after three with only Peyton hustling - Steve Smith scores 33 in the 4th running around like a maniac.  Also, in soccer, most goals are scored very early or very late in a half.

Relationship between time and goal scoring in soccer games-Analysis of three World Cups
Soccer goals and non-guassian distributions

Nigel Davies comments:

Here's another view from a mistake specialist (both my own and other peoples'):

The mistakes we make tend to crystallise around different deeply rooted thinking patterns and attitudes but then change their form when people notice them and try to something about them.

An example might be that of a trader 'taking profits too early', vowing to do something about this and then taking them 'too late'. He could be 'correcting his mistake' but failing to address the real issue of making arbitrary decisions rather than operating according to a tested plan.

Normally you have to go very deep to ferret out the cause of error and then, assuming someone is willing to go there, it's unlikely they'll actually be able to do something about it. But success can come when the number of good moves outweigh the bad, so for those with an innate 49-51 split have hope…

George Parkanyi says:

Making mistakes is not one you can generalize like that. Mistakes are how we learn. If you are not making mistakes you are probably aren't stretching yourself enough. Mistakes also come in all shapes and sizes — some are disastrous, some are benign.

Recovering from, or leveraging mistakes — now there's something.



 I have just read the first chapter of A Conceptual Introduction to Chemistry by Bauer, Birk, and Marks. The question immediately arises as to what would a chemist who lived on Mars and knew nothing of our financial situation study or do to make a profit in markets when he came down?

He would certainly place much emphasis on the changes in state that the various companies went through and their effect on stock prices. Big mergers and acquisitions would be studied as to their impact. The moves above 100 and below 10 or 5 would be considered. Stocks would be grouped by their digits and volatility. The amount of trading in each range would be considered as a measure of density. And the luster of each stock, relative to publicity and ballyhoo, and its electronegativity would be considered.

Does a stock dissolve in water, and at what temperature? Yes, and of course the ability of a stock to move on its own or the external force would be high on the list. What are the basic elements, the companies from which all others are built? One would think that a whole set of quantitative studies, probably much more useful than the ones usually found in the literature might be sparked by such a consideration.

Allan Millhone replies:

When the chemist came down from Mars in this down market he would see that items containing oil would be a good bet for future products.

He would note a suppressed housing market and might look at roofing and construction materials. Roofing, felt paper, ice guard brand products, tar. Or is it best for him to buy XOM and the like? I note the Golden Boys predict $85 oil. They must have a swami at a crystal ball like the wicked witch had watching Dorothy and her friends to see the future.

T. K. Marks adds:

The chemist would benignly synthesize a powerful new opiate aimed at pain relief and call it "Price Averaging, This Time It Will Definitely Work."

I would experiment with such, thinking that only others could get hooked.

George Parkanyi writes:

He might also look at what properties of a market attract energy (money), or repel it. Can markets be combined into compounds? If markets do form into complex "molecules", what would make them stable or unstable? How would the combinations behave? What would be the tipping points? What would be the solid, liquid, and gaseous states of a market? How much energy does it require to move from state to state? Does change of state happen smoothly, or in quantum increments? Do markets have polarity? Which ones repel; which ones attract each other? If markets don't necessarily interact with other markets, can they still act as catalysts to facilitate interactions between other markets? Does one market orbit around another? Does the state or presence of one market crowd out or starve another? Is the main trend of markets toward entropy (increasing disorder), and how much energy is required to keep markets organized and behaving in their current states? Can markets serving purposes today, be used for other purposes?

And… which markets cause high blood pressure and heart-problems…

Alex Forshaw comments:

The chemist would identify a massive, exploding black hole which the human species alternatively call "the Fed", "the US government", "FDIC", "FHLB", "Fed", Congress", "Obama", "Bush", and many other names, consuming everything else … and he would watch in amazement as market liquidity, entropy, gravity, etc were warped beyond recognition every other week.

He would probably blast off of Mars to a galaxy far far away ASAP before Mars were imminently gobbled up by the same black hole.

Easan Katir adds:

Thank you for this new chapter drawing analogies with your introduction of chemistry, in the service of profitable trading.

Though more hydraulics than chemistry, here is a video demo filmed at Cambridge of how a plumber / economist approached similar questions back in 1949, with his "Phillips Machine ", or "Moniac."

[Ed: if I understood correctly it is a hydraulic simulation of the Keynesian Liquidity Preference model].



 Heading to my roof job out 7th Street in Parkersburg, I noticed a lot more individuals on foot. I noted one older man walking this afternoon with a large golf type umbrella covering him from the 86 degree afternoon. On that street I noted a Kia dealer offering 5,000.00 for anything you drive in towards a 2009 Spectra or Sportage. This dealer already has 2010 cars on his lot! The housing market concerns me as well as the US auto market, and I wonder about both when the dust settles? Note gold was strong today and pushing towards 1,000.00 again. I have some rental units still vacant as people cannot get the deposit together. When the stimulus money subsides I wonder what will be left — other than a staggering national debt?



I noted the steady rise in gas prices in my area (+20 cents) when I fueled up this morning. I'm wondering if there is a formula out there that shows the effect of (stimulus) to (oil speculators) = (higher pump prices) and the effect on the (market)? Is the steady rise in petrol devised by the government to force the implementation of their more fuel efficient vehicles plan? $3.00 a gallon regular will be great this summer to force many to stay home and further drag down the travel industry, etc. Likely this will be a good summer to spiff up the gas grill and do some serious bar-b-q in one's back yard.

At what oil price per barrel will Mr. Pickens make his return to TV?

James Lackey writes:

If it wasn't for oil speculators you'd be driving a hybrid and paying 15-20% more for you car for the past decade. Oh wait… that's the new mandate. Don't worry, with all the govie rules we will let the Chinese have all the cheap coal and cheaper than hybrid deep sea oils.

Wait, there is more! If you have four friends, you're taking two cars. The hybrid to make 36MPG fleet wide average will never seat five comfortably at 3250 pounds. Or you'll pay a huge premium for the few big cars and small trucks that will be built. It's quite an average and all the car guys are behind it since they can produce an average fleet at gasp… a profit… just wait until the car industry is profitable, OM goodness cars will cost a fortune. Good luck getting parts for old models.



PreaknessDo horses and stocks have something in common? I note talk that Mine That Bird might like a muddy track to get that edge over the other horses running. Is the study of the racing tabloids like the study of stocks? Is the jockey viewed like the CEO of a company you see promise? Is horse betting like placing a bet on a stock to perform well? What can the market trader learn from what leads up to the actual race?

James Lackey comments:

Oh hell yeah. The poor track conditions give the lesser funded teams a chance to win. When it's easy for everyone to make a mistake, its easier to capitalize.

When conditions are perfect, the markets are in a beautiful, high pressure, low wind, sunny up day, only those with unlimited capital can outperform. Unless of course we juice it.

The markets today are seemingly much improved vs. the Katina flooded out race track from last season. Yet vs. most years, it's quite sloppy. A good chance of rain at any moment, and when the sun does shine the humidity is miserable, the track is sticky and its difficult to breathe. It is a perfect situation for the fast movers that can adapt quickly.

Yet, one must be very careful going for a victory. One false move, the hole closes, we must get off the horse quickly, or come up lame. Run an amateurish race, you can run the horse into the ground.



 Nobody asked me, but which recent Wimbledon champion had his role in default due to mother and daughter sanitized to win because of injury in a recent obit?

As usual the bond vigilantes are close to causing a double dip, and a well deserved one at that, in the economy.

The US long bond and German Bund now both at 120 1/3 move together like love and marriage despite their differences in everything, like the S&P and Nikkei now close to the magic 1000 but still flirting with the mid 900s.

Longwood Gardens has the most fun children's garden in the world and had lines of 50 cars waiting to get into their 1500 car parking lot.

There are entire blocks of seaport communities wherever I look vacant before the boom season of summer auguring badly for the state of recreation.

A store offers 10% off to those ripped off by Madoff and another one out of business offers prices reduced by 70% in line with the cold weather of February.

The discount stores continue to do very well with all the Bob Evans and Applebees I went to with big lines outside. Thus the price mechanism works well with high priced items showing much reduced demand and low priced items increasing in line with Walmart and McDonalds performing better than Tiffany's .

The price to weight ratio pioneered by Roger Longman is a better indicator of abnormal, exceptional business than return on equity. The correlation between the price to weight ratio and subsequent return is highly negative during recessions.

The economy would have been in much better shape right now without the interventions than with them. The evidence that bank failures were highly correlated with reductions in output is due mainly to the output's causing the failure rather than the bank failures' causing the output declines.

The fears of crony capitalism that Albert Jay Nock wrote about vis a vis the Secretary of the Interior's being the most important person in the government that everyone wanted to glad hand as he twirled around like a teetotum not being able to sing the last lines of Marching Through Georgia are so resonant with the crony capitalism that is so common in Russia, the old Germany, and places and times so much closer.

Alan Millhone writes in:

Speaking of one of favorite restaurants, I took my mother to the Parkersburg Route 50 Bob Evans today for the last time as it closed for good today at 4 PM. Very unusual for any Bob Evans to ever close as new ones open all the time in America. A good book is out about the life of Bob Evans who began as a short order cook at his roadside cafe in Gallipolis, Ohio years ago. He and his wife lived on a farm in Rio Grande, Ohio and he passed away not that long ago. He gave away much of his wealth to a variety of good causes. It was sad to see today one of his namesakes close. All the workers there knew our names and we knew theirs. We will miss going there.

Jim Sogi comments:

J SogiLook at some past excesses that in hindsight seem so obvious, but at the time seemed, well, kind of high. Real estate of course seemed kind of high, but it wasn't clear the effect of the fallout on credit and bonds. The dot com bubble of course seemed high, but the fall out was bad tho contained. The premature bailout caused the real estate boom. The high teen bond yield in the 80s was outlying. Looking around now, what seems, 'kind of high'? Government spending/debt is the obvious answer. Just as crashing real estate wasn't really comprehensible, government itself crashing isn't comprehensible to many. But look at the Palindrome, the Distinguished Prof, at Russia, at Iraq, at Sarajevo, Japan, Germany, all governments that fell rapidly in recent memory. It's not so farfetched. States and municipalities are stretched. The Feds are painting themselves into a corner. The boomers are getting old. I shudder to think of the downside. To protect yourself, you have to think of the downside. What if?

 Douglas Roberts Dimick comments:

Why Nobody Did…

All the time that Greenspan and clan where being hurrahed, I wondered about the Bob Evans and Big Mac folks.

It seemed he was fixated on the eminence of real estate and stock portfolio managers and their giants of ownership, allowing them to feast and fatten on the depositories of working people post Glass-Steagall.

Meanwhile, Greenspan’s so favored and their legions of bean counters and suits figured new ways to lean out related entitlements and private sector employee benefits.

This article’s taking to task the recent interventions appears well founded in that context of price to weight ratio. Though valid in ideal and policy, two-party, two-administration applications may be collectively recorded as the epitome of the saying that we use to spout out in the Army… “Good enough for government work.”

Therewith, the legalized corruption of the US federal (and some state) electoral processes came to roost.

The question to be answered now: as a society and as a voting electorate, have Americans become too blind (or perhaps jaded or merely reduced in common sense quotient) to see above those well manicured bank and financial hedges, now only pillared a la government bailouts when not political party sellouts?

Will we seek out those who now hide behind well-trimmed bush, so appropriately labeled “crony capitalists” as they are now seen, as the tide continues to ebb outward, to be not only financially and morally naked but quite two-faced about the role(s) of government in business and society?

The time to smell the roses is past. Time to spread their manure and plant our new, hopeful hybrid-seeds for individual and collective wealth generation.

Derrick Humbert writes:

When in the Atlanta area I strongly recommend Callaway Gardens, located 50 mi southwest of Atlanta and 60 miles from Auburn Al. It has so much to offer from PGA golf, to world class bass fishing to butterfly exhibit to herb garden seen on PBS to a Christmas display.

I visited it some years back and the view is absolutely breathtaking. I suggest if you plan on lodging you get a cabin for the week and a restaurant package as there are no real restaurants in the area. Plan ahead as cabin availability is severely limited for the summer.

Nearby is the winter home of FDR, who came for the warm springs to help with his polio.

Much to offer here and the place in not affiliated with the golf company Callaway.



 Does checkers have more to offer to the speculator than chess as the chair suggested?: "moving backward and forward one square at a time is a very binary thing".

May I add that backgammon is similar to checkers in this regard. I find myself a two dimensional person. That is to say I visualize things linearly. It is very easy for me to work with numbers whereas I am challenged by construction projects as they require a three dimensional view. I recall in my past Mensa testing, I scored very highly on math, reading, average on two dimensional analysis and below average on three dimensional analysis. Checkers is very much a two dimensional game and chess is three dimensional.  

Furthermore of all the pieces in checkers are effectively 2 D and chess pieces are 3 D. A knight may jump an opponent's piece and Castling is a very effective strategy to protect the King both are 3 D. In trading, we see everything on a flat screen. The numbers are representative of the collective thought at the time and once again are organized and in "code" so to speak. Charts have an x axis and a y axis and are laid out like a board.

Scattergrams are 2 D. Movements are in points once again 2D no "en passant" allowed. I offer these comments to the group in the hopes that my esteemed colleagues will expand upon this. My friend the great GM needs to interject his view with his usual remarkable insights which he has accumulated from his years of devotion to the great game of chess.

Alan Millhone comments:

A MBackgammon is okay, but I never liked games of chance with dice involved as part of the game. Checkers on the surface is such a simple game to learn the rudiments as to who moves first, taking your jump, crowning a piece, etc. Chess looks so impressive to the masses as you have pieces moving in many directions. In fact, that back and forth motion takes away from Chess. In Checkers you push a piece forward and it remains there till jumped, moved forward again or becomes a King which is equal to two singles, unless brought in by your opponent for a crown then out again for a stunning 'in and outer' .

Checkers is top of the heap for depths and combinations the majority will never come to enjoy. Joe Schwartz once told a reporter in Vegas that a spectacular combination or win, etc in Checkers is like "having an orgasm of the mind"! Joe is so right.



Hello Everyone: All my windows open at home today and then I hear in my opinion the worst noise of Summer…  Power mowers cutting yards in my neighborhood! I see that Black and Decker has a new 24 volt mower on the market that touts it will cut an acre (not sure how tall the grass is for that claim). Seems like years ago a mower named " Flymo " (anyone remember ? ) came onto the U.S. market and then vanished. How much more quiet and reduced noise and air pollution would be achievable if a powerful enough electric mower was developed. I remember seeing a few electric mowers that you had to drag along a power cord, but I never saw too many of them. My Father growing up told me that his brother cut a very large yard with a " power by arm strong " old type multi-bladed mower for fifty cents. When his brother got married my dad took over that same yard and dad said for the same fifty cents and with the same mower !! Regards: Alan



One of hardest things to do is nothing. To rest. It goes against everything. The urge to do something can result in disaster. Especially the urge to catch up say when price passes you by or you miss a fill.

Victor Niederhoffer writes:

In reading Deep Survival ( which one has eschewed for many reasons), one comes across the chapter on panics. The conflict between trying to achieve a goal, of food shelter and a mate, (always there) , and being lost causes great discombobulation. Great foolish activities leads to people refusing to survive when it was so close. One finds the same conflict between lost and goal in markets. For example, one has a target. You put your limit in. The algorithm boys move in front of you. The price moves away. You are lost. You have a goal. There is a tendency to panic, to die when it would have been so easy to go down the previous path, or use your tools. A terribly poignant and applicable sensation.

Chris Cooper responds:

Those lessons about paying attention are reiterated in depth in a book I recently finished, "Traffic: Why We Drive the Way We Do" . It is full of counter-intuitive evidence regarding driving and safety. Especially noted is that seemingly unsafe situations can be safe simply because people pay attention.

Dan Grossman replies:

I agree with Chris, Traffic is a great book. Both for understanding driving/road safety and for other aspects of life.

Book was the only advice in my life that changed the way I drive. For example, now realizing statistically how dangerous changing lanes is (what a high percentage of accidents are caused by it), I change lanes far less frequently.

Also makes one appreciate how less safe red light cameras (now common in NYC) are: More accidents caused by stopping short at red lights to avoid camera tickets, than by finishing scooting through.

Alan Millhone writes:

Hello Mr. Sogi. I had an old friend that told me , " if you miss one deal there is usually another around the corner somewhere ". Regards, Alan

Legacy Daily comments:

So true… I don't know which is a bigger regret: the buyer's/seller's remorse or the regret of chasing a price to get a fill then seeing the market go back to the original order level. The price frequency distribution helps (not always) against my wrong instincts so the new routine is to remember the eye exercise program in those moments. :)

1. Blink ten times by closing the eyes as if falling asleep (very slowly). This help re-wet the eyes.

2. Look away from the computer and gaze at a distant object outside or down the hallway. Looking far away relaxes the focusing muscles inside the eye to reduce fatigue.

3. Look far away at an object for 10-15 seconds, then gaze at something up close for 10-15 seconds. Then look back at the distant object repeating the cycle 10 times.

4. Take a break, stand up, move about and stretch the arms, legs, back, neck and shoulders.

Kevin Eilian writes:

Wisewellian - that which effects your move the least effects your opponents the most (courtesy of chair).



A MI was at my friends home the other day and he said his little grandson came over and had a handful of assorted foreign coins he was playing with (little boy is five). My friend got to looking at the coins and one stood out and it was a Gold Sovereign of King George in uncirculated condition! Then my friend took from his pocket and placed in my outstretched hand another coin and by its feel knew it was Gold. It was a 20 Franc Gold coin from France. My friend is keeping the coins for now and wrote down the story and will give the note and the coins back to his son at a later date. The little boy never missed the two shiny little coins from the pile of other coins he had. I found the story interesting and told my friend how easy it would have been to have dropped the coins in the yard between their two homes. Maybe there are more in their yards !



I have enjoyed the discussion on reading people. I find it very important to read possible renters. Many are truthful and many will tell every lie known to man! Some of my favorite lies I hear…

  1. I live alone, but my boyfriend is here on rare occasions.
  2. I have an 18 year old, but he is seldom here.
  3. Can you work with me on the deposit?
  4. I have no children (but you can hear them screaming in the background.)
  5. I occasionally watch a friend's child (this leads to full time baby sitting.)

In all honesty, I try to rent to as few people as possible. Go in and clean a unit up after a large group has moved and you will see my reasoning. The 'wear and tear' is unreal with two or more children (most of the time).

Back to reading body actions. Those who call from a friend's phone or from a pay phone worry me. Those who need to move right now worry me. More and more of my units are going to be non-smoking units. People tell me they do not smoke, but the yellow fingers, and the smell on their clothes tells me a different story. I like to meet and then read how a person conducts himself while chatting to me and to see if he looks me in the eye.

One of the best ways to read a perspective renter is! For an application fee of $35 you can learn a lot about people. Many times I give them the application and never hear back from them (a good thing). I do add the $35 onto their deposit, most don't do this and the applicant simply forfeits if he or she is not accepted.

People who get behind on their rent have numerous stories I hear and most won't face you. When you don't see them you face a type of silent and invisible body language on which volumes could be written.



 Hello Dailyspeculations:

Our Ohio film crew is in South Africa and now in Port Elizabeth to film and interview our man of color for a few days. Thought you might enjoy their blog so far….

Sincerely: Alan



 The Chair advises us to use simple statistics for market analysis. They are good enough for sure. But I wonder every once in a while: why eschew the sophisticated stuff? It must have been developed for a reason, mustn't it?

Or must it?

Little by little, I am starting to see the light in keeping it simple. Today yet again, I got a glimpse of it while reading Unit Roots, Cointegration, and Structural Change by  G. S. Maddala and In-Moo Kim.

This is a book about complicated and modern stuff that is not being used in the tests posted on DailySpec. I am only half through, but I think I can already comment on it. This is an excellent book. It is very clearly written. Usually, when reading this type of book, I am left with the impression that the author is confused. Not here. Maddala and Kim are clear-thinkers who obviously understand their subject matter, to the point that they are able to write about it in an articulate and insightful way.

They understand it so much that they can distance themselves, warning that these tools are mostly ineffective — not to say bull. What I really appreciated upon reading their conclusions about unit root tests (which is just another word for random walk tests), is that they state without any passing thought for political correctness, that the ones everybody uses, like Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP), should not be used, because of dismal power in small samples. This is based on Monte Carlo simulations from other researchers, whose results they provide in the book. These results are ominous and devastating for these oft-run tests. But they don't stop there. They add that they spent two chapters on answering the question: "Which Unit Root Test?". Whereas a better question should have been "Why Unit Root Tests?". To which the answer would frequently be: "They is no reason to perform unit root tests, they are useless for most purposes". I am exaggerating a bit, their statements are mellower, but that's the gist of it. And I like it a lot. A book about unit root tests saying that they are frequently useless (frequently, but not always, to be fair).

In a similar vein, there is a part on panel data unit roots where they mention that a Fisher meta-analysis test from the 1930s, is as good or better than some clever and modern stuff from the 1990s.

So let's Keep It Simple and Stupid!

For 90% of our needs, a grassroots OLS is just as good and more robust than all this rocket-science 20th Century mumbo.

A final word: this book also strikes a perfect balance in maths. They go deeper than usual textbooks, inasmuch as they don't only provide the formulas for the tests, but also the mathematical intuition behind them. But they don't do the full demonstrations, for which they provide an ample bibliography. This is still graduate to upper graduate maths and econometrics so please don't buy this book if you are looking for an introductory text.

Alan Millhone adds:

The game of Checkers when played scientifically follows the KISS method. Checkers is a game of utility. If you have a win on the board you execute that win in as few moves as possible. I remember a time when a novice (at times I think I am still a novice!) and my opponent had a King in each opposing double corner and I had three Kings and did not know how to consumate the win. With the help of a beginner's Checker book that win on the board is now 'old hat'. Knowledge is power in about anything.

Chair admonishes the Market trader maintain a hand written manuscript. I have a Checker manuscript and record my games for later reference. Any 'tool' that makes you more effective is valuable. 



 I wonder if snow, for example the deluge on Feb 1, 2009, in New York has a negative impact on stocks. It had a positive influence on the ability of youngsters in the 1950s to buy stamps, as school was out and Nassau Street was accessible by train. Now you can't even find kids having snowball fights as they are all inside with Nintendo or Twitter or IM.

Paolo Pezzutti comments:

Last evening I left my girls to spend a few hours at some friends' place. I left them playing with a "Chinese" toy pen with very basic videogames such as bowling or skying in it. When I came back they were still playing with that silly toy. They were hypnotized, although sleepy, but they would not give up. What is the power of these applications — even as simple as this? We can track a parallel with a trading screen and its ability to hypnotize wanna-be traders (and not only them) creating a compulsive attraction and dark force to trade even when it is not the best setup.

I was somewhat nervous about my daughters because they were not stimulated to do something different. It seems that if they are not "educated" and addressed to healthier and outdoor activities kids (and adults too) in most cases prefer spending their time following action on a screen. This is what game companies and stock brokers exploit.

Michele Pezzutti adds:

 That's true. This is something I always think about when I reflect on the way kids are growing. I often wonder if the way the kids play today is healthy. I do not want to sound old-fashioned. I do not come from the 18th century. But are fantasy and creativity stimulated the same way by a computer game as they are by Legos, for example? I think that the problem is not in the technology itself but in the use we make of it as in everything else. Too much is poisonous. And I feel relieved when I see that my kids, when they feel like, can still play as only kids can do. From nothing they are still able to create their world and stories. They have plenty of imagination. Then my worries fade away as I can see in them the same kids we used to be. In the end, every new generation must have asked the same question.

Jim Sogi replies:

J SogiWhen my son was younger, we also worried that he also loved computer games and stayed up all night playing. I reasoned, better playing at home than out on the street. He was also an athlete who surfed, snowboarded, skate boarded. But the training he got playing games serves him well now in his new career in the financial markets. Is what we do 24 hours a day glued to a screen any healthier? I say no. It's really the future of work and communication and social structure.

Speaking with my daughter, we compared our contacts with old high school friends and family. She right pointed out that it is easier for her with IM, Twitter, email, sms, and use cell phones to keep in touch. Don't be old fashioned. It's a new world.

Alan Millhone writes:

 On the news tonight it was reported on a program in El Paso, Texas schools that has a regular exercise program in the schools that shows that regular exercise in youth produces better test scores, etc.

When I was a youth the neighborhood kids played outside till dark and our parents had to call us in for supper. In the Winter we built snow forts that we defended with snow balls against attackers. In the Summer if a new basement for a house was being excavated when the workers left we had dirt clod battles!

I began collecting stamps at age seven when that Christmas my parents gave me a Coronet stamp album and some stamps from H. E. Harris and Co. of Boston. In my early years they gave me sets of Lionel Trains (still have both sets in the original boxes ). We had no computers, cells, Ataris, etc. to fritter away our time and no TV for several years. We played board games, rode our Huffy bikes with a baseball card held in the rear spoke with a wooden clothespin. Modern technology is good to a point for youngsters. Much though that was good and wholesome has been forever lost. Just like the Checker players that at one time could be found on a daily basis in Central Park under the wooden canopied shelters. Tom Wiswell would not believe the changes there.

Jeff Watson comments:

I just got through watching the excellent movie Surfing For Life. Written and produced by David Brown and narrated by Beau Bridges, it chronicles the lives of people who are still surfing in the twilight of their lives. The movie took a sampling of notable surfers from the ages of 60-93, gave brief bios, and showed them surfing well as seniors. Surfing for Life is much more than a surfing documentary, it's a celebration of man's optimism and the results of living a life of optimism. It showed one particular surfer who visits senior facilities on a volunteer basis, and most of his charges are younger than him. It then cut away to him surfing a nice 6' wave. The central theme of this movie is that living a life with an optimistic bias will ensure personal happiness. My favorite scene is the closing where they show Doc Ball, 93 years old, riding a skateboard. Not only was he riding a skateboard, it was obvious that he was clearly enjoying it like a little kid. I've been told by many that I'm just like a little kid, and take that as a compliment whether they meant it as such or not. Little kids enjoy playing games, are optimistic by nature, and receptive to new experiences and knowledge. I'm of the view that trading is a game, an extension of the games we played as children. It can't be mere coincidence that a plurality of traders I know usually excel at one form of game or sport. Whether it's checkers, chess, poker, the racket sports, or surfing, these games played for a lifetime keep one's mind sharp, and mentally nimble. Game playing also keeps our competitive edge well honed, which serves us well in the markets. Surfing for Life is such a positive, uplifting movie that it should be seen by all, as it exudes optimism. It would be an interesting study to analyze the optimism/pessimism ratio for all market players. I have a hunch that the successful players would fall into the optimistic category. Optimism breeds self confidence.

Russ Sears says:

 When I hear tales of the freedom of youth my thoughts often turn me back to my 7th grade year, in Pauls Valley OK, where I delivered the Pauls Valley Daily Democrat door to door on a rusted out Schwinn bike I had spray painted baby blue.

I recently went back and visited the town 33 years later. The drugstore where my brother and I spent our share of the subscription price on comic books, baseball cards and soda fountains chocolate shakes had moved from across the street from the newspaper to the new Wallmart. Parts where still the same, with only a fresh coat of paint, others totally gone.

We had a great time "owning" our part of town. However, I think we were one of the last two kids to deliver papers this way. The only reason they gave me the job, since the Sunday papers weight more than me, was cause they were desperate. Few parents would let their kids do something like this even in small town mid late 70s. And thinking back, there were several times where I think "what were my parents thinking"… As I had a machete to my neck from a high druggie, learned where to drop my collection money off before I went to certain areas, and narrowly escaped a pedophile.

Bottom line is it's not all the kids' fault.

Anton Johnson writes in:

In addition to dirt clod fights, we would play king-of-the-hill on construction excavation mounds, resulting in the occasional emergency room visit. During spring-time we played Monkey-in–the–Middle and 500, honing our baseball skills, all the while dodging vehicles and swatting mosquitoes. On moonless sultry summer nights, we played neighborhood wide team hide-in-seek, some of us subtly maneuvering to get close to the object of our affection. Not even brutal winter weather could keep us inside. Often a dozen would-be Bobby Hulls would play ice hockey, taking brutal hits without pads (some of us even wearing figure skates). We shoveled our own rink on the lake, and hauled seemingly endless buckets of water to fill in ice cracks. Almost nothing could deter us, we played whether +40F or -15F degrees, sometimes coming home soaked after falling through the ice or occasionally with a frostbitten appendage. I wonder whether the electronic generation will reflect on their childhood with a similar nostalgia.



 As a builder I use various size plastic tarps to cover and protect materials, roofs that are torn off in event a sudden downpour appears out of nowhere, covering framing lumber, etc. The Feds version of a TARP is used to cover (up) some things as well. Now I see where part of the government 'stimulus plan' calls for the expenditure of 600M for the purchase of all types of 'fuel efficient' cars for government workers to use in an even bigger 'car pool' . Knowing the government they will now reduce the existing fleet of cars, but will in fact add more drivers to the already bulging government to drive that new fleet of cars! Throwing good money after bad will solve nothing.

The Dow almost got below 8000 Friday. Gold was up $27 Friday. Will Gold reach $1000 before the Dow reaches 7500? I also note that to get a Cabinet position one must exhibit some type of prior tax issue to be considered! I did not vote for Obama, but support him 110% in what he is attempting to do to save our economy. I had a renter move out today as he lost his job at a local car lot here in Belpre, OH due to no sales on the lot.

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