Jerrold Fine has written a novel which should be of interest to dailyspec readers:

This debut novel, Make Me Even and I’ll Never Gamble Again, follows a young man who, hoping to achieve financial independence, finds himself drawn to the stock market.

By the early 1970s, Rogers Stout is only 16 years old, but his father, Dr. Charles Stout, wants his son to live up to his potential. The Ohio teen is bright but putting minimal effort into high school studies. This changes the summer before his senior year with an internship at Prescott & Prescott, a stock brokerage and investment banking firm. Rogers becomes fascinated by the stock market and sets his sights on a finance major at Penn-Wharton in Philadelphia. He closely follows the market all through college, gradually developing abilities, such as how to deconstruct a company’s financials and analyze its prospects.

As an exceptional poker player, courtesy of regular sessions with his dad, Rogers equates his investment philosophy with the card game. He plays while winning and stops to reassess his strategy after he’s lost. Rogers hard work pays off, as he lands a gig at a research and money management firm in New York. But his subsequent plan to invest in a small company is an unquestionable risk, and life, like the financial markets, can change instantly and unexpectedly. Despite the desperation implied by the title, the levelheaded protagonist is rarely distraught. (The title is derived from a line that a losing poker player “not Rogers” utters.) Still, Fine’s coming-of-age tale is engrossing. The historical backdrop, for one, is an enhancement: Rogers witnesses the 1973-74 stock market crash and worries about his girlfriend, Charlotte Marks, who, in 1977, is in a war zone in Cambodia for Doctors Without Borders. There’s also turmoil in the protagonist’s personal life, as banker Elsbeth Aylesworth fills the void created by his geographical separation from Charlotte. Prose is detail-laden, including poker and baseball games as well as investments, while financial terminology is adequately explained. But there’s still room for humor: Rogers description of his job is to read and think and then occasionally make a bold decision. A leisurely paced but ultimately absorbing story of an aspiring Wall Street trader.



 I have the audiobook version of this book The Little Book of Talent and find it to be something I re-listen to because of the density of useful and interesting ideas:

The Little Book of Talent is an easy-to-use handbook of scientifically proven, field-tested methods to improve skills—your skills, your kids' skills, your organization's skills—in sports, music, art, math, and business. The product of five years of reporting from the world's greatest talent hotbeds and interviews with successful master coaches, it distills the daunting complexity of skill development into 52 clear, concise directives. Whether you're age 10 or 100, whether you're on the sports field or the stage, in the classroom or the corner office, this is an essential guide for anyone who ever asked, "How do I get better?"



 Meteorology Today by Ahrens is a text book and provides an antidote to the news hype surrounding Hurricane Lane and market moving weather events.

Add actual data readings and a more accurate picture forms clearing the news fog and fear Mongering.

Our late friend Mr E and I would talk late into the night during major hurricanes and monitor data that could and did swing markets.



The market is amazingly resilient today [8/21/18] vis a vis the two decisions on cases. All the Asian Markets are strong as a stone wall. And eminis are down only 7. We will see if the European markets can hold up especially since they have been very strong the last two days. I would posit that a bad market would show that Trump is good for markets and this would keep him in the battle.

Kim Zussman writes: 

A hostile deep state bringing felony convictions (with ridiculous sentences compared to violent youth's) of associates in order to upend the presidency in the name of Russian collusion will bring great succor to the Russians. And it would seem to put the finishing touches on anyone who isn't completely cynical toward all forms of aggressive government.

Stefan Jovanovich writes:

KZ's basic point is incontrovertible. Manafort was and is guilty of the counts on which he was convicted (tax evasion, bank fraud, failure to report himself as a lobbyist); but the sentencing is out of all proportion to what other taxpayers would receive in a "normal" case.

One of the many, many things the List and our Host have taught me is to trust the verdict of the markets. What they seem to be saying today is that Mueller has yet to lay a legal glove on the Great White Hope.

And now for another message from the past:

"The Tenure of Office act, it will be remembered, was passed in 1867 for the express purpose of preventing removals from office by President Johnson, between whom and the Congress a quarrel at that time raged so bitter that it was regarded by sober and thoughtful men as a national affliction, if not a scandal.

An amusing story is told of a legislator who, endeavoring to persuade a friend and colleague to aid him in the passage of a certain measure in which he was personally interested, met the remark that his bill was unconstitutional with the exclamation, "What does the Constitution amount to between friends?" It would be unseemly to suggest that in the heat of strife the majority in Congress had deliberately determined to pass an unconstitutional law, but they evidently had reached the point where they considered that what seemed to them the public interest and safety justified them, whatever the risk might be, in setting aside the congressional construction given to the Constitution seventy-eight years before.

The law passed in 1867 was exceedingly radical; and in effect distinctly purported to confer upon the Senate the power of preventing the removal of officers without the consent of that body. It was provided that during a recess of the Senate an officer might be suspended only in case it was shown by evidence satisfactory to the President that the incumbent was guilty of misconduct in office or crime, or when for any reason he should become incapable or legally disqualified to perform his duties; and that within twenty days after the beginning of the next session of the Senate, the President should report to that body such suspension with the evidence and reasons for his action in the case, and the name of the person designated by the President to perform temporarily the duties of the office. Then follows this provision: "And if the Senate shall concur in such suspension and advise and consent to the removal of such officer, they shall so certify to the President, who may thereupon remove said officer, and by and with the advice and consent of the Senate appoint another person to such office. But if the Senate shall refuse to concur in such suspension, such officer so suspended shall forthwith resume the functions of his office."

On the 5th of April, 1869, a month and a day after President Johnson was succeeded in the presidency by General Grant, that part of the act of 1867 above referred to, having answered the purpose for which it was passed, was repealed, and other legislation was enacted in its place. It was provided in the new statute that the President might in his discretion, during the recess of that body, suspend officials until the end of the next session of the Senate, and designate suitable persons to perform the duties of such suspended officer in the meantime; and that such designated persons should be subject to removal in the discretion of the President by the designation of others. The following, in regard to the effect of such suspension, was inserted in lieu of the provision on that subject in the law of 1867 which I have quoted:

"And it shall be the duty of the President within thirty days after the commencement of each session of the Senate, except for any office which in his opinion ought not to be filled, to nominate persons to fill all vacancies in office which existed at the meeting of the Senate, whether temporarily filled or not, and also in the place of all officers suspended; and if the Senate, during such session, shall refuse to advise and consent to an appointment in the place of any suspended officer, then, and not otherwise, the President shall nominate another person as soon as practicable to said session of the Senate for said office."

Grover Cleveland (Ma, Ma, Where's My Pa) made this speech to the Princetonians after leaving Presidential office (for the 2nd and last time).

anonymous writes: 

A hostile deep state bringing felony convictions (with ridiculous sentences compared to violent youth's) of associates in order to upend the presidency in the name of Russian collusion will bring great succor to the Russians. And it would seem to put the finishing touches on anyone who isn't completely cynical toward all forms of aggressive government.



 By using the same techniques and statistics that are generally used to describe and forecast markets, i.e. means, measures of variation, and bootstrap estimates, based on prices, and balance sheet and income sheet data, you will be beating down a well traveled path. There are approximately a hundred articles a quarter, and numerous textbooks that use these methods. Chances are that as soon as a paper is published, the non-random effect will be dissipated by copying or the theory of ever changing cycles. Thus, I have turned to methods that are used to study the dynamics of insect and vertebrate populations. In particular, I have found the following books very helpful for thinking out of the box:

Ecological Methods by Southwood and Henderson

Game Theory and Animal Behavior by Dugatkin and Reeve

Individual-Based Models and Approaches in Ecology by DeAngelis and Gross

I will review some of the novel methods and approaches in this books when a calm in markets prevails.



 So the traditional way of trade wars is to levy high tariffs on goods imported from the opponent country. The logic is that the higher tariffs result in higher prices in the market for those imports, so the compatriots will buy less of those, resulting in less exports by the opponent country, and hence damaging the economy of the opponent country. A critical condition for the traditional way of fighting is that there is sufficient competition in the market for the targeted imports. Otherwise, the compatriot consumers will end up paying more and get hurt. In many cases, this latter case is true. This is why many say there is no winner in a trader way.

So can't a trade war be fought better with a better strategy? Instead of imposing tariffs alone on the imports, the policy is to force reduction of import prices on goods from the opponent country, and then levy the tariffs. The percentage of reduction can be deviced according to market conditions in the imposing country and in the opponent country. Should we term this as "managed pro-dumping"? With the price reductions and tariffs, the prices of the imported goods will likely stay relatively the same as before in the market. This way, the compatriot competing indutries don't get hurt much, the compatriot consumers don't get hurt as much, but the opponent country bleeds if they continue to export.

Stefan Jovanovich writes: 

There tariff question was one of the 3 issues that Americans disagreed about enough to make them a constant political argument. The others were (1) the expansion of slavery to new states and the Federal territories and (2) the currency question which was about everything from internal improvements to national banking. Neither side argued that there should be no tariffs, just as neither side argued that all slavery should be instantly be abolished. The question was whether tariffs could be protectionist or had to be for revenue only. In the current debate the revenue question has been largely ignored. I doubt that it will be much longer. For 2016 total U.S. imports were roughly $2.25 trillion. The average rate for the Walker tariff - written and passed by the revenue only side of the debate -was 25%. Applied to total imports a modern Walker tariff would produce $550 billion - 55% of all the employment taxes collected last year. I doubt very much that I am the only person who has made this back of the envelope calculation, and the geezers among us remember the last time a non-establishment Republican President considered tax changes based on numbers that could be scribbled on a napkin. What no American in the 19th century disagreed about was that foreigners should pay the taxes and leave Americans to worry about the costs.

anonymous writes: 

All taxes are (pick one or more) fascist, communist, democratic socialist, Gaullist, Whig…..They are, as the Libertarians justly remind us, enforced at the point of a gun. The question that must always be asked is which official theft is least threatening to citizens' individual liberty. Direct taxes are everywhere and always the worst because they are imposed on people directly (hence the name) and not simply on their transactions and property. That is why the Constitution did not allow them until the party of slavery, segregation and socialism and the theocrats (aka Prohibitionists) made their evil bargain. Tariffs work, for the same reason sales taxes do; the rates can, in a political economy not wholly corrupted by wage bribery, be set low enough that cheating is not worth the bother - as Amazon's recent conduct illustrates. (Collecting sales taxes has not affected their volume of trade, contrary to what do many analysts once feared.) The fundamental point to be understood is this: income taxes and employment taxes, in particular, demand the greatest oppression because individual extortion is built into the process of collection. People will cheat much more on direct taxes because they reward cheating. The rate differential is enormous (25% is the minimum) and the taxpayer has the "freedom" (sic) to characterize his/her/its transactions. (Contrast the enduring simplicities of the Uniform Commercial Code with the exponential mushrooming of every income tax law.). Like the drug laws and other forms of outright prohibition, direct taxes are guaranteed to be an abomination. No wonder Marx loved them.



 There are some wonderful market lessons contained within this short video.





 I speculate that if Dems take the house this will be bearish for stocks, to the extent this would damage the current pro-business regime.

On the other hand, it doesn't seem like congress does much anymore, and for the past decade or so regulation and de-regulation is via executive orders.

Other thoughts?



 For those on the list following the Birds, they are finally above .333 on their win-loss percentage. But I have great faith in these boys of 2018, and if they make an effort at it, I'm sure they will continue to pursue and exceed the 1962 Mets record for the most losses in a season (at least I think it's the Mets). After all, those arms are only going to get weaker with the further along we go in the season. Not that they were ever strong to begin with. Actually, pretty weak to begin with.

There is one upside to this season of ignomy: It is almost impossible (though I'm sure there may be only a non-zero (read: epsilon) chance) to imagine the GM Danny Duquette surviving into next year. Even Peter Angelos will be hard pressed to excuse the miserable team that goes under the name of the Baltimore Orioles.

And when the end of the season comes and the Os have successfully displaced the 1962 Mets, I suggest noting the epicenter of the strongest earthquake experienced on the East Coast of the United States in millennia. It will be at Earl Weaver's grave.



 Arm waving aside, whenever they advocate about officials deciding about who should get what, I think of Czech or Hungarian limp bodies swinging from lamp posts.

Laborers don't want their good efforts expropriated. As do not those smart and industrious enough to create profitable systems in the first place.

There is a zero sum sense short-term, but the battle is positive sum and unending. The problem lies in subsidizing profiteering champions of your cause when you wind up on the wrong side.

Zubin Al Genobi writes: 

Under capitalist theory, the purpose of capitalism is to use workers labor to provide a return to those whose capital is being utilized. Labor cannot really be levered, and is limited in a way that capital is not. I suppose productivity is a leverage of labor but does not grow exponentially in the way capital does. The worker does not reap the benefit of productivity. Capital has mobility. Labor is less mobile.

Stefan Jovanovich writes:

Discussing commerce using the academic Marxist term "capiatalism" is like listening to a former communist explain why freedom is a good idea. They mean well, but they never quite escape the notion that liberty has to have an underlying dialectic. It doesn't. Money is movable only in the abstract; in practice, it's owners have to go with it. If they don't keep an eye on where it is parked, both digitally and physically, it has a terrible likelihood of disappearing. Labor can be levered; that is precisely what enterprise is - the ability to get people and machines to work together better, faster, cheaper. And cheaper is measured by unit costs of outputs, not individual rewards. The reason American and most other progressive countries' labor laws outlaw payment by piece work is that it rewarded the people who could work faster and smarter. The unacknowledged part of U.S. labor history is the struggle between the home grown craft guilds and the mass unions promoted by the (mostly) German immigrant believers in syndicalist labor organization. Of course, workers reap the benefits of their greater skills and productivity. The question is whether the law, in the name of social justice, will allow them to do so. My Polish grandmother figured out in 6 weeks how to work two looms at once and more than doubled her wages (she said her work had better quality when she could follow the rhythm of 2 machines). She then learned how much of poverty is about people acting like crabs in a barrel and preventing anyone from being able to climb out. A Socialist comrade complained that Hedwiga was not showing proper solidarity and that was that.

Peter Ringel writes:

Stefan's great reply saves me from a rant. He checks all the boxes. Some additions (not well sorted):

- there are leverage winners and leverage losers. More or less a zero-sum game.

- leverage facilitates the animal spirits, which is an important driver of an economy (H/T G.Gekko)

- labor is leveraged

- I agree with ZAG & Stefan: productivity is a form of labor leverage, especially the work-time saving aspect.

- we are all highly specialized workers with specialized skills, standing on the shoulders of earlier generations.

- In my whole lifetime I could not build a machine, that brings you this email. I can not pump the oil to build a PC, and If I could, I can not build the wafer or the chips, and if I could, I can not build the undersea cable or the satellite, and so on, yet I produced this email in a few minutes.

- I see this accumulated knowledge as leverage.

- by many measures, my wealth is greater than the historical wealth of British royals. I have a car. They had a horse (or two)

- "they" call it capitalism. "We" call it freedom. It's about where to move and apply spare capital most efficiently.

- Smith's invisible hand moves the investor and the laborer (and the politician). Every laborer is also an investor.- the German immigrant communists in America were an embarrassment. Something is wrong with us. An analysis would bring us back to Kafka and his characters.

- Stefan's Polish grandmother is exemplary: I believe the urge for freedom of the Polish people where always stronger compared to the Germans. I grew up in East Germany. In the 1980s from an age of ~8 to 12 my father took me to Poland each Summer. It was the Poland of Solidarność and it was the land of freedom for me. My definition of freedom back then was: CocaCola, Pepsi and arcade Games. None of this existed at my home. This was all that counts.



 The worst feeling in the world is the feeling of fear and anxiety in the pit of your stomach. I can ball up from discomfort into pain and nausea. It is the thing that can make trading so hard. It's the ugly side.

This bad feeling arises in many circumstances and I'm sure everyone has had it.

Different forms of training can help cope with the feeling, or alleviate it. Sports, yoga, practice, exercise might help. But its there, and sometimes its forces you out of a trade just to alleviate the pain. Having fixed criteria and contingency plans help avoid pain inducing situations, and help with decision making in times of crisis.

anonymous writes: 

On my short term operations, that particular account I have blocked the account balance. This is a recent experiment that I am going to keep and turn into a habit. The amount of time just observing up's and down's was a waist and caused improper decisions at times.

The last two weeks I've done pretty well, and I have only a slight idea of the amount of my gains.

This account I don't hold positions over the weekend, and on Fridays I simply call my broker to double check if all my positions are closed.



 The book Biological Invasions by M. Williamson contains many topics of interest to market people interested in the impact of one major move in one market on other markets. The book case studies of invasions of fulmars, rabbits, and impatiens. It describes the spread with chronological maps. Topics covered are the process of spread, contagion, diffusion, rate of natural increase, pests, spread, and interaction with the food web. There is a brief introduction to the mathematics and statistics of invasion. I find the book relevant to big moves in one market, say, wheat and its effect on say, the stock market, and the effect of an usual move in one market on another. The book is full of examples of invasion with their ecological effects; Williamson posits a rule of 10% to describe the 10 % of invasions that last, and describes the reasons that they fail and diffuse. The framework could be very useful for thinking about invasions in life and markets.

Jim Sogi writes: 

I live in Hawaii. About 8 years ago a handful of coqui frog came on some plants in a container and landed in Hilo about 90 miles away. A nursery 5 miles away brought to this side of the island. Over the next years they slowly but surely moved down and have invaded my land by the hundreds. They are very loud at night. In the dry season, they dry up and go dormant. As soon as it rains they return.

About 80 years ago a friend's grand father, who was a missionary, brought a few seeds of tussock grass from Africa. When he planted it and saw it spread, it tried to burn it, only to discover burning is what it needed to germinate. About 30 years ago, it only appeared in a few spots along the road. Within the last ten years, what was one bare black lava, is now completely covered by this grass as far as the eye can see over the entire West Hawaii region.

Amazon might be a good analogy. Available in 2008 for $8 its now taken over the entire retail landscape and a global shift. Look a Apple and iphones, valued at over a trillion, and the largest cap ever. It grew until now as far as the eye can see, everyone has one in their hand and is mesmerized by the device. These invasive ideas have the potential to change the world.

Several billion years ago, small microbes that ate carbon and produced oxygen changed the atmosphere to an oxygen rich environment where life as we know it began.

Stefan Jovanovich writes: 

The precursor to our species relied on a similar invasion–the rise of flowering plants.


"Primate Origins Tied to Rise of Flowering Plants"

anonymous writes: 

Although I don't agree with deep ecologists that humans are an invasive species, the spread of humanity over the earth's surface is impressive.

Steve Ellison writes: 

Cheatgrass, which originated in Russia, similarly displaced many of the original native grasses in the US Mountain West. Cattle grazing of the original grasses by early American settlers weakened those grasses and encouraged the spread of cheatgrass, which was unappetizing to cattle. Cheatgrass's high flammability also aided its spread once established.

When my daughter had a project to collect seeds of original native grasses for the local university, she went to the cemetery in Virginia City, Nevada, once a silver boomtown and now a tourist trap with a small fraction of its 1860s population. The sacred ground of the cemetery had never been grazed, and the original grasses were still flourishing within its fence.




 I found this article about Gustav Born quite fascinating.

Gustav Born was a physician and pharmacologist who taught the world about blood clotting. In 1945, he was posted as a British army doctor in Hiroshima, and noticed that most of the survivors of the atomic bomb suffered from chronic bleeding. He demonstrated that exposure to radiation destroys the body's platelets to cause bleeding and laid the basics for treatment of bleeding and clotting disorders, some of which are still used today.

In a lifetime of research, he made major breakthroughs in histamine, stomach acid secretion, how involuntary muscles work, how adrenaline works and much more. He demonstrated how aspirin helps to prevent heart attacks and strokes, how high blood pressure can cause heart attacks, and how plaques break off, which causes clots to form resulting in heart attacks. He showed how white blood cells help to prevent infections.

Brilliant achievements often come from having outstanding genes and being exposed to brilliant people. The number of famous and brilliant people in Gustav Born's family is impressive and the creative genius of their close friends and colleagues is almost unbelievable.

Refugees from Nazi Germany, Gustav was the son of physicist Max Born, who received the Nobel Prize for his work on quantum mechanics and whose friends included two of the greatest physicists of all time, Werner Heisenberg and Albert Einstein. In 1933, when Gustav was 12 years old, Hitler came into power in Nazi Germany and his father lost his job as physics professor because he was Jewish. Gustav Born remembers his classmates refusing to play with him and hitting him because he was Jewish.

Albert Einstein told them to leave Germany immediately. These were horrible times, but some non-Jews showed great courage. Nobel prize winner Max von Laue, who was not Jewish, suffered greatly for supporting his Jewish colleagues. World famous and Nobel Prize winning physicist Max Planck went to see Hitler in person to ask him to let Jewish scientists keep their jobs, but Hitler "foamed at the mouth and wouldn't let him talk any more". Sixteen Jewish refugees who fled Nazi Germany went on to win Nobel prizes.

The Born family moved to Cambridge University in England, then to the University of Edinburgh where Max Born became professor of physics. Gustav was a brilliant student who could have studied anything, but his pacifist father encouraged him to go to the university's medical school so he could avoid having to kill anyone in the coming war with Germany. His grandfather was also a physician.

Stefanie Harvey writes: 

It would be 17 if Lise Meitner had not been excluded in 1944 (the prize for Chemistry went to Otto Hahn exclusively.)



 Crumb & Mairovitz's book about Kafka argues that 1. Kafka has been reduced to a single adjective by those who haven't read him thoroughly 2. Jewishness, Jewish mysticism, and the mystical experience of the Jewish ghetto where Kafka spent almost all of his life, are the real takeaways from his work.

The second piece was strongly coloured by a father who always called him a failure, who frightened him even as Kafka tended to the old man in his dotage. The US census shows that more 20 somethings are living at home (with more degrees than ever). Pace Charles Murray, changes in living arrangement particularly the American (versus, eg, Saudi, Surinamese, Pakistan, Burkina Faso) seem to me a likely change if the U.S. jobs picture stays bad.

Stefan Jovanovich writes: 

It is difficult to tease out of the census how many "children" lived at home while working in the 19th and early 20th centuries. Our present world only began with the Fair Labor Standards Act which Congress and the President enacted in 1938. It made employment of anyone under the age of 16 a crime; but the Census had not bothered tabulating the numbers for the problems that the Progressives were solving.

The 1900 Census questions
, for example, do not ask how many children are working.

Neither, for that matter, do the 2010 questions.

The American Community Survey–the "long form" questionnaire–does ask the question; but it has only been used since 1998.

It may be a scandal that people are living at home; but it may be that people are sensibly concluding that, in "average" residences that are 3 times the size they were in 1950, there is no more reason for the "children" to move out before they get married than there had been when most people still lived on farms.

I don't have the answer; but, then, neither does Charles Murray. He just likes the idea that there was once a golden era when all Americans were "normal".

Mr. Isomorphisms writes: 

Freud lived at home until a wealthy patron set him on his course of nervous therapy, setting him up with enough wealth to afford a home in which to put himself and Martha Bernays.

So did D'Alembert (inventor of the wave equation)–with his adoptive mother–until his 40s.

Early US video, eg the "Brooklyn ghetto fish market" (and you can cruise around on or getty images to see more), shows a lifestyle much like what Mairovitz tells of Kafka's upbringing. As for people who neither would be worthy of depiction by Ms. Austen nor influenced the course of intellectual history–information on their lives is scarce indeed.

I'm not sure it's scandalous for families to share houses. For whatever reason, that became Americans' expectation, even though only a couple generations ago flophouses, boarders, county poorhouses, and many other arrangements were common. It's still an open question how money and jobs link to fertility and housing arrangements. Chinese migrant workers come to mind. I heard there is a law that children who work in factories MUST return on certain dates to their parents in the country. 

The part of Murray's most recent book that I like to focus on is the geographic segregation of rich and poor. He contrasts Manhattan in the 1950s to the 2010s. The point was made by Tom Wolfe as well (Bonfire of the Vanities is now 30 years old, if you can believe that).

It was a ten-dollar ride each morning, but what was that to a Master of the Universe?

Sherman's father had always taken the subway to Wall Street, even when he was the chief executive officer of Dunning Sponget & Leach. Even now, at the age of seventy-one, when he took his daily excursions to Dunning Sponget to breathe the same air as his lawyer cronies for three or four hours, he went by subway. It was a matter of principle. The more grim the subways became, the more graffiti those people scrawled on the cars, the more gold chains they snatched off girls' necks, the more old men they mugged, the more women they pushed in front of the trains, the more determined was John Campbell McCoy that they weren't going to drive him off the New York City subways. But to the new breed, the young breed, the masterful breed, Sherman's breed, there was no such principle. Insulation! That was the ticket. That was the term Rawlie Thorpe used. "If you want to live in New York," he once told Sherman, "you've got to insulate, insulate, insulate," meaning insulate yourself from those people. The cynicism and smugness of the idea struck Sherman as very au courant. If you could go breezing down the FDR Drive in a taxi, then why file into the trenches of the urban wars? (The same review critiques Mr Wolfe for drawing characters for whom he has no sympathy.)

Howard Gillette Jr's book on Camden, NJ, begins with a similar outlook from even earlier.

Hazzard of New Fortune, William Dean Howells


At Third Avenue they took the Elevated, for which she confessed an infatuation. She declared it the most ideal way of getting about in the world, and was not ashamed when he reminded her of how she used to say that nothing under the sun could induce her to travel on it. She now said that the night transit was even more interesting than the day, and that the fleeting intimacy you formed with people in second and third floor interiors, while all the usual street life went on underneath, had a domestic intensity mixed with a perfect repose that was the last effect of good society with all its security and exclusiveness. He said it was better than the theatre, of which it reminded him, to see those people through their windows: a family party of work-folk at a late tea, some of the men in their shirt sleeves; a woman sewing by a lamp; a mother laying her child in its cradle; a man with his head fallen on his hands upon a table; a girl and her lover leaning over the window-sill together. "What suggestion! what drama! what infinite interest!

Gillette compares this to himself as a suburb-dwelling commuter living the good life whilst gawking at the commoners in the United States' favored image of its post-industrial failure. 



A case study in multiple comparisons and a warning against using cart for market prediction:

"Exercising for 90 Minutes Or More Could Make Mental Health Worse, Study Suggests"
by Sarah Knapton, Science Editor

Steve Ellison writes: 

A statement by Mark Hulbert in Sunday's Wall Street Journal raised my suspicions. He said that the percentage of household financial assets invested in stocks had an R-squared of 61% since 1954 in forecasting the net change of the S&P 500 over the next 10 years.

There have only been 6 non-overlapping 10-year periods since 1954. I have not gotten around to getting the data for household financial assets, but how could any factor possibly have an R-squared of 61% with any significance after 6 observations?

I will grant that the indicator makes some intuitive sense from the perspectives of "copper[ing] the public play" and waiting to buy until the old men are hobbling on canes, but I question the statistics.

Link and relevant excerpt below:

The most accurate of the indicators I studied was created by the anonymous author of the blog Philosophical Economics. It is now as bearish as it was right before the 2008 financial crisis, projecting an inflation-adjusted S&P 500 total return of just 0.8 percentage point above inflation. Ten-year Treasurys can promise you that return with far less risk.
Bubble flashbacks
The only other time it was more bearish (during the period since 1951 for which data are available) was at the top of the internet-stock bubble.
The blog’s indicator is based on the percentage of household financial assets—stocks, bonds and cash—that is allocated to stocks. This proportion tends to be highest at market tops and lowest at market bottoms.
According to data collected by Ned Davis Research from the Federal Reserve, this percentage currently looks to be at 56.3%, more than 10 percentage points higher than its historical average of 45.3%. At the top of the bull market in 2007, it stood at 56.8%.
Ned Davis, the eponymous founder of Ned Davis Research, calls the indicator’s record “remarkable.” I can confirm that its record is superior to seven other well-known valuation indicators analyzed by my firm, Hulbert Ratings.
To figure out how accurate an indicator has been, we calculated a statistic known as the R-squared, which ranges from 0% to 100% and measures the degree to which one data series explains or predicts another.
In this case, zero means that the indicator has no meaningful ability to predict the stock market’s returns after inflation over the next 10 years. On the other hand, a reading of 100% would mean that the indicator is a perfect predictor.
Since 1954, according to our analysis, the Philosophical Economics indicator had an R-squared of 61%. In the messy world of stock-market prognostication, that is statistically significant. Our analysis begins in that year because that is the earliest date for which data are available for all of the other indicators that we studied.

Jared Albert writes: 

As I understand the statement, the R**2 is generated from the correlation between the end of one ten year period and the end of the other.

Is this a fair model:
1) Use the annual returns for the SP500 for the period 1954-2014 broken in the 6 decade buckets.
2) Use the standard deviation of returns for each of those 10 years periods (STD calculated on only 10 yearly values for simplicity).
3) Generate a random return value from a normal distribution for the end year of each period
4) repeat the above for cash and bonds
5) create the portfolio ratio of stocks:bonds:cash
6) calculate the r**2 value between every 10 year period for stocks
7) do this 1000 times and calculate the summary stats for the R**2

Is this the way to build the model? I may do this later, if I can quickly find the cash and bond return. Thank you,



Nice summary vid with stats for the impressive Mr. Trout: "Mike Trout is the God Of WAR"



 "Payroll Tax Receipts Growth"

Reconciling macroeconomics and "job chatter", understand that the data do not support the enthusiasm of the news. Everywhere there are reports that the number of job openings outweigh the numbers of those looking to be employed. That may be the case, but the fact is that they are not being employed. Not yet at least. Maybe it is because the prospective American workers are unqualified (e.g. cannot pass the drug tests).

Whatever the reason, the jobs are not getting filled. That will change, but it may require some technology to assist the new workers. The trick is to make the job simpler for the unqualified, but no so much so that their jobs can be taken over by robots.

There are countries that have significant growth, and it is usually where the education system has provided the students with more than a sense of entitlement. Pardon my pessimism. We are actually quite bullish, but we would appreciate it if the numbers confirmed. Soon.



 Immeasurably tragic but fascinating story of social engineering and the unintended, and often bizarre consequences.

Frank Dikotter on Mao's Great Famine:

Historian Frank Dikötter of the University of Hong Kong and author of Mao's Great Faminetalks about the book with EconTalk host Russ Roberts. Dikötter chronicles the strategies Mao and the Chinese leadership implemented to increase grain and steel production in the late 1950s leading to a collapse in agricultural output and the deaths of millions by starvation.



This could be a game changer: "The Corn of the Future is Hundreds of Years Old and Makes its Own Mucus"



 The dollar is strong and looks like its getting stronger. CAD is .76 NZD is .66, Eur is down to 1.14. Not sure if this is good or bad. Using the big mac scale, prices in Canada were high, but their economy is suffering. They rely on resource extraction, and its a losing economy, because once the resource is gone, the place is ruined, the multinationals leave, and the local get the shaft. Land is cheap in Canada. By the way, the Okanogan wines are fantastic.

I'm heading to New Zealand, and will report, but its getting really popular down there with Chinese. Busloads of very loud and arrogant acting tourists with expensive clothes fill tourist spots. Land used to be quite cheap but has boomed over the last few years. Gas was over 8/gal.

Last year, Japan was really cheap. Cars are cheap. Hotels are under 100, meals are cheap. People work incredibly long hours there. You see the same people working the restaurants early in the morning and late at night. They are polite, but there is a weird underlying tension. in Japan, French wine is $7 a bottle from the prime regions.

Someone once said if there are major tectonic shifts occurring, look to the currencies. With rising rates, one can understand the strength of the dollar.



 Slab City is a school for the unorthodox, and a suggestion to traditional education, in a nod of gratitude to famous educator John Gatto for laying my own techniques as a sub-teacher of ten years. It won't do to tinker with schools and try to make them better. We have to start from the ground up in a free market place like Slab City and reconsider what education is.

The most enjoyable teaching is on a thick carpet or outside under a shade tree with no furniture, no blackboard, no textbooks, and no purpose. The discussion follows free flow thinking, with questions asked and answered, and I've never seen so much learning take place, for me and my students, anywhere else.

I tried to create the same feeling in the traditional classroom by literally throwing the text across the room to get attention, lecturing off the cuff on the topic of the day, rewarding paperclips for original thinking, and paying for projects in a capitalistic ploy that worked. It earned me the highest praise from students and faculty, while the third crafty side of education called administration fired me for being a maverick. I hit the rails, then the city streets of thousands of world communities, narrowed the best learning spots to a handful of utopias, and that was my passport to higher education in Slab City.

School is a major actor in the recent failure of America. The school crisis is an even greater social crisis. Our nation ranks at the bottom of the world's 35 industrial countries in reading, writing, and math. At the very bottom! My observation from the trenches is that our schools are designed to produce formulaic human beings whose behavior can be predicted and controlled.

Some form of free market in public schools is the likeliest place to look for answers to education. The free market would include family schools as at Slabs, homeschools, small entrepreneurial ones, crafts schools, vocational, and I favor the old man with a dunce cap behind Ronald McDonald fielding life's most mysterious questions easily from his vast learning, to compete with the government schools.

Students can volunteer for the kind of school they wish, even if it means self-education.

Whatever education is, it should make you a unique individual, not a conformist, and energize your spirit to tackle big challenges and achieve. It should make you a morally rich person who enjoys whatever you're doing. The better classroom for this for a child or adult is a rolling boxcar, city barbershop, hiking trail, doorstep of an uncharacteristic mentor, or weird town.

A walk through Slab City is going from slab to slab, that is, class to class, and talking to people. If they won't talk, just observe. Bring them an iced soda to open the can of worms of their lives that equal the most worthy biographies at

Education is not the filling of a pail, but the lighting of a fire by the right person.



 Steve Ellison writes:

This indicator was also mentioned in Mark Hulbert's article in the Wall Street Journal on Sunday. People who cite it as an indicator usually implicitly assume that the aggregate value of the stock market should grow at the same pace as GDP over the long term.

I believe this assumption is flawed for two reasons. Privately held companies are not counted, so changes in the relative percentages of public and private companies affect the ratio. More importantly, the traditional capital structure of 50% debt and 50% equity, in which all upside value goes to equity holders, is a good reason why stock valuations should increase faster than GDP, especially over very long periods. Indeed the inflation-adjusted compound annual growth rate in the S&P 500 between the generational lows of 1982 and 2009 was 4.4%, significantly more than GDP growth during the same period. So I don't lose any sleep over this ratio being higher now than in 1929.

Stefan Jovanovich writes: 

In a recent speech Jorg Meuthen made a simple point: GDP calculations assume that civil servants are somehow as magically "productive" as the people who have to do work for a living and successfully sell their work for cash.

No one in the "mainstream" (sic) wants to do calculations that remove all the recipients of government payments from political economic calculation. It is, from the point of view of modern economics, heresy.

I took Big Al's elegant calculation and found its "private sector" derivative.

The results are precisely what spec and others see in their views of the data. Not at all a pretty picture. If you take private earnings from wages net of taxes as a proxy for the country's additions to wealth, the 5 years up to and including 2017 only recovered the amounts lost from 2007 through 2011. From the point of view of people to do work that other people actually pay for, the last decade has been a complete wash. It is only the gains for this year and beyond that can be counted as actual increases in wealth.



From Jan to April 10th there were 46 half hour moves of 15 big points or more in S&P, from April 10th to July month end there have been 3 moves of 15 big points or more.



Say you start with equity amount A and lose x percent every day (or year, doesn't matter). After number of days N1, your equity reached to B. From that day, you start to gain x percent every day and after number of days N2, your equity gets back to A.

Surprisingly to me, the difference between N1 and N2 almost does not depend on x. The second surprise to me is that the difference is not very big at all. It's not surprising though that N2 (on the gain side) is larger than N1 (on the loss side). And it depend on A and B, but not by a whole lot.

The same applies when you inter-change words "gain" and "lose" in the first paragraph.

A=100000, B=50000, then N2-N1 is about 0.7, to be precise:
when x=0.01 (1%), N2-N1=0.6931529570463937
when x=0.2 (20%), N2-N1=0.69550029741854
A=100000, B=10000, then N2-N1 is about 2.3, to be precise:
when x=0.01 (1%), N2-N1=2.3026042820666532
when x=0.2 (20%), N2-N1=2.3104019779971665
A=100000, B=1000, then N2-N1 is about 6.9, to be precise:
when x=0.01 (1%), N2-N1=6.907812846199931
when x=0.2 (20%), N2-N1=6.931205933991492
Interchanging "gain" and "lose", and N1 and N2
A=1000, B=2000, then N2-N1 is about 0.7, to be precise:
when x=0.01 (1%), N2-N1=0.6931529570463937
when x=0.2 (20%), N2-N1=0.69550029741854
A=1000, B=10000, then N2-N1 is about 2.3, to be precise:
when x=0.01 (1%), N2-N1=2.3026042820666532
when x=0.2 (20%), N2-N1=2.3104019779971665
A=1000, B=100000, then N2-N1 is about 6.9, to be precise:
when x=0.01 (1%), N2-N1=6.907812846199931
when x=0.2 (20%), N2-N1=6.931205933991492


Resources & Links