May

29

 What can we learn from shelled species about the markets? Shells protect creatures from predators, wind, sea currents and the sun. Sometimes they are conical, sometimes circular, and sometimes spiraled, with each shape being specialized to its particular purpose. Why do shelled creatures often live for so long … and in the markets, what makes some stocks live longer than others?

Reputation is key to business success, with companies spending fortunes to keep their reputations up, so that customers will pay more for their products. How does the market use the reputation effect to maintain its feeding webs, with particular reference to the last period effect, where there is no current incentive for a politician or market to fool its voters or votaries?

The Japanese and Israeli markets are both up sharply this morning, from when the U.S. markets closed at the end of last week. To what extent has there been correlation of these market's moves to the U.S. markets' move on the following day? My hypothesis is that the correlation was weak until last year, but has increased recently.

There has been a much greater tendency to reversal after big moves lately. Is this indicative of a change in regime or tempo, or is it bullish or bearish? The risk premium on stocks, according to a cursory study transmitted to me by the sapients at Gavekal, is at its historic average, but the risks nowadays from the economy are much lower than they have been before. To what extent is this bullish or bearish also?

It is an old saying that a nation's preferences in sports reflects its character. What can we say about the changing nature of sports in the U.S. that is indicative of future market moves? Is it truly hard to find kids in the ghetto playing basketball these days, and families visiting national parks together, because outdoor pursuits have been crowded out by computer games, etc.? If true, what are the implications of this for amusement park companies?

The ten year bond is a tenth or so away from a five percent yield? Is there a gravitational effect towards the round number, and will this have a detrimental psychological affect on stocks, with the yield differential still being at one and a half percentage points.

When will all the remaining trend followers get tripped into being long the dollar, and will the increased movement in the dollar's favor lead to another opportunity for the banks to make money from going against such a fixed position?

As a final thought, some old men are the greatest repositories of wisdom for the younger generation, like Ed Marks who was the greatest speculator I've ever met, or Larry Leeds, who has the best record of all for institutional funds. Others, (like the weekly financial columnist and the Nebraskan), have a message, that if followed would lead to lassitude and mediocrity.


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