Oct

10

Shape of LifeRecent study of the work of Rudolf A. Raff, including his book The Shape of Life, inspired by the supposition of Galton that there are only a small number of forms that are consistent with life based on biological and physical limitations, has led me to consider the specific fixed forms that a species and a market can take. Many of the fixed forms at the basis of the phyla seem to start with a pipe: a mouth, a gut, and an excretory organ. I find that many times the market displays such pipes. Another line of inquiry are the architectural forms that the market displays. Today, the market action in S&P looks like a cathedral. The study of the shape of life raises many fascinating questions as does the architecture of the market. How they be classified and predicted, is a good starting point.

James Sogi augments:

Both Weyl and Wolfram consider the basic forms of bilateral symmetry as being intrinsic to natural processes in art and nature. (See Wolfram's artificial leaves). Weyl attributes symmetry to even deeper metaphysical processes. The market's basic bilateral process of bid and ask with two opposing forces of buying and selling tends toward the creation of bilaterally symmetrical forms. This lends itself to many predictive applications and the formation of generally negative correlations within lower time frames. The general rule seems to be negative correlation with bouts of correlation breaking out for limited durations. What is not so regular is the durations of said regimes. Study of endings and durations are more robust than study of new beginnings. In other words it is hard to recognize the new regime when it begins, but one can tell when an existing cycle is long in the tooth. On the counting point, Weyl studied the alternating symmetrical patterns prevalent in ancient art friezes. With a typical pattern coming in 3's or other odd or prime numbers, the bilateral symmetry of the market would tend towards an alternating pattern as well. This has predictive application.

Bruno Ombreux adds:

Sand DollarBilateral symmetry is prevalent in nature and the markets (for instance Lobagola, as Vic and Laurel coined it). But it is not the only form of symmetry. Sea urchins display pentagonal symmetry. Could one find higher forms of symmetry in the markets too?

One obvious market is the oil market. There is a fundamental source of of triangular symmetry in the interplay of heating oil, gasoline and crude oil, tradeable in various crack spreads. Going up one further level, oil arb relationships, geographical, time-based and qualitative, are creating a web of multilateral symmetries that are there for the taking.

Changing subjects but keeping with the symmetry theme, I am wondering about the Magic T theory, which is mentioned on pg. 72 of Vic and Laurel's book. Marty Schwartz was a successful S&P trader. He allegedly was a big fan of this so-called theory, though he didn't invent it. The name Magic T is ridiculous, evoking the worst of technical analysis. But it is some kind of Lobagola/mean-reversion theory. There could be something in it. Yet it is not easy to test.

Russ Sears ponders a related question:

A question I have asked myself, but have never studied in life forms is "why is it that the hierarchical ancestral classification of families of animals done many years ago (Linnaeus, etc.) was proven uncannily correct by modern genetics DNA research?"

The basic classification system was based on the outstanding/noticeable physical differences in life forms. This was well before the complex understanding of the chemistry of life existed.

Obviously, the divergence from normal of the life form filled a niche and created a branch. But why would the visually noticeable difference matter, as much if not more than the hidden chemical differences. Especially when the hidden differences are often the more fundamental or theoretically obvious difference of successful adaptation.

I suspect that once the more fundamental difference occurs, the visually obvious adaptations and physical evolution occur quickly.

A clear case of death to the unfit would be lack of immunity to disease for example. For a converse example the difference between herbivores and carnivores. Fundamentally is a difference in stomach chemistry, not a outward appearance. However, a well known adaption is that herbivores have eyes on their sides to see more of everything, whereas carnivores have eyes in front to see specific targets.

In other words once the subtle difference occurred did the physical difference form rather quickly. Or did large physical obvious differences come first and the subtle difference taking more time follow.

For a speculator, I propose a analogy for carnivore/herbivores eyes. The optimist seeing a vast sea of potential food, must be alert for the sudden unexpected attack. The starving pessimist must focus on the targeted prey. However, both should understand how the other view differs from theirs. The optimist to learn how to shake the predators when he is in their sight. The pessimist, should understand that the optimist has a more rounded view, to see where the opportunity truly is when it appears to come from out of nowhere.

Phil McDonnell adds:

The two key driving forces of evolution are survival and reproduction. Sometimes these are characterized by the phrases:

1. Survival of the fittest
2. Survival of the s-xiest.

In order for an animal to reproduce it must first identify a mate. For most animals the primary identification sense is eyesight. This is not to exclude other senses. Certainly hearing comes into play in the form of mating calls and territorial calls. Smell, touch and even complex courtship behaviors are all used to identify and woo potential mates. So to answer the question why is there such a strong correlation between the outward appearance of a species and its DNA we need only to realize that to reproduce the animals must first recognize each other!


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