Mar

3

1. "Electrocybertronics," an article in Smithsonian, March 2008 issue, points out some sexy company names, especially suffixes, from the last century starting with electric, going to "ex," then "ola" then "tronics" then "cyber" then "nano." I made a preliminary study of returns the 35 US public companies with "nano" in their names and found that most of them are near zero and have not risen in price. I can't pass this subject without noting that like most new things, those who wish us to remain primitive are fighting against this development, and much life-saving will be prevented. Apparently there are nano pants that stay clean, and perhaps this will play the same role that hybrid seeds played in opening up biotech in opening up life extension and reduction of human drudgery in nanotech.

2. We've now had the greatest number of down S&P opens in a row in history at six. And that's surprising since it's only a 1 in 64 shot.

3. How often can people take one city, one month, and send the market down a few percent, as they did with Chicago Purchasing Managers, only to reverse it the next day when the next random number, such as NAPM, comes up.

4. In "The Mauritius Command" by Patrick O'Brian there's a beautiful passage about how Mauritius bonds are trading at only 10% on the dollar recently from 80% as they follow the probabilities of success of Aubrey's imminent invasion and his recent results against the French. Very much similar to the movements in the market as Democratic prospects for victory wax and wane.

Easan Katir writes:

Vic's post stirs memories. To properly observe a mid-life crisis at age 43, I sold my book and moved to a beach house in Mauritius, about 100 yards from Point aux Cannonieres, the fort from which the French defended their island against the British in 1810. One could easily imagine those frigates in full battle. O'Brian mentions the monsoon. A few months after we moved in, a category 5 hurricane's eye passed directly over our house I can't imagine how ships of that day withstood these monsters.

So the nanos have gone the way of the Mauritian dodos. Two more words to add to the 100-year historical list might be 'railroad' and 'mining' as most of those went to zero, and more recently 'bio.' The takeaway message is be on the lookout for the next fad name. We are right in the middle of the crash of any name containing the word 'finance.' Perhaps any name with 'solar' is on deck next, unthinkable as that may now seem.

John De Palma adds:

You wrote today: "In "The Mauritius Command" by Patrick O'Brian there's a beautiful passage about how Mauritius bonds are trading at only 10% on the dollar recently from 80% as they follow the probabilities of success of Aubrey's imminent invasion and his recent results against the French. Very much similar to the movements in the market as Democratic prospects for victory wax and wane."

I'm reminded of how historian Niall Ferguson studied whether bond markets anticipated World War I, discovering that they did not: "…Ferguson is intrigued by the behavior of the financial markets on the eve of World War I because stock and bond prices at the time registered scant concern about the impending cataclysm. This contrasts with the conventional view among historians that the war was all but preordained because of a decade of escalating great-power rivalries that erupted into violence after the assassination of an Austrian archduke by a Serbian terrorist in June 1914… Ferguson was most surprised that the people who had more to lose from a war "bond investors" didn't see it coming…" 

Similarly, before the Iraq war, Penn economist Justin Wolfers ran regressions of changes in various financial assets against changes in the TradeSports Saddam contracts. He inferred the extent to which an anticipated war was built into financial market pricing and objectively determined what the impact of the war was on markets. Also, MIT economist Michael Greenstone analyzed the Iraqi bond market to gauge whether the country would survive.


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6 Comments so far

  1. Lawrence Schulman on March 3, 2008 3:46 pm

    A good many of the dotcoms went to zero too. As far stocks opening down six straight days for the first time, that may be partially due to the elimination of the so called "uptick rule." It's been about nine months since the "uptick rule" changed so maybe we will see more of these down opening streaks.

  2. Anatoly Veltman on March 3, 2008 5:01 pm

    I disagree on technicality with Mr.Schulman; he might have not realized Vic was talking about the 9.30am S&P futures open. The uptick rule vacation allowed individual issues to be shorted at the open; thus taking previous not-always-deserved pressure off the opening futures print…

  3. Lawrence Schulman on March 3, 2008 6:43 pm

    The S&P futures trades for most of 24 hours. There is no 9:30a.m. S&P futures opening. My comment was on the stock market 9:30a.m. opening. Am I missing something? Wouldn’t elimination of the “uptick rule” put pressure on a stock’s opening price if shares are being sold short using market orders at the open? If an event having a 1/64 probability of occurring just happened for the first time in the markets history I asked myself what could have caused it. The uptick rule was changed on July 6th, 2007, or approximately 140 trading days ago and I thought that may have had some effect in pressuring the opening price of stocks.

  4. Anatoly Veltman on March 3, 2008 7:36 pm

    Dear Mr. Schulman, I gently explained to you Vic's terminology: 1. He has loosely called S&P futures "stocks" for a few decades now; he's unlikely to retract any time soon. 2. He still considers the 9.30am futures pit open "the open". Clearly, the 4.30pm nominal futures open rarely meaningfully differs from the 4.15pm settlement. Please, work with Vic. Now that you understand which "open" he discussed in his post — I doubt you will insist that your respectable hypothesis hits the spot.

  5. Lawrence Schulman on March 4, 2008 7:37 pm

    Today was the seventh straight day of the S&Ps opening lower. The last six days the Yen was lower as trading began. Perhaps the unwinding of the Yen carry trade or fear of it being unwound is manifesting itself in the spillover effect as trading begins in the USA. The economic slowdown is causing speculators to cut their losses; getting out to repay their yen loans.

  6. Lon Evans on March 7, 2008 3:55 am

    Lord,

    Does it ever get less tiresome?

    So many numbers and so little wisdom. Please people, go back and look at all of the advice from the "commentators." over the last six months. Then go back and look at of the advice from those allowed to post.

    Among the "commentators," I'm singularly the only one with the bravery and the foresight to have attempted an opinion as to what was to come. And to date, well, bulls eye!

    As I stated a bit in the past to Mr. Russell Sears, we'll talk about your misinformed reality when the SnP tests 1300. Well, Russell, let's talk! Your misinformation has come back to bite you in the ass, hasn't it? What now?

    In comparison, Mr. Sogi has recently posted a couple of very pertinent and demanding opinions, yet not a one of you VicBots comment. Why not?

    Yet, should the guru belch, oh yes, then we get a conflagration of agreement, sycophantically realized. What a bunch of cultish fools.

    When wrong, shut up, cause your whining is pathetic.

    My latest "gloating bear" scenario. SnP @ 1225. Anyone out there willing to take the calls I'm selling? Didn't think so.

    lon

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