1. A visit to the bookstores these day is reminiscent of those in 2003. At that time, all the books were about the coming bear market, and the only offset were the tons of worthless tomes with the sanctimonious bearish always, no one can do what I do, channeling of the Sage. Now the books are all about the coming financial panic, how things are going to get much worse, and how the only solution to our problems is to turn everything over to the commanders. I posit that the books these days will turn out to be as wrong in the aggregate as those of 2003. January is usually an up month, having risen 32 of the last 50 years. I hypothesize that there is a tendency for the Januarys that are down to be succeeded by a rally that brings the month-end close to a higher level than the previous year end December, i.e. one month ago. Such a hypothesis would have to take into account a year like 1974 when the market declined 30% from its January close without ever breaking the previous year-end level, and 2008 itself where the market declined some 35% from its January level without a break. Indeed of the 18 years in question, seven of them never achieved a rise above the December level. A strategy of holding to the first break of the previous December level or to the end of the year would have lost on average 4% on the 18 occasions it was triggered.

2. Yet another example of the theory of least effort comes from my son's acquaintance with three pools in the swimming facility he frequents. One is normally at 100 degrees, the kiddie pool at 83 and the main pool at 80. At first he was exposed only to the main pool at 80 and loved it and used it regularly. However, after being exposed to the hot tub pool, at 100, he now finds the main pool much too cold, and refuses to go into it without much incentives and or (I will not finish that sentence). I wonder if the market takes the least effort into account by finding the weakest link in a chain and using that to make its major moves. This is a fuzzy statement. but it can be quantified in some interesting ways that I will leave as an exercise.

3. The NY Knicks are truly a team without a foundation. I can hear Tom Wiswell saying, "checkers is a game of architecture — you need a strong base of operations," whenever I see them lose yet another game as they stagger aimlessly around without a game plan near the end of the game. On Sunday, they managed to lose a game by a point in the final second after being up by 13 with five minutes left in the game. The market mistress, I always suspect, looks at all the ways the Knicks can lose, and then uses the template of such a woeful loss as a model for how to make the specs lose that way. One could do well by taking account of the way the Knicks lose, waiting for the market to recap such a loss, like a big rise up to 3pm and then a small loss for the day for fun and profit.

4. I should know something about gain and pain because of my 12,000 competitive matches in racket sports. The main thing I know is that one should never lose without giving oneself terrible pain, putting everything one has into the loss. I hate to see a person quit and give up the ghost through want of effort and avoidance of pain in business or a match. The other thing I know about pain is that it's the extra little effort you put in that always leads to success, and that pain in the input is necessary for all those who are not naturals in the activity. When I practiced squash, I would always end my sessions against myself with something like an excruciating regimen of up to the front wall and back to the back wall and that stuff was always the reason that I can still count on my hands and remember every one of my defeats in squash. There's a difference of course between playing a match where if you lose it, it's all over and a market foray, where another game will always be playable if you have the capital.


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