A friend of mine invented a new style of acrobatic dance for ball room dance competitions that generally won him the national championships in his field. He liked to warm up for about 5 minutes before the competition started and do his lifts, sometimes as high as 25 feet for a few minutes, then leave. He finds that by the time he leaves his competitors are so demoralized and confused and awed that winning is much easier. One wonders if such effects happen in the market.

The editor of our site, Victoria Niederhoffer, likes the work of David Burns in creating happiness. One of his methods is to take the worst fear that you have and make yourself do it, e.g. talking to an attractive girl you haven't met, and showing that when it happens, it's not that bad. One wonders if the moves below Dow 7000 and Nikkei 7000 played a similar role to Burns' technique.

Of spectacular leaps is what I found in my rackets career. I found that dissipating energy by anything not related to the game itself was totally dysfunctional. In particular, arguing with the referees a la McEnroe, or romantic interludes before the game was always a sure precursor to defeat. I never did it again after I figured it out. I looked at spectacular leaps before the opening of the S&P to see if the ballroom dancers or the racket players experience was best. I found that all spectaular leaps before the opening were reversed shortly after the opening much to the cost of the leaper, and much to the confirmation of the hypothesis and experience of the racket player.





Speak your mind

14 Comments so far

  1. Steve Leslie on March 15, 2009 9:39 am

    Tony Robbins is now running infomercials to promote his books, tapes and now downloads. Perhaps it has something to do with the times we are in that he is exploiting this event. He has much to contribute in this field also.

    I know we avoid pain much more than we seek pleasure. Or rather perceived pain. Once we confront our fears we find the pain is not as severe as it was painted in our minds.

    I like two quotes from Vince Lombardi and use them regularly:

    "Action cures fear."

    "The Good L_rd has given you a body that can withstand almost anything, it is your mind you have to convince."

  2. Steve Leslie on March 15, 2009 10:04 am

    I remember an observation that I think about during this market collapse these last six months. If you take a pot of very hot water and toss a frog into it, the frog tries to leap out. However if you put a frog into room temperature water and then heat it up the frog will just stay in the water until it expires.

    With respect to markets, it is far more likely to get away from a bad position if it drops suddenly than if it is a slow grind downward.

  3. George Martin on March 15, 2009 11:16 am

    My worst fear is blowing up my account. Maybe I should do this to be happy?

    What do you think Vic?

  4. Steve Leslie on March 16, 2009 5:57 am

    If you have not figured it out by now, the proliferation of acidic comments by this "George Martin," "Paul Stanley," Spinal Tap characters and others are not real names. George Martin was the fifth Beatle. Larry Tribe, a Harvard Law Professor. Other fictitious names are being used to corrupt this website.

    It is a real shame that infantile people get thrills by performing such antics when the goal of this site is to benefit as many people as possible. But yet there are those who think it is fun to create viruses to infect computers.

    I guess it is a sign of the times that genetically inferior misanthropes proliferate and we do not have an effective method to screen them out.

  5. Darrell Lance Abbott on March 16, 2009 7:34 am

    Steve Leslie said: “With respect to markets, it is far more likely to get away from a bad position if it drops suddenly than if it is a slow grind downward.”

    Do we know if there are any studies or even widespread anecdotes to support such a statement, or is is just meaningless blather? I can’t find anything. I have, however, found the following link:

    This shows that your boiling frog metaphor is false. Does that suggest that your assertion above is also false?

  6. Steve Leslie on March 16, 2009 8:48 am

    This has turned into a joke:

    Who is going to attack me next, Slash from Guns and Roses?

    I used the boiling frog as an analogy. I have a creek in the back of my house and I will look for frogs today and try to boil them — what would an appropriate number of frogs do you think I would need? Better yet how many angels can dance on a top of a pin. Would you like me to investigate this also?

    I will report back to you whether I am successful or not.

    In my experience I am more likely to get away from a position…

    Now Mr Darrell Lance Abbott do you feel better? or is it Darrell Lance Abbott, rock guitarist?

  7. Larry Tribe on March 16, 2009 9:04 am

    My name is Larry Tribe, and I'm not the law professor. There is more than one person in the world named "Larry Tribe," but I guess that's a difficult concept to grasp if you play poker all night for minimum wage.

  8. douglas roberts dimick on March 16, 2009 3:55 pm

    One may consider retracing, re-enforcement, re-assault, reconnaissance… all to be variations of acting out fear that would cause leaps either forward or in retreat.

    Perhaps our past failures and losses are those residual spirals of negative energy from which fear is generated or projected by psychic centricity connected to past events?

    Consider these excerpts from “Strike Two for Niederhoffer” and my comments shortly before the real blowing up began six months ago…

    Smart people populate all corners of Wall Street. Victor Niederhoffer might be one of the smartest of them all… Victor might not be the first, or last prodigy to crash and burn on Wall Street… But not everyone gets a second chance. Will he get a third?


    … perhaps the question does not related to if or why but “when”—does he reform the lines and attack (see Jim Sogi article at his web site, Daily Speculations).

    I am reminded of the movie, Pi… theories concerning analysis and distinguishing order and chaos, random and that being possible as well as systemic and that being probable.

    Where does study and performance separate relative to human inquiry and human endeavor? … Perhaps you may consider an inquiry into whether standards and practices (such as those assumed or subsumed with program trading dynamics) reflect a single methodology in terms of design and application?

    For the man in your article, perhaps what is most noteworthy is the transparency of his intellectual study relative those “multi-billion dollar blow-ups” so realized from “black box” results of industry practices.

    I noticed a commentary at his site which references three precepts of Mushashi:
    Attack while retreating.

    Having briefly studied Shaolin, I find that linear and circular applications may define as well as redefine such human applications.

    When does what appears to be a retreat become realized as an attack?

    Is it the man or the market(s) that tell us so?

    You might ask him…


  9. Saul Hudson on March 16, 2009 4:47 pm

    I think the general idea, Steve, is that in the internet age one doesn’t need to boil the frogs from your creek to find out the answer, one only needs to do a quick internet search.

    What would be worth testing in some manner would be whether or not your assertion about markets is true. As a reminder, you said:

    “With respect to markets, it is far more likely to get away from a bad position if it drops suddenly than if it is a slow grind downward. ”

    That being said, I agree with you about the silliness of using fake names on the forum.

  10. Steve Leslie on March 16, 2009 8:19 pm

    Due to the fact that I have never seen you contribute anything heretofore, I deduced that you were an infantile blogger. My apologies, Mr. Tribe. However, I am dumbfounded as to your equally ridiculous assertion that I play poker for a living. I buy and sell businesses. So I expect quid pro quo on an apology from you. And when shall we see original material from you? What great insipid wisdom would you like to share?

    I do assert that a frog will boil if water is heated slowly enough. You gave one reference — do you have others?

    In the movie Fatal Attraction a rabbit was boiled but I am unaware of the method used. Perhaps Eddie Van Halen, Stevie Ray Vaughn or George Thorogood might be able to weigh in on this one.

    Of course, once again a perfectly good subject is hijacked by idiots. Well done, idiots. Now back to the asylum for you.

  11. Steve Leslie on March 17, 2009 9:21 am

    One final humorous stab and back to seriousness. There are over 2500 different varieties of frogs, and there are many ways to serve shrimp as Bubba so eloquently described in Forrest Gump. Until someone shows me a study that includes every variety of frog from African Bullfrog to American tree frog, my contention stands that properly done, you can raise the temperature of water a frog is in and it will not jump out. Please come to my rescue, Dame Edna Everage throw me a lifeline!


    My experience is it is easier to get away from something that gives you an initial shock, such as a quick and sudden drop in a stock that you are long in than a protracted decline. It is a reflex reaction mostly which causes this fight-or-flight reaction. When something is systemic, slow and steady such as a six month decline that we experienced in 2002 and 2007 to present it is so much more difficult to pull away from. It is like a slow acting form of cancer that eventually kills you. You begin to learn to live with it and accept it as an unwelcome event.

    Perhaps something that relates to this can be learned from Victor Frankl in Man's Search for Meaning. He explains why many died in the death camps. They gave up hope, The constant slow dehumanization, the physical and mental daily torture becomes too much until their minds cave in and they lose their life force.

    Erin Go Bragh

  12. Michael Dorn on March 17, 2009 12:07 pm

    You are right that a rabbit was boiled in Fatal Attraction. Perhaps I will try to contact Hollywood to figure out how it was done. I have generally found that Hollywood is fantastic at solving problems/questions about the physical universe that others have trouble figuring out. However, I have had no response yet as to how exactly to get Heisenberg compensators to work as they do in Star Trek.

  13. Steve Leslie on March 18, 2009 10:38 am

    Just a note about Star Trek and Stars Wars. There is a show that is periodically broadcast on A&E or Discovery, I cannot recall which station. They interview scientists, and propose whether technologies presented on Sci Fi shows could be replicated either today or in the future. In short whether the laws of physics would hold. For example could a light sword be built or can one travel faster than the speed of light?

    It is really entertaining and remarkable. Look for it sometime.

  14. Yariv on March 18, 2009 12:10 pm

    What are the implications assuming a bank will be nationalized on the bond-holders??



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