Apr

27

BaseOne of Tom Wiswell's favorite things to say was "make sure you have a strong base of operations." I find this true in all aspects of life. In the market, it would involve the preparation for the investment or speculation. Certainly having all the equipment and getting in on time. And having the proper capital and vig relations. Certainly not being distracted. Tom liked to say afterwards "checkers is a game of architecture." The importance of a proper foundation in a building, a proper base relative to the tower, and proper communication between the various departments of the building is also clear. I have been thinking of this subject in conjunction with a note I am going to send to Aubrey on his third birthday. It is important to have a good base of operations in whatever you do. Always prepare in advance. Don't rush. Plan what you're going to do. Don't act in haste. Make sure you take in the proper foods. That you get a proper sleep. That you don't run around too much distracting yourself from the important essential goals to survive and prosper. Have a proper financial foundation. Be prepared for adversity. Put things aside in case things don't go as planned. Move forward when healthy. Develop your talents. Get proper mentors.

The thought leads me to suggest something controversial. I am a very weak chess player and my thoughts on it must be taken with many grains of salt. However, i took lessons from Art Bisguier for about 20 years, and I have seen Adam Robinson and Dr. Vic play many games as well as watched many games in Brighton Beach where they played every day. I think from my observations that checkers provides many more life lessons than chess because the rules are less specialized. Moving forward or backward, except when a opposing man is in front of you where you jump, is a very binary kind of thing from which all kinds of ultimate outcomes arise including its proximity to computers, electrical relays, and logic circuits which are also on/off or 0/1 systems. Thus, I would recommend  checkers as more helpful to kids as a game to prepare for life than chess.

Nigel Davies comments: 

I've found myself that the number of rules in chess has diminished with my level of understanding, and I tentatively suggest that this might be applied to all fields.

Douglas Roberts Dimick adds: 

The Art of War, Sun Tzu

Chapter 1 — Laying Plans explores the five key elements that define a successful outcome (the Way, seasons, terrain, leadership, and management). By thinking, assessing and comparing these points you can calculate a victory, deviation from them will ensure failure. Remember that war is a very grave matter of state.

As for state, so to for money…

All battles are won before they are fought.

Anatoly Veltman comments:

 I can speak from personal experience: Aubrey's received an essential for a 3 y.o. memo!

My parents handed me over to a personal checkers coach when I was 5, and I was taught basic framework. Master trainer in charge of Odessa Women's Team took over - within the next year, I've traveled the Soviet Union (without parents) as part of the Women's Team. My paradise ended when other teams filed protest over "unfair advantage". I proceeded to score enough wins in Men's tournaments to qualify for "Master of Sports" title by 12 - youngest in Soviet history of any sport. They exempted me from statutory "age 13" requirement, when I've scored double the required points… And curiously: I was not a "natural". Topping eventually over a million registered competitors in my sport for three straight years in Play-off finals - admittedly, I never felt as the gifted one. For instance: the blind-folded record on 100-square board was 10 simultaneous; but I could never complete more than 2-3 games at a time.

What gave me edge over competition was iron discipline and preparation. At 6, they taught me to sit straight and down-the-middle. At 10, they trained my peripheral vision, so I could gaze the entire 100-square board and successfully transition from the 64-square game. Consequently, I could count 30 moves ahead on 100-square board, without touching the pieces. My coach kept me away from alcohol, smoking and all-night bridge sessions. In course of Round-Robin, I'd review each opponent's favorite openings, prepare surprise divergence and win on time-clock alone. Others in my age category often felt defeated, just taking a sit in front of me. My first trades happened to be in Comex gold, and it surprised me how many of "big punters" were totally oblivious to basic idiosyncrasies. It took me only a couple of 50-lot orders, which remained "unable-on-10" - to figure out that physical arbitrageurs were seeking out 40-lot = 10 400oz bars! It took me a forfeit of a million-dollar unrealized profit in Silver on April 27, 1987 to figure out that Comex notice/delivery rules were skewed in favor of Shorts (over the next two years, I made a client $5m profit based on this quirk alone)… It always amazed me that even largest speculative funds neglected 80-lot Yen futures increments = exactly a billion yen; and worst of all neglected two-banking-day settlement duration. That translated into significant Yen and Gold carry on Wednesday evenings year-round (and a real kicker in front of long weekends and numerous Japan holidays!) Since Nov 1997 split, trading 4 or 40-lot bigSP makes much more sense given new $25/point denomination than 5 or 50; but 90% of the participants neglect that too… Dark pools and market-maker wigs have been a "wet dream" of high-frequency trading outfits for years, translating into billions of nearly risk-free profits for them. Yet, schools and teams of "stock day-traders" continue entering the industry in record numbers to this day…


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12 Comments so far

  1. Steve Leslie on April 28, 2009 11:39 am

    Musings from a sunshine stater:

    I paraphrase but it has been said that "compared to war, all other acts of human endeavor pale in comparison."

    Perhaps no other organization in the world understands the importance of establishing a strong base of operations better than the US military. The great generals and leaders of military campaigns throughout history certainly understood this. Those who did not had short careers. I have been studying the campaigns of Hannibal and Alexander recently. The Discovery channel and History channel has presented excellent shows on this. There is an amazing amount to learn through this for the speculator from the great military leaders in history. They also presented a show entitle Patton 360 where they analyzed Patton and his battles in El Qatar, Kasserine Pass and his invasion of Italy. http://www.history.com/content/patton-360

    These numbers are a bit outdated but at one time it took 7 personnel to support 1 infantryman. With the advances in modern technology the role of the foot soldier in the military has been largely modified and replaced but the point remains that there is an incredible amount of logistics involved in supporting a forward position.

    Years back I wrote of an aircraft battle group and how the aircraft carrier is supported and protected by its group. One would be well served to read up on the methods and role that each vessel provides to support the main aircraft carrier. http://en.wikipedia.org/wiki/Aircraft_carrier

    I watched the Formula 1 race this past weekend in Bahrain and I am overwhelmed as to how organized and efficient a top level F1 team is. Watch them in action and one will observe poetry and fluidity not unlike a magnificent ballet.

    Now that we are approaching May it will be interesting to watch the S&P 500 as to how it performs. It may be establishing a "base of operations" in anticipation of another advance. Time will tell.

    Proper disclosure: my 401 is truly a 201 having succumbed to a 50 percent decline these past 6 or 7 months. Hopefully Mr Lobagola will remind the markets that enough is enough and we are ready for another advance of the elephants.

  2. Larry Tribe on April 28, 2009 1:14 pm

    Although I would prefer a visit with the dentist, I am nevertheless obliged to praise Mr. Leslie for his candor, “my 401 is truly a 201 having succumbed to a 50 percent decline these past 6 or 7 months.”

  3. Khosrow Ali Vaziri on April 28, 2009 1:28 pm

    S LES said: “Proper disclosure: my 401 is truly a 201 having succumbed to a 50 percent decline these past 6 or 7 months.”

    Thanks for the disclosure. Given all the three and four baggers you bragged about recently, you must have had some real stinkers to average out at down 50%.

  4. david higgs on April 28, 2009 1:57 pm

    concentration, observation, and remember tomorrow is another day.

    went long at 1:46 a.m. this morning and closed out at 9:32 a.m 8 hours later. didn't allow swine flu to distract me and observed a pattern from yesterday… keep it simple and don't chase the mistress…

  5. vniederhoffer on April 28, 2009 10:51 pm

    Would the very erudite and welcome commenters please have the dignity not to engage in personal invective and vitriol on this site as it demeans and lowers the standards and turns civilized people away. We will be taking down such vitriol as soon as we find it and the market allows. vic

  6. Stevie Ambrose on April 28, 2009 11:10 pm

    Khosrow–Steve actually did something praiseworthy–why not give him some credit? All stick and no carrot is not the way to go. I fear that you knocked him off the wagon now, as he reverts to his pattern, typing on his computer, trusty thesaurus at his side, challenging his phantom adversaries to duels with pistols, mud wrestling matches, minimum wage poker, and buffet eat-offs.

    Let’s take it one day at a time. I appreciate Steve’s improved level of candor.

  7. lenny poffo on April 29, 2009 7:01 am

    Re Steve Leslie comments: Mr Leslie although a bit pedantic offers genuine insight and uses allegories to describe events that occur in the world or to explain events that occur in the markets. He does bloviate occassonally but one should take the chaff with the wheat as there are some true pearls to be discovered in the oyster.

    He is villified by some for pontificating yet one is challenged to find a quid pro quo from those who criticize and assail him.

    I for one appreciate his efforts and he should at the very least receive an occasional pass and a free "get out of jail card" for his many years of faithful service to this website.

  8. Steve Leslie on April 29, 2009 7:29 am

    I have thought on the Chair's commentary as to his belief that lessons from checkers has more to offer to the speculator than chess. I might suggest that he struck the nail with the hammer when he stated that "moving backward and forward is a very binary thing" eloquently put. May I say that backgammon is similar to checkers in this regard.

    I find myself as a two dimensional person. That is to say I visualize things linearly. It is very easy for me to work with numbers whereas I am challenged by construction projects as they require a three dimensional view. I recall in my past Mensa testing, I scored very highly on math, reading, average on two dimensional analysis and below average on three dimensional analysis.

    Checkers is very mush a two dimensional game and chess is three dimensional. First of all the pieces in checkers are effectively two D and chess pieces are 3 D. Furthermore a knight may jump an opponent's piece and Castling is a very effective strategy to protect the King both are 3 D.

    In trading, we see everything on a flat screen. The numbers are representative of the collective thought at the time and once again are organized and in "code" so to speak. Charts have an x axis and a y axis are are laid out like a board. Scattergrams are 2 D. Movements are in points once again 2D no "en passant" allowed.

    I offer these comments to the group in the hopes that my esteemed colleagues will expand upon this. My friend the great GM Nigel needs to interject his view with his usual remarkable insights which he has accumulated from his years of devotion to the great game of chess.

  9. Khosrow Ali Vaziri on April 29, 2009 11:32 am

    The general idea behind our hosts' worldview is that all ideas should be tested. Whether they are trading ideas or thoughts about the nature of man, or of nature, one should not accept pontifications and Socratic style debate as definitive answers to complex questions.

    Or to put it another way, one should only believe that which one knows to be true.

    My issue with S Les is that he is in fact the king of throwing out totally unsupportable beliefs as if they are fact. Then, when challenged on them, he goes absolutely nuts and attacks the person challenging him. (He also has a habit of plagerizing material from Wikipedia and passing it off as his own).

    He has severely limited debate on this forum because it turns off those who come to learn, debate, test, and resolve complex issues.

    These forums are like occupied territory now. Consider me the rebel in an occupied country who does what he can to make the occupier bleed to death from a thousand little cuts.. Like a partisan hiding in the Pripet Marshes, emerging from time to time to cut a rail line. Well, when I am not in the ring, anyway.

  10. vniederhoffer on April 29, 2009 10:18 pm

    I was pleased to receive the instructive and sometimes humourous, even if I mite say Galtonian (see his feud with Darwin about inheritance of acquired characteristics) feedback that the assertions without testing and humility and accompanying invective have stifled the expansive nature of our mission. The relevant parties have noted the gravamen, agreed with it in principle, and we will move forward together on a higher plane. No further personal critiques on this matter are necessary or appropriate or printable.

  11. Steve Leslie on April 30, 2009 6:18 am

    To fake name wrestler Iron Sheik: Is your role as overseer of Daily Speculations an official one or "ad hoc"? There is already an Editor and The Chair and the Mistress so what official role do you perform here? Do you speak on their behalf? Do they endorse you? I don't see them screaming outwardly as you choose to do so. Nor do I see much defense on your side from others who proliferate here.

    And if you are here in some sort of "journalism police" why do you use fake names of professional wrestlers and musicians? Why don't you use a real name and expose your self to the same criticism that you care to dole out?

    And if you claim some intellectual skill and integrity where are your original offerings? What would you care to offer that has great insight and statistical research to support it. For the benefit of the group?

    Until you choose to do answer these questions how can anyone take you beyond surface value as a bitter disgruntled and perhaps frustrated backstabber?

  12. Trend Architect » Blog Archive » Weekend Reading on May 1, 2009 7:07 pm

    […] Base of Operations, by Victor Niedehoffer […]

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