Jul

9

Instead of sports, consider the physics of those consiliences that Vic has noted…

The Quantitative Relativity of markets dictates that gravitational pull (or downward drift absent causation of price action) equates to that alacrity of stadium economics. That age ole notion of “time is money” is literally realized within this calculus, whereby nonactivity costs money due to time degeneration (or depreciation when expensed).

Likewise, the phenomenon of economic announcements serves as the cause (for insider/outsider necessitated effects) by virtue of its media-worthy consonance found within political-economic cycling. Be it upon fundamentals or technicals, markets act as they are so constituted, dictated by the rules from which they are constructed and from so operate.

I wonder if one has the numbers of long versus short positions (pre/post) relative to those cross classifications of big/small rises and declines?

Such as factoring retail (retirement/pension) ratios and holdings as a condition precedent to any individual stock analysis, should one not first consider that insider/outsider ratio among market (or indexed) tiers of price support and resistance levels?

I see it here in the Chinese markets. Mom and pop are not allowed to short; as a result, the sucker money is long, whereby insider advantage focuses on short-cycling declines, big and small relative to randomness and scalability of any cited consiliences. Cannot the same be said of US-based (if not worldwide) worker-based pension fund schematics within investment banking circles — as when so ruled by Greenspan and Rubin?

If so, market incentives, as one so previously highlights, become merely the elements of formation for similar rules-based retail schematics. For instance, the post Glass-Steagall construct was an insider/outsider ruse, whereby the outsiders (or homebuyers and taxpayers a la the ensuing default and foreclosure “crisis”) financed insider (or investment banks and political parties) service charges and fees to effect wealth consolidation via derivative issuances and resales.

During my last three years of travels along a comtemporary Samarcand Road, whereby, from Wuhan among Hubei to Shenzhen to Hong Kong to Macau to Beijing among Henan to Shandon and Shanghai to Yangzhou to here, Hangzhou, one may arrive, an hour away from the market facades of Shanghaiese Communists, to ponder the pooling reflections of China’s famous West Lake. As with the terrain darkness of China’s stock markets ranking last among some 176 countries by year-end 2008, silk-stained strands of like-kind (top-down) political economics seemly appear crocheted into and expanding globalized fabric, one born of and so worn by tribes of self-appointed monetary kings, who themselves appear to have no clothes, but are only so fashioned, neither of doctrine or principle, merely hooked along an intra-governmental pattern connecting treasuries as pillars with the daily speculations of a market’s posts.


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21 Comments so far

  1. Alex Landefeld on July 9, 2009 9:41 am

    Holy Toledo. Consiliences . What a word. In the first sentence of the blog, a whole new world opens up with just one word. I'm a Victor Niederhoffer neophyte, so I'll just continue lurking… :-)

  2. Nim Chimpsky on July 9, 2009 6:09 pm

    But what are the physics?

  3. Dmitri A. Borgmann on July 10, 2009 10:04 am

    DRD: Ah ha! Semordnilap…!
    A wonk spins garb — saw rats. But are denim repaid?

  4. douglas roberts dimick on July 10, 2009 4:07 pm

    Nim, the physics are the space/time correlations relative to valuation that one may find, such as V’s stadium example. Baseball and advertising: what “ought” to be a stadium’s valuation relative to those two, separate markets? See Item 10 of the article.

    Assuming one could create an electronic exchange system for the “market value in aid from the service payers that is greater than their market value,” Quantitative Relativity states that one could then construct a rules-based quantification of that exchange process, wherefrom trend identification would facilitate profitable trading of the respective financial security.

    This construct would evince that consilience in the sense that we would have a concurrence of inductions from different data sets (advertising and baseball).

    V’s big and small rises and declines of cross classifications provide another example. My query “if one has the numbers of long versus short positions (pre/post) relative to those cross classifications of big/small rises and declines” concerns the convergence of physics related to electronic exchange market systems. Here, however, he indicates consiliences found both among academic disciplines (law and math) as well as differing data sets (stocks and bonds) — which is what makes his observation so cool…

    You might consider articles here at daspec concerning related issues to include metacircularity, triangulation, closed-loop systems, enantiomers, pseudorandom numbers, curve fitting, and electronegativity. You are also welcome to view the table of contents of my book project introducing QR: see the Quantitative Relativity page at my web site.

    DB, of the letter, as one learns as a 1L or by simply watching Perry Mason episodes… “Counselor, please rephrase your question.” As to the spirit of your comment, I can only postulate that your implication may prove to be true, wonk-like or otherwise; awaiting percolation for one’s chaired tutelage, I code for the day when either profits are generated or this “nice idea” is shelved.

  5. nim chimpsky on July 13, 2009 1:39 pm

    You ask “What of the why?” I ask, “Don’t you know why?”

    Physics is the science dealing with the properties, changes, interactions, etc. of matter and energy. A more interesting discussion would be about the creation and use(and possible misuse) of artificial intelligence and computerized bots.

    Another good question would be to ask if the poetry of Allen Ginsberg offers market predictability, and or correlation. Do dilithium crystals exist, and how do quarks affect the time/space continuum and do they offer a glimpse into the future? Is it logical to be illogical, and did Descartes really reject the analysis of corporeal substance into matter and form?

    Would the curvature of the universe affect the market in Malaysian tin? Could the aforementioned curvature influence the beta of options?
    Did the government repeal the Glass-Steagall act, or did the Glass-Steagall act repeal the government? Finally, how does all of this affect the price of tea in China?

  6. Dmitri A. Borgmann on July 14, 2009 11:25 am

    DRD writes: “Counselor, please rephrase your question.”

    Does not your acephalous catena accroach circumvolution — culminating in a fibratus deliquescence? Or, as the sophist inculcates, “Rubber bands last longer when refrigerated.”

  7. douglas roberts dimick on July 16, 2009 6:43 am

    Nim, here in China?

    I am not sure if the price of tea is one of the scheduled products that is regulated by the Chinese government's department of price controls — I understand that oil and coal are though.

    A recent law school graduate (only masters program here) who is a member of the Communist Party told me that he just got a job in that provincial department. I shall ask if and when I see him.

    Glass-Steagall was an act passed following the Great Depression. It separated commercial and investment banking.

    As alluded to in Victor's article, rules may serve as incentives within markets. Clinton repealing this body of law changed the gravitational dynamics of capital markets. Without its repeal, this ongoing crisis could not have occurred as it has, because asset-backed derivative issuance and resale could not have been so leveraged as to fuel all that "cheap money" — which is an example of the "physics" of the markets.

    I understand the scope of your definition of physics. I guess it is traditional academia. My space and time application of the discipline originates from the study of rules-based construction of program trading and portfolio management systems. My theory is that consiliences (as Victor uses the term) found between markets and physics appears consistent (or uniform or universal) in application of primary rules for function and indicator design when considering varying types of markets and securities.

    As for Ginsburg, quarks, crystals, and Malaysian tin, each may have their own relative value, so, given Quantitative Relativity, yes, it may all be related depending on the inter- and intra-correlations to be found by researching corresponding rules-based constructs affecting or effecting such valuations, as with Victor's example of the stadium.

    Don't I know why?

    As to such associated values and correlations, no, I do not know.

    You state: "Physics is the science dealing with the properties, changes, interactions, etc. of matter and energy." Agreed. How to apply E=mc^2 becomes the issue at hand relative to our commentary here. Look at any electronic exchange market reporting of a given security. Price action represents energy, hence the physics of our markets to be queried.

    DAB, sophistry or not, I still don’t follow… Guess the spoof is on me. Remember, I'm just a guy with a theory attempting to learn from a series of observations by Victor posed in his preceding article. dr

  8. Don Chu on July 16, 2009 5:05 pm

    Hi Mr Dimick,

    I think what Noam (oops, I mean “Nim”) and “Dmitri” really meant to ask (in their own unique, measured and hilarious ways) was whether you have considered Kripke structures in your theory of “Quantitative Relativity”. If the state transitions in your QR finite state machine is basically a truth (switching) table, perhaps a consideration of language-games may help.

    [Dmitri,

    Live and let live - deliver star…
    (or else loop)

    Evil rats stole evil reel, reviled dna pool !
    ]

  9. nim chimpsky on July 16, 2009 10:42 pm

    Mr Dimick, I have studied quantitative relativity for some time ahd have come to a couple of conclusions.

    First, I have found that having given the number of instances respectively in which things are thus and so, in which they are thus and not so, in which they are so but not thus, and in which they are neither thus nor so, it is required to eliminate the general quantitative relativity inhering in the mere thingness of the things, and to determine the special quantitative relativity subsisting between the thusness and the soness of the things.
    Secondly, I have found the fables of the great Russian, Krylov to offer market predictability if you consider the the quantitative counting aspects of the derivative of the iambic pentameter integrated with the numerology. Not getting too specific, as I don’t want to give anything away, one might look at Krylov as the holy grail, much like a Rosetta Stone of the markets.
    Finally, if you consider the way Fermat’s Last Theorem was solved, and read the proof, Professor Wiles did an elegant solution that combined the category of schemes with the Iwasawa Theory, which I’m certain you’ve included in your studies. Wiles did not know it at the time, but his proof offered great forecasting possibilities.

  10. douglas roberts dimick on July 17, 2009 3:33 pm

    Hi Don,

    Thank you for the guidance.

    I guess NIM and DAB are way above me on logic structures, classical and non-classical.

    I have been working on state machine design since December 2007, when a Tradestation engineer said that I needed a state machine. My bottleneck at present is devising the sequence and combination formulations to align the order execution component of the state machine with the market strategy component (state input output) based on market situation (state input state). I can see it on the chart; coding it is my challenge.

    No, I have not considered Kripke.

    Reference: http://en.wikipedia.org/wiki/Kripke_semantics.

    From my lay understanding of Kripke semantics, here are is my assessment…

    A Kripke frame or modal frame is a pair, where W is a non-empty set, and R is a binary relation on W. My function generated output may be reported on an ASM chart as binary relations.

    A logic has the finite model property (FMP) if it is complete with respect to a class of finite frames. Yes, my market situation and strategy components are coded in classes of finite frames (rising and falling edges relative to time and space intersections).

    It is vital to know which modal logics are sound and complete with respect to a class of Kripke frames, and to determine also which class that is. For the purpose of using classes to determine states, I have designed a closed-loop system to ensure that the classes are complete. The idea here is creating uniformity among data sets regarding randomness and independence.

    A truth table precedes an ASM Chart? It appears so as T and F are used therewith, whereby binary combinations constitute the latter. I have constructed ASM Charts based on my state machine design of the situation and strategy components.

    The key here appears to be distinguishing between a finite state machine where for each pair of state and input symbol there may be several possible next states as compared to the deterministic finite automaton (DFA), where the next possible state is uniquely determined. My machine’s market strategy determines the next state at time of state transition based on relativity of present to past indicators generated by space and time intersections. Thus, I think I am past the utility of language games… though, clearly, NIM and DAB demonstrate that I am wholly lacking of understanding here, so I could be wrong.

    I only note that my first three years was figuring out how to engineer and defend a statement of theory, which was constructing semantics in the translation of e=mc^2 into indicator and function formulations. This process led to articulation of my Theory of Quantitative Relativity.

    Last summer, I found Madras University of India at Youtube.com with a series on Digital Circuitry, which dedicated several of the 40-some lectures on state machines. Early this year, the Chinese government extended its Great Wall in the Sky to include blocking Youtube, so I am without that resource now.

    I advanced significantly in my understanding of state machines with the Madras series. Just enough knowledge to really confuse me, though, as I continue to alter situation and strategy applications in attempts to construct logic combinations and sequences for coding the execution protocol.

    Thus, I am now, once again, going around in circles, unable to devise (Tradestation) Easy Language blocks of code that execute what my indicator-generated functions classify via lines on a chart. Tradestation has gone corporate, so its tech department has not been willing to help me upon several forum requests for assistance. And NIM and DAB here having fun merely highlights my deficiency.

    My dad’s name was Don (Donald) too. He would help people who did not understand things, to include me quite often. So all I can say is thanks, you’re a good guy too for letting me know… dr

    Ps. If you have any suggestions or know anyone who can help me, please feel free to email me at douglas.smarttrading@gmail.com.

  11. douglas roberts dimick on July 18, 2009 3:50 am

    Hi Nim,

    Not sure if you are writing some sort of Kripke semantics or simply critical of my theory and posts here at daspec. I will assume the latter as I have already acknowledged my inferior understanding of physics and logic compared to you and DAB.

    As to your first paragraph regarding “the thusness and the soness of the things…” Too obtuse, right? I could be way off here with a bunch of nothingness, as you imply. I plan to see what comes of it under a trained eye via varying program trading scenarios. I have not found special and general variations as with the Theory of Relativity itself. I believe that this phenomenon exists because QR is a rules-based construct – thus generating output based on the particulars of “the thing” (not things, as the idea of batching was dismissed early in my research due to randomness and lack of uniformity of the data sets determining input(s).

    As to your second paragraph on giving “anything away,” the purpose of my book project as outlined with a working table of contents at drDimick.com is to introduce the concept while seeking to realize a successfully operating prototype. An interesting issue, which V has alluded to since the crisis, is one of understanding chaos and order regarding market performance relative to roles of public and private actors. I think his cross-classification article, which was the basis for my article here, invites such analysis.

    Finally, I am familiar with Wiles and Fermat’s Last Theorem, again, as a layperson. I did not include such works in my research. Interesting, though, is the close of your parting sentence: “his proof offered great forecasting possibilities.” Actually, QR is based on the posit that the physics of electronic exchange markets may allow us to preclude forecasting in favor of identifying rules-based schematics of (non)directional patterns generated within the price action (or energy) found among the domains (or states) of any given series of reported securities transactions. Given the advent of quantitative programming with algorithm operatives, V’s life long pursuit of seeking out ways of identifying patterns with quantitative impressions seems the logical prelude to QR. Hence my participation here at daspec albeit such well-founded highlighting of my academic limitations if not inferiority. dr

  12. Don Chu on July 18, 2009 5:10 pm

    Hi Mr Dimick,

    The Danish philosopher, Søren Kierkegaard, wrote his thesis/first work on “The Concept of Irony”; an understanding of which is crucial towards reading Kierkegaard and his masterful crafting of irony within the content, form and structure underlining his entire corpus of works. Essentially, Kierkegaard wrote under pseudonymous authorship (more than ten), in order to portray different ways of thinking and to allow ‘indirect communication’ to surface.
    Irony — razor-sharp when used judiciously — slices away illusions to reveal truth.

    A finer appreciation for Irony may allow one to have a better grasp on the cut-and-thrust of another’s communication/expression; like where the above commenters are coming from…
    [Of course, Ironists should restrain themselves from cutting others too deeply with their iron(ic) knives]

    Being not at all familiar with your “theory of Quantitative Relativity”, but guessing (ie. after much reducing from your rather obfuscated language) that you are trying to construct a state machine accepting input-states (market data?) to generate outputs (just binary?) in accordance to your prescribed state transition conditions (your so-called “rules-based”? “strategy components”? “situations”?).
    So, from the gray fog of the above, I proposed Kripke Structures (half in jest, half in all seriousness) for you to check for logical fallacies in the model system of your state machine.

    I sincerely hope that you are “past the utility of language games” (as in obfuscation), but was really intending in my previous comment to point to the language-games of Wittgenstein.
    [Hopefully, one can move from the sharply delineated binary truth tables/functions of early Wittgenstein (which essentially, all your state transition systems reduce into) to the more realistic grayed+interlinked boundaries of the language-game of the later Wittgenstein.]

    If you would still like to share more about your QR theory, perhaps comparisons with possibly related concepts (eg. multi-factor analysis) which DS readers would be more familiar with, will help.

    In any case, Hangzhou’s Xihu (West Lake) is beautiful. The coming autumnal willows by the water will be most delightful. Enjoy.

  13. Don Chu on July 18, 2009 5:27 pm

    Nim+Dmitri,

    Sorry for spoiling your fun guys. And honestly, I appreciated your humour and found it really funny. But…

    Nim,
    You speak of “thusness and the soness”.
    Are you invoking the Tathātā of the Lankavatara Sutra; or am I indulging in a Gettier-type problem here ?
    :)

    Dmitri,
    I can’t resist, one last anagrammatic-semordnilap play:
    {Dmitri A. Borgmann = Timid man ran. Borg}
    Just jesting, Dmitri…

    [I actually regret stepping into this little rumble…but there it is, I already have.
    Go easy on me guys.
    ]

  14. douglas roberts dimick on July 18, 2009 10:17 pm

    Hi Don,

    As to your N/D aside, I think it was mauling not rumbling. LOL.

    Back in Shanghai, West Lake reminds me of some smaller lakes and ponds found in my home, Maine. Looking out from the Goethe Hotel’s top floor restaurant (http://www.goethe-hotel.cn/Public/Dininginfo.aspx), one may scan how the cityscape cuddles that little body of water.

    The government there is seeking to develop its TCM (Traditional Chinese Medicine) market, to include exporting its products and services while increasing tourism. To be honest, having done due dil on related (alternative and holistic) projects, I was not impressed, as the standard presented was more government conformity than health industry excellence.

    When you say “construct a state machine accepting input-states (market data?),” I take it you mean the execution protocol (or code) to effect order entry and exit?

    From my study, there are three components of a program trading system: market situation, market strategy, order execution. Your “accepting input-states (market data?)” actually describes the entire system. For my state machine operation, input-output-state design consists of two, determinative operations: state-input-state (or state transition) and state-input-out (being order execution).

    QR (Quantitative Relativity) is what I call “the physics” apparent in the state-input-state aspect of state machine construction. QR posits a math-law rubric to both (a) generate the market situation input and (b) strategically correlate state and output indications within the market strategy section. The state machine processing of this system occurs at the third, order execution component. In toto, I call this system the SMART (securities market automated relativity trading) Program.

    Again, it is all theory, hence sounding obtuse.

    See the Madras University series at youtube.com (http://www.youtube.com/watch?v=piuWSMLNeco&feature=related ) for more on my interpretative design applications – assuming the Internet is not blocked by the government wherever you are located.

    My design classifies state machine input as that “market data” (which you refer) once processed by a series of QR based functions and indicators. This process occurs in the market situation component.

    The market strategy section then correlates the market situation generated inputs relative to states and outputs. As you imply… which may be assimilated into binary relations “in accordance to … [a] rules-based … strategy.”

    You said it: “check for logical fallacies in the model system of your state machine.” Geesh, I am there now.

    After an intro to Wittgenstein (http://users.sfo.com/~rathbone/word.htm ), I would say that language or word games is not my issue. As I am dealing with spatial and timing quantifications, I am at ASM Charting, which causes me to circle back to the strategy component for integrating binary related output and states into order execution code.

    In this regard, you are spot on as to the inclination to “move from the sharply delineated binary truth tables/functions … (which essentially, all your state transition systems reduce into) … to the more realistic grayed+interlinked boundaries …”

    However, I have quantified those boundaries into sequence and combination latches (or switches). So, again, I return to logic, which may be equated here with systematics (e.g., if a and b, then c if, either d>e or d=c, or f>=g and f <e).

    Also, yes, I seek to identify "related concepts (for example multifactor analysis)" implied with combination and sequential arrangement of the output and state correlations to be represented in binary relations for order execution.

    Actually I suspect that I am lacking here with multi-factor analysis. Reading http://itl.nist.gov/div898/handbook/eda/section3/eda355.htm following your comments, fallacies in my coding appear to concentrate here.

  15. Dmitri A. Borgmann on July 20, 2009 7:52 am

    In our final cryptic comment on this thread, we note that — but for a Homer Simpson-esque "DOH!" — the inestimable and peceptive Don Chu is anagram-free. As to DRD, we offer him an Occam's Razor as he grows and grooms (on the advice of the Don) his new "ironic mustache".

  16. Don Chu on July 20, 2009 11:54 am

    “Dmitri”,

    Its always safer to be nameless and faceless within the hermetic collective of the Borg eh…
    :)

    And beyond a Homeric “DOH!”, my own anagrammatic-self could possibly be a painful: Ouch’nd!

    But I hear you.
    Methinks if a man grows a long enough mustache, he may well give himself enough rope to hang himself with…
    But I just thought we should cut the poor chap some slack.

    [So many word-games, so little time…
    A new game may be matching pseudonyms to actual daily speculators.
    ]

  17. douglas roberts dimick on July 20, 2009 4:53 pm

    Thank you gentlemen for all your input.

    For DAB and NIM, I note that DAB’s last comment attributed “our” to the prior posts, so I gather youall are married or study or work together – although not disclosed, the emails seemed coordinated. The razor reference… right, keep it simple. Think I already hung myself many a time – part of the process to discovery, I have always believed.

    Don, right, thanks for the slack, and I have found much of the investment and finance business to be just that – lots of clever complexity to hide not so difficult (or not so honest) schematics for “taking” peoples’ money. Case in point: http://blackstarnews.com/news/135/ARTICLE/5870/2009-07-19.html .

    What I love about the Simpson’s, as I gather others do given its longstanding popularity, is how the program constructs a sense of justice (or balance) from the affable “DOH” moments of Homer and Marge relative to the semantics of an episode’s plot. There is a “retro” (as in retrospective) tug of one’s conscience that cause us (at least me) to think of mother and father along with their little wisdoms (or witticisms) that can help carry one through times of personal challenge and social conflict.

    In a Homer-esque sort of way during my nine years of developing QR as a theory, and as securities and investment industry experts (them) always seemed to be selling perspective customers (us) on their stochastics of the future, I have come to the conclusion that therein floats the sucker money among a sea of cleverly worded, well “logicized” – not sure if this is a semantic a la NIM and DAB but I made up the word – and uniquely constructed language for all (i.e., the dummies, also itemized on financial statements as the suckers or “us” again) to read and ponder. The intended effect of such language construction is shock and awe, whereby that portended investor (us) gets relieved (by them) of our savings and disposable income (or so we thought it was disposable) when all that neatly configured, well reasoned, highly intellectualize whatever (published by them) does not result in being profitable – not for us but for them – but, alas, requires a federal bailout (the U.S. of us).

    One dimension of daspec is how V and the more seasoned cadre here are able to slice and dice all those word games (or language games or logic constructs or rhetorical, possibly self-flagellating queries) found in any given article or commentary. They appear to be able to do so not by constructing prospective allegory and metaphor but by deconstructing (being the “retro”) occurrences corresponding to the issue at hand.

    As with QR and this article, I have stumble about and proceed often as Homer, asking: What if one was able to construct a program trading and portfolio management system equal in utility? dr

  18. Roxanne Thomas on July 28, 2009 4:56 pm

    Just reading through these comments and found what Don Chu had to say insightful.

    (DRD writes)
    You said it: “check for logical fallacies in the model system of your state machine.” Geesh, I am there now.

    After an intro to Wittgenstein, I would say that language or word games is not my issue. As I am dealing with spatial and timing quantifications, I am at ASM Charting, which causes me to circle back to the strategy component for integrating binary related output and states into order execution code.

    In this regard, you are spot on as to the inclination to “move from the sharply delineated binary truth tables/functions … (which essentially, all your state transition systems reduce into) … to the more realistic grayed+interlinked boundaries …”

    (Then DRD writes)

    However, I have quantified those boundaries into sequence and combination latches (or switches). So, again, I return to logic, which may be equated here with systematics (e.g., if a and b, then c if, either d>e or d=c, or f>=g and f

  19. Roxanne Thomas on August 1, 2009 1:48 pm

    The remainder of my submitted comment not posted…

    Mr. Dimick - The problem may lie in sequencing these, as you say, combination latches or switches in binary code, which is how Tradestation operates. This is where the possible limitations you are experiencing may exist. Tradestation Easy Language limits the layering or sequencing of conditions to around five, and then it stops implementing the coding. If the coder requires more holistic quantifications to be met, then this brings the coder back to having to re-describe each quantification with more complexity. When the code is rewritten in this way, it then changes how the conditions are being classified and in what order they are being implemented. Unfortunately, this then alters the combination of latches and switches, which are not being equated holistically to the desired effect.

    Tradestation is a good tool, but it has limitations.

  20. Kierkegaard: NEITHER a leap NOR ironic « gobbledygook… on August 9, 2009 6:17 pm

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