F FSome of the more vivid analogies to markets come in blood sports. Harry Clews writes well about them in Florida Frenzy. Here he describes and wonders about the honesty of cock fighting: "I watched guys shouting across the pit at one another, calling numbers, signaling to each other with upheld fingers, and it seemed to me there was no way in the world they could keep track of the bets. I turned to the man who had brought me and asked why losers of bets being made that way didn't renege, simply say the bet hadn't been made and walk away. "First, everyone here knows every one else. And second, these folks are as good as their word. Some of them got more money than others, but it ain't one here whose word you can't risk your life on. And the last thing is, welching on a bet can buy you a lot of trouble real cheap. You could git dead from it.' " Crews didn't realize that people will be dishonest when there is not any repeat business involved because then it's in their interests. And he doesn't take account of the value of reputation. But he does give a pretty good explanation of why there were so few cases of dishonesty in the pits even when walking away from a trade made the difference between life and success.

Victor adds:

It is an interesting aspect of human nature that pit traders, among the least honorable people I have ever met in dealing with the outside world, are so highly ethical in their dealing within their own tribe.

Tom Marks replies:

T MWhen futures trading was exclusively pit-based I always wondered why funds just didn't hire an ex-pit guy to go down there, tap the executing brokers on the shoulder, introduce himself, explain that he'd worked on the floor for many years, but now represents the interests of person X.

Then further explain that person X would greatly appreciate if any executing broker of his would eschew getting egregiously creative in the handling of his orders. Especially since person X has a knack for ferreting out patterns that is by no way limited to price movements on a grander scale.

Polite and to the point. They'd get the message.

That said, though, some might suggest that the chicanery of pit traders pales in comparison to what routinely goes on in law, and especially medicine, of the high-end variety. Regarding the latter, the bill is run up considerably by ordering expensive tests of dubious necessity and diagnostic value considering the circumstances. In that field it's called The Game.

Just as in pit trading and law, not all doctors play The Game, but regrettably a fair share do.

Art Cooper remarks:

Consider the difference in consequences between acting unethically to one's "own tribe" vs. the outside world. As a general rule, the adverse consequences from acting unethically towards the former are serious enough to enforce ethcial conduct. Adverse consequences from acting unethically towards the outside world, if any, tend to be attenuated. It's not a question of human nature; it's a matter of self-interest.

Douglas Dimick writes:

During my second year at U Miami Law, I went to one of these fights with a south Miami Cuban club type. Electronic market exchange systems would appear to shift the “ethic” here from the integrity of transacted exchange to the efficacy of the market process.

I see it here in China. Markets are rigged though the exchange transaction appears rules-based (or fair); from a transactional standpoint, the evil of nontransparent manipulations of supply and demand result with fraudulent systematics. Government and Communist Party affiliated holdings being sold (or bled) into the market, for instance, indicates how such a bloodless system sucks the life (or money) out of 80% of those who participate — being the percent of losers in China’s stock markets.





Speak your mind

8 Comments so far

  1. Steve Leslie on September 22, 2009 9:22 am

    I don't know a lot about cock fighting or dog fighting except that these are very small groups and cliques involved and it is true that everybody knows everybody else there. The Latin community dominates cock fighting in Florida and there is a very well defined social strata to the community. One thing that they treat as golden is a wager. The consequences of not paying off a bet can be quite severe. There is as we say a self-police mechanism at work. Two of the best movies on gambling ever made are The Cincinnati Kid and The Hustler. watch those two movies and one will get a keener understanding of the shadiness of local gaming.

    There is a great scene in "Hard Times" with Charles Bronson as Chaney, a drifter bare knuckles figher in the 1930's, James Coburn as his manager Speed and Strother Martin as his trainer. Coburn schedules a fight with Chaney and a local champion in New Orleans area. Chaney wins and Speed declares that they owe him money. The other combatants "Owner" says he won't pay because Chaney is a "ringer". Speed states "I don't see where that is part of the rules." Whereas the "Owner" pulls out a pistol and points it at Speed. Strother Martin casually remarks "somebody always brings a gun."

  2. Michael Sobolewski on September 22, 2009 12:28 pm

    For not knowing a lot about cockfighting you sure seem to know quite a bit about it. Then again, all you did was repeat information already in Vic's post.

  3. lawrence schulman on September 22, 2009 1:22 pm

    The Mob was called into Havana during the Batista years to run the casinos because “they ran a clean and honest game.” Nothing kills a casino more than outright cheating by management or crooked gamblers. So while they ran successful casinos what was in it for them was skimming of the profits along with the investments in the hotels/casinos.

  4. Steve Leslie on September 22, 2009 2:38 pm

    I did not repeat information; I expanded on it. There is a difference and I did not see anything in his post commenting on movies so your brilliant critical evaluation seems empty at best. You on the other hand offered nothing original. What magnificent insights would you wish to offer? Feel free to step right in.

  5. Steve Leslie on September 22, 2009 3:07 pm

    In Ocoee Florida they have one of the largest Auto Auctions in the Southeast. Here is something to watch. The uninitiated will be exposed to some really interesting tricks. There you will find shills in the field bidding up autos to get a better price for the vehicle. For those who are not really careful they can really get hit on the buy side and the sell side. Things are very fast and furious and the product moves through at a very fast clip. As with all things there is a learning curve and certain rules. Just like floor trading.

  6. John Hutchins on September 22, 2009 5:15 pm

    "It is an interesting aspect of human nature that pit traders, among the least honorable people I have ever met in dealing with the outside world, are so highly ethical in their dealing within their own tribe."

    In one of Bob Dylan's songs he states "you gotta be honest to live outside the law."

  7. Diego Joachin - from Guatemala on September 24, 2009 7:46 pm

    "everyone here knows everyone else."

    So true. I went to the CME pits last july, and when I just got in, every body get notice of your presence there. Every body looks at you like "I think you are new here, I wonder who you are". I got that feeling when approaching the TY pit.

  8. Steve Leslie on September 25, 2009 1:02 am

    There is an old saying in poker: If after 20 minutes of sitting down to a poker table you haven't figured out the pigeon at the table chances are it is you.

    Canada Bill Jones says that some people consider it a crime to take money off a guy who doesn't know what he is doing — I consider it a crime not to.

    I know it is crooked but it is the only game in town.

    If you don't know how to play poker bring more money to the game.

    And one of my all time favorites:

    A Smith and Wesson beats four of a kind.


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