Mar

8

 stray dog riding on the subway in RussiaIn a dynamic talk about the adaptions of the environment, Greg Rehmke alluded to the stray dogs of Moscow. What can market people learn from them?

1. The dogs ride the subway and serve as watchman. They adapted from pets to work dogs. If dogs can change so drastically in their function in a few years, so can markets. The idea of doing the same thing over and over again when conditions change becomes a losing proposition.

2. The dogs use deception to bark behind their victims and to pretend to be your best friend by laying their head on your lap. Deception is key in the market and dogs, caterpillars, and humans have a million deceits up their sleeve. Things are never what they seem.

3. Only 3% of the dogs survive. But they lead a very satisfactory life, riding first class on the subways etc. The stocks that have been beaten down the most and survive, and even start advancing, like the financials, are good buys.

4. The dogs have specialized niches in which they ply their trade. Watchdogs, robbers, night raiders. To survive, pick a niche and specialize in it.

 5. The dogs are very sensitive to human interaction. They can tell your feelings and smell your nervousness. They are good to have around in the trading room so that they can tell when you are about to go on tilt, or the commentators or you are particularly stressed and need a break.

6. The dogs have learned to coexist with humans. They are not too friendly or too hostile. Many markets that used to be antithetical to each other like bonds and stocks learn to harmonize and change their relation from friendly to coexistence like the dogs. But they don't bite the humans either. The relation between the regulators and the regulated in all fields is similar, and is to be striven for.

7. Put a beggar on horseback and she'll gallop. The model was once devoid of private property. But when the guard dog attacked her dog, she cut it up. The worst slave drivers were the freed slaves in human times. The worst people to have on the other side are your former fellows in arms.

8. As income rises, the demand for luxuries will increase. The Russians now love the 55,000 dogs that are left in place. Before they tried to cull them but as they became wealthier they were able to be more compassionate. Everywhere the desire to be friendly and compassionate increases with income.

9. One notes that now the dogs are becoming vicious. 70 bites a day, a few killings.

10. The dogs all have wedge shaped faces and are medium height. The move from a high to low and then the same high is very bullish, and the move from a low to a high and then the same low is bearish

11. You must beware of dogs that are down on their luck as they have nothing to lose by killing you. Never short a down of the market. 

12. Dogs learn and diffuse to geographically related areas with some polymorphic modification. The dogs in Hungary do not ride the subways but ride the buses. They pretend to be with a passenger and wait right by their seat until the passenger leaves and then they get off at their stop. The moves in China and Thailand (I look around three times) diffuse to neighboring countries and ultimately to Europe and the US.

What other things do readers see?

Pitt T. Maner III writes:

The need to interpret key indicators — even if a dog is friendly, let him smell you first and only offer the back side of your hand and have it ready to move if the dog gets snappy. I had a friend whose older dog was very cute looking and generally nice but he suffered from a type of epilepsy and would bite down unexpectedly.


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3 Comments so far

  1. Alexander Peschkoff on March 8, 2010 10:41 am

    3% survival rates seems to refer to abandoned pets, not to the stray (i.e. born in the street) dogs as such. Poyarkov said that the headcount of strays remain more or less static - newborns simply “replace” the ones that died.

    Also, strays show how quickly the past is forgotten: newborns don’t know any other way of life, although the ancestors could have lived in a drastically different environment just one generation ago. How many times greed led to stupidity that led to a crisis during the past 20-30 years? Yet very few people (read banks/companies) learnt - or, at least, remembered - their lessons.

  2. Kent on March 8, 2010 4:32 pm

    dogs are ticklish

  3. Gregory Rehmke on March 9, 2010 1:28 am

    This Financial Times article reports on Moscow’s stray dogs: http://www.ft.com/cms/s/2/628a8500-ff1c-11de-a677-00144feab49a.html
    Researcher Poyarkov claims there are four types of strays: guard dogs, beggars, scrap gatherers, and wild dogs, which are the dangerous ones. The “metro dogs” are called a sub-group and developed when subway supervision decreased, allowing them to follow commuters onboard.

    Are there industries that could be similarly categorized as guarding, begging, scrap gathering, and wild? What industries have to beg the state for scraps? Maybe education, defense/military, prisons, space, and medicare/medicaid qualify. With government income way down, and borrowing power soon to collapse, these industries should shrink significantly.

    Poyarkov concludes “Given a correct relationship to dogs, they definitely do clean the city. They keep the population of rats down. Why should the city be a concrete desert? Why should we do away with strays who have always lived next to us?”

    News reports of stray dogs attacking people are explained by one dailymail.co.uk comment: The dogs attack people in Moscow ONLY at certain areas - mainly open air parking lots and areas of private enterprises. The owners of such places (car parks and emterprises) bring guiard dogs (mixed breeds) and do not care if they attack people. They do not provide documents of ownership. And this is not the dogs’ fault - the dogs do their job - they guard the territory.” (Read more: http://www.dailymail.co.uk/news/worldnews/article-1181590/Moscow-dog-catchers-mission-poison-beat-death-30-000-strays-Eurovision.html#ixzz0heMQtJht )

    Do Moscow residents consider city streets safer with or without stray dogs? In most cities people are far more likely to be attacked and robbed by people rather than dogs. Do Moscow’s stray dogs lower the crime rate? Perhaps a future Moscow will feature streets patrolled by stray dogs who have learned to protect residents and visitors. People could carry those whistles that only dogs can hear, to call for help.

    The domestication of dogs played a role in the dawn of civilization. Dogs were guards of person and property, and with property protected men and women could travel further for hunting and gathering.

    For investors, perhaps there is a lesson in considering the open institutional territory around firms and industries.

    Stray dogs flourish in like Moscow because the city, by accident or design, allows a measure of freedom in public spaces long lost in the United States. U.S. cities have become public health nanny states outlawing dogs, smoking, beer, driving without seat belts, and other everyday freedoms. Friends from Romania were shocked when I got a ticket in San Francisco for allowing a passenger to stand and look out the sun roof while driving at 15 mph in the city. I was surprised in Bucharest when told it was okay to drink a just-purchased beer outside at a parking lot table. Talking to a friend via cell phone is banned when driving in many states, but not talking to a friend in the back seat, or eating a hamburger, shaving, or applying makeup.

    Stupid limits on economic and personal freedoms limit joy and opportunity for learning and development in society. Such regulations limit unexpected and welcome adaptation. In a free society, retired people would likely help out part-time at local schools, and students would learn and earn from helping out at companies, hospitals, and retirement homes. Dogs would enjoy spending time in schools, companies, hospitals, and retirement homes. Over time they would figure out helpful and rewarding tasks (or at least tasks that lead to tasty rewards).

    But such freedom for adaption is severely limited across much of American society and industry.

    U.S firms in the medical care, financial, telecommunication, airline, and manufacturing industries, for example, survive inside regulatory envelopes. They must lobby hard to protect their territory from new regulations, taxes, and lawsuits. Stray innovations devised to enhance products and services are often banned by draconian regulations similar to public health measures that ban stray dogs in public places.

    Consider a medical device company wishing offer new products or services in drug stores and health clubs, but unable to without expensive and often arbitrary testing (why not just insist that the good or service be adequately insured?). Alcohol suppliers could cheaply put vitamins in their products to protect alcoholics from cirrhosis of the liver, but are not allowed to advertise such features. We don’t know if alcoholics would pay an extra 25 cents for vitamin-fortified MD 20/20, but why not give them the option?

    So what industries still have free open spaces that allow “stray” innovations? Computer hardware and software for sure, in America and around the world. India’s technology boom exploded in the accidental open space allowed by the Indian government not knowing such technology existed. Once discovered, regulations were passed and outsourcing technology growth began to slow. Thanks to antitrust ideology, the federal government attacked Microsoft during the Clinton years, and the Obama antitrust goons seem eager now to attack Google.

    The financial industry is already heavily regulated (second only to the medical industry). What aspects of medical care and what aspects of financial markets are the least regulated? In these open spaces stray dogs can adapt to new niches. After the Junto discussion ranged to developing medical schools and hospitals on indian reservations, where state regulations might be less severe.

    Instead of gambling with your life at a state-regulated hospital, or flying to India for a less expensive joint replacement, people could drive to a nearby hospital on an indian reservation (and if they choose, could gamble away the savings while recovering). Such safe hospitals are not allowed in California, for example. Established hospitals lobbied the state legislature to block new private hospitals for joint surgery and replacement. Surgeons in this field prefer hospitals that do not treat people with infections (see: “Bad Medicine” 2/14/08: http://www.forbes.com/forbes/2008/0310/086.html ). Accidental infections are the great killers in American hospitals. Why do surgery in the same hospitals where people are trying to recover from various infections?

    Consider too that animal hospitals have freedom to innovate that people hospitals do not. In Canada cats can get cat-scans, but not people (without long waits): Stossel reports: http://www.youtube.com/watch?v=SXkB64Ss5Xk

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