An Exchange Between a Speculator and a Broker Friend

November 17, 2010 |

Just finished "Surprise" again. Aubrey went at Marengo and was hulled over 200 times with 24 pounders. He succeeded in convincing Linois that the Indiamen had a larger military escort and Linois backed down, but Surprise took a tremendous battering. Had the french gone for the rigging instead of her hull things may have been worse. The fact that Marengo couldn't open her lower (leeward in this case) gunports and bring her 36 pounders to bear (due to the swell) was sheer good fortune and provided the crux of Aubreys tactic. Things could have been much, much worse, women and wine or no!

Chris Tucker

A speculator replies:

Such a weakness was also prevalent in the boy wonder, Jesse Livermore, who was married 4 times, and had several follies girls on his payroll when he filed for bankruptcy the fourth time before committing suicide because of his excessive churning. An interesting side light is that one of his wives had 5 husbands, including him, all of whom committed suicide.

Chris Tucker writes back:

Why is that? Must be something glandular that leads to the inevitable incorrect choice - I'm sure there's a human behavior study in there someplace.

A speculator writes:

it is guaranteed to happen when one's position is such that one cant hold for fear of ruination, and the market senses that and takes one final move to shake the weak holders out, just at the worst time as it did with me. The antidote to that terrible condition is to wait, hold the fire, as Jack Aubrey did with the French and then go right at them.

P. S. One had an excessive position in fixed income and stocks believing
that they would maintain their negative coterminous correlation and
could not appropriately hold both fixed income and stocks at the same
time, so had to choose one, and chose the wrong one. Guaranteed to
happen.

Chris Tucker replies:

Yes, though one could argue that strategy was easier for him to effect as he faced an adversary less stout than current markets.

A speculator responds:

Yes. The French were too interested in their food and women to put up much of a defense even when they had the better ships.

One had in his day in his vault, many tokens of the tendency of the French to revel in those priorities, with many exquisite French Prisoner of War sculptures, ( including one in ivory of the Guillotine), as a reminder of that all too human tendency and its inevitable consequences.

Comments

1 Comment so far

DH. on November 19, 2010 8:08 am
One is beginning to manifest an unhealthy interest with Livermore…whose lifelong manic depressive tendencies may not have been entirely attributable to the vig and the whatever…

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