Mar

4

 1. The SPU on March 3 showed a rise of 45 points relative to the DAX which was down 3.5% versus the SPU 0.75%. The ratio of DAX to SP fell from 5.20 to 5.09 in one day.

2. Eileen Power,  the libertine expert on medieval economic history who no woman or man could resist (she was engaged to the chief senichal of the last emperor of China) had a father who apparently used the same techniques as Drier to defraud his creditors. He pretended that he was borrowing money for his clients, and used their balance sheet to borrow, but he kept the money for himself. It is amazing how in frauds there's nothing new under the sun.


3.
Stoudemire is the only one that seems to know the source of the Knicks problem. Smith, of all people, the worst player in the NBA said the problem with the Knicks is they don't have heart. No one had the courage to contradict him, apparently because they all frequent the same clubs as him, except Stat who said "before making accusations, the accuser should look in the mirror".

 4. The move from Friday to Monday and Monday to Tuesday in all markets was an amazing example of a Lobagola. It usually takes at least a week or two for the elephants to migrate back the same way they started, but this time it only took a day. And as the wild liberal from the Beltway said in his most (perhaps only) intelligent pronouncement: When it goes one way big and catches you, and then it recovers, go with it. Hold on. This must be tested.

5. The great composers always have poignant thing to say about life that are applicable to our field. I like what Verdi said: "symphony is symphony, and opera is opera"; he wasn't talking about the proper separation between technical and fundamental analysis, but he should have been.

 6. I am re reading the book Our Mysterious Panics by Charles Collman, 1930. (see prev post ) He believes the cause of all the panics was excessive speculation and lack of liquidity. He asks relative to the 1907 panic, "Did Morgan deliberately engineer a stupendous financial panic, which was likely to paralyze business, ruin industry, throw his own interests into confusion and set the country back ten years at least, simply to buy at a low price, a stock valued at seventeen million dollars." He bought Tennessee Coal and Iron Company on the cheap at the height of the panic.

7. Stocks are opening at a new all time high today, March 3, after a big decline the previous day. It's never happened before. You have to give the market mistress credit for always coming up with something new. As usual the unusual is a good motto for the market. Time and again, one tries to encap the most similar events to a given days moves looking back 10 years or so, and finds nothing similar.

8. The biggest mistake that new speculators make when trying to look at things like trade station plus, lim, or the things that they "borrowed" from me is to make things too complex, and to forget about the problem of multiple comparisons. When you cut a sample 2 or 3 times, you need a probability of 1/1000 at least to come up with something inconsistent with normal 5% randomness. The next biggest mistake is when keeping it simple is to assume that the simple relations will repeat. Thus, between Scylla and Charybdis.

 9. The predictive relations between bonds and stock in the short term is exactly the opposite in 2013 and 2014 from what it was in 2012.

10. The fawning coverage of the benevolent grandmother at the Fed was guaranteed to happen. After all, no chair of a Fed ever has been more devoted to the idea that has the world in its grip than her. I like the comment that "she is perhaps the most qualified chair of the Fed in history". People in my family took her course in International trade at Harvard, and have confirmed her fine sense of humour of which there are 1.4 million references thereto on Google.

Anatoly Veltman writes: 

August 1991's failed Russian coup comes to mind as a proper example of two-day Lobagola in stocks, bonds, USDDEM, and oil.


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