Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.

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Jean-Paul Schmetz

Mr. Schmetz, a Munich philosopher at ease with both econometrics and the study of mass behavior, conducted a workout of the Fed Model. He believes this variant of the model "is good for (1) extremes (and we are about as extreme as it gets today) and (2) for mid-term trend assessment (6-24 months)."

The Fed model is centered most of the time -- i.e., it usually gives a fairly valued reading. Only the more extreme readings (above +20% and under -20%) offer predictable extra returns (although you wouldn't catch me shorting an overvalued reading).

What the model says today is clear -- BUY the QQQ or the S&P and wait until the model reverts to "slightly overvalued" (may take a few years....).

Jean-Paul Schmetz brings to Daily Speculations an interesting mix of philosophy (not afraid of real thinking), econometrics (measure, quantify, test...) and media (understanding of mass behavior). Mr. Schmetz holds degrees in Philosophy (M.A. magna cum laude) and Economics (econometrics) from the University of Louvain (Belgium). He ran the digital division of a large global media firm based in Germany until the end of 2002. In 2003, he switched out of operations to focus on a hedge fund he created in 1998. He continues to sit on the media firm's supervisory board and is a special advisor to the owner. He was born in Belgium and raised in Belgium and Boston, Massachusetts. He is married with four children, and lives with his family in Munich, Germany.