Hi, Victor.

I hope you're well.

I was on CNBC in Asia this morning, talking about the implications of the current anti-Japanese riots in China.

Interestingly, the anchors seemed to be under the impression that there's 'rule of law' in China. I wonder if anyone can live in the 21st Century and still believe this? Is it not generally known and accepted that China suppresses free expression and uses the 'rent-a-crowd' concept whenever it wants to put people in the streets to let off some steam against alleged 'foreign enemies'?

Anyway, I hope I made an impression.

Jay Nelson



 Without going into too much detail on the matter, there is a terrible amount of inspiration for traders in studying Hannibal's victory at Cannae, his march of 100,000 infantry, cavalry and African elephants from Spain, up through the Italian Alps (!), down the Lombard plain and spine of Italy to Cannae. Hannibal's marching and battlefield tactics are replete with examples of tenacity, perseverance, deception, offensive and defensive psychology, adaptability, everything required of today's trader. In short, Robert L. O'Connell's Ghosts of Cannae is a profoundly interesting and entertaining read.

Peter Grieve comments: 

The Romans' steadfast response to Cannae and their eventual victory through Fabian tactics are worth thinking about also. And note how much gratitude "The Delayer" Quintus Fabius Maximus received for saving Rome.

Stefan Jovanovich writes: 

I think traders would find more useful information in a study of Fabius Maximus (from whom we get the term "Fabian" strategy - which the NY Times and others persist in attributing to the Fabian Society ) and a reading of Dexter Hoyos' book. Hannibal's Dynasty: Power and Politics in the Western Mediterranean, 247-183 BC is a expensive ($30 for even the Kindle edition) but it will give SpecLististers the back story– how the Barca family's rise to power affected Carthage's own choices and how, even as they won all the battles, the Barcas lost all in the Second Punic War.

P.S. Denis Feney's comparison with Stalingrad is another of Times' wonderful bits of nonsense. Professor Feney has the comparison absolutely backwards. Paulus' surrender was a defeat but it was hardly a destruction of the Wehrmacht. It was the Red Army that had already suffered 3 successive Cannaes (Minsk, Smolensk and Kiev) even before Paulus' army reached the Volga. The lessons of history are useless if you insist on only reading its book back to front.

And - I hope Jay would agree - the context has to include an understanding of how much the Roman's collective arrogance was fueled by the tension between the presumed aristocrats and the nouveaus; even the "hooray for our side" accounts make it clear that Varro and Paullus were spending far more time worrying about which one of them would wear the victor's wreath than they were spending in thought about what the stupid barbarians were up to.



JapanThis is a country that very quietly has moved out of near-depression to having a growth rate competitive with ours for over 3 years now. And the country's performance is only going to get better relative to ours, as their investments in mobile communications, energy efficiency, miniaturization, use of MEMS technologies in robotics and smart houses, and other technologies, are really going to start paying dividends in the next three years.

There are also some big gains soon to be realized from licensing and commercializing much of their intellectual property which has to date been neglected…

Not only that, but they have $14 trillion in savings, mostly in low-yielding bank and postal accounts, that will finally begin moving into equity markets over the next decade now that this month's full deregulation of selling insurance at the bank branches becomes effective.

As soon as China hits the wall (and it will), Japan will finally get the recognition it hasn't had since the 1980s.

Full disclosure: We publish a leading management publication on Japan.



PrechterEarlier this week Bob Prechter posted on his website a contributor's view that the time for apologies is market-correlated and about to come to an end:

Prechter [1995]: "In bear markets, anger, fear and the urge to destroy overcome the social conscience. Remorse, on the other hand, is a bull market trait born of the larger trend toward inclusionist impulses… The peaking social mood has brought apologies for a host of transgressions that are decades, generations, and even centuries old. After years of bickering, the Japanese government reached a "compromise" apology for its part in World War II. At a recent press conference, President Clinton resisted considerable public pressure to ask forgiveness for bombs dropped on Japan eight administrations ago. A group of ethicists and historians has decided that financial compensation and a formal government apology is due victims of secret human radiation experiments conducted in the U.S. during the Cold War…"

Galasiewski continues: "Apologies in 1998, 1999 and 2000 made the greatest three-year total within the topping years, and there was a record one-year spike in 2002, when other measures of sentiment, such as the number of S&P 500 futures contracts held by small traders, also made their all-time peaks. Since then, however, annual apologies have not kept pace with price, suggesting that the wave of reconciliation that took off in the early 1990s is almost exhausted. Once the bear market resumes, expect the public's willingness to acknowledge past wrongs to become itself a thing of the past. In its place will be an impetus to act in ways that will require apologies later.

Last spring, several U.S. states approved resolutions formally expressing remorse over and apologizing for their role in slavery. In July the U.S. House of Representatives approved a resolution demanding an apology from Japan for its military's sexual enslavement of women in Asia during World War II. As the next chart [not included here, ed.] shows, historical apologies have increased dramatically in the past 15 years, along with the stock market. The coincidence is not random; both are driven by the wave of positive social mood that took off in 1982.

Other aggrieved parties seeking apology or compensation would be wise to push their causes swiftly, while historical wrongs still garner the public's sympathy. With the stock market on the verge of a major collapse, the window of opportunity for the redress of grievances is rapidly closing."

My question is, if the time for apologies to and among city-states is rapidly drawing to a close, what does that portend for the civil discourse more generally and intra-company dialogue in particular –that is, between spouses and family members in family-run companies, between partners in the workplace, among "teams" in corporate America, etc. and might that suggest a benefit to small-caps that, all other things being equal, have fewer intra-organizational relationships at risk?


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