how much of masters 1000 and airline regulation and coke and walmart and sports leagues and the stock market in general can be explained by this:

George J. Stigler, "The Theory of Economic Regulation"

In the field of regulatory policy, few articles have achieved the impact of George Stigler’s "The Theory of Economic Regulation," published in 1971. Stigler punctured the idea that regulation arises solely to advance the overall public interest by correcting market failures. He forcefully argued that instead “regulation is acquired by the industry and is designed and operated primarily for its benefit” (p. 3). Although Stigler never used the phrase “regulatory capture” in “The Theory of Economic Regulation,” his article has nevertheless come to be so identified with the idea that regulation serves private interests that it is hard to find any serious discussion of regulatory capture in the last 40 years that does not at least cite Stigler’s work.

From WSJ, 2014:
Regulatory Capture 101
Impressionable journalists finally meet George Stigler.

The financial scandal du jour involves leaked audio recordings that purport to show that regulators at the Federal Reserve Bank of New York were soft on Goldman Sachs. Say it ain’t so.

The news is being treated as shocking by journalists who claim to be hard-headed students of financial markets. One especially impressionable columnist calls it “a jaw-dropping story about Wall Street regulation.” The real scandal here is the excessive faith that liberal journalists and politicians continue to put in financial regulation. The media pack is discovering regulatory capture—a mere 43 years after George Stigler published his landmark paper on the concept.

Willem H. Buiter and cognitive regulatory capture:
Lessons from the North Atlantic financial crisis

For more examples:
Regulatory capture



A pullback before the rally into the year end for S&P 500 and crypto? 2021/10/22

Yelena Sennett and Andy Aiken: Bitcoin and Ethereum sell off after the ETFs launch, is the top in? Can S&P 500 trade 1000 points lower next year? Tesla is on the way to a trillion dollar company…



Ideas That Changed the World, by Felipe Fernandez-Armesto, contains the idea of universal force. is there a universal force in the stock market? how does it relate to constructal force?

the idea of the Mana, the universal force - is there a Mana in the stock market that causes it to go up 100,000 fold a century?

the book's idea that there is a purposeful universal force should be augmented to apply to the stock market. the studies of Jim Lorie, and Elroy Dimson et al, show the inevitable rise of the stock markets. how does it apply now?

i see about 30% of all days since the end of 2020 have been all-time highs. rite now we are 14 away from another all-time high and 29 days away from the last one of sep 06. how does it happen? one way now is for all the companies to submerse themselves in the current political system (ie, rumpelstiltskin) and realize the favoritism and emoluments of being with the force. how can the stock market go up 10% a year when profits don't grow that much? being with the force. what do you think?

Vic's twitter feed



Yes, it is a different mind set and self fulfilling. I am thinking about replacing some wood flooring and got a quote and now makes me think better do it now before the wood becomes less available and/or more expensive. Meanwhile cash is losing 5% this year. Multiply this mindset x 100m people and you get some inflation. Fed won't raise rates, wages won't keep up, but assets should do well until the yield curve is so steep that rates have to go up, which is the big unknown. Who will be our Volcker of 2020s? Does this not make the case for all the supply-siders. You can demand all you want, but someone has to make the stuff.

Steve Ellison adds:

I worked in technology supply chain management in a previous career and have been thinking about a scenario called the "dreaded diamond".

Technology part shortages occurred with some frequency as the transition from designing a next-generation product to ramping up production did not always go smoothly. And even before covid, accidents happened; some years ago, a factory in Japan caught fire. Many specialized components have only one supplier.

What typically happened in shortage situations was that the supplier would allocate the limited supply among the buyers. The buyers would try to game the system by placing 3x to 5x their normal orders, hoping that would increase their share of the allocation. Meanwhile, executives would want daily updates on the situation: how many units were delivered, and what the likely delivery schedule was.

This situation might continue for some months, with buyers continuing to place inflated orders, and the apparent shortage stretching out longer into the future with the higher orders.

As actual deliveries increased, one day, all of a sudden, the buyer would cancel all the excess orders. As other buyers did the same, the demand on the supplier would crash to near zero. This phenomenon of illusory orders that would vanish later was called the "dreaded diamond". A few quarters later, there would be big inventory write-downs because technology products lose value fast as they age.

Maybe some variation of this scenario could occur in the general economy as some of the shortages are alleviated in the course of time. We might find out the shortages have been exaggerated by purchasers trying to maximize their own supply.

Alston Mabry offers:

The Odd Lots podcast (BBG) had a recent episode about the chip shortage, and the guest described this exact scenario, where a customer orders 10x chips and is told by the supplier, "We can deliver 1x chips now, and the rest within 50 weeks." So the customer then orders 100x chips, hoping to get a 10x allotment, after which they cancel the rest of the order. But suppliers must be catching on.

A reader comments:

Sounds like how the Street allocates hot deals. The “pad-my-order-by-a-factor-of-10” move can’t help but to attract attention on the syndicate desk… and the result rarely benefits the customer.

A reader adds:

This has been my base case for some time. Interestingly, I get the sense that complacency is increasing lately, which us odd.

I expect a deflationary shock from overproduction within 24 months, globally synchronized. The delay us from supply chain snafu’s continuing for about another 18 months.

The difference between this and the diamond is deliveries being made and a simultaneous demand drop (ie they get their increased orders).

Hybrid system in time models are rolling out still.

Pamela Van Giessen writes:

This is not rocket science or even dismal science.

Quit testing healthy people for covid so companies that engage in non-Zoom activities can work at capacity and people aren’t "scared" to be around other people. We are still testing well over 1M and sometimes 2M people daily. ~2.5M people were unable to work between June-Sept because of covid. Since there weren’t that many sick people the bulk of them were out of work due to covid related quarantines. And I can promise you they weren’t the zoom class. Supply issues and inflation last as long as covid is a 24/7 threat that "must be conquered."

Our World in Data: Daily COVID-19 tests: USA

Yes, hoarding makes the problem worse but that will evaporate in 2 seconds once we have reliable supply.

Last week I saw a man on a bike wearing a mask in Park County MT where we have nearly 3000 sq mi and a population of ~16k. No helmet but he had a mask on. I should have snapped a pic as it was a perfect illustration of the brainwashing insanity that plagues our economy and health right now. The vaccines may prevent serious illness/death from covid but they don’t seem to be good for much else be it the supply of canola oil, engines, or other health conditions/injuries, etc.



Laurel Kenner on Substack: Nobody Asked Me, But…



It’s never easy

October 20, 2021 | Leave a Comment

it's never easy, clear sailing in markets. and with bonds at or near the 9-month low at 157 60 versus 157 50 month low on mon oct 11. it doesnt seem like very good for sp. however, the numbers say that it doesnt get bearish until thur oct 21 or at the close on oct 20. histeresis.

Vic's twitter feed



The energy crunch in China and Europe may grow into a bigger trend worldwide. Its one of those small line notes you notice and go hmmm. Like the pandemic was in early 2020. Hmmm, shortage of masks. Hmmm, Shortage of gas, coal. Things that make you go hmmm.

Water shortages also coming up. See how this winter is. Reservoirs are quite low. Look at weekly chart of FIW water etf.

Jeff Watson adds:

I’m noticing many holes where product should be on shelving at every retail establishment we patronize. I’ve been waiting on a part for my Jeep that’s been on back order for 6months. Still see little to no ammo in stores. The system is full of hiccups.

Tim Melvin notes:

I saw a lot of empty shelf space at Costco last week. Very unusual.

Pamela Van Giessen writes:

No joke. We have a huge problem. This is what happens when the world gets shut down and everything is all covid fear all the time. No workers. Test school kids constantly and they will end up being sent home and parents won’t be able to work. Then stuff won’t get made or shipped to where it needs to be. Freight train, fully loaded, sat parked in Livingston MT for nearly 2 weeks. Just left the other day.

As someone running a business that relies on actual commodities (flour, sugar, etc) I find myself overbuying out of concern that I will not be able to get basic ingredients. I had a hard time getting boxes about 2 weeks ago. It’s ridiculous.

Laurence Glazier writes:

It’s getting reminiscent or the Atlas Shrugged movie.

Nils Poertner suggests:

UK is worth to watch as most things we are going to see here in Eurozone or you guys in the US are happening a touch earlier over there (UK being such a tiny, little, open, exposed, econ).

Laurence Glazier adds:

Yes, over here in London it's harder to get petrol (i.e. gas) for the car, less things available in online stores.

James Lackey writes:

I can get everything to build a car a bike or a motorcycle and mysteriously no spikes no single bearing or one simple chip - I call BS. This is almost as big as a Vatican scam.

Jeff Rollert adds:

The most common boat engine, the Merc Cruiser, is quoting deliveries of full engines for next summer.

Duncan Coker notes:

Motors being taken out of production. Sounds a lot like a book I know.



How do traders deal with sleep patterns or disruption? Especially with markets in different time zones, etc.

Circadian Rhythm and Sleep Disruption: Causes, Metabolic Consequences, and Countermeasures

Circadian (~24-hour) timing systems pervade all kingdoms of life and temporally optimize behavior and physiology in humans. Relatively recent changes to our environments, such as the introduction of artificial lighting, can disorganize the circadian system, from the level of the molecular clocks that regulate the timing of cellular activities to the level of synchronization between our daily cycles of behavior and the solar day. Sleep/wake cycles are intertwined with the circadian system, and global trends indicate that these, too, are increasingly subject to disruption. A large proportion of the world's population is at increased risk of environmentally driven circadian rhythm and sleep disruption, and a minority of individuals are also genetically predisposed to circadian misalignment and sleep disorders. The consequences of disruption to the circadian system and sleep are profound and include myriad metabolic ramifications, some of which may be compounded by adverse effects on dietary choices. If not addressed, the deleterious effects of such disruption will continue to cause widespread health problems; therefore, implementation of the numerous behavioral and pharmaceutical interventions that can help restore circadian system alignment and enhance sleep will be important.

Larry Williams comments:

That’s one of the hardest parts of this business 'secially when you live in 2 places.

Zubin Al Genubi writes:

Haha. I sleep when I trade. Wake up . Sell too soon.

Jeff Watson responds:

Sell too soon? My life story is that I always pay too much and sell too cheaply. It's a bad habit.

James Lackey adds:

In Ecuador your perfect 12 hours of sunlight all year 365 sure beats fall back to dark at 5pm here. The fall back time change and the further/ farther your from the equator is
More difficult than staying up 100 hours a few times a year.



Here's a good download site for all 51 books of the Harvard Classics Anthology. Since they are all in the public domain, there is no charge. They can be easily put on your Kindle or other reader.



The Big Ratchett by Ruth DeFries is an excellent book describing the human insecurity in more productive ways of producing food such as hybrid seeds irrigation, capture of nitrogen and phosphorous for fertilizers, insecticides versus the ratchet that comes from diets. it leads to a cob web test of food prices versus stock market and other useful relations.



After a bull week, S&P500 & crypto ready for the new highs? Coinbase and Galaxy 2021/10/15

Yelena Sennett and Andy Aiken: A pause, small pullback and range trading for S&P 500 next week is likely. Bitcoin ETF, Coinbase NFT trading, lots of other headline news contribute to bitcoin rally, is it too much too fast?



Heard a great quote today while driving and listening to SiriusXM. No clue who said it but enjoying this nugget of deliciousness from the meal for a lifetime:

Music is mathematics for the ears.

[Ed. note: attributed to Stockhausen]

Art Cooper writes:

Here's another, in a similar vein:

Geometry is frozen music.

Peter Saint-Andre chimes in:

Music is the hidden arithmetical exercise of a mind unconscious that it
is calculating.
- Leibniz

Music is mathematics - and architecture is music in stone. - Ayn Rand

Andy Aiken builds on the theme:

Goethe said, "Architecture is frozen music".

There aren’t physical geometric forms, but many physical representations of geometry, such as in architecture.

Nils Poertner suggests:

Christopher Wolfgang Alexander

(born 4 October 1936 in Vienna, Austria)is a widely influential British-American architect and design theorist, and currently emeritus professor at the University of California, Berkeley. His theories about the nature of human-centered design have affected fields beyond architecture, including urban design, software, sociology and others.



One of my contrarian disciplines is to read the quotes from money managers and analysts in the Wall Street Journal’s daily market roundup. I don’t care about the opinions themselves—on any given day there are 100 plausible reasons the market might go up, and another 100 reasons it might go down. It’s the editorial selection that is interesting and might occasionally give a clue the market is leaning too far in one direction. But today’s first quote is a head-scratcher.

WSJ: U.S. Stocks Waver Amid Energy, Inflation Concerns

Investors are running around like chickens with their heads cut off,” said John Buckingham, portfolio manager at Kovitz. "They focus on one thing at a time and buy and then change their mind and sell."

What is he talking about? The S&P 500 is down 0.2% today, maybe 1% over 3 days.



Mr. Terminal Value

October 12, 2021 | Leave a Comment

mr. terminal value: i always used terminal value rather than discounted value on problems including my final exams for big things like phd. it's so much better than discounted value. but the professors never understood it. and I got graded down. so i had go to the dean for rectification of terminal value. the dean was George Stigler who was in the old days too good an economist to be canceled by the "committee". fortunately he was still able and sharp and understood it. he was able to hit 3 holes in 1 at 60 in his club in canada.

Vic's twitter feed



Biden's nominee for Comptroller of the currency has a plan, a big plan. It's such a big plan, it's best done in places that used to have 5 year plans…don't worry, we're getting there soon enough.



No it is not the Onion.

3 economists awarded Nobel for work on real-world experiments

"The Royal Swedish Academy of Sciences said that Card's studies from the early 1990s "challenged conventional wisdom." By comparing what happened when New Jersey hiked its minimum wage to labor market conditions in neighboring Pennsylvania, he was able to upend the accepted theory that increasing the minimum wage would lead to fewer jobs."

Peter Saint-Andre adds:

Why don't we raise the minimum wage to $200/hr so everyone can be rich?

James Lackey relates:

True story: What is the probability old lack would sell a unit to University PhDs in Econ in a year? They both asked why I sell Carz. That I blew up again peaked their interest. What they didn’t realize is the Econ profession told me the exact same thing the Law clerks told me: Go trade lack.

Anyhoo they always bring up the big short movie book or some other mumbo story then they quote their book. I exhale and call bs.

I get very upset at men calling me a not ummm honorable man or imply that whether it’s Carz or trading for a living.

I blast them with a 11 minute data dump and why the street works and how and Mr Vics ecology the story of the elephants and like Gresham law they know they never read Albert K Nock and they do implicitly understand the law of least effort. I end my discussion with the same to all business men: It’s the pay plan man!

I’ve been asked to speak at MBA classes and seminars and for sure interviews for their next book. After blow up artist and hour interviews and a one line quote that was actually the get the joke true real deal about Mr Vic "he always found a way for all of us to make money". Which in bmx or drag racing terms means to win! I say no thanks have a nice day.

A year later I see the profs new book at the library. I flip through it and I’ll be damned. Ya can’t make a jackass drink the koolaid.

Henry Gifford comments:

The thing frequently referred to as the Nobel Prize in Economics is misleading, at best.

The original Nobel Prizes were established in 1895, and financed (the word "funded" implies "free" government money in some circles) by Alfred Nobel's will.

The prize in economics was established in 1968 by a donation from Sweden's central bank. Perhaps the central bank has some economic agenda to pursue, but if so, they didn't state that as their goal.

In 1995 the prize in economics was redefined as a prize in social sciences for the stated purpose of widening the field of possible recipients to include people who are not economists.

While the prize in economics is often called "The Nobel Prize in Economics" in the US, that has never been the official translation to English agreed on by the people giving the award. The official English translation of the name has changed eleven times since 1971 - perhaps they are striving for the most confusing and politically correct name possible. The official names in English usually include the words "Memorial" and "Alfred Nobel."

At a minimum, the prize should be referred to with the word "Memorial" in the name, to distinguish it from a genuine "Phone call from Sweden."



Uncle Howie

October 10, 2021 | Leave a Comment

My uncle Howie: (1) is notable for winning and losing 55 national handball Nationals, and (2) is the world's most apreciative person of father Artie (he lived across the steps from him)and (3) he always looks like he's going to punch you in the face if you disagree with him.

(4) he gave me that mix of 2 to 4 and insisted i take a whole body scan. its similar in its efficacy to the illumina story. I finally yielded in view of 2-4 and it saved my life when it found a 10-fold elevation in cea. David Brooks said I had about 6 months to live had he not operated on me. how many have passed away because of regulatory delays?

Vic's twitter feed



Is the market ready to rally to new highs as bonds sell off? Part 1 2021/10/08

Yelena Sennett and Andy Aiken: Everything being woke is good for the markets as well as the sell off in bonds. Lower volatility is likely for next week as we close above the vol trigger level.

Part 2

Best DeFi project to buy now. Shibu? Ethereum & Bitcoin update. Part 2 2011/10/08

Yelena Sennett and Andy Aiken: Will the Ethereum killers succeed this time or will history repeat itself? Curve CRV has one of the best valuations in DeFi now.



arthur niederhoffer my father was a police officer for 20 years and routinely did acts of kindness for others. everyone who knew him said they thought of him as their fondest elder brother.

banana ice cream: Artie encouraged many kids and police officers to go on from high school to college. At 12 midnite when his shift ended he led a regular group of 12 in going over the entrance exams using the Delehanty study guides.

At that time NY City creameries included the Breyers Ice Cream Factory. Artie treated all his students and me to banana ice cream from Breyers at 1 or 2 am after the study sessions ended. After 70 years i can never eat banana ice cream without crying as i'm doing now.

the slice backhand: as part of his acts of kindness, artie graded the Delehanty guides. indeed on the last day of his life he graded all his students at John Jay and gave them all an A. i studied these Delehanty guides and it helped me get into Harvard. it was there i learned the terrible slice backhand as i had never played squash before.

The life and career of Arthur Niederhoffer

At his memorial service, John Jay College President Gerald W. Lynch said:

"Arthur is the prototype of what John Jay College is; the practitioner who stood on the front line of police work; the thinker and explainer to us all of the reasons for social deviance and the proper responsibilities and limits of social control; the man of strong compassion for his fellow human beings who strove to help us understand police work and its stress, as well as the criminals the police must deal with.

"In loving tribute, his colleagues, friends, and relatives established the Arthur Niederhoffer Memorial Fellowship, awarded annually to students in the doctoral program in criminal justice at John Jay College who ”best epitomize in academic achievement and in the promise of future fulfillment the professional accomplishments of Arthur Niederhoffer.”

Vic's twitter feed



still 53% for d's to win. and with 25 million gov employees who vote 90% dem, and 50 million on foodstamps etc, its amazing its only 53%.

electionbettingodds.com: Chance of…Presidency 2024 (by party)



Last moonless midnight I bumped my CSC-259 along the railroad right of way looking for the old RR stations. I was 20 miles south of Niland when I passed a railroad signal and the arm went down. But there was no train, and the arm went up again. A minute down the track, I turned back and this time the signal faced me. The arm went down, and I stopped.

The Salvadoran carried nothing but a jug of water, new blanket in a package he had found in the track, and an extra pair of tennis shoes strung over his shoulder.

Three nights ago, he stood at the Trumps new, unclimbable border fence and climbed it. As he got his first foot off the ground a gun pressed his temple, with the order, ‘Not yet!’ The Mexican Mafia robbed his cell phone and wallet. He had $2.75 in his pocket when he dropped to the other side in USA.

The railroad track here begins in El Salvador and passes through Mexico to Calexico, and north through Slab City to the promised land. It is the notorious La Bestia line that is the rolling pipeline of Central American immigrants into America and jobs. He had taken one month to pass through Mexico, worked a week in Mexicali to buy the phone and stake the border hop. Now he had turned himself into a RR signal to try to stop the only passerby he had seen in three days of walking the hot track.

‘Is this California?’ he asked in fair English. I laughed in Spanish. He had lived for fifteen years in Virginia, owned a house, car, and then his wife took everything and reported him to immigration. They had flown him back to his native country, where he turned around and rode La Bestia the second time. His goal was to recover the American Dream.

I have ridden La Bestia myself and, knowing the travails, picked up the walker. He had not eaten for three days.

He ate the same as I did that night, canned spaghetti, and the following morning I outfitted him to hobo the freight out of Niland. There is a patch of bushes on the west side of the track to twiddle the thumbs until, daily, a Union Pacific pauses to change crew. There would be orchard work at the next stop in Indio, CA. He carried a copy of my ‘Executive Hobo: Riding the American Dream’.

He ducked into the portal of a cement car. There you are in a steel rolling hotel room looking out. I waved goodbye like a RR signal, and he mechanically waved back.



%$#@ Yankees

October 6, 2021 | Leave a Comment

to me the yankees play a pathetic game with no small ball and terrible defense, and the great majority of their batters with averages below 220. typical is their clean up batter gallo with a 190 average. compounding the misery for me is the terrible managing and the way the yankees use quant strategies unvarying and fixed. even worse than technical analysts in our field. no matter what, the yanks will take a pitcher out after 100 pitches even he's if pitching a no hitter.

worst of all are the promotional ads like kars and dear priscilla and the cancer and lotteries ads on the radio that destroy ones equanimity. in short the yankees don't deserve to win and good bye susan and john for 6 months.

stockholm syndrome at bronx baseball. the players, when asked about the good job that boone is doing, come up with "he shows up every day."

Vic's twitter feed



in proper sell-off in equity, one eventually gets a massive backwardation - and we haven't seen this - almost the opposite- it slightly steepened yesterday - that is odd - and could mean a lot more stress but who knows, am not an equity guy just noticing it on the side and it needs to be tested more…

Zubin Al Genubi comments:

Decay of hi vol over time is a regular tendency. This leads to pennant like structures. The most dangerous time is at the expansion phase where the rate of expansion rapidly increases.

James Lackey responds:

This is a fabulous lesson for new specs that fall for the bear memes then get whacked post dip rally buying.

Look there are times for all things. We can make money short but it's so crazy risk dangerous and the vigorish is insane. I love Mr Vic's "never short" advice!

However if you must sell them without owning them I'd test when the vix is increasing in the short term ie today's vix is higher than 5 days ago then keep it to something like no more than a few trading days hod short et al.

My gist is paying huge vig and buying strength and selling weaknesses is the stupidest system ever! However I'm a man that made it happen and allot over many years even prior to my spec list school.

In closing don't lol but if you must: It makes sense to move all the contracts you can, all day every day when the vix is over let's say 25 and my hypothesis is when it's expanded rather than contracted.

With love honor and respect for those that trade for a living.

Nils Poertner adds:

whenever this graph (from Peter Garnry at Saxo Bank) is -20 or -30, it is possibly a contrarian buy.- that is how I read it. in other wards, in strong backwardation in the vix curve…eventually one needs to switch and be bullish - in context perhaps with other indicators? treat with caution - have not done study myself. always test for yourself



1. Human Error, James Reason. A rather disappointing academic treatise on cognitive analysis of how humans make errors which is really dragged down by obtuse academia speak. Two major sources of error are lapses and slips, and secondly errors of reason and rules. Slips are when you forget steps, lose your place, get distracted, fall into a habitual practice inappropriate for the situation. Errors of reason are using the wrong rule for the situation, where the plan does not go as expected, or the plan was wrong. When the rule doesn't fit, the expert acts like a novice.

There are the raft of heuristics. One is how humans utilize familiar patterns rather than calculate or optimize a current new situation. It is cognitively difficult to consciously think through a new situation.

An interesting section was about how the brain uses "autodrive" to do many familiar things to make room for conscious thought. I was driving down somewhere thinking, and look up and arriving at my destination, realize that I basically had no recollection of the drive there - just on autopilot. A lot of daily life is on auto pilot thus ripe for error.

It's a difficult read. Better to rent, than buy.

2. The Genetic Lottery: Why DNA Matters for Social Equality, by Kathryn Paige Harden

A flawed book addressing a difficult subject. Galton's biggest failing was his theory on eugenics. One of Harden's main points is to debunk the misconception that the genetics of race has any meaning. Race is close to meaningless in genetics. For example, people with genes from people from Africa have a much larger variation in genes than in all the other races, and the categorization of Black and White becomes meaningless.

Genetics does have an effect on personal traits. It predicts certain diseases. The attempt at connecting genetics with achievement in education, life satisfaction, and wealth, suffers from too many variables to have any use.

Their statistical studies, not disclosed, I think will not be robust.

3. John Steinbeck, Sea of Cortez, recommended by Andrew Moe. A beautifully written book and a joy to read.

4. Yottam Ottolenghi, Plenty More. Highly recommended cook book with smashing recipes for vegetarian dishes with a mideastern influence. He has other cookbooks such as Jerusalem with recipes that are real home runs. I've made a number with great success.

5. Michael Lewis, The Premonition. Excellent book about the sad state of the lack of preparedness for a pandemic in the US. Outlines some of the goings on in California to deal with pandemics and disease. Lewis is a fine writer and easy to read.

Pamela Van Giessen comments:

Lewis is a facile writer who performs a parlor trick by bringing forward, in Vanity Fair like story telling, that which will convince you that his view is the correct view. He will not be remembered 100 yrs from now.

A reader writes:

There are three sentences in the short review of The Genetic Lottery that are utter nonsense:

"Galton's biggest failing was his theory [sic] on eugenics."
"Race is close to meaningless in genetics."
"The attempt at connecting genetics with achievement in education, life satisfaction, and wealth, suffers from too many variables to have any use."

These sentences could probably be accepted in, say, the NY Times given that and other leading publications' denial of much of genetic science, but not on this Spec List.

James Lackey appreciates:

Fantastic report! I dig Lewis because moneyball was a great movie lol but really love him because his Wife is so amazing that he must be a good dude to keep her.

Duncan Coker

Thanks for the list. Has anyone read the latest from Steven Pinker, Rationality? It seems like a more scientific analysis of what Kahneman failed to do. We humans have trouble with advanced probability in every day life, so appear to be irrational, but there is more to the story. Do the shortcuts we use help or hurt. Try doing Bayesian Analysis at the grocery story. I think Pinker is one of the best writers we have at present.

An excerpt from Pinker's latest:

Why You Should Always Switch: The Monty Hall Problem (Finally) Explained
By Steven Pinker



Vic notes:

an observer who seems as acute as andy:

SUBSCRIBER 6 minutes ago: We had a hot tip, in about 2010, about stock in a company that could do many different lab tests from a "drop" of finger stick blood! Knowing nothing about the company structure–just the excited promises–but being 30+ years into a Laboratory Medicine career, we realized that this was nothing new. We'd been doing a variety of chemistries & blood counts on finger stick and heel stick blood sample since at least the early 80's–actually 2 or 3 drops of blood in a thin glass capillary tube. The variety of tests, and the number of analytical systems doing these tests, expanded every year. It was routine–a standard of medical lab operations…nothing at all new except the excitement of a 20-something girl who had the market, a score of hyper-successful board members, and an uninformed public fascinated by her predictions. She was masterful at marketing–initially.

A reader adds:

I have heard several interviews with John Carreyou about his book, Bad Blood, but haven't read it yet.



Decoded neurofeedback

"Decoded Neurofeedback (DecNef) is the process of inducing knowledge in a subject by increasing neural activation in predetermined regions in the brain, such as the visual cortex. This is achieved by measuring neural activity in these regions via functional magnetic resonance imaging (FMRI), comparing this to the ideal pattern of neural activation in these regions (for the intended purpose), and giving subjects feedback on how close their current pattern of neural activity is to the ideal pattern. Without explicit knowledge of what they are supposed to be doing or thinking about, over time participants learn to induce this ideal pattern of neural activation. Corresponding to this, their 'knowledge' or way of thinking has been found to change accordingly."

Nils Poertner comments:

interesting. personally, I found cross-training v helpful - so honing skills in non-work areas, too. eg, professional trader in equity who has singing as hobby might benefit a lot from taking professional singing classes to open up new pathways (also re creativity in trading. also) - am happy to be the subordinate then whereas in trading there can be some unconscious resistance in learning from others.

Jeff Watson adds:

Ben K Green wrote a book called Horse Tradin'. The entire book is cross-training and might even be on Chair's list of recommended books. If it isn't on a list, then it should be.

James Lackey writes:

I've been working on this for a while now 3 years. Path duration outcome based on neuroscience. Dr Andrew Huberman my skate park guy is one of the best - Prof from Stanford University and Army special forces fan. It's fantastic to study.

Nils Poertner responds:

yes excellent. the thing is it can't be an endgaining experience, one needs to have an intrinsic interest in something /also the learning part. if ppl love skateboarding for the sake of skateboarding and hire a teacher to get better, this enthusiasm may carry over for trading (learning /improve process here as well) too.

(our whole culture is way too much based on endgaining - maybe not in all areas - but in a lot of them which is part of the problem why are in this situation altogether)



An Armor Conspired: the Global Shipping Freeze

First, the foundations. While bottlenecks are occurring everywhere, at present US ports are disproportionately affected. Docking locations along US coasts are among the slowest in the world: not because of size or technological capacity but collective bargaining hindrances. As Dominic Pino recently wrote,

Why are our ports so far behind? Not because we don’t spend enough on infrastructure, as the Biden administration would have you believe. The federal government could spend a quadrillion dollars on ports, and it wouldn’t change the contracts with the longshoreman unions that prevent ports from operating 24/7 (as they do in Asia) and send labor costs through the roof. (Lincicome finds that union dockworkers on the West Coast make an average of $171,000 a year plus free healthcare.) The unions also fight automation at American ports today, “just as they fought containerized shipping and computers decades before that.”

James Lackey adds:

Pete there is another one you can add to your list: The conspiracy to collude. The ftc is looking the other way whilst all car manufacturers minus Toyota Subaru and Mazda are limit up on next years ie 2022 sticker prices and it's not collusion - if you're not cheating, you're not winning in racing.

Oh, and the help wanted signs are bullshiza as they do not want to hire anyone as their wage offers are limit down. They can't pay back the ppp - they are all broke.

Bud Conrad comments:

The article is long on the sequence of events that colluded to a Perfect Storm of shipping delays. But he doesn't pick the specific culprit (Labor Unions? Government Port Investment? COVID Rebound? Trucking and intermodal capacity inadequacies? and I'll throw in another: Some kind of government or business sector conspiracy to get prices higher.

Regardless of the cause, the impacts on our economy are likely to be most felt in surprisingly high price inflation, for a broad range of products, that the US no longer knows how to make.

We will also see prices rising from the expanded money supply. Wage price inflation is already visible.

Pete Earle responds:

I don’t pick a specific culprit as the current state is not the product of a singular influence. Very simple, and the entire point of my article.

"Some kind of government or business sector conspiracy to get prices higher." [Not a reasonable theory.]

Bud Conrad clarifies:

I learned a lot in reading your article, and the problems you so well identify, including presenting the many charts. Yes: the world and its movements do work with multiple influences.

My challenge was rooted in my hope for identifying an overriding cause that could be addressed, and thus be the course of action to get things back into balance. Of course solutions will require many many efforts. And that was your point. What do you expect to happen?

I also threw out what I expected to be the consequence, that we would have very high price inflation, which will have obvious implications for all of us.



Is the market correction over? S&P 500 new highs coming up or 200 day MA? 2021/10/01

Yelena Sennett and Andy Aiken: Crypto breaks out as Fed loses the hawks and Powell goes woke. Crypto rally was not confirming the risk-off selloff.



Zubin Al Genubi writes:

bullish tendency

Larry Williams cautions:

Yes but not very much for october

Big Al starts the analysis:

Simple test on SPY, all dates thru Sept, 2021, comparing first days of the month to all days:

All days
count: 7171
mean % move: 0.04%
sd: 1.19%

count: 341
mean % move: 0.25%
sd: 1.31%
z vs all: 3.28

Steve Ellison digs deeper:

Last 36 first days of the month, enough for significance and equal month weightings, but a short enough lookback to allow for ever-changing cycles, especially from prior knowledge of those who worked for the Chair: The average first day of the month is positive, but not significantly different from the overall upward drift of this period, t=0.68.

Date // Net change
10/01/2018 0.4%
11/01/2018 1.0%
12/03/2018 1.2%
01/02/2019 0.2%
02/01/2019 0.0%
03/01/2019 0.7%
04/01/2019 1.2%
05/01/2019 -0.9%
06/03/2019 -0.1%
07/01/2019 0.8%
08/01/2019 -1.0%
09/03/2019 -0.6%
10/01/2019 -1.4%
11/01/2019 0.9%
12/02/2019 -0.9%
01/02/2020 0.9%
02/03/2020 0.7%
03/02/2020 3.9%
04/01/2020 -4.7%
05/01/2020 -2.8%
06/01/2020 0.4%
07/01/2020 0.4%
08/03/2020 0.8%
09/01/2020 0.8%
10/01/2020 0.5%
11/02/2020 1.1%
12/01/2020 1.0%
01/04/2021 -1.5%
02/01/2021 1.6%
03/01/2021 2.3%
04/01/2021 1.1%
05/03/2021 0.3%
06/01/2021 -0.1%
07/01/2021 0.5%
08/02/2021 -0.2%
09/01/2021 0.0%

Average 0.2%
Standard deviation 1.4%
n 36
t 0.68
Average of all days 0.1%

Big Al continues:

Prompted by Steve's analysis, here is SPY broken into two-year periods, with September as the ending month. Shows the z of the FDOM moves for that period vs the SPY daily % moves for that period.

2yr end // z of FDOM
Sep-2021 0.69
Sep-2019 0.14
Sep-2017 1.67
Sep-2015 (1.18)
Sep-2013 0.16
Sep-2011 1.67
Sep-2009 (0.18)
Sep-2007 1.68
Sep-2005 2.88
Sep-2003 0.99
Sep-2001 0.85
Sep-1999 2.64
Sep-1997 2.56
Sep-1995 (1.23)



I've learned how to foil surf. (It was a brutal learning curve.) You can also downwind surf in open ocean swells on the open ocean, but it's tricky. You need to catch a chop that is steep enough to allow one to get enough speed to get flying on the foil. Once flying on foil, it is very fast and efficient and one can ride the open ocean like a bird.

The trick is to pick the right chops so as not to exhaust yourself paddling before flying on foil. There are 3 or more energy sources manifesting in the ocean wave pattern: (1) wind, (2) surface chop, (3) open ocean ground swell. The various energy sources create different wave energy patterns that overlap. At the intersection of 3 energy sources, a steep breaking chop is created which gives enough energy to paddle in and get up flying on the foil. This is the idea of a rogue wave, but on a smaller scale.

This practice can be applied to trading. As Larry Williams explained in his video on seasonality and cycles, there are energy currents and cycles in the market in seasonal wave patterns. Additionally there is energy in day to day price patterns and, as today, in monthly price patterns. It seems that occasionally three or more of these price patterns overlap and all the energy gets focused in one spot creating a good opportunity for a trade. An example might be 3 or 4 big down days, an x-day new low, an overnight drift pattern, and an end of quarter/month pattern, might all intersect for a good trade opportunity with lots of energy.



The Irony of China’s Most Recent Bitcoin Ban
by Peter C. Earle

In light of both its history and the decentralized nature of crypto, it’s difficult to see this latest ban as anything but terrifically bullish for the development of the sector as a whole. It forces miners located in China taking advantage of cheap development and energy costs to move elsewhere, likely resulting in greater geographic diversification. (The concentration of hashing power in China-based mining facilities was seen as an existential vulnerability to Bitcoin by some observers; yet for several months an exodus of mining operations has been underway.) The crackdown will likely induce more research into energy-efficient means of mining. And there will undoubtedly be increased innovation directed at the concealment of ‘on and off ramps.’

Steve Ellison adds:

The power shortage in China is the least expected and most interesting news of the week, apparently driven by a push to reduce carbon emissions.

China’s Manufacturing Weakens, as Power Cuts Threaten More Damage
Contraction ends 18-month expansion that powered the country’s recovery from the Covid-19 pandemic

BEIJING—China’s manufacturing activity contracted in September, ending an 18-month expansion that powered the country’s recovery from the pandemic, with power curbs in hubs threatening further disruption.

China’s manufacturing purchasing managers index fell to 49.6 in September, the National Bureau of Statistics in Beijing said Thursday. That marks the gauge’s first drop below the 50 mark that separates an expansion of activity from contraction since February 2020, when the metropolis of Wuhan and surrounding Hubei province were shut down to contain the fast-spreading virus.



nobody asked me but the yankees are a much worse coached team than any of the other contenders and are likely to lose in the wild card very quickly. they constantly take out pitchers and refuse to play small ball.

nobody asked me but the relation between susan and john on the yankees game would be indecorous if john weren't so old and susan weren't so nice. he refers to her as my dear and often says that he knows nothing and she knows everything. neither of them seems to have insights into the game but susan knows many anecdotes and john is often bewildered by the uncertainty of the game.

i enjoy listening to them while i'm watching prices but every ad on their radio program seems to be a promotion of one kind. the worst besides the kars for kids which seems to be a promotion all around is the sniff and shimmei for the ny lottery as it promises two wins daily.

the ads for cancer are particularly reprehensible as they indicate that someone has hope because a comprehensive cancer center will do research on their particular cancer.

Vic's twitter feed



S&P 500 test of all time highs coming up? Fed, Tesla, Inflation. Part 1, 2021/09/24

Yelena Sennett & Andy Aiken: Tesla breaks out. Nasdaq tests and holds 15K. Evergrande and China update.

Part 2

Full blown attack on crypto last week. But is it too late? Part 2, 2021/09/24

Yelena Sennett & Andy Aiken: Are the powers to be threatened by DeFi and Crypto? But price action is very resilient, given the amount of negative news. Is Evergrande paper behind Tether?

Part 3

Bitcoin and crypto valuation metrics, security. Bitcoin, Ethereum. Part 3, 2021/09/24

Yelena Sennett & Andy Aiken: How to value the crypto space, given that traditional metrics don't work in a new decentralized structure. Bitcoin price vs its security vs the number of users

Part 4

Dogecoin popularity, DOGE AMC adoption coming? Part 4, 2021/09/24

Yelena Sennett & Andy Aiken: Is it a broken coin? A publicity stunt for AMC? Dogecoin popularity continues, despite the lack of use or any new development.



Symphony No 2 in D The Hello

Jeff Watson comments:

Fellow spec lister Laurence Glazier knocked this one out of the park. This piece can only be described as "delightful." The man certainly has musical chops.

Andrew Moe adds:

Thanks Jeff and of course, Laurence. Loved watching the musical arrangements for the entire orchestra simultaneously. It's like watching the ticks in multiple markets go together. A little ditty from gold, then the bonds … suddenly the euro and yen rise - all to the beat set down by Sanchez. Beautiful!

Laurence Glazier writes:

Thanks both for kind comments.

Yes, it is market-like. Taking in data - melodies and fragments which come to mind - and putting them together, constructing positions, treading a narrow path between excesses of caution and exuberance.



Can Stock Market Forecasters Forecast?
By Alfred Cowles 3rd
A paper read before a joint meeting of the Econometric Society and the American Statistical Association, Cincinnati, Ohio, December 31, 1932

This paper presents results of analyses of the forecasting efforts of 45 professional agencies which have attempted, either to select specific common stocks which should prove superior in investment merit to the general run of equities, or to predict the future movements of the stock market itself. The paper falls into two main parts. The first deals with the attempts of two groups, 20 fire insurance companies and 16 financial services, to foretell which specific securities would prove most profitable. The second part deals with the efforts of 25 financial publications to foretell the future course of the stock market. Various statistical tests of these results are given.



Ken Burns Says Current Times ‘Equal’ to Civil War, Depression and World War II: ‘It’s Really Serious’

Historian and documentary filmmaker Ken Burns said that the present day is one of the worst times in American history.

Burns made the remark while on the “SmartLess” podcast, hosted by Will Arnett, Jason Bateman, and Sean Hayes, comparing current events with the Civil War, the Depression, and World War II.

“It’s really serious. There are three great crises before this: the Civil War, the Depression, and World War II. This is equal to it,” he said on Monday’s episode when asked about the direction the United States was headed.

Peter Saint-Andre offers:

Perhaps he's been reading The Fourth Turning by Strauss & Howe. Highly recommended.

It does strike me that the recent run of presidents rivals the likes of Fillmore, Pierce, and Buchanan. Stefan can provide a more informed perspective for us.

Leo Jia writes:

The Fourth Turning sounds very interesting, thanks for sharing. I had similar senses in recent years, hope I had read it earlier.

According to Wikipedia [Strauss–Howe generational theory], our current turning is crisis starting in 2008 and ending in 2020 (+a couple years perhaps). The last crisis was between 1929 and 1947 (depression and ww2 together for 17 years). The crisis before that was between 1860 and 1865 (civil war for 5 years).

As one turning generally lasts 20-22 years, the current one is coming to the final years.

The next turning following a crisis is termed high. It's like 1946 - 1964, and 1865 - 1886, for which we can be hopeful.

I am not sure if the authors discussed about the not fully synchronous nature of the turnings through the world. For instance, America didn't suffer ww2 so much as Europeans or some Asians. Europe didn't have the depression, though it had ww1 earlier. Also, even in the same crisis turning for instance, different groups or countries can take differently: winners get more benefits than losers for instance.

So the podcaster talks about a worst crisis we are in, well that may be true, but the good news is that not everyone has to suffer.

Vic adds:

presumably that fellow traveler who has never believed in american excetionalim is referring to the negative feelings about president biden which i happen to agree is bearish as the masters 1000 and the big tech and the bilious billionaires will have less chance of capturing the rake from being one with the lokis.

Henri Huws suggests:

If you’re enjoying The Fourth Turning have a look at Decline of the West by Oswald Spengler. He was a history teacher by trade that wrote extensively on the coming decline of the west. Spengler’s cyclical theory on history is very interesting. He famously predicted the fall of the third reich, 9 years before the end of the war. All of his work is fantastic, but has a much longer time horizon than the 4th turning. In vol1 he focuses on how culture in civilisations throughout history changed as their civilisations grew and declined. In vol 2 He puts more emphasis on politics and economics. Its a dense read, but well worth it.

Duncan Coker recommends:

For geopolitics I recommend Peter Zeihan. His latest is due out next year, and the title is provocative: The End of the World is Just the Beginning. It could be taken as negative or positive depending on your time frame. As much as I like Ken, his comparisons to other points in history seem way off the mark.

Stefan Jovanovich

Mr. Burns left out the wow finish with Jesus and George Washington - always Lincoln's favorite bit of stagecraft.

Reason, cold, calculating, unimpassioned reason, must furnish all the materials for our future support and defence.–Let those materials be moulded into general intelligence, sound morality, and in particular, a reverence for the constitution and laws: and, that we improved to the last; that we remained free to the last; that we revered his name to the last; that, during his long sleep, we permitted no hostile foot to pass over or desecrate his resting place; shall be that which to learn the last trump shall awaken our WASHINGTON. Upon these let the proud fabric of freedom rest, as the rock of its basis; and as truly as has been said of the only greater institution, "the gates of hell shall not prevail against it."



an important book like this deserves a proper reference

The Analysis of Economic Time Series, by Harold Thayer Davis (1941) [pdf]



Levels of the bias

September 26, 2021 | Leave a Comment

in john mcphee's book about the ashe-graebner match (Levels of the Game), he told me 100 people came up to him on the princeton train and berated him for it being biased against graebner and 100 came up to berate him for bias against ashe.

i am berated by the bears for being an ignoramous and having a bullish bias and others compliment me for being so smart. i am not so smart. and like all old people i have to change to adjust to modern times.

Vic's twitter feed



some shocking moves in bonds stocks gold last week. the frog jumped out of the water. will the flexions allow a debacle while infrastructure in play?

the study of circuit diagrams (Boolean algebra, logic gates) with the output depending on various consecutive combos of and, or, not, and +, gives good insights and possible uses for the color diagrams. for example let "stocks up" be p and "bonds down" be not q. we've had two p not q in a row.

it happened 44 times since 2019 - nothing special for either as an output.

by adding a + r, one can put a third variable in it. these extensions were strangely inspired by insights about checkers. the moves in checkers one forward or one backward with red and black have always seemed to me indicative of logic circuits with the output corresponding.

Vic's twitter feed



laurel writes that it's execrable to go on a date to a dance concert with someone who can't dance. i fear she is referring invidiously to me. all i can say is that my father was the best dancer in the police force and also the star of folk dancing from russia and latin american countries which were very hard to learn and perform which my dad performed every day with 50 women and 20 men daily in the baths at the beach.

also my daughter galt would have been a star of american dance machine if the director had lived.

all my daughters are great dancers and so is my wife. somehow i can't dance even though i have taken lessons from four different teachers. my favorite teacher was yuval hod.

Best Lindy Hop Dance Routine - Yuval Hod & Nathalie Gomes!

yuval had the same problem in winning 4 world championships that i did. all the judges at the international competitions were biased against Israel. the squash officials used to love it to make me lose and called around when i was losing.

fortunately they didn't see me losing that much but i would have won another n.a. championship if stew breauns had called one down on me that i was up. he had never called one down on me before. it was 14 all when he called it against me in the semis. i can still see him, a diabolical smile in letting sam howe win who had never beat me before.

funny how memories from 60 years ago are so resonant. i remember every match i lost. the funny thing was that even though i was practically undefeated for the 10 years of my prime. i should have been much better if i hadn't been taught that accursed slice backhand.

i wish i was 1/10 as good at markets as i was in racket sports. the slice backhand was particularly reprehensible in racquetball. marty hogan hit backhand 150 miles an hour. i was lucky to reach 60 mph. the funny thing is that i am the only player with a plus record against marty.

my father could do anything perfectly. he was a formist and did everything with perfect form. i do everything with terrible form. my wife is a formist also.

i violated larry wiliams rule about less than 1/2 age + 7 with my formist wife when she was 19 and I was 32. i'll never forget when i entered a rac tourney and 10 guys ran up to me and said "you have to see this girl's backhand perfect form and she's a looker also."

i taught her that backhand and she beat john hummer with it with my father watching. john was twice her height.

Vic's twitter feed



2022 House of Representatives control


USA - House of Representatives Election 2022



The Afghanistization of America

Victor Davis Hanson:

The United States should be at its pinnacle of strength. It still produces more goods and services than any other nation—China included, which has a population over four times as large. Its fuel and food industries are globally preeminent, as are its graduate science, computer, engineering, medical, and technology university programs. Its constitution is the oldest of current free nations. And the U.S. military is by far the best funded in the world. And yet something has gone terribly wrong within America, from the southern border to Afghanistan.



some comments on the big decline.

(1) it was a decline red in tooth and claw with bonds, stocks, and gold down.

(2) it was harbingered by the decline of 47 bucks in gold on thursday. a once in a decade decline. the main reason there was a status incongruence.

(3) everything bad for the US. the 70 billion of equipment left behind. and all the US could come up with was that the afghans and their allies aren't smart enuf to reverse engineer it.

(4) the foreigners have to decide on options expiration whether they should continue their US buying. with the US in decline from the withdrawal and everything related, why should they park in US.

(5) the status incongruence of the admission we killed 19 civilians in the drone strife. but this was clearly an attempt to come up with good talking points about our over the horizon capability. this was the only thing they coudn't blame on pele another incongruence.

(6) the incongruence of Milley worrying about sanity of Trump but not concerned about the montreal semantic test for other high officials. incongruence of no punishment for generals who worked for raytheon and g.d. but impeachment if pele did it.

(7) as the professor says, the market moves to every higher numbers with cataracts along the way.

Vic's twitter feed

Jeff Watson writes:

With many talking doom and gloom regarding the future, it is a noteworthy accomplishment for the S&P to only be 2.5% off it's ATH.

Mark Graham asks:

so what's next come monday?

Jeff Watson responds:

Who knows what the market is going to do on Monday. Who cares what I think? Who cares what anyone thinks should happen in the future? Why should one trust the "experts?" People might have an idea of what might happen, but that's about all it is. I can't count the times I've been perfectly convinced something would happen and it didn't. What happens tomorrow happens, and you will either be right or wrong. That's the case for every one of us. It doesn't matter what Chair, Bill, Sogi San, Larry, myself, or any other member of this list thinks the market is going to do. It only matters what you think and how you navigate the often treacherous currents, eddies and shoals of the markets. Opinions given for free, market tips, supposed insider info, etc are worth less than what you pay for them. LeFevre talked all about tips, and allowing others to do one's thinking for them, and his advice should be heeded.

Larry Williams joins in:

There are people I listen to intently; they have established they are worth listening to…some are on this list. An explanation of why a trader expects such and such to happen is not a “tip". Big difference.

Jeff Watson clarifies:

Since I obviously wiffed the ball in my previous reply, to clarify and make my point clear, the message was it's best to keep one's own counsel.

Larry Williams concurs:

Yup, listen to all but pull the trigger at the target you see.

Nils Poertner adds:

I think what is tricky for most people to understand that in many other parts of business life (in particular as an employee), one can do very well as long one is social enough, aggressive, disciplined enough, progressive etc… or went to the right school…

whereas maneuvering mkts (long-term - over decades) by oneself requires a different mindset altogether - and trading even more so than pure investing



Time to buy S&P 500? Levels to watch. Tesla breakout? 09/18/2021



The two most recently completed calendar quarters were by far the most profitable quarters in the history of the S&P 500. 12-month earnings through Aug. 31 were $158.74, compared to a year-ago estimate of $129.15. Who says estimates are always too rosy? Source: Standard & Poors

Click to see S&P earnings table



‘Science,’ They Said

Victor Davis Hanson:

The scientific method used to govern much of popular American thinking.

In empirical fashion scientists advised us to examine evidence and data, and then by induction come to rational hypotheses. The enemies of “science” were politics, superstition, bias, and deduction.

Yet we are now returning to our version of medieval alchemy and astrology in rejecting a millennium of the scientific method.



As I have said a number of times, China demographically is where the US was in 2008, as the larger cohort born before the one-child policy ages out of its peak productivity and spending years.

Evergrande’s Woes Fuel Selloff in Chinese Property Shares

Conversely, the US now has a demographic tailwind as the large millennial generation forms households and advances in careers. The Fed should end QE now because the demographic drag that made the Obama-era economic recovery so painfully slow has reversed. QE is now inflationary.



Yankee analytics

September 15, 2021 | Leave a Comment

forget the regularities and statistics. the yankees lost 7 in a row while s&p moves to 14 day low but won 13 in a row while the market broke 4500. yesterday they finally won one while following insane analytics that are set before the game and don't take account of recency.

incredibly an analytics that says that after 100 pitches the other side does better trumps an ERA on current pitches of 2 or less et al. does someone know about ever changing cycles there or are the analytics designed for losses the way yankees use them?

the yankee games are good predictor of the sp? why is this not chance? but the ads on the radio game are so biased and woke that they ruin ones enjoyment of the predictions. worst of all the the attempts at humor of the insurance ads and the hope for cancer and the lottery ads.

the kars for kids and the lawyer ads that have received a 6 million settlement are reprehensible also

Vic's twitter feed



i found this interview extraordinarily educational and revealing. self-loathing virtue signaling military defense generals at general dynamics and raytheon.

In this Direct interview, John Anderson, former Deputy Prime Minister of Australia, is joined by Victor Davis Hanson. Dr. Hanson addresses Biden’s role in the Afghanistan crisis, increased tensions between China and the US, and the future of the US-Australia relationship.



Current odds for 2022

September 14, 2021 | 2 Comments

apparently 4 to 1 that house will be changed in 2022 and 55 to 45 that senate will be changed

Current PredictIt odds on the House and Senate 2022



S&P pullback, Apple lawsuit & Crypto selloff explained

Yelena Sennett and Andy Aiken: S&P 500 2% pullback, what next? Crypto's sharp reversal this week, cause and levels, weekly close is important. Inflation and hawkish Fed is likely.



The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.

More H. L. Mencken quotes



From Lee Child in Without Fail:

The thing about baseball is that the regular season is one hundred sixty-two games long. Way, way longer than any other sport. Any other sport has about half as many games as baseball. Basketball, hockey, football, soccer, anything. Any other sport, the players can start out thinking they can win every single game all season long. It’s just about a realistic motivational goal. It’s even been achieved, here and there, now and then. But it’s impossible in baseball. The very best teams, the greatest champions, they all lose around a third of their games. They lose fifty or sixty times a year, at least. Imagine what that feels like, from a psychological perspective. You’re a superb athlete, you’re fanatically competitive, but you know for sure you’re going to lose repeatedly. You have to make mental adjustments, or you couldn’t cope with it.

Stefan Jovanovich adds:

It's even worse. You go up to the plate knowing you are going to swing and miss or, at best, hit a foul many more times than you are going to hit a ball square into fair territory. And, then, on the ones you hit right, half will be outs.

Total # of games played in MLB and Negro League history: 232,680
Total # of perfect games, i.e., 27 outs, no hits, no walks, by losing team, no errors by winning team: 22
Ratio: Perfect to Played: 1/9.455045556128589e-5
[That is, 0.00946% of games played were "perfect". -Ed.]



Blow off top or a small pullback? NFTs craze fuels Ethereum? 2021/09/03

Yelena Sennett and Andy Aiken: S&P 500 statistics on all time highs bring up the ghosts of 1987 & 1929. Crypto Punk is worth more then Picasso as NFTs become the new status symbols.



Music and Math: The Genius of Beethoven

Laurence Glazier comments:

Very nice, I would add that Bach was the engineer who enabled Beethoven and everyone else to write in lots of different keys. 1.5^12 and 2^7, in music 12 fifths and 7 octaves, are almost but not quite the same. Bach fixed this with a tuning system which averages out the difference.

Peter Saint-Andre adds:

Indeed, there were a lot of tuning systems developed around then: Neidhardt (seemingly Bach's preferred system), Werckmeister (he developed several), etc. Just last night I read all about them in The Esoteric Keyboard Temperaments of J. S. Bach. These folks were the quants of their day!

Peter Grieve comments:

Yes, the problem with getting good fifths and good octaves in the same scale is find a power of 3 that is equal to a power of 2. This is because a fifth is a ratio of 3/2, and an octave is a ratio of two.

Of course, there is no power of 3 that is exactly equal to a power of 2. There is a fairly good match at 3^5=243, and 2^8=256. The power of 5 on the 3 means that this corresponds to a pentatonic scale. And 3^12=531,441 while 2^19=524,288, (proportionately a better match) which as Laurence says is the basis of a diatonic scale.

Because the matches aren't exact, something's gotta give, and this is what Bach's temperment ideas addressed (as Laurence said).

There are other near matches at larger powers, but a scale with dozens or hundreds of notes has limited appeal.

Laurence Glazier writes:

Excellent attachment on the tunings, esoteric is the right word. The fact that this is being rediscovered after hundreds of years, is of special interest to me.

Adam Grimes adds:

I have built and played harpsichords for many years. When you play harpsichords, you also tune them. A lesser-known fact is how quickly this instrument goes out of tune… you can have it in tune for a concert and then it will need a touch up at intermission.

So, harpsichord players quickly become very familiar with these tunings. Some are much more useful than others, but it also explains what composers meant when they talked about affects or emotions associated with certain keys. This was a very real thing, in some of the older tuning systems, but has been completely lost (for better or worse) with modern equal temperament.

Another interesting aside is that I find these historical tunings don't work that well on the modern piano. Completely aside from the temperament issues, there's also the issue of inharmonicity (the deviation of a physical string from the theoretical ideal). All strings have this, but the piano has A LOT because of the thickness of the strings. (Certain types of harpischords (Italian) have scalings that are much closer to the theoretical ideals.) A piano is tuned ever-sharper in higher octaves so that it is in tune with its own overtones rather than the actual pitches. It's subtle, but it's real and important… and it also obliterates the precision of these historical tunings. (Another interesting aside is that once your ear learns to hear in these historical tunings, moving back to ET is a kick in the gut. You'll sit down at a piano, play a chord, and think "wow. everything really IS out of tune." which is the compromise of ET. (For the record, ET is a beautiful and useful thing, as well.)

What I don't see much value in are the microtonal modern experiments, but I understand what drives that line of thought.

For any musicians, if you haven't had the experience of singing pure-tempered intervals against a drone I'd highly encourage it. You can spend hours or even weeks exploring the beauty and power of these resonances… and you'll know musical materials as an EXPERIENCE of resonance rather than a sound or a theoretical construct.

One might imagine that it was these experiences of resonance that encouraged early humans to sing, to seek sound, and maybe even to seek language… maybe in those caves where they left us paintings of mystery and power… somewhere a very long time ago.

But, seriously, go get a bass drone sound and sing some pure octaves, fifths, and thirds against it. You'll never hear the same way again.

A reader adds:

Each open tuning has a special resonance that is different than the same notes played in concert. Similarly chord inversions carry different overtones from base fingering.

Jeff Watson adds:

I love Fripp’s New Standard Tuning, CGDAEG. The mnemonic for recalling it is “California guitarists drop acid every gig.”

Adam Grimes responds:

yeah but slightly different. Fretted instruments are ET. You could potentially bend some notes, but you're still working in an ET world. (Scordatura certainly changes the timbre of instrument, and resonance of open strings, etc., but is a substantially different thing from temperaments.)

Laurence Glazier writes:

Thanks Adam, fascinating thoughts.

When transcribing from inspiration, I am sometimes unable to use the note I hear in my mind, which lies somewhere between a pair of adjacent semitones. As my software uses ET tuning, I have on occasion resorted to using MIDI control instructions to nudge the pitch into place, but in the light of your post, I now see that the issue may be with the tuning system. On one of the historical keyboard instruments, the note I require might simply be there.

I have enjoyed writing music in the past for clavichord, because of the pressure sensitivity, but am now writing mainly for orchestra.

As you say, experience trumps academic construct. I personally consider music to be an elemental force of nature, and species evolve to sense it along with every other aspect of reality. It's also interesting that lunar and planetary orbits often lock into similar ratios. The Pythagorean Comma has a counterpart in the slight divergence between the lunar and solar calendars. The term live music, in my opinion, is literally true.

Adam Grimes responds:

Clavichord is a beautiful and intensely problematic (at least in my experience!) instrument.

I own one. The intimacy of it is incredible… it puts the player's finger in almost direct, expressive contact with the vibrating string… but that brings up so many issues of control and it's such a different technique than any other keyboard instrument. To say nothing of the whisper-soft sound level (that defies amplification, which might seem to be the obvious answer.)

And you're right… all those "in between" notes exist as a possibility on that instrument. Not hard to imagine someone playing in a remote key and instinctively bending the out of tune notes into an acceptable range.

Zubin comments:

Guitar players always bend notes giving infinite micro tones. Squeezing the string to approach the note can give great feeling. Of course singers all do it too.

Vic is reminded of a Beethoven story:

During a performance of one of his piano concertos Beethoven was the soloist, and he got so carried away with conducting that at one point he forgot to play the piano. He flung his arms wide and knocked the candlesticks off each side of the piano. The audience burst out laughing, and Beethoven got so mad that he ordered the orchestra to start over again.

Two choirboys were enlisted to hold the candlesticks out of harm's way. One of them got increasingly intrigued by the piano score and came in closer and closer just as a loud passage broke forth. Out went Beethoven's arm, knocking the choirboy in the mouth so that he dropped his candlestick. The other choirboy, having followed Beethoven's motions more cautiously, ducked, to the complete delight of the audience.

Beethoven fell into such a rage that on the first chord of his solo he pounded the piano so forcefully that he broke half a dozen strings. Die-hard music lovers in the audience tried to restore order, but failed. After that debacle Beethoven became increasingly reluctant to give concerts.

From Wisconsin Public Radio: The Catastrophic Conductor



I don't believe in psychology, I believe in good moves!
- Bobby Fischer

Met top player in chess (IM level), who started trading in 2014 and has done very well for himself. Loved his attitude re learning.

Chess is wonderful training ground as ppl tend to look at things more objectively.
Think about it - to be good at chess player- one has to become very honest with regards to oneself. Self-deception is not going to work for long.

And empathy means real empathy (understanding moves of others, not projecting own fantasies which modern world is all about). Kids got to learn chess more.

Michael Cook agrees:

Couldn’t agree more!

I think there are a good few other parallels. If we take a game in a series as a trade, eg sometimes you can see your position degrading over time and sometimes something you never saw coming, in a move or two, completely destroys you. If it’s obvious to you, it is highly likely it is obvious to your opponent (the lack of value of first order thinking) etc etc.

Nils Poertner seconds:

agree. modern psychology is overrated and chess (and other board games) under-rated for the human mind.

so many ppl have strong views about this and that (eg academic world). and that is fine for me, but in chess one is getting more or less direct feedback within a few minutes or hours.

An enjoyable few minutes with one of the best:

Magnus Carlsen's Mind-Blowing Memory! World Chess Champion tested



advice of Tom Wiswell to all (especially teenagers): "look and listen and learn — the secret of success lies in using your eyes and ears."

Wiswell's favorite and most important proverb for games and markets and life: "moves that disturb your position the least, disturb your opponent the most."

Vic's twitter feed



Is this market as good as it gets? Cardano vs Ethereum? 2021/08/27

Yelena Sennett and Andy Aiken: The less freedom, the more the market rallies, but it can continue longer than anybody expects, like during the great financial crisis in 2007. ADA Cardano Coin outperformance.



recommended article of the month "self cancellation, deplatforming, and censorship", nick gilespie Reason Magazine current issue (calls for a reality and extremism expert)

(Ed. note: Currently available only to digital subscribers of Reason Magazine.)
Self-cancellation, Deplatforming, and Censorship: A taxonomy of cancel culture.

Vic's twitter feed



Ghost Soldiers

August 27, 2021 | Leave a Comment

what a difference between the planning and the courage and the direction and the execution and the bravery of this mission in 1944 with world war 2 technology and ww2 spirit and direction. how these rescuers would look at the current situation. well worth reading, listen.

Ghost Soldiers, by Hampton Sides



one notes the use of the word progressive in many advertisements. what other hidden persuaders do you see in marketing?

The Hidden Persuaders, by Vance Packard

free associations of the day: loss of identity, masks, kamala harris proximity, changing of guard around holidays, infrastructure.

Vic's twitter feed



One of the things that make me a poor manager but perhaps a leader mindset is to me pointing out problems with out a proper solution seems, well, silly.

At the trading desk here in Weston with Mr Vic, the one thing that caught my eye quickly was the FTSE and it's low prices. I have no clue so google landed the link below. any ideas?

Has the FTSE 100 really performed as badly this century as it appears?

Nils Poertner muses:

good spot - many other indices are rich (and firms, too, eg. Apple)?

long FTSE is probably the next big thing for Cathy Woods - am mentioning her name since she gets a lot of bad press in Europe but her calls have been quite good in last few yrs.

Paul O'Leary is skeptical:

FTSE an unlikely place for Cathie Wood to find the hyper growth she looks for.

A reader offers a critique:

The author shoots himself in the foot when he says if you bought all the companies in FTSE 100 in 2001 this is what you would have got…the constituents have changed. I skimmed the rest because it was clear the author didn't really know what was going on.

James Lackey clarifies:

Thank you paul, my apologies to all. My better question is what is wrong with English stocks or is that a bad question, i.e., nothing is wrong? I've lost so much money buying laggards and value, specs forgive me.

Big Al theorizes:

Here's a theory: The Digital Revolution has been one of the greatest expansions of human activity/productivity/wealth in history and it has been centered in the US, as have the stocks of the companies surviving the competition for doing the revolutionizing. The winners have been added to indices, and the losers dropped. This equity/index mechanism has far outperformed all others.

James Lackey responds:

Big, that is what I needed! I was lost (did not get the joke) and as usual was the last to know.

Stefan Jovanovich provides an historical perspective:

Big Al nails it, once again. The British invention of industrial production achieved the same startling results; within a third of a century, the center of the world's low-cost production of fabrics shifted from the hand-looms of India to the "infernal machinery" of the Midlands.



While 4500 is still a possibility, large correction is likely. 2020/08/20

Yelena Sennett and Andy Aiken: Odds of a 10-15% correction in S&P 500 & Nasdaq are increasing with the continued loss of confidence in the US military and government.




My favorite art museum in NYC is The Frick Collection. Large enough to get overwhelmed with the beauty of both the art and the building, not so big you get exhausted and feel small like in The Metropolitan Museum, not so crowded you get jostled in the crowds and can’t see anything, like at MOMA or The Guggenheim. For the Frick at 70th St. and 5th Ave, take the 6 Train to 68th St.-Hunter College. (Editor's note: As of this posting the Frick Collection at 70th St. and 5th Ave is closed for renovations, but the Frick Madison is open at 945 Madison Avenue at 75th Street. Take the 6 Train to 77th St.)

Don’t forget The Cloisters (A train to 190th Street, then a 5 minute walk through an amazing garden). It is a building built partly from parts of cathedrals and monasteries wrecked during WW1, and saved from being re-used to build stone walls, instead reassembled and made into a museum on a bluff overlooking the Hudson River. It houses one of the world’s best tapestry collections.

The largest church in the US (as per floor area) is The Cathedral of St. John The Divine at 112th Street and Amsterdam Ave. A few blocks North, at Amsterdam Avenue and 116th Street, is the Columbia University campus, which is interesting to walk through. Riverside Church, also breathtaking, is a few blocks away at 120th Street and Riverside Drive. Across the street at 121st Street and Riverside Drive is Grant’s Tomb, which was the most popular tourist attraction in the country in 1900. #1 train to 110th or 116th Street, or B or C train to 110th Street.


But the real cathedral, the Cathedral of Commerce, is B & H Photo on 9th Avenue at 34th Street. Don’t walk in and get overwhelmed and neglect to go upstairs, where the real action is. I find it inspiring to see so much success, so many people adding value through consenting exchange, something no government could ever hope to create, such prosperity enjoyed by all, that I never cease to be inspired no matter how many times I go there. They are religious, thus they are closed on Saturdays, and close early on Friday. Open Sunday through Friday.

The most beautiful room in (I think) the world is the Rose Reading Room in the library that is on 5th Avenue between 40th and 42nd Street. From there you can walk two blocks east to Grand Central Terminal, the largest and (I think) most beautiful train station in the world at Park Avenue and 42nd Street. If you want to see some of the natural beauty of the NorthEast take a Hudson Line train from Grand Central Terminal to Cold Spring – trains leave at least one per hour and take 70 minutes. You can see the antique stores or eat lunch or dinner in Cold Spring, then get another train back. Do not bring anything to read on the train – the river and The Hudson Valley are too beautiful for you to get any reading done.

Much of midtown is too touristy to easily find good eats, but in Hell’s Kitchen there are many good restaurants, especially all along 9th Avenue between 45th Street and about 54th Streets.


In Greenwich Village, at 53 Christopher Street, which is between 6th and 7th Avenues at about 8th Street, is The Stonewall Inn, which is famous for the start of the gay liberation movement. When King, Malcom, and Kennedy were already dead, the pill had been invented, and women could vote, homosexuality was still a crime, even in NYC. The law defined things rather broadly: it was a crime for two men to stand facing each other in any bar, and lots of people were arrested for doing just that. There was no gay rights movement, no newspaper, no organization, no nothing until The Stonewall Rebellion, in the summer of 1969.

Then walk East on West 4th Street, cross 6th Avenue, then another block into Washington Square Park, and see the arch. The French built a similar one in Paris.

Go two blocks South to Mamoon’s Falafel at 119 MacDougal Street. Best falafels in town for $4.50, or with Hummus for another $0.50. It is normally easy to tell if someone is not from New York – you don’t see New Yorkers waiting on line. But even New Yorkers wait on the line at Mamoon’s if it is busy. Down the block at 99 McDougal Street, upstairs on the right, is The Kati Roll company. Get a chicken kati roll, or an alu (potatoe) kati roll. Very good eats, but not worth the wait if there is a line, as the line moves very slowly.

Then walk South on Wooster Street to Canal Street, then down West Broadway to the World Trade Center. Then go West to the river and down along the water (clears your head after the WTC) to South Ferry, and take the Staten Island Ferry (clears your head more, except the sniffing dogs “protecting” the ferry terminal since 9/11). Ferry is “free,” runs at least every half hour, runs 24 hours, 20 minutes across the harbor, they kick you off and you get another ferry back 5 minutes later, and see The Statue of Liberty the way my grandparents saw it, which is much better than waiting on line for 4 hours, getting searched, and then taking a boat to the statue itself, where you are too close to it to see anything but the feet.

Then walk up to Wall Street and then over The Brooklyn Bridge, then eat in Junior’s at 386 Flatbush Avenue Extension (corner of Dekalb Ave). Up the block from Junior’s are almost all the subway lines to wherever you want to go.

And, if you don’t go to Central Park on a nice day I’ll never speak to you again.



I may have been born in Chicago. I may live in the NC mountains. However I belong in Manhatten. I can't understand how people do not understand NYC. The people are amazing and beautiful. There is every color size smell and that's absolutely wonderful.

Henry Gifford suggests:

Please do an experiment while you are in Manhattan. Go to the booth in the subway with the person sitting inside (some entrances do not have them). Ask for a subway map. They are free. Then stand on a corner and unfold the map and make believe you are trying to find out which way to go (it includes all the major streets, and is the best map of the city I’ve ever seen).

See how many people come over to offer help without being asked, and let us know.

Yesterday a neighbor asked me “If you could live anyplace, where would you live?” I told him “I can live anyplace, and I choose to stay here in Manhattan."

James Lackey runs the experiment:


I had 6 people help just by over hearing I needed a route stop from a stop 135th street Harlem. That's absolutely amazing and wonderful.

The joke was the older the person the more complicated the answer. A young man said here, stop, grab that bus, 2nd stop hit subway the 2 or 3 train. The express gets off 30th street it's only six blocks dude.

Hahaha. Absolutely fantastic. People run over each other to be helpful! Post covid NYC is dynamite. People act as if they were locked up and forgot why they live in NYC and now absolutely love to share.

Bo Keely adds:

As usual, Henry Gifford is thorough, and takes you places no others will or can. I will never forget our boiler room tour of Manhattan.

The Manhattan map trick works not only in NY but around the world. I've used it in many cities in many countries. Holding a guidebook with a puzzled look works almost as well as long as there's a pic of the country on the front. The best method in no-English nations is to shout in a bus or restaurant, 'Does anyone speak English?' you will meet professionals and students. Another style is to wander a tourist spot with a backpack (travelers use backpacks while tourists carry luggage) that has your country's little flag sewn on it. Many travelers sew on the flags of all the nations they visit, immediately identifying them as an interesting person to approach for conversaation and invitation to dinner.



S&P 500 pullback probabilities. Afghanistan effect. 2021/08/17



The American Institute for Economic Research: The Gold Standard: Retrospect and Prospect

“In general, the gold standard effectively managed the money supply to stabilize the purchasing power of money over time. This was no accident.” ~Peter C. Earle and William J. Luther

On August 15, 1971, President Richard Nixon closed the gold window, thereby preventing foreign governments from converting United States (U.S.) dollars into gold.

The Nixon shock created a clear dividing line in American monetary history. Prior to August 15, 1971, the U.S. dollar had been tied to gold in one way or another since the nation’s founding.

Fifty years after the Nixon shock, it is difficult for many to imagine a dollar connected to gold. Most Americans have never used a gold-backed dollar. They do not understand how the gold standard worked. They have not considered the merits of returning to the gold standard. The gold standard, in their minds, is a relic of a bygone era.

The contributions in this volume help to bridge the knowledge gap created by fifty years of fiat money.



The Limits to Growth, Meadows et al (1972), used the systematic model technique promoted by Jay Forrester at MIT. “All models are wrong. Some are useful.”

Reading the book started me looking at demographic trends. In 2010, I developed a very simple model for world population growth. The peak population occurs in 2047 at 8.54 billion, which is only 11 percent more than the current population.

Each year, I compare the model results to the actual numbers published by the CIA in The World Factbook. In 2021, the CIA reports a world population of 7.772 billion and a growth rate of 1.03 percent. The numbers from the model are 7.708 billion and 0.80 percent. Because the differences are small, I will not change the model.

I also calculate the impact of the 10 largest countries. (Note that I retain Japan as the 10th largest country even though Mexico now has a larger population. Including Mexico in the top ten in place of Japan would introduce “drift” such as that encountered by the Dow 30 and Fortune 500.)

The 10 largest countries have 57 % of the world’s population. The combined fertility rate of these countries has declined from 2.17 in 2014 to 2.09 in 2021. The current rate of fertility is about the level needed for replacement. Two of the countries, Russia and Japan, have declining annual growth rates of -0.20 % and -0.37% respectively. Of the ten largest countries, only India, Pakistan, and Nigeria have fertility rates above the replacement level. The fertility rates in all ten large countries either continue to fall or remain below replacement levels.

Examining the age and gender cohorts of the populations reveals some interesting facts. The 25 to 54 age brackets of males plus females are 652 million in China compared to 551 million in India. The 15 to 24 age bracket of females are 74 million in China compared to 108 million in India. Given the respective fertility rates of 1.6 and 2.23, the annual birth rate in India will soon be twice that in China. Within ten years, the 25 to 54 age cohort in India will exceed that of China. Soon thereafter, India will be larger and the difference will be material. This change in relative levels will impact geo-political calculations and perhaps investment decisions.

In other notes, I have pointed out that peak farmland is in the past. Improved agriculture practices (productivity is much greater than population growth) will continue to improve diets. Technology advances in manufactured foods (Quorn, Heme) will compete with protein from animal husbandry and perhaps with protein from agriculture. Urban farming will reduce the need for farmland. In ten to fifteen years, electric vehicles will reduce materially the need for corn to ethanol in the United States. Marginal farmland in remote areas may not be a good investment.

The models used in The Limits to Growth were based on continuous exponential growth. The rates assumed in the models have changed. Therefore, many of the conclusions in the book are no longer valid.



why does big corp, big sports, big unions, big centrals, big media love progressives, and why does the market go up as the trend continues? some hypotheses:

1. the progressives and those who favor centralized versus individual action are in control. better to be with them than against them.

2. they appoint all the regulatory officials, and these officials constantly make decisions that favor their supporters.

3. the big tend to be educated at the iveys and stanford where the dangers of socialism are not taught and centralized planning is lionized.

what are your explanations for while the market keeps going up as woke increases?

for big players - especially formerly investment banks, now banks - can directly make profits by becoming more woke, and having their executives make the rules that profit them especially meshing with the Fed and fellow travelers in all branches of government.

the mass person always prefers a system of handout to working, and the pickadees that nock mentions and galton talks about who are born to herd and not lead. as the handwriting becomes clearer, that is a stampede of surrender as in afghanistan now. better to live than be executed.

Vic's twitter feed



Will the market pullback next week after disappointing consumer sentiment data? 2021/08/13



Christopher Tucker recommends:

Boyd: The Fighter Pilot Who Changed The Art of War, by Robert Coram

John Boyd, or "Forty Second Boyd", had a standing bet against any and all comers at the Air Force Fighter Weapons School at Nellis AFB in the fifties that, beginning from a position of disadvantage, he could out maneuver and defeat any opposing pilot in air combat in less than forty seconds. He was never beaten.

Boyd knew in his gut that he had stumbled upon a very deep principle of combat and it took him years to finally articulate it, one of the results of which is the OODA loop. (Which is much more complicated in practice than simply Observe Orient Decide and Act.)

His theories led to a complete rewrite of the curriculum at the Marine Corps Amphibious Warfare School and the development of the Marine Corps Maneuver Warfare tactics.

He was also the originator of the energy- maneuverability theory which revolutionized combat aircraft design and the way pilots think about controlling their aircraft.

Great book, not particularly well written, but tons of practical ideas.

Stefan Jovanovich points out:

A recent paper on Boyd's OODA Loop

Abstract: The concepts of the late US Air Force Colonel John R. Boyd have influenced military thought in profound ways, from the design of modern fighter aircraft to the tactics used by the US Marine Corps in both Gulf Wars. This paper describes the best known aspect of his strategic thought, the OODA “loop,” and how practitioners in war and business can use the loop to implement a framework that has proven successful since the time of Sun Tzu.

A reader adds:

The article briefly mentions Japanese samurai defense concepts. The part of Musashi Miyamoto's Rin Go No Sho I like for trading is the part about attacking while running away.

It seems as contrarians, a lot of the time you are running away, but attacking at the same time. In a combat situation, the pursuer's mind is set on attack and his attitude is forward, then has a hard time adjusting when the escapee turns suddenly and attacks, creating confusion and hesitation.



Trouble ahead?

August 13, 2021 | Leave a Comment

Jeff Watson writes:
The market weathermen, self described sage like realists, always see trouble on the horizon and are compelled to give all knowing, logical reasons the market will get hit. Sometimes even invoking "science." To them the pressure is dropping hard, the seas are building, and we're about to get hit with sustained gale force winds. It's always doom and gloom to them. They want the little guy to get scared, pitch his position and make the broker money, rinse and repeat. Meanwhile, Steve provides some perspective and his chart lists 49 reasons for the market to get hit…while the S&P went up 35X during that time. Unfortunately the brokers don't want their clients looking at charts like this or reading Dimson.

James Lackey agrees:

Jeff says what we all learned the hard way. The market in stocks is an engine designed to go up. Any business decisions based otherwise are in between risk-based conservative - which in most cases is a good thing - and ruinous, as the vigorish will grind you to a long-term guaranteed loser.

Michael Cook responds:

I broadly agree with this but let’s not take it as written on tablets of stone.

One of the nastiest human failings in my opinion is recency bias and for investors in US stocks, an entire career (unless a very seasoned investor indeed) has been a basic bull market tempered by the bear markets of 1997, 2002 and 2008 and whatever the hell March last year qualifies as. Recency bias on steroids.

But it doesn’t mean it must always be like that. Just ask eg the investors in the Japanese stock market 40 years ago who pretty much are still waiting to be making money now…

Leo Jia adds:

Even if there is a sharp drop, it will only be shallow and short term. This is not a big bubble and there is no euphoria yet. If one suspects big money are selling, the question is what is the alternative to the US market. Perhaps the worry will be legitimate when Turkey and China become out of any concerns.

Nils Poertner writes:

what makes the difference between folks who are in the market - and trade successfully in the long-term and those who don't is often the acquisition of implicit knowledge. Things we know are true on some level, and that we need to experience personally many times to know that they are true - not in the absolute sense but more intuitively - and percentage-wise.

we live in a very explicit world now everything needs to be spelled out. but the "absense" of something is a better guide than the appearance of an event.

an example would be that SPX drops by 3pc one one day (after months of overheating) - AND the financial press is somwheat quiet aout the drop. as long as they are loud…one can normally relax a bit more.

not to be confused with long-term investing. eg, some of my English friends who bought prime real estate in the 90s in London, and levered up every year with new flats, are all fabulously rich now. was it being lucky or smart? who knows? implicit knowledge is underrated - was my point to say.

Leo Jia comments:

Even if there is a sharp drop, it will only be shallow and short term. This is not a big bubble and there is no euphoria yet. If one suspects big money are selling, the question is what is the alternative to the US market. Perhaps the worry will be legitimate when Turkey and China become out of any concerns.

Duncan Coker writes:

Agreed, it's worth noting that the 00's were the worst decade since the 30's for stocks. I'd propose there was a bearish recency bias going on during the 2010s.

I liked the video about carnival scams. I recall "winning" an album at age 13 from a darts game on the boardwalk at Asbury Park, NJ. No doubt I overpaid. It was a vinyl from a band I had never heard of at the time called the The Allman Brothers which forever changed my life in music.



Oh dear, oh dear. Gladwell's book is bad military history and even worse moralizing. The Norden bombsight, etc. were the Army's attempt to do even better than the Navy's Bureau of Ordnance. For more than half of WW 2 the U.S. Navy had torpedoes that not only didn't explode but were a positive danger to our own submarines. See:

USS Tang (SS-306)

The "precision bombing" of the US Army Air Force consisted of having the bombers fly a straight course and a constant speed and altitude over the target. The Germans - being clever people - quickly figured out that they did not have to aim at the bombers; they could simply aim at the airspace that the bombers were going to fly into. The result was that the U.S. Army Air Force bomber crews were the only Allied warriors whose casualty rates matched those of the German's U-boat crews. The odds of survival were 1 out of 10 if you served 2 years or longer.

There are a dozen more howlers from the 30 pages of Gladwell's book before I gave up on it - this Amazon reviewer was strong-minded enough to keep reading all the way to the end.



ridiculous and naive editorials in the wsj talk about how the other side has an inflation problem. but bonds went up today on the inflation numbers and it's forcasting a 1% or so inflation rate in the next 10 years and about 1.5% in next 30 years. problem is socialism.

stocks refuse to go down and bonds after many a yellow and red day refuses to go down more than its 20 day rather harmonious low.

everythings progressive today stocks should harmonize with capture of profits by master 1000.

gold finaly not being displaced entirely by crypto, makes a comeback down 75$ in a week.

as usual stocks go down on inflation numbers but bonds go up. who is rite and who is topsy turvy?

Vic's twitter feed



Will S&P 500 pullback this week? Buy Coinbase? 2021/08/10

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