Re-reading ur paper Santiago.
It should be required reading in the study of deception- among other things - starting out apparently attempting to test (only) one hypothesis, but ending up testing and confirming at least 6  thers, which are still true!! (Momentum, reversion, endogeneity of mkt movements, recursiveness of prices, irrelevance of news; conditional movement vs randomness…sort of boggles the mind when I read it now. Wonder if Fama ever figured out how you hoisted him on his own petard.
Just amazing



 No doubt that the loss of Federer to Djokovic is one of the most agonizing that one can suffer. What an incredibly lucky shot Jok hit at 5 -40, 4-5. He had already given up. And was smiling at the fact of the loss. And then he just hit a desperation hail mary with no hope of it going it. Having given up. Then the next point he hit a very weak return that fed had made about 50 out of 55 times on an inside out forehand. And he hit the top of the net cord. The shot was a poor percentage shot. And he could have hit it anywhere outside in and made the point with no worry. Then to add insult to injury he finally got an ace in at 30-40 down the line that if he had just hit two points ago would have won the match. He has to be thinking, "how could I be so stupid".

How many times does this happen to one in the market. You buy them when they're down, and it goes down 3 stand deviations on you. Then you do the same thing the next day, and you take a 3 tick profit and it goes up 10 standard deviation. Beware of the switches. I have to say that Djok is a very poor sport. All that disgusting pelvic moves to get the crowd to stop hating him. The crowd can sense a bad sport the way they did with Connors and used to with Agassi before he tricked them into thinking he had changed his colors. The only salient thing I ever hear Mac say is that when he used to act like an idiot and go crazy it helped him at the beginning of his career but hurt him at the end.

On the other hand, the idea that you have to be quiet and respectful at a tennis match sort of like at a classical concert is loathsome. To have to wait 30 minutes to go in and out of a stadium so as not to upset the sensibilities of the players, to be removed from the stands for whistling. Why is tennis so much more sensitive than a basketball game where one is trying to sink a foul shot.

It's the colonies. There is a tendency to slavery in the humans inherited from the oxen as Galton said. And we love our royalty and the imperial trappings of worshiping the English who are our former rulers. The English way of sportsmanship I have seen enough of and their common law may be very good but their way of noblesse oblige in the sports coming from the time that the Lord was the only one who could play and the feudal serfs played lawn bowling only on Sunday carried over to the tennis circuit has many market implications about the tendency of humans to love slavery and worshipful of the lord. Fortuitously the custom of having the lord handle the romance apparently went out in the 14th century but not in tennis.

Ha. I'm finally writing about something I know about.

Peter Gardiner writes:

 It was agonizing. The hail Mary return was the percentage play for Djok, but Fed had another chance, and his inside out short forehand is his money shot. He has famously missed his forehand on many key points against Nadal too. Federer's inability to close out certain tight matches against certain opponents is the cost of his unflappability under the threat of loss, his Houdini-like escape abilities when up against it. But with his hand at the throat of a tough, fiery opponent, I have seen his grip weaken far too often to give up alcohol. Laver did not have this problem. Neither did Sampras. Neither, perhaps, had the tools, élan, and balletic mastery of Federer, but they would kill you cleanly if given a chance. Conners was the master at this.

As to the manifest presumption of the tennis establishment as to proper conduct, it has struggled against colored clothes, tie-breaks, hawkeye, and other changes like any entrenched monarchy. But it is encouraged in this by the people: they enjoy the theater, and by entering the precious, hushed grounds of the Lords manor, momentarily aping his effete ways, they are thereby allowed the use of the sorcerers stone: they leave behind their natural peasant lives, and draped in theater, are ennobled by the very act of watching a stylized pantomime of medieval battle.

Victor Niederhoffer wrote to friend and tennis pro Pedja to ask his opinion: 

What did u think of the final? 

Federer has a truly weak backhand with so much wrist it's completely uncontrollable. And I noticed that whenever Nadal or Federer sliced they lost the point against the bludgeon straight shots of the Slovakian. 

Pedja replies: 

Hi Vic,

The strokes are ugly but he managed to perfect them and the speed of his ball is incredible. I watched his practice in Belgrade a couple of months ago, and the speed that he has with the least amount of effort was stunning. He uses his whole body in every shot. When he is aggressive he is currently playing the best tennis. His fitness is incredible this year.

I am looking forward to Davis Cup, this Friday we are hosting Argentina in the semis here in Belgrade.



One of the key chapters in price theory books such as Price Theory and Applications by Peter Pashigian, is on the pricing policies and resulting profits for companies, which are based on the degree of competition they face, the elasticity of demand for their products, and their durability. One important conclusion is that the more differentiated a product is, and therefore less competition it has to contend with, the greater that company’s profit margins. The basic theorem initially being that all firms price where the extra unit of revenue equals the extra cost incurred by the production of one more unit.Other conclusions are that the lesser the degree of competition, the more inelastic is the region in which the company prices, i.e. demand will be less responsive to any given price increase. Increases in demand for firms that do not face much competition increases their profits in the short run, and may do even more so in the long term when plant size can change to accommodate the extra demand. Cost innovations are also very profitable for such firms.

Since profit margin serves as a proxy for how differentiated a company’s products and processes are relative to its competitors, I thought it might be helpful to have a list of companies classified by profit margins. Note that the high profit margin companies all tend to trade at a much higher p/e than other companies, however, the basic economic model shows that companies that face many competitors will have their profits reduced to the point of the risk free return — so this is to be expected. Any studies on profit margins versus stock market return would be interesting.

Thanks to Mr. Dude Pomada, who is soon to tie the knot, for the following calculations.

Here are the Dow 30 companies, based on the previous 12 months both operating margin & profit margin, sorted by profit margin:

DOW30    Oper Margin    Profit Margin
MSFT        37.20         28.45
INTC        31.46         22.31
KO          26.13         21.09
MRK         27.51         21.04
JNJ         26.47         20.61
C           24.46         20.44
PFE         29.90         15.76
AXP         18.68         15.39
MO          25.14         15.14
MMM         23.66         15.11
PG          19.42         12.73
MCD         19.52         12.72
GE          15.07         11.05
XOM         14.93         11.01
T           14.06         10.91
JPM         19.40         10.62
VZ          19.02          9.85
AIG         20.82          9.62
IBM         10.29          8.71
DIS         12.86          7.93
CAT         10.41          7.85
DD           8.07          7.71
UTX         12.13          7.18
HD          11.49          7.16
HON          8.97          5.98
AA           8.15          4.71
BA           4.02          4.69
WMT          4.90          3.59
HPQ          5.72          2.77
GM          -7.30         -5.49

Peter Gardiner comments:

A direct comparison of profit margins (without adjusting GAAP statements) may be quite misleading, as for example r&d for a software company like Microsoft, or advertising for a consumer products company such as Proctor and Gamble is expensed, while the massive capital expenditures required for, say Intel, are amortized. The amount of net invested capital required to produce $1 dollar of revenue, or $1 of pre-tax income may yield a differently ordered list.


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