Jul
24
“It is apparent that the pattern of dependence for consecutive changes on all trading days is qualitatively and quantitatively similar to that following world events.”
July 24, 2020 | Leave a Comment
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
Sep
12
A Lucky Switch, from Victor Niederhoffer
September 12, 2011 | 2 Comments
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.
Aug
14
Degrees of Competitiveness, from Victor Niederhoffer
August 14, 2006 | Leave a Comment
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.
Archives
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- Older Archives
Resources & Links
- The Letters Prize
- Pre-2007 Victor Niederhoffer Posts
- Vic’s NYC Junto
- Reading List
- Programming in 60 Seconds
- The Objectivist Center
- Foundation for Economic Education
- Tigerchess
- Dick Sears' G.T. Index
- Pre-2007 Daily Speculations
- Laurel & Vics' Worldly Investor Articles