There are several reasons that cynics are on the rise in my opinion.

1. People assume the cynic is the expert. The cynic has an aura of authority.

2. Cynicism is masked as realism.

3. People assume the cynic is a healthy skeptic. On first encounter these two are hard to distinguish.

4. The cynic guards against disappointment.

5. The cynic creates an “us” against “them” world. "We won't be fooled again" by "them".

6. It is easier to find a problem than create a solution or even understand how complex creativity works.

7. It is easy to ignore the positive. Hard to ignore the negative.

8. People assume their bias is only one sided: When they like something too much. People recognize their biases when there is favoritism but justify their biases when there is disdain or prejudice. The cynic reinforces that their biases are the only morally defensible ones.

 9. The cynic has many times when he is proven wrong, but it is often hard to pinpoint the opportunity cost to that cynicism (for ex. the profit he missed by staying out). However, when he is proven right, it is very easy to see how much he has saved.

10. The belief that Type II errors or believing falsely in a person are much more damaging than Type I errors or not giving a good person a chance. Despite the time it takes for a person to prove she is proficient and the moment it takes to lose trust-worthiness.

11. The cynic is elevated as “your own man” by the media and politically. Thus becoming the “go to person” when they want something said or done. This creates all sort of side agreements and quid quo pro understandings.  Every TV program needs the phone numbers of a few favorite cynics.

12. Ironically, the person most likely to publicly be called down for their cynical tendencies is the person that is cynical towards the celebrated cynic.

Con-artists understand deeply the appeal of cynicism and use it against their prey.

The cynic is the ultimate champion for the status quo. The cynic can define people by their weaknesses not their strengths. Since everybody has weaknesses, they can dictate who is important by defining who is not important. Old man’s disease is giving in to the appeal of cynicism.

Rocky Humbert writes:

 "A cynic is a man who, when he smells flowers, looks around for a coffin."

H. L. Mencken

In the spirit of not being a cynic, I note today's news story reporting that volunteers in Japan are being asked to grow sunflowers to produce seeds … so even more sunflowers can be grown in areas contaminated by radioactivity from the Fukushima disaster. The proponents say sunflowers can efficiently absorb radioactivity from the soil in a process known as phytoremediation. Here's the news story.

The skeptic (as opposed to cynic) in me thought that this sounds like an example of "green" people confusing Flower Power with nuclear physics. But a little bit of research reveals a bit of "sunny" science for the weekend. There is REAL science here! Sunflowers (and certain other plants) CAN decontaminate radioactive soil faster and cheaper than many other approaches. Chernobyl was a large-scale proof of concept. Here are 2 of academic papers on the subject:"Screening of plant species for comparative uptake abilities of radioactive Co, Rb, Sr and Cs from Soil,"Gouthu et al ; Journal of Radioanalytical & Nuclear Chemistry" and  "Uranium Absorption Ability of Sunflower, Veiver and Puple Guinea Grass," Roongtanakiat et al (2010)

SO THE MORAL OF THE STORY IS: "A cynic is a man who, when he smells flowers, looks around for radioactive contamination."


Pitt T. Maner III comments: 

The phytoremediation and bioremediation fields have bloomed to aid companies tasked with difficult cleanups. Even earthworms can be useful with certain contaminants (PCBs).

Larger trees also can be used to influence the flow of impacted groundwater so that contaminants do not move offsite—effectively they act as small pumps (think of all the Florida maleleucas used to drain wetlands, now designated as "noxious weeds"). Trees can help with the treatment process through the uptake and concentration of contaminants or the breakdown of contaminants in the bacteriologically-rich portions of the root system .

The economics can be interesting and one can only imagine what they are in the Japanese case and how they affect current land values. Those with an understanding of the actual risks involved and the ability to cost effectively clean properties have in certain instances done well:

"Acquisition, adaptive re-use, and disposal of a brownfield site requires advanced and specialized appraisal analysis techniques. For example, the highest and best use of the brownfield site may be affected by the contamination, both pre- and post-remediation. Additionally, the value should take into account residual stigma and potential for third-party liability. Normal appraisal techniques frequently fail, and appraisers must rely on more advanced techniques, such as contingent valuation, case studies, or statistical analyses.[11] Nonetheless, a University of Delaware study has suggested a 17.5:1 return on dollars invested on brownfield redevelopment.[12]"

Kevin Depew writes:

Why do you believe cynicism is on the rise? In my opinion, the < 35 generation doesn't really understand it or ignores it. I don't have access to it now, but I saw some large scale polling data on Friday that was remarkable in the cross section spreads between < 35 and those over, especially > 65. The gist, based on this polling data, is that if one is > 65, one is likely to find the country going to hell, the economy going to hell, that politicians are evil and stupid and that all bankers and finance people are crooks by a wide, wide margin over younger subset. If interested I'll forward data when I get back in office Monday. I was looking at it in the first place because there is a wide divergence between consumer comfort and confidence data vs market that is outside of 25 year norms and was just curious about the asymmetry in both economy and the polling data.

Victor Niederhoffer writes: 

Artie wrote a book on cynicism in the police force that attributed cynicism as a variant of the authoritarian personality. He believed that police became cynical because they saw so much evil that their own persona looked relatively good compared to all the evil, and their cynicism and corruption was a natural outgrowth of the impossibilities of fulfilling all the requirements of an all too demanding job with conflicting goals. I believe we become cynical on the list because we see such ephemeral behavior by the public and funds, and such inside maneuvering by the cronies and flexions. It's hard to maintain a proper chivalrous attitude when confronted by these things day after day.

Jeff Watson adds:

But that cynicism, if allowed to fester, will have profound effects on one's trading. I've seen it happen too many times to people and they end up losing their edge.

Ken Drees writes:

Cynicism towards markets and politicians is healthy, but toward general mankind or society, probably not so well placed since hope and belief in goodness of the total gives one an overall positive tendency towards world view but also a well placed skepticism at certain segments.

The idea of erosion is interesting where the rigors of the job or the constant focus on conflicting outcomes that collide with the overarching worldview wear down the person's belief in good. One thought along these lines that I have is that by the end of one's life you are so distilled down in terms of your true character that its impossible to change. You are either that positive and generally nice old person, or a frown wearing old crank; the thoughtful scientist who never stops learning, or a worn out 24/7 TV watcher.

Russ Sears adds: 

I believe it also has to do with the narrow vision we have of public versus personal life of the cynic. We do not see that like a partying narcotic addict, the soul has been sold for a very narrow gain. The personal life is full of turmoil and eventually rots the productivity out of the person. Think about the cynicism required of the steroid user or EPO user for example.

I believe that many companies demise starts when a new "C" position arrives within it- the Chief Cynic. If not confronted as Artie did, often this position is allowed to become an all consuming cultural force.

Vincent Andres adds:

"the cheaper money tends to drive out the dearer"

(the money of lower value drives out the money of higher value)

–Nicolas Oresme

(« la mauvaise monnaie chasse la bonne » )



 Wall Street Raider is a computer software game. Costs less than 20 Dollars. Fairly imaginative in including short sales, options, commodities, running ticker tape, ability spread rumors, inflict and defend lawsuits, mergers, greenmailers, LBOs. Changing economic scenarios, FED policies, ability to maneuver earnings of companies you control, multiple players possible, stock splits, changing banks, tax free liquidations, taxable liquidations, buying tax assessed loss making companies for reducing taxes, synthetic database of 1500 unique companies created each time you start the game with corporation names as colorful as JPM Wall Street et al make this a fairly educative widget to have.

Young minds at home curious enough to know what pa is doing but running out of questions will find this a good resource to cut their teeth on, acquire newer curiosities and one never knows if playing with hypothetical dollars a few beer and pizza challenges real life traders can achieve greater conceptual clarities of their own response mechanisms to various market stimuli.

Researching companies with certain attributes such as ROI > X or P/E <Y is possible too. Share buybacks, bond call-ins etc etc. much stuff loaded here.

You can download a trial version before purchasing.

I would recommend a good explore rating to this one, over any action thriller games or any other mumbo jumbo that our kids get exposed to on computers easily these days. Time for my 12 year old to inquire why should bonds go up if FED moves from a neutral to easy money policy.



Some hypotheses regarding the reaction to information? Case very similar to the flexionic move down when the bailout was passed. Since it was known to all flexes, they had to liquidate when they realized that what they positioned for happened? Of course there was the certainty that the new man of change would be elected also? Or was it a case of going up whenever it looked likely that the vote in Greece would be positive, and then when it happened, …as Dooley would say "how will they make it happen? What you think?".

Alex Castaldo writes: 

Most were positioned in expectation of a favorable vote: long stocks and short bonds/bunds.  For a while it seemed the markets cared about nothing else.

At 6:41 am ET Papadimitriou (from the opposition party) announced that he would vote for. The S&P vaulted past 1300 and the Bunds future fell below 126.  The size of the market reaction perhaps incongruent with an announcement from a single politician. 

Then the voting started.

At 8:45 Kouroublis voted against, and there was a noticeable sudden decline in stocks and rise in bonds, bunds. This did not last long.

At 8:56 Athanasiadis, who had been expected to vote against, voted in favor, with the opposite (though smaller) effect.

After the 9:04 announcement that the votes are available to guarantee passage, there was a period of hesitancy and then an attempt by the majority to make a dignified exit now that the expected had happened, only to find the exits rather more crowded and disorderly than hoped…  The stock investors, especially, experiencing some downdrafts. 

Alston Mabry writes: 

Given the news about previous governments in Athens cooking the books to get into the €mark in the first place, and then all the reports of tax evasion and government benefit exploitation and so forth, it's easy to be skeptical, and even cynical, and take the view that things like "negotiated agreements" and "midnight parliamentary votes" and "austerity budgets" are things that politicians use as their own currency, and that they keep trying to spend this currency in an alternate imaginary world in which they believe they can hold off hard consequences with soft ideas. (See: "Munich agreement".)



 An Introduction to Difference Equations by Saber Elaydi and Difference Equations by Paul Cull, Mary Flahive et al have me thinking of second order difference equations.

x(t+2) = a + b  x(t+1) + c  x(t) + u(t) where u ( t ) is a random variable.

The fibonacci equation has b and c = 1 and x (t) = x(t-1 ) + x (t-2) , x(0) = 1 , x( 1) = 2 and the series is 1,2,3,5,8,13,21,… the simple way to solve for the x(t) in such a series is to make it a binomial (x) (x) - x -1 = 0 and then a very beautiful set of roots described in Edspec in a math team problem comes about with a(( 1 + 5 to 1/2)/2)to the 1/2 and a (( 1 -5 to 1/2)/2) to 1/2 term as the multiples to apply in the solution.

Okay, I think the second order difference equations have many applications in many markets. I propose to simulate the best fit for a second order difference equation with say the last 10 sets of 10 observations, and then to predict where it will go. I believe that a simplicity based solution using only the constants 1, 2, and 3 and no higher powers than a square should be found.

I propose that this would be predictive and the divergences from the prediction would be tradable. The exercise violates our rule that the higher the mathematics the less the use in predictions. But it seems to me a useful reflection that is much more relevant than the essays on stochastic difference equations that one sees in the literature such as this and it's a useful diversion from cross road puzzles and pattern recognition I think.



 As specs we snicker at the lottery player, he is a sucker. We smile when we hear how the crowd is routing for the hometown favorite when we know odds favor the other side. We hopefully carry out the canes when the crowd is tossing down the tickets in disgust, we sniff for value when there is no value there–so says the financial press.

But what is our own attachment to this concept–catching a falling knife, holding a loser, getting involved in some fiasco stock since the market is beginning to bore, riding a coattail that turns into a skid, throwing in "just this once"? Why do we fail to follow our own good sense from time to time?

There must be a thrill or an ego impulse underneath this temptation to turn from the path and into the wind of long odds–"cause we can handle it".

Victor Niederhoffer writes:

Our own attachment should be based on quasi scientific study., not riding a coattail. 

Ken Drees writes: 

True, but do we fasten our own rickety reasons from study based on the past which has no real reason to work in the future other than past frequency, tendency and relationship, and thus delude ourselves into thinking that our proof more than compensates for the new speculation? And if finding tendency and causality can be negated by the speculative theme of ever-changing cycles, and also trumped by the unknowns –how do we believe this and thus risk capitol?

I think that the chair has outlined many great themes in speculation, almost like laws:

1. Methods must be tested in order to find relationships of validation.
2. The laws of ever changing cycles are present in the market at critical-mass moments.
3. There is a high degree of relationship between markets and natural systems. What can be said of the "unknown"? What is this speculative doomer, the whispy apparition above the pond at days end? What law can be attributed to this unknown force that seemingly has uncanny timing?

Ralph Vince writes: 


I think it's simpler than that.
-The past gives us a proxy for the distribution of what can happen.
-We can amend that distribution of what can happen based on how we foresee the future diverging from the past
-That very distribution can now be used to determine how aggressive we might want to be withing a given risk (drawdown) constraint.
-If we don't exceed that drawdown constraint, and our distribution is reasonable of the future, the profits accrue.

Gibbons Burke writes: 

 I wrote this in a previous thread about the difference between speculators and gamblers, and I think it holds true: "Gamblers are willing losers who occasionally win; speculators are willing winners who occasionally lose."

At bottom, and at one time or another, most of us are gamblers. It takes a very disciplined, brilliant, and perhaps unrealistic person to only play games where the odds are in our favor. The reasons many engage in knowingly losing propositions are greater than the stars in the night sky in rural flyover territories. Entertainment and division rank high among them, sociability, peer pressure, guilt about the money they are risking (unconsciously disposing of it), fear of success, self-disgust, compulsive addiction to the stimulus-response loop, adrenalin junkie.

But all these are all proxies for the thing everyone is really seeking, usually unconsciously: a desire to be in union with the godhead, the creator, the divine purpose. As St. Augustine wrote in the opening lines of his autobiographical "Confessions": "You made us for thee, Lord, and our hearts will be restless until we rest in thee."

Phil McDonnell writes: 

When I ask people why they do not invest in a guaranteed savings account or short term t-bills they usually respond that they are too boring. And they are, or at least used be because they could not lose. Most traders unconsciously seek to lose because it represents action and excitement. While I think the usual arguments that it takes assumption of risk to increase return have validity, at the sub-conscious level the desire is really no more complex than risk seeking for excitement.

Ralph Vince writes: 

I agree — this is what frightens me about individuals who are out investing their own money — no kid needs to relive the station wagon as home for awhile as a consequence of Dad's gambling proclivities.

I'm beginning to think institutions are just the individual lambs in the wolves clothing of trading with other's money.And the reason I say this is because, again, not only can they not articulate their criteria for being involved in this, most criteria involve the ultimate metric of "what is the probability of getting smacked x% in the coming y period(s)."

And I don't see ANY of them operating that way. Rather, their risk metrics are ones that don't really tell them anything, analgesic salves that do not stave off the infection. 

Russ Sears writes:

Personally, my record shows that I am more often guilty of trying to catch the falling knife on an individual stock and on an option trade, than I am on an allocation strateging or long term market timing basis. I believe this is because of two reasons, One reason is I am just to gullible for a single stock, and buy the story the more it goes down the more I am convinced it will pop, often averaging down. I believe most businesses as a whole are running honorable businesses, that is they are trying to do what is best for the long term. However, the exceptions happen and there are frauds/crooks and businesses that have agency problems (businesses run for the executives or employees short term interest) The second is that I am often guilty of believing that the studies timing is much more stable than it actually is. It may be that the market is over sold and will bounce back, this results is the crux of my "edge, but the time period is often part of the ever changing cycle.

I have helped this some by giving myself some boundaries or a do not buy or sell if held rules of:
1. If the market believes the board or leadership is not acting in the stockholders interest, based on key decisions they have made.

2. If there are union grievances making the press.

3. If there are rumors of fraud or accounting problems.On options buying time or gamma seems to work better. And in general I have learned to not do as many option trades as I am not as good at them as I think I am.

These rules are simply my adjustments for my own shortcomings.

Jim Sogi writes: 

The heuristic at work here is risk aversion where one would rather face a known small risk with bad odds of a big win, rather than a 51% favored odds with a risk of a large loss. It's very hard to overcome the natural tendencies.



 Jay Cost's writings on the statistics of politics (first for Real Clear Politics and now for the Weekly Standard) are the best single commentaries we have the horse races called elections. They are required reading if you want to bet on politics or have any idea which politicians are likely to be the most important members of what Mark Twain called America's only "native criminal class" - i.e. the Federal government.

So, I was thrilled to see that Mr. Cost had written a long piece for the National Review on "The Republican Challenge".

Alas, it seems you can take the man out of political science graduate school but you can't take the political science graduate out of the man. Mr. Cost's narration of the history of the Republican party is not awful, but it repeats the fiction that Karl Rove authored - that the modern Republican Party was established by William McKinley. That is simply not true, and Mr. Cost knows better. After the Civil War the Republicans were as much of a minority party as they were in the 1930s. They had barely half the electorate in the North and less than a third in the South even with extension of the franchise to former slaves. Yet, by 1872, they held a majority of the seats in Congress, even with the readmission of the Confederate States AND the increasing disqualification of black-skinned voters in the South (and elsewhere). The Republicans lost badly after the Panic of 1873; but it took them only 5 years after the greatest Depression of the 19th century to regain control of the House. From then on, the 2 parties were equal. And, when the Democrats had their turn to be the party in power during a financial panic - 1893, they suffered a defeat that kept them permanently in the minority until Champ Clark won the speakership in 1910. The majority McKinley enjoyed was not created by him but inherited, together with the Republican's good fortune to have been out of power when the Panic of 1893 hit.

The "Challenge" for the Republicans is to go much further back - to the party of Grant and Keifer and Reed .



 One wonders if there is a economic explanation for how different sectors perform when the Fed is buying bonds and expanding high powered money at high rates. Would it tend to cause small business to do much worse than big business? Would it cause employment to go down? The mechanism might be something like that which often overides our list. Total disgust and loss of incentives that the big boys are getting a free lunch at the expense of the hidden or unintended costs?

This hypothesis would first have to be tested to see if it exists. Many of us are disgusted that the Fed is buying bonds and bailing out banks with printing of money. It has to come from somewhere? Someone has to be paying? But on the other hand as pointed out by Mr. Rocky, the small caps are performing much better than the large caps? And the banks have shown relative lack of performance lately also.

How could these speculations be narrowed into something testable or put into a better framework?

Stefan Jovanovich writes:

The fresh money comes to Europe:

China will continue to work with other countries with common responsibilities. We should make concerted efforts to strengthen the co-ordination of macroeconomic policies, fight protectionism, improve the international monetary system and tackle climate change and other challenges. We should welcome the fast development of emerging economies, respect different models of development, increase help to least developed countries to enhance their capacity for self-development, and promote strong, sustainable and balanced growth of the global economy.

Last time it was Charles Dawes.


Mr. Dawes arrives:

China pledged to buy Hungarian government bonds and said it will “consistently” support the euro as Europe battles to fight its way out of a sovereign debt crisis. China will buy a “certain amount” of Hungarian government bonds and remains a “long-term investor” in European debt markets, Chinese Premier Wen Jiabao said in Budapest today. This afternoon, Wen travels to the U.K. and then on to Germany on his three-country European tour. “China is a long term investor in Europe’s sovereign debt market,” Wen said in translated comments at a press conference with Hungarian Prime Minister Viktor Orban. “In recent years we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”



 Long before laboratories had HPLC, GC-Mass Specs, spectrophotometry, computers, even chemicals and glassware for that matter, there were still inquisitive people who wanted to learn and study about the earth and the universe around us.

The first laboratories equipment probably consisted of a couple of straight sticks, after which they added a rock, and a string. A timepiece would have been nice, but since timepieces weren't invented yet, they probably needed the stick to tell time. The first scientists pounded a stick into the ground and noticed a few things.

First, they probably tracked the stick's shadow from when the sun rose until the sun set. The scientists noticed that the shadow was longest when the sun rose and set, and the shadow was shortest when the sun was at the highest point of the day, They also noticed that when the shadow was shortest, that was the exact middle of the period of daylight and they were able to determine the local noon(midway between sunset and sunrise). The first scientists had inadvertently created the first timepiece, the sundial, from a simple stick.

This sundial was also the first compass as at the exact moment of local noon, the shadow pointed either due north or due south depending which side of the equator they were on. They also noticed that in the northern hemisphere that the shadow revolved around the base of the stick in a what is called a "clockwise" pattern.

Since it's safe to assume that those early scientists had plenty of time on their hands (no worries about publish or perish or tenure), it's not a stretch to think that that they made observations of the stick for a very long time. First, they would have noticed a big pattern of shadows in a 365 day repeating period. Had they observed the stick for any 365 day period in a row, and recorded what they saw, they would have noticed that the sun doesn't rise on the exact same spot on the horizon. They would have also recorded the fact that on two days a year, the shadow at sunset points exactly opposite the shadow at sunrise. When this happens, the sun rises due east and sets due west and the daylight lasts as long as the night. These two days were found out to be the spring and fall equinoxes. Any and all other days, the sun sets somewhere else on the horizon, not due east or west.

The scientists also noticed that while the sun was rising and setting on different points of the horizon, it's trajectory was also changing. They recorded the two days of the 365 where the shadow at noon where the shadow was either the longest or shortest. The day the noon shadow was the longest, it was the winter solstice, and when it was the shortest, it was the summer solstice. It's amazing that with a simple stick, those first scientists were able to record the four points on the compass, and were also able to identify the four days of the year that mark the change of seasons.

Those scientists weren't finished with the stick, they had more observations. At night, they lined up their stick with a familiar star in the sky. Using their hourglass, they would have noticed that the star took 23 hours, 56 minutes, for the star to align it with the stick from the previous alignment. From this they would be able to deduce the length of a day and determine that it was uniform throughout the year.

The scientists weren't finished with the single stick, as the scientists that recorded the tip of the shadow of the high noon noticed that the shadow fell to a different spot each day and over the course of 365 days, those marks traced a figure 8. The figure 8 happens because the Earth tilts on its axis by 23.5 degrees from the plane of the solar system. The tilt gives rise to the seasons and the apparent wide ranging path of the sun across the skies.

The figure 8 is the result of the sun migrating back and forth across the celestial equator during the year. Due to many other things, the earth's orbit is not a perfect circle and according to Kepler's Planetary laws, the orbital speed must vary, increasing as we move toward the sun and decreasing as we move away. Because the Earth's rotation is constant, but the orbital speed isn't, high noon does not always correlate with "Clock noon." The variance can be as much as 16 minutes early or late depending on the time of year. Interestingly, the clock noon equals high noon only four days a year, Dec 25, April 15, June 14, and Sep 2.

But I digress, the first scientists had much more on their plate, and they had science to do. Those scientists probably sent their assistants due south way beyond the horizon (more than 6 degrees would be ideal) with a stick the same length. At a predetermined time (high noon?), on the same day in the future, they measured the length of the shadow, and were able to use those lengths to calculate the Earth's circumference using simple geometry.

 From the circumference, they could determine the radius, diameter, volume and much more. From this, one could have probably made a few more simple measurements and arrived at a mass of the earth. Eratosthenes of Cyrene measured the length of the two shadows with a partner in 222BC and got an answer that was within 15% of the true circumference. As an aside, the word geometry is derived from the ancient Greek word, "Earth measurement."

The first scientists were also able to pound a stick into the ground at an angle other than vertical, attach a string and a rock to the end, creating a pendulum. If they counted the number of times the rock swings in 60 seconds, they deduced that the mass of the rock and the width of the arc had very little to do with the number of swings. The only thing that matters is the length of the string and what planet you are on. Using very simple equations, one can, from a pendulum,. determine the acceleration of gravity on the Earth. If you went to the moon, you would find the pendulum moving much more slowly and you could calculate that the gravity is 1/6 of that of Earth.

 There's more experimentation that could be done. If one got a large stick, or tree around 33 Meters long and tied a long string to it with a very heavy stone at the end and set this pendulum in motion, the bob would swing for hours on end. If the early scientists tracked the direction of the pendulum swings, they would have noticed the plane of the swing rotates. Ideally, if one set up the pendulum at either of the Earth's poles, the swing would make one full rotation every 23 hours, 56 minutes, but the rotation would go slower as you went towards the equator where the pendulum's plane would not move at all. This not only proved that the Earth rotates, but using a little trig, and a timer, one could determine one's latitude. For what it's worth, Focault, the French Physicist did this in 1851, which was one of the last truly elegant experiments. That big pendulum was named after him and they can be found in almost every science museum in the world.

It's very interesting that from a couple of sticks, a string, and a rock, one can determine the four points of the compass, the four days of the year that mark the change of seasons, the exact length of the day, the circumference of the Earth, it's diameter, radius, volume, your own latitude, and the acceleration due to gravity.

A modern common complaint is that a lack of tools keeps us from doing proper science, and that is a very intellectually lazy complaint. The basic axioms of science were proven, long ago with a stick, a string, and a rock. In fact, the first computer was invented in 150 BC in Greece and was called the Astrolabe. I wonder if traders approached their study of the markets using the same ingenuity and out of the box thinking as Eratosthenes of Cyrene, Focault, Euclid, or Newton, what differences in understanding would be? For what it was worth, Newton was an investor who lost the equivalent of $2.75 million in the market, and this author will let the reader draw their own conclusions.

Pitt T. Maner III adds:

The use of sticks and stones to produce metal must have been a wondrous experiment. 35,000 BC by the Khormusans is an early date for the advance, and the power of a simple magnetized needle to give direction.

The story is that when Einstein was a young boy he was fascinated by a compass:

When he was 5 years old and sick in bed, Hermann Einstein brought Albert a device that did stir his intellect. It was the first time he had seen a magnetic compass. He lay there shaking and twisting the odd contraption, certain he could fool it into pointing off in a new direction. But try as he might, the compass needle would always find its way back to pointing in the direction of magnetic north. "A wonder," he thought. The invisible force that guided the compass needle was evidence to Albert that there was more to our world that meets the eye. There was "something behind things, something deeply hidden."

So began Albert Einstein's journey down a road of exploration that he would follow the rest of his life. "I have no special gift," he would say, "I am only passionately curious."'



Starting with an example, assume yesterday's close was above the simple 10D moving average: will today's close be below the 10D moving average?

Two things change from yesterday to today - today's close will be added to the series, and the close 10 days ago which was part of the moving average will be dropped (as it becomes 11 days ago).

C1 = today's close
C2 = yesterday's close
C10 = close 10 days ago
MAt = 10DMA as of today

MAt = sum(C10:C1)/10  (sum of C10 through C1)

The statement that "today's close < MAt " can be written

 C1 < sum(C10:C1)/10

10C1 < sum(C10:C1)

10C1 < C1 + sum(C10:C2)     ( Using: sum(C10:C1) = C1 + sum(C10:C2) )

9C1 <  sum(C10:C2)

C1 <  sum(C10:C2)/9

The right hand side is the 9 day moving average as of yesterday.

Thus today's close is below the ten day moving average if and only if today's close is below yesterday's 9 day moving average.



Can you please outline the color coding rationale for the daily performance chart. I am confused on why some down days are red and the others are yellow..etc - A Reader

We track daily movements in U.S. stocks and bonds (specifically S&P Index futures and Long Bond futures).

The colors are based on the performance of both markets:

Red days: both stocks and bonds down.

Green days: both stocks and bonds up.

Yellow: stocks up, bonds down.

Blue (technically azure): stocks down, bonds up.

If you are interested in days when the Bonds are down, those would be Red or Yellow (depending on Stocks' performance). Personally, if I want to look at a single market I find it easier to ignore the color and just look at the sign of the price change shown. 



"Audiences use language devices seen regularly in the movies to shape their own discourse," he points out. In particular, people are likely to see what types of speech 'work well' in the movies in enabling characters to gain their objectives, and copy that. "One might surmise that movies are the marketplace for seeing what's on offer, what works, and what needs purchasing and avoiding in buyers' own communicative lives," Giles says.

From here

Gibbons Burke writes:

 Saturday Night Live seems to have an initial measure of success. The actors and writer seem to track how effective they are at planting and watering the seeds of catchwords in the culture, ways of talking in novel distinctive ways that they can see in society and know they are having an impact.

For example, it was sort of novel when David spade played an arrogant receptionist who would receive clients at an office. Rather than ask a straight question, every request for informatiowas posed as a fill in the blank. For example, rather than ask the client "May I have your name?" or "What is your name?" make a statement which required an answer to complete. "I am here to see Dr. Dinkus." Spade replies "…and you arrrrrrre ________?" "Tom Turkey" "and you re seeing Dr. becaussssssse _________?" "I have a sore back."

All of a sudden, it seems to me everyone starts talking like that - a viral verbal meme. Maybe it was there before, and SNL just lofted it to prominence.

A more recent case like that is the repeated "Really?" question - as an expression of indignation, surprise, disbelief. "Really, San Francisco? Banning goldfish? Really? Really?"

I don't know if the writers on SNL heard that somewhere and then decided to flog it into mass acceptance, or whether their writers just like coming up with that sort of thing, but it seems to be a cultural game that probably goes on in the movies as well.

Pitt T. Maner III writes:

The one that has become noticeable to me in the past couple of years on CNBC is the use of "So" to start answers to questions. Maybe this has been around a long time but it has an odd cadence to it. The host asks the guest a specific question and the guest answers with a somewhat deflective sounding…"So first quarter sales improved and our expectations for the rest of the year are…."

"So" becomes a transitional word to suggest a level of sophistication about what is to follow—it eases the speaker into a difficult answer, but it has certain dismissive and weaseling connotations when overused.

One is tempted to say "so, so what?" to CEOs who begin all sentences with "So".

I am not sure where or when the "So" meme started or how it took root in the Wall Street Community but there must be a simple explanation not related to Peter Gabriel's 5th studio album.




The literature on bundling seems to focus on the sellers' asymmetrical advantage; but the most common reason for bundling is the customer bias against paying for services as opposed to stuff. Our customers want to believe they are renting THE EQUIPMENT when they are actually renting our ability to unpack, clean, test, bill for physical damage, reprogram, test, pack and ship within minutes and juggle inventory against orders that can be cancelled the day before pick-up. No wonder Marx remains so popular; there seems to be an innate belief that physical objects are important in and of themselves and the inventorying and distribution of them is so unimportant that it should be available for free. Whether one believes in their business models or not, the social networking companies clearly understand this. They know that their users must receive the services without charge. No wonder the poor newspaper publishers were doomed. They actually thought they were selling "the news" when they were really getting paid for the paper and the ink.



 In Beyond Candlesticks, Nison describe the record session using daily bars where new highs are made.

Traditionally 8 or 11 new highs signified and extended market.

The record lows is somewhat different as Russ recently pointed out.

Intraday is be different again, but higher dimensions than just price change alone can add info.



Anyone have any advice on passive investing– there is no timing the market, so one therefore invests with an eye to neither highs nor lows of a particular day or time or season?

Ralph Vince writes: 

Correct, but there are now two "flavors" to such, as you will, as an advent of "active" indexes. Typically, one would mimic, say, the S&P 500, and the returns would be those of the S&P 500 (there is a problem with reinvestment of returns here often, and of additions and withdrawals, but in theory, you would track the index).

"Active" indexes typically seek the same underlying components, but the weightings into the components tend to be dynamic, so the returns tend to be those of the underlying index with an upward bias.

Rocky Humbert writes: 

Ralph raises a brilliant point. Over the last 20 years, the Russell 2000 (small stock) index and the S&P500 (large cap) stock index have both returned about 8% per year.But from 1993 to 1999, the S&P returned 24% per year while the Russell returned 12% per year. A 200% outperformance for the big cap index…Next, from 2000 to 2011, the Russell returned about 7% per year while the S&P has returned 2% per year. A 350% outperformance for the small cap index…Today, the Russell is trading at 35x trailing p/e … while the S&P is trading at a 14.6x trailing p/e. In order to justify this record valuation difference, small caps must grow their earnings twice as fast as big cap companies. While small companies often grow faster than big companies (due to the math of compounding), arguably Mr. Market's pendulum has swung too far — and it's improbable that the Russell 2000 will outpeform the S&P500 over the next 5-10 years FROM THE CURRENT RELATIVE VALUATIONS.

Note: Dr. Zussman, I (and many others) have studied this phenomenon, and we've not found any consistent explanation for these swings other than investor preference…. and these cycles/trends last years and go further than "sensible" people expect. However, if I were starting a passive investment strategy today, I certainly wouldn't pick the IWM (Russell 2000) as my investment vehicle with a 5-10 year time horizon.



I try to stay true to the spirit of the dinner party, and avoid overt political comments, but I believe the following piece sums up well everything that is hateful and wrong with the current administration. At a time when small businesses need to be encouraged more than ever, Geithner dispenses the following wisdom:

Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to "shrink the overall size of government programs.

The administration's plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.

Full story here .

I have never seen such outright hostility towards those who want to succeed than I have from this administration. It's incredibly disheartening.



There are pictures of migrations in the current National Geographic and group think in movies in the NY Times. Part of the idea that has captured the world in current days? Relation to markets? How to predict the stages of migration and big moves in markets and individual stocks?

Vincent Andres writes:

Read this interesting article which may relate:

America, at its best, is a glittering symbol of promise to would-be immigrants. But where do they actually want to live in the United States? Trulia, the real-estate listings site, has come up with the only data set we've seen that actually breaks that question down to the city level. Their infographic, Global Pursuits of the American Dream, was built using incoming real-estate searches on Trulia's website . These were then broken down by country of origin, and the city being searched. Here's what the data looks like for two relatively wealth countries, Germany and Italy.

Steve Ellison writes:

While California was one of the top U.S. destinations for immigrants in the 1990s and 2000s, during the same years many more native citizens moved out than moved in.

Bo Keely writes:

 The most dramatic human migration in modern history is the Central Americans atop Mexican freight trains the length of Mexico to the USA border. The quest is freedom and financial independence, with the dream of staking a new individual life and sending sponsor money to their thousands of Central American villages to get the next person on the freight. Each day about one hundred wade cross the river border between Guatemala and southern Mexico, hop on a daily freight- up to 100 per train recalling the USA Great Depression- and jiggle north to Mexico City where they fan out on RR lines to the Texas, New Mexico, Arizona and California borders. I've ridden with the young men and a handful of women in three years, once getting caught in mid-stream of the Rio Grande river by US border patrol that took some explaining. A breath-taking though small sample of the month long ride is detailed in Nazario's 2003 Pulitzer Enrique's Journey. The journey for Central Americans is a tale of hardship, although this is the first time I've ever been collared by a RR bull who took me home and introduced me to her mother.



 What higher purpose is involved in all the news about Greece? How does it help the flexions? And how does it make man small? The answer must lie somewhere related to these last two.

Vince Fulco writes:

1) "Only Govt has the answers…"
2) The powers that be must deliver bad medicine (aka taxes) regardless of one's individual responsibility/frugality/discretion/smarts.
3) Overcomplication hides the truth as long as possible.
4) Suffering should be shared by the masses, prosperity obtained/retained by the sharpies

Jeff Rollert comments:

Actually, I see the flexions losing control. The public has tasted information freedom. They won't give it up easily. If Greece says "No" then their world changes rapidly. In my circle, the banks are "reaching out in the community" with ever greater frequency. Yet, consumers interest in their products is waning, except at the mid/mega cap level and gov't.

Dylan Distasio replies:

Jeff, can you elaborate on what you mean by information freedom, specifically in reference to the Greek situation?

I think some of the flexions have already profited in the first round of the Greek bailout by offloading bad debt to the ECB from the private sector when the ECB agreed to take it. I'm sure the other ones tied up with the IMF have a strong incentive to make the Greeks take their medicine.

I don't see how the Euro will survive this situation long term. It is very unlikely that Greece's economy is going to improve enough to meet these payments especially with a Draconian austerity plan. All this new bailout is doing is delaying what appears to be the inevitable. It might take another year or two for the pain to become insurmountable for the ECB and Germany/France, but they will eventually be forced to stop throwing good money after bad. The Euro is a flawed currency and there was no exit plan built into it. Greece, Spain, Portugal, and Ireland all need to devalue their currencies to one degree or another and are unable to. This situation is untenable.

  Things fall apart; the centre cannot hold;
   Mere anarchy is loosed upon the world,
   The blood-dimmed tide is loosed, and everywhere
   The ceremony of innocence is drowned;
   The best lack all conviction, while the worst
   Are full of passionate intensity.

Ralph Vince writes:

I agree with all except it "it could get real ugly part." Not that I don;t think the possibility exists, but my analysis leads me to believe we are on the brink of gigantic, unprecendented economic growth in America, that we are rounding the turn, given a trough of some sort around 2014-2015, things REALLY take off after that.

And as we saw with China post-Tiananmen, nothing quells the masses like economic growth.

This is an extremely sophisticated society that, in the main, on the level of the individual, produces, despite their governement. In the main, Americans are quite peaceful, self-organizing, self-reliant people when need be. The seeds of pare-to-the-bone efficiency are in place here like nowhere else, the technological advantages now in place and as-yet unfelt — a catalyst need only emerge. The amount of available capital, so desperate now for a return, will be the second great biblical flood.

Talk to the younger crowd, and you see they isotropically have little faith in the future, little appetite for risk. They aren;t going to all be right. We re in the prime years to push all of our chips as individuals out onto the table.

Stefan Jovanovich writes:

I share Ralph's optimism about future returns in what the old men with canes would have called "sound securities". If I had the energy for it and did not still live in California (aka PIGS West), I would be buying and managing as many small businesses as I did 20 and 30 years ago. I don't find the absence of "faith in the future" among young people to be as alarming as Ralph does; I don't remember even thinking about the future when I was 15 and 20 and 25, and the young people I now meet who "have a plan" are basing their projections on what they have learned in school, not their dreams. The others - who are properly cynical about school - understand that their fate is largely at the hands of the marketplace. But they are not scared. Quite the contrary. They seem to be far more comfortable with risk and uncertainty than my generation ever was and still is (we seemed to think we had the divine right to complain and receive whatever medications were available to escape from the pains of actual life.) I think intelligent young people now understand the difference between risk (doing potentially dangerous things that require skill and practice to avoid harm) and the arrogance that comes from ignorance. Extreme sports have never been more popular; but Lack's kids and others are sensible enough to wear helmets voluntarily. The kids are all right.



You would think that a very good scientific study could be made of the performance of companies that guide down a quarter and a year. The corresponding quarter the next year would seem to be a comparison that would be very good, and the ephemeral nature of following the herd, and reducing targets when quarter to quarter growth is not steady would seem to give you the wind at your back. 

Such a study would have to take account of the well known tendency of CEO's height to fall as their stocks declines. An as is study with measurements before the companies were de-listed or added to the list would have to be made. 



 Reinhart and Rogoff said governments usually get out of debt crises by default/decree or printing inflation. The next edition will include a chapter on what happens to sovereign debt when a government doesn't control its own currency.

Gary Rogan writes:

When Einstein was a boy, seeing a magnetic compass convinced him that
there had to be "something behind things, something  deeply hidden." 
This is the same way, there is something deeply hidden behind things. 
The world doesn't work as most people expected it to work, but they are
finally getting clued in. 



 Norwegian biologist Thor Heyerdahl suspected that the South Sea Islands had been settled by an ancient race. [He] knew that the trade winds and ocean currents off the South-American coastline bear in the direction of Polynesia. Ridiculed by the scientific establishment, […], he decided to prove the possibility of his theory by duplicating the legendary voyage.

Watch the full one hour documentary here.

Lessons from Kon-Tiki:

1. Ridiculed ideas pay the best when proven wrong.

2. Follow the drift.

3. When ancient methods and modern expertise contradict, chose the former.

4. "Don't resist nature, but yield to her commands and accommodate" (Golden rule among native tribes)

5. Technology complements #3 and #4. (Without a radio Kon-Tiki would've been a one way journey)

6. There will always be sharks following in one's wake.

7. Preparation puts the odds in one's favor.

8. No matter how well prepared, be prepared to improvise.

9. Befriend the locals.

10. Always bring a BBQ kit.



The National Academies Press, the publication arm of the Academy of Science is now offering pdf versions of all their books for free. There are over 4000 free books available covering subjects from A to Z (Agriculture through Zoology). While one can pay $29.99-$99.99 for hard copies of the books, the pdf's are easier and free of charge…..OK they're not free as the government, or whoever, is paying for them. 

I recommend checking out this mostly grant driven, federally funded, politically correct assortment of papers and books. There might be some real kernels after sifting through the chaff.



 Here is an article that describes a study of percentage of pro athletes from small towns.

However, from practical experience might I suggest that small town effect also comes from the proximity of practice. The fields, schools and coaches are close to the child. Think of the ease in small towns for a kid to hop on his or her bike and make it to practice or simply go to the park where other aquaintances can be found to join a game. It would seem that hover parenting gets a big boost by soccer Mom's having to attend every practice as the taxi.

And as an adult my running time was possible because of a 5 minute commute to work.



 Between the Folds, on Netflix, is a fascinating movie about origami and the new directions modern practitioners are taking the art form. Everything has folds, space, the galaxy,DNA, and market moves. The flat plane of a piece of paper, when folded takes on complex and dynamic forms, curves, moves and can mimic forms of nature and remarkably realistic forms. The new generation of origami including mathematicians and physicists use complex math and computers to design the folds to create realistic and beautiful forms.

I've always talked about the higher dimensions of the market above the flat charts, but reflecting on the transformation of a flat paper to complex design based on folds may reveal some interesting approaches and ideas to analyzing the folds, the turns of the market and what kind of forces and dynamics are being created. Paper, you see, is not a flat plane, but has dynamic properties and memory. The folds are memory, but the paper wants to return to flat and the tension creates a dynamic force with the intersection of the many vertices. What is the force created when the market reverses? What is the effect of the intersection of two or more folds or turns in the market. How does the turn in the market represent a memory and what force is trying to return to the old form.

We've recently seen a turn off the bottom in this market and there seems to be a memory in the turns from the down turn. How might this "unfold"?



 I think it says something that China's best marathon record time ranks it 24th out of countries and India's best time is 2:12:00 rank it the 60th fastest country.

USA is 3rd in population but 4th best marathon time.

These two country's populations dwarf the rest, with these 2 added into the top 60 countries by time there is 0 correlation. Without them there is R sq of 20%

I believe this has more to do with the size of government than it does with the population size. To have 4 times the population of the USA, how many times must the individual be squashed to keep order.

I have heard that you have a better chance becoming a pro ball player when you are from a small community than when you are from a big city. I don't know if this is true. Would like to see the stats. However looking over the data for marathoners it looks like you have a better chance of being world contender if the population is less than 100 million.



 Here is Greenspan talking to Charlie Rose, in an interview on June 17th.

Here is a quote about what was the biggest thing he learned in last 4 years, and it has huge implications for how markets work….


"We have time preference. People discount future events. Nobody pays for the right to consume something or gain an asset 5 years from now more than getting it today."

Sounds like the good doctor is learning now a bit about behavioural finance and trying to put a spin on a more simplified definition; i.e the end of the "lay-by " (In Australia and NZ a system of payment whereby a buyer pays a deposit on an article, which is reserved for him until he has paid the full price) and the emergence of the sequence of increased credit card and debt use, leverage and volatility).

Give consumers and inch and they will take a mile.

Seems by trying to keep connecting the dots, looking for a foolproof setup in a ever changing and dynamic system, his strategy will always be behind the curve, while losing the forest for the trees.



In trading, we can all agree that fewer conditions or filters results in better conclusions, better understanding, and less curve fitting. Conditions or filters block information. Too filters can result in less new insight and fewer opportunities.

Here is where trading is a good lesson for life. As we grow older our tendency is to filter out information, people, paths. It's partly a necessity to avoid the bad or overload, but good things can be missed. Our experience tends to specialize our knowledge and narrow our focus. Though this has some benefit in expertise what opportunities or knowledge or growth may be missed. Ignoring, filtering or refusing to hear or listen to ideas we disagree with or that are different than our own may lead to narrow mindedness, missed opportunity to change and important information. For younger people it might be seen as closing doors. Meeting new people, hearing new ideas, going to new places. Nobel laureates advise not to tighten parameters too tightly as the surprise result may reveal itself. I recommend opening up parameters, let the fresh air in. Let's not become grumpy old men. We've seen closed small minded people and don't look on them with respect. Broad vision is necessary to see above and beyond the noise. You really need to force yourself against the tendency to close the mind.



 Having just returned from a 3 day mini-vacation in Chi-town, I dare say they have superseded NYC in terms of things to see and do in a compact space. Within about a 10 block radius, one can enjoy the Art Institute, the Cultural Center (hand painted Ghanese movie posters, the largest Tiffany glass dome in the country and a US Veteran's Art show all under one roof), the Fields Natl History Museum, the Aquarium, the Planetarium and an architectural boat tour off of Navy Pier. Absolutely perfect for a visit with a short stay. Lastly, check out Le Colonial on Rush Street, French-Vietnamese cooking which has moved up my list of best places in the US. Wanted to try every single thing on the menu; they were that novel and interesting. As down as I am on IL about their politics/tax schemes, kudos for an extraordinary sightseeing experience.



 Most people love to think and act alike. It starts in infancy when you mimic your parents or siblings. Teens are notorious for talking, dressing, acting, and thinking alike, and many dangers arise for them as a result. Young adults I notice tend to dress alike and sport similar hairdos. In Japan, consensus is a compulsion.

In trading it has been common recently to see everyone piling on in the same direction during the day. The internals confirm this. Big players seem to like to wait to see which direction the day is going and all pile in the same direction. Are we much more than fish? Apparently not. There doesn't seem to be much science, analysis or thinking going on in the market recently, nor in the news coverage. It looks like group think. The problem is it's hard going against, in life and in markets. However when used as strategy it's productive, but when used for misdirected frustrations, its not.



 I have been having an interesting discourse with friends and family on the subject of social media versus the news services on the timely delivery and accuracy of "facts" presented. My thesis is that social media is replacing traditional news sources as a better, more up to date, more accurate, broader coverage, more accurate, more varied source of current events than traditional news. The case in point was the tsunami here in Hawaii Island which was totally lost to traditional news. Governmental sources were wildly inaccurate declaring the danger over when it was just beginning here. Facebook and Youtube and other blogs and social media had current up to date, accurate data, video, sensor readings and on-site reporting while government and news were still asleep. Twitter broke the Bin Laden story. Everyone has data collectors on their cell phones. On the other hand traditional news is biases, has limited coverage, is slow, limited reporting capacity and notorious for getting the story completely wrong.

Jim Sogi adds:

Here are some interesting links

Democracy 2.0 in Iceland.

Democracy 2.0: Iceland crowdsources its next constitution  


The town of Omaha



 I was reading about the famous double slit experiment and then thinking about the Heisenberg uncertainty principle, the math, and the observer effect. I wonder what types(if any) of market implications could be attributed to the observer effect.

Ken Drees writes:

Interesting. I was contemplating this more than a few weeks ago too, but let it drop. It made me think of Schrodinger's Cat:

Schrödinger's cat is a thought experiment, usually described as a paradox, that Austrian physicist Erwin Schrödinger devised in 1935. It illustrates what he saw as the problem of the Copenhagen interpretation of quantum mechanics applied to everyday objects. The thought experiment presents a cat that might be alive or dead, depending on an earlier random event. In the course of developing this experiment, he coined the term Verschränkung (entanglement).

I was considering how a trade is alive and real only when one puts it on or opens the box and everything else is meaningless– the counting, the theory, the expected outcome– all meaningless unless you commit and then make it real and apart of consciousness, reality, an entity. 

Michael Cohn adds:

 Schrodinger's kitten's also interesting as a thought experiment across space and time. What I recently learned about the uncertainty principle was that there is a different way to think about it. I always thought about it in terms of how the observer may be creating the uncertainty in measuring both mass and acceleration with the instruments. What I now understand is because of quantum uncertainty these particles actually don't really know exactly where they precisely are at a given point in time beyond a prob distribution so if they don't know where they are I certainly can't help them as much as I would likes to be able to do so…

Jim Sogi comments:

2 closing related issues:

There's the insidious cursor and key watcher viruses.

Another related aspect is the inadvisable practice of putting your cursor over the execute button onscreen and having it execute without having touched the mouse, or accidentally touching the mouse or keyboard at the wrong time triggering the trade. Been there, done that.

There is also the issue of order field depth, which is a form of "disclosed" watching, and other order related manipulation issues perhaps posing, perhaps honest bid, perhaps flow bashing or bandwidth hogging, flashing. Lack surely can speak to many of these techniques he sees in individual stocks.

Russ Sears adds:

 If risk is defined as what is not known in the future that if it happens would hurt you, than imagination of what could happen causes you to avoid and prevent that perception.

Done to extremes this creates new risks from the over abundance of care and lack of focus on any other risks even to the point of altering the minds ability to cope. Think interest rate duration management and the creation of the tranches in the securitization process and modeling of those securities. Done in mass this creates bubbles, hysteria, or pop-stars. ( I believe this is the "Lady Gaga" "Apple" link. It is not mysticism but the creation of popular mystic.)

Much of psychology is the study of how unrealistic risk perception creates a difficult life and alters their reality for the fearful and anxious. Why should the markets be immune?

Ken Drees comments:

Lady Gaga is to Apple as Amy Winehouse is to Rimm.



The Sumatra soccer field on the outskirt of Lake Toba is made of 'Indonesia astroturf' — red brick with ingrown grass and bamboo goal posts. The coliseum has more trees than spectators these days, but i was lucky today to crowd into some ivy and watch a heated match between high school youths. The Batak teams are graceful and strong, larger than Latins and cheer when the other team scores a goal. There was one white tennis shoe on ten bare feet on the brick field- shirts and skins- running, tumbling and kicking a new soccer ball out into the jungle where they exited after the game was over.



It turns out the streets of New York really are paved with gold - as long as you don't mind searching for it on your hands and knees.

Raffi Stepanian, a self-styled urban prospector, has discovered enough tiny jewellery fragments hidden in the sidewalks of the city's Diamond District to make a living . Using nothing more than a Styrofoam cup, tweezers and a butter knife, he collects hundreds of dollars worth of gold, diamonds and rubies each week.

Read the full article here. 




For SPY from 2000 on here is the count of "inside" and Outside days, if inside day is defined as High < prior day High and Low > prior day low. Likewise outside day is High > prior day high and Low is < prior day low.

It would appear that the inside days do not like to occur in middle of week. While outside days like to occur in the middle. But Mondays do not have many occurances of outside days.


Binomial Distribution

          Inside   Outside Count      In        Out 
Mon.       68       34       542   86.07%     0.03%
Tue.       65       80       590   48.61%    99.05% 
Wed.       54       82       593    6.00%    99.46% 
Thur.      63       54       581   43.38%    17.42%
Fri.        72       55       577   85.60%    22.89%

Jim Sogi comments:

Very interesting study by Russ. Would imply that its going to be hard to beat Friday's high in the next ten minutes.
My initial thought was that Fridays were more volatile making it harder for Monday to be an outside day, but on counting the vol using SD, its not so.
M 15.74
T 15.64
W 14.86
T 15.32
F 14.27



 I don't know much about options, but can anyone explain to me why expiration days seem to have lower ranges and absolute volatility? I haven't quantified this but that's my impression and I read something about it. Are there figures for biggest option strike. I've heard stories of why this might have some sort of effect on underlying price. Thanks.

Sam Marx answers:

One of the reasons is what is called "pinning" where stocks close to their strike prices will trade around that strike price and get pinned to it. This is not true in all cases but occurs often enough to decreases stock swings.

There have been scholarly studies on this and you can read more about it in the book Trading Options at Expiration by Jeff Augen.

Phil McDonnell adds:

I do not actually know if expirations have lower volatility and reduced ranges or not. But IF it is true it may have something to do with pinning. Pinning has been identified in several academic studies as being a real phenomemon. Basically it involves the stock closing at or on a given nearby strike price which happens to have a large open interest. Essentially the stock gets stuck trading at the round number with greater likelihood than on other days.

Option strategies such as sold straddles, calendar spreads, butterflies all reap their maximum profit at a particular strike. So the incentive could be there for flexionic manipulation. Or it could simply be a product of all the competing cross currents which occur on those days.

Sam Marx replies: 

It has been tested and reported in academic studies.

As a starting point I refer you to Trading Options at Expiration by Jeff Augen.



 For sailboat racing, good conditioning comes from ripping up hundred dollar bills in a cold shower with the lights off. I'm thinking something similar for trading.

A Letter from the President of the Old Speculator's Club, Jack Tierney: 

While this is an accurate observation, it's applicable solely to the owner. Those of us who spent our springs, summers, and falls "crewing" didn't suffer similarly from the experience. On the contrary, when offered a boat of our own at a "give-away" price, we politely declined– the perceived glamor far exceeds the reality– just as Wall St. movies are generally completely off the mark when picturing the "ease" with which fortunes are amassed.



Here is a great page that has a list of visible comets on a month by month basis, good through the next few years. There are some pretty nice comets in the sky right now and a good 4.5" Newtonian will suffice to get an excellent view of all of the comets listed. Not all comets are listed, and many comets are out there, ready to be discovered.



 After I got to the odd warehouse/loft venue on the 6th floor at 150 Varick—to a back room behind hall after hall of hip-hop clothing and buyers having nothing to do with the plain white-stucco'ed room where the film would be shown on the wall, and all there was at the 'reception' was a bin of beer, nothing else (even water), as the hour for the screening approached–they finally brought out a few Vietnamese things that were hard to identify, but sort of like tasteless white bao-bracketed sandwiches, maybe fish or chicken or something else entirely. Odd flavorings, like crystalline sugar or shredded algae as dressings. Each time a waiter came in, with about 100 guests milling about in their Manolo Blahniks and Ermenegildo Zegnas, they high-plattered about 7 sandwiches or canapes of indeterminate etiology onto a platter. Quickly, very quickly, emptied. Thence a wait for 10 more minutes for 7 more of these unusual edibles to be ferried in. A carafe of ice water appeared! At last, some water for my plastic cup of ice (scooped from the homely beer cooler, as a last resort to sweltering heat and no inclination toward beer).

The film was introduced, with the sad news that Bulli would see its last customer on 30 July. Hold your horses if you want to indulge—chef Ferran Adrià just decided, at the very Michelin top of his profession, to close up shop. Reservations were long since closed out. On the day they opened, in fact. There has not been an open place for a seating since the one day a year they open the phone for reservations. (There were 2 million requests for the 6 months they serve. That is a two with six zeroes after it.) The setting is on the scenic outskirty skirt of Barcelona, nowhere easy to get to.

The film is outstanding–*EL BULLI*, the world-famous restaurant that is closing end of July, I am sorry I cannot get to Spain to sample the miraculous creations the food imagineers and chefs concoct. Perhaps the best restaurant in the world, according to Michelin and the scant-favors /New York Times/. But however intoxicatingly amazing the confections (can we even call these unprecedented gustatory sculptures of taste that?), entrees and nameless wonders may be, they never got around to discussing the cost of this exorbitantly fabulous fare.

But such exorbitantly fabulous fare. What does price matter? Mere money is just green. These meals are a morsel of memorable majesty and magnificence. Whatever it costs, it cannot but be worth well more than one deducts from Mr. Visa or Mistress MasterCard. What the winter ice-fantasy carving extravaganza is to Harbin, China, and the art caravanserai of Art Basel is to South Beach, Florida, every February is to painting and canvases, *El Bulli* is to food.

At the end, I felt it was a transcendent involvement, and the audience of critics and chi-chi downtown types were knit together by the experience of seeing the developmental lab work of six months of R&D (every year it has been open for business) researching, documenting and formulating—exactifying and quantifying by tiny increments, taste upon taste, sensation upon sensation—the most exquisite ingredients in the most 'bewildering' and teasing conjugality.

And always: tasting, nibbling, sipping, popping into the mouth. And chewing, savoring, laving with the tastes coating the millions of taste buds in the moist ready orifice.

Reservations for this year are foreclosed and done. So <sigh> cross that divine wish off your bucket list.

When the tasting menu of this year's outstanding 35 unveiled onto the screen, two by two, like Noah's chosen survivalist species, mouth-wateringly poetized below the foods the precious word-pictures captivated, I needed…a cigarette… .



 For the image-and-effects crowd, there is every type of visual effect in this summer cooler—digital doubles, keying, crowd-simulation scenes, CG blood, compositing, digital environments and matte paintings. Space shots and montages, wholesale destruction and multiples.

Still, Ryan Reynolds, whose eyes are small and close set, dark and mischievous, has a narrow face and head, as if he had trouble negotiating the birth canal some years ago. Nevertheless, his body is that of an anatomical chart for the ideal corpus delectable.

Reynolds has a slew of impressive actors to help him in the delight-filled and entertaining comic-translated to celluloid flick. Blake Lively is lissome and lovely as Carol Ferris. And Peter Sarsgaard outdoes himself in an icky but challenging role as ne'er-do-well science-guy Hector Hammond with unfortunate integument and blood cells that do him in insofar as handsomeness is concerned. Tim Robbins makes a blessedly short appearance as Sarsgaard's senatorial papa. Mark Strong is eponymous in the allover crimson role of …Sinestro.

Not everyone will go for this comic-book invigoration; some won't like the SFX-heavy /leit/-motifs. Others will be distinctly uncomfortable with the metaphorical parallel to the late-in-film 'invasion' of the extremely bad-guy aliens—the street scene, though in California, is too close to the NYC 9/11 melee of panic in the streets. It is still early in our country history to evoke pillows of ash and smoke and people running in hysteria every which way.

Ryan Reynolds plays Hal Jordan, a hotshot test pilot who is recruited by the Green Lantern Corps to join their crusade against evil in the universe and membership into an intergalactic squadron tasked with keeping peace within the universe.His colleague hot-dogger pilot is Ferris-Corp daughter, played by the luscious Blake Lively, but she has Dagny Taggert elements of management in addition to being the ace pilot just shy of Reynolds' amazing air-climbing prowess. With the help of a power ring, Jordan is granted a number of superpowers–but can he overcome his fears in time to defeat a marauding army of evil?

Strong is good as an otherworldly presence in magenta. And sundry animatronics fish-people and oddities with beefy no-neck bodies and what-not voiced by Geoffrey Rush and others. The CGI, though really amazing here as rarely before—AVATAR, sit back down!—are, to use an overused term, awesome. The special effects are as good as the laser presentations in the Planetarium, and the protagonists have humorous, serious and bookish things to say that keep the audience leaning forward to catch lines before a Biff! Bam! Boom! scene erases the prior lines. It's good for 8 through 80, has eye-candy all over the place, and for fans of the comic book,,.or for those agnostic of the pulp paper of decades ago, this is a swift entertainment.

 Keep in mind: I never read the comic. I have no brief for conversion films from the ancient fanzine base. And I am a girl, so these things do not naturally float toward my delight index. Still, I have long loved sci-fi, and this is a satisfactory offering in the canon. Though not all my colleagues agree. (Can't please everyone.)

If you have teens or just-pre-teens, though this is a mite strong in the bash 'em/trash 'em in a few scenes, my view is it was a lot more not-to-be-missed if you want to get into the good graces of the young for the weekend. If not, carve yourself out a cardboard tyke and go and enjoy.



How can we compare the relative importance of stock selection and market timing?

The removal from a portfolio of the best or worst performing stock(s) gives some idea of the importance of stock selection.  The removal from a stock market index time series of excellent or dismal time periods gives an illustration of market timing.

The chart below plots mean return for successive deletion of extreme winners and losers, both for skipping extreme winner and loser stocks in the stock portfolio as well as extreme gain and loss months in QQQ monthly time-series. Both series were scaled to start at zero origin, and the much larger dispersion of returns in stocks over the index is seen.

Green and yellow are the effects on mean QQQ return for skipping extreme winning and losing months. The effect is quite symmetrical in penalizing missing top gaining months and rewarding skipping bottom loser months.

Red and blue are the effects on mean stock portfolio returns for skipping extreme winning and losing stocks. The effect is asymmetrical, penalizing missing top gaining stocks more than rewarding deletion of bottom losing months.

One interpretation is that skew is more significant for stock returns within a portfolio than index returns within a period, and there is more penalty missing big individual gaining stocks within a period than missing index gains within a period.



As we all know, the market has had two small up days but is down over longer periods starting with 3 days. Yesterday's action was unusual in that it was a big up opening, but down consistently from the opening. I find that such a condition has never occurred before, although it all seems quite reasonable and de rigeur. What other seemingly normal things hardly ever happen, thereby violating the random walk?

I dare say an artful Downian simulation of the last 3 days would show that the actual transpiration of events was quite normal under random numbers, ( the magnitudes of the opens would have to be taken into account), yet it didn't in real life. Does it signify anything except the infinite creativity of the market mistress, who is so likely to find that those louses will go back to their spouses in these terrible days.



 There's a plethora of articles recently published that discuss the possibility of the sunspot cycle going into hibernation for awhile and a new Maunder Minimum (Period of decreased solar activity lasting ~70 years or more that caused a "Little Ice Age") taking place. There are articles here, here, and here that discuss a new solar minimum. Already this possibility is being politicized by the global warming crowd and articles are saying this, this, and outright falsehoods in this article.

There are many comments based on opinion and no science, like this one swirling around that said, "A new Maunder-type solar activity minimum cannot offset the global warming caused by human greenhouse gas emissions," wrote authors Georg Feulner and Stefan Rahmstorf, noting that forecasts by the Intergovernmental Panel on Climate Change forecast a maximum 4.5 degree Celsius rise by this century's end compared to the latter half of the 20th century. On that last partisan note, I expect that if there was a new solar minimum, the sun would have a solar flux of 11% of it's peak value and 50% of it's average minimum value. During that period, sunspot count could approach zero and average solar output could drop by 0.9-1.3%, going way below the solar constant. A solar minimum could be a big deal with a huge planetary climate disruption. Thinking ahead by looking to the past, one notes that Oats, barley, beets, other cold weather crops and "Ancient grains" all had an increased planting range during the last Maunder Minimum. Other crops like wheat, rice, and tropical crops had a shrinking planting range.

Jim Sogi comments:

This just shows how facts can be picked to substantiate any thesis. The verity, relevance, reliability, conflict of interest in any particular fact or its origin may affect its reliability and thus the strength of whatever conclusion is being drawn. These factors can also be used to spin facts to support spurious conclusions. Irrelevant facts often determine outcomes of decisions based on their emotive content or recency. These are well known heuristics. I know this probably better than anyone on this list. We see scientific studies by drug and food companies misused to promote their products. We see facts misused by the propagandists of the power elite to distort the truth. Thus the use of facts is not the only road to truth. The use of reflection, thought in the absence of fact can be useful and productive.

Vincent Andres writes: 

Thus, as long as the IPCC satisfies its true clients, it can– like its clients– completely ignore the critics. They are valueless, unimportant and powerless. That is what it has learned-– the classic "mind over matter" trick. It doesn't mind and we don't matter. That is the way modern government works, and the IPCC is part of it– as this brazen example shows.



 This Wired story I read today "Can we prevent the next bubble?" is s a nice story, but it is a fable. It has been told by Wired and almost every financial moralist since Charles MacKay because the "mania" offers a wonderfully conventional morality tale that ends with the lesson that markets need regulation. The tulips were part of the art mania that helped feed all those painters who ended up on Ernie Kovacs ' cigar wrappers; but the speculations in the flowers and the art that portrayed them were in no way comparable to our recent real estate finance bubble.

Anne Goldgar is a wonderful scholar (i.e. one of those school teachers who give their profession a bad name by actually doing research). Her book, Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, University of Chicago Press, 2007, goes over the history of the bubble in painstaking detail (the woman had the audacity to actually read the financial records of the individual transactions, not just look at the secondary sources for a price index). The story she tells is fascinating, but it is not the one that our latest crop of "social scientists" are so desperate to find.



This is a phenomena that has been talked about a lot and said to influence abilities as diverse as sports, music, exam scores, sex drive, etc. Never seen the reference to trading ability before.



Technology is tricky, eh? It's great on the upswing, but it sure does hurt when it starts to get replaced by the next big thing.

I can't help but think of a friend of mine who is an engineer. About forty years ago he did consulting work for a small company that paid him partially with company stock, because actual cash was tight. The stock wasn't worth much, but he must have liked the people running the company, because he kept it. That little part of the account is now a 7-figure position that he can leave to the kids. The company's business? Gravel and rock.



 Recently I have posited that the market to an inordinate degree shows the main attributes in its daily moves of the most vivid sports game that has not been used. I would add to this that during each hour the market is likely to move to the rhythms and dynamics of the most likely classical music being played on a classical music station in home town, for example the former WQXR in New York, in full knowledge that these programs are often selected 2 months in advance, and noting that I was a subscriber to same when I was 12 years old.

I am adding to my list of mystical encampments and predictions that the fortunes of Apple and Lady Gaga will follow a similar arc in the future, and as soon as the Lady loses her luster, or a substantial base of her gay support, Apple will be ready to nose dive.

Do you feel that because of these ideas that I should resign my post as chair of Dailyspec which is designed to deflate ballyhoo, or is this just a symptom of that predilection that old men such as the Sage and the Fake Doc have to maintain their romantic aura?

Henrik Andersson writes: 

As an engineer I can be accused of being too focused on science. One of my mystical ideas right now is that I believe the market will turn once these four companies reached the round 4. In Chinese '4' is an unlucky number as it sounds similar to 'death'. That's why for example there are no Nokia product lines that begin with '4'. Marine Harvest will at a salmon price of NOK 28 post an EPS of 0.40 in 2012e. At PE 10x, the stock is going to NOK 4, Maersk profit warning is getting closer whearas i believe 40k will be reached. June also seems to the peak season for ordering new vessels, Husqvarna has been on a straight path from SEK 50 to 40 with the CFO canned and the CEO watching the share price decline from the hospital bed. Nokia is this morning getting very close to EUR 4.00. I just read yesterday they are now making more money on iPhone sales (they are getting royalty) than their own sales. The market needs to 'die' before it can rise again, and these stock will in the process all hit 4.



Vincent Andres has a beautiful website in French with a photo of the cover of Atlas Shrugged and subheadings like "Kleptocracie" and "Liberticide".

Vincent Andres writes:

Thank you Victor for the kind word. It's far from DailySpec, but I do what I can being in a very socialist country (which is now threatening the internet.)

I must specify that I'm not alone and I'm greatly helped by marine research expert Michel Olagnon who writes many articles. (Michel works on rogue waves but he is also a very nice and active quant. You may remember him since he won one of your Dailyspec award in Feb 2006 with Jim Sogi.) 



 Steve Nison in Candlesticks describes the "Abandoned Baby" pattern where price gaps up, then gaps down the next day.

This occurred two days ago. The pattern was bearish (despite prior drop) according to traditional candlestick theory and modern scientific analysis.



It has been just over 100 points pretty much straight down since the high over a month ago to today's low. Common sense and hope tells you it ought to be bullish, but it ain't necessarily so scientifically speaking. The drops sure are dizzying and the pops are breathtaking as well. You can see see how they design them to scare the living daylights out of you or suck you in deeper and the rallies are designed to give you hope but just shy of a new high. Takes some strength, stamina and savvy to be involved here. In 08 the drops went into the hundreds. The action is all day and all night long without let up.



 I have always loved a good library. And some of my happiest days have been spent wandering the stacks of the Widener Library and Baker Library at Harvard, the University of Chicago Library and the University of California, Berkeley libraries. Indeed it was a visit to Lamont library which contained old volumes of the Monthly Weather Review with the great article on runs in sunny days that started me on my hopeful but sometimes fruitless quest to uncover regularities. I never know what I am going to discover in the stacks, and going through the books on a subject as opposed to looking through an index catalogue opens up new worlds, and horizons and puts me in touch with the greatest things that people have ever thought and written.

 On one of these forays, exactly 50 years ago I discovered the Fitch sheets that contained every transaction on the NYSE and ASE. I discovered evidence of microscopic reversal and macrospopic momentum and systematized it, and I believe this was the first of one of the first microstructure of markets studies.

Subsequently when I was still in the orbit of the palindrome, we would frequently meet a common friend as we entered the tennis courts or a gathering and they would out of a attempt to harmonize with the palindrome, "what are you doing these days. Same old thing?" and before I could say "yes" the palindrome would always say "yes, unfortunately".

I often think he's right and that over the last 50 years, I have not discovered much new. And yet, here are 10 things I have discovered since then that are simple but I believe have wings.

1. There are always interactions between markets but they are always changing. Witness the bond stock relation and our colored chart on the site.

2. After a regularity has been doing well, it tends to do badly and after it does badly, it does well. This is a variant of the principle of every changing cycles.

3. The interrelations are always different on different days of the week, weeks of the month, months of the year, hours of the day and minutes of the hour.

4. The market likes to force the flexions to take actions that will be in the interests of the top feeders and cronies in the market.

5. After pessimism is at a high level it is good to take out the canes.

6. Inactive markets like islands in the Ocean have a completely different microstructure than active markets. and as activity in a market change,the microstructure changes. Never try to make money in an inactive market or as I say, "never play poker with a man named Doc".

7. The markets have strong regularities but they have as much non-random tendency to do the unusual, so no matter how much a regularity appears, one must manage his money properly to take account of the unusual.

8. There is an upward drift to stock markets to compensate for the return that entrepreneurs need on their money. The higher the necessary compensation, the greater the return.

9. Most technical analysis which is based on shibboleths and seasonality is only good if you are going to reverse it and take account of the vagarious prices that emerge when transactions engendered by such pseudo things are filled by the strong.

10. A major purpose of markets is to transfer resources from the weak to the strong, so that the infrastructure can be augments and stabilized, and everything you read or hear about the market is designed by an invisible evil hand to put you on the wrong foot so that you will contribute and lose more than you have any civilized personage has any right to do.

I've got a few others up my sleeve but I'd like to hear your ideas on this.

Craig Mee writes:

 Regarding point # 6, I think, Victor, there may be a medium hand in this, and that markets under modest growth and less speculation may show greater structure relative to their more highly prized counterparts.

No doubt the role of harmony is present in all markets to varied agrees, and the players, although they may variate size from time to time in their chosen poisen, are fairly consistent throughout. 

Russ Sears writes: 

1. There is a rational often sophisticated explanation for every bubble or to paraphrase Proverbs, "there is a way that seem right unto the market, but the end thereof leads to death."

2. A corollary: to be really sophisticated you must accept some form of willful blindness. Most people will learn to ignore those blind spots. They are blinded by the light. Those that understand where the blind spots are will stuff all the risk into those spots. Then short those blinded.

Ken Drees:

In the stacks of a library one may come upon a book that one would never have thought to look for in the card catalog– like at a garage sale, how you never know what treasure you will find. Same thing with newspapers, when you open them and scan the ads and story headers, you may read something that you would never had googled. Really there is something to be said for this type of information interaction that will be lost for a time…until it becomes the new thing to do. 



 The book The Improving State of the World by Indur Goklany and the follow up references to it show that in every measurable area including  schooling, life expectancy, nutrition, hours worked, human development, freedom, poverty … there have been steady gains.

The work of Lomborg updates Simon on all measures of environmental quality in the air and water showing vast and continuous improvement.

How small the flexions would keep man so as to be better able to take our chips, and make us so hopeless as they take so much more than Bacon would have us give.



 It began Tuesday NY time, highlighted by heavy selling in EUR. This was no big deal. However, then what appeared, we hadn't seen for some time.

Equities off hard, USDJPY breaking out…with Yen being somewhat weaker, and what's this.. CHF WEAKER as well! with USD shooting to the moon. Against all and sundry.

Ears prick up. CPI a bit firmer, but Notes and short end bid…can't be that. Forget about Euro troubles, that's old news. Moody's snooping around French banks, no… couldn't be that…mmm seems something's happening behind the cloak and dagger of the night, where today was going to be the day, no matter what, for a concerted liquidation of USD short positions…. And no doubt there were a few players in the game all lined up together, shooting ducks, and for us punters, there is a need to be nimble and follow the form, or start quacking.



 Here is a great, but long (20 minute) video taken aboard the ISS. You get to see the station up close and Col. Doug Wheelock, commander of the station, gives a pretty good tour. Note the difference between the section of the ISS made by the USA and the section made by the Russians. What was of interest to me was the ham radio segment and seeing him work hams from all over the USA on 2 Meters while passing over the states at 17,500 mph.. Wheelock has a Technician class amateur radio license (KF5BOC), is pretty patient and was on the radio every day giving hams from around the world a chance to talk to the ISS. I managed to work him a dozen times or so while he was in orbit. Since he came back down, the ISS has largely been silent on the amateur frequencies despite the fact that there's two other astronauts with Technician Licenses up there.



 Does the current global taxation rate, environmental focus, regulatory environment and other factors serve to actively discourage the type of innovation and production gains we have seen historically.

I think even the politically correct mode of thinking has to be considered ad a negative. Consider this. All of Galton's work would have been dismissed as the ramblings of a racist hate monger had he produced it today. His work on eugenics would have rendered all his other work meaningless in the eyes of the academic world. Much of the work done in energy innovation fits this classification. If it is not wind solar or another "approved" energy source all work is widely discredited and attacked.

Not taking a position yet, just thinking aloud.



 Along with Einstein, Galton, et al, one should elevate plant pathologist and geneticist, Norman Borlaug to a high pedestal. Borlaug died in 2009, but during his long life he created dwarf varieties of wheat that were disease and drought resistant, along with increased yields. He sent those varieties of wheat to third world countries allowing them to help feed themselves and reduce imports. From 1968 until 2009, India's population doubled but it's wheat production tripled, much can be credited to Borlaug.

For his great works, Borlaug won the trifecta of honors, Nobel Prize, Congressional Gold Medal, and Presidential Medal of Freedom. He is credited with his varieties of wheat saving over a billion people from starvation. He proved that there could be a Double Wheat Season, and created hearty varieties of wheat that would be able to grow in any area without needing a fine tuning.

Borlaug created the Borlaug Hypothesis that stated, "Increasing the productivity of agriculture on the best farmland can help control de control forestation by reducing the demand for new farmland." Borlaug invented the real "Green Revolution," not the Green Revolution so popularized and taught by the statists, Socialists, and others as a means to the population.

Borlaug's "Green Revolution, " was meant for people to be empowered, to give them methods to feed themselves and prosper, to be able to pursue that most noble of rights, "The right to pursue happiness." The fact that Borlaug was right is evidenced by the environmental groups and the central planners that opposed his methods and wished to maintain the status quo..



 I think this essay is worth reading:

"primitive agricultural communities are `dynamic'. They are subject to continuing change in agricultural technology, induced by population pressure…"

And also this article by Grantham: "We're Heading Toward a Disaster of Biblical Proportions".

Victor Niederhoffer asks Alex Castaldo to explain to him what this is all about.  Alex Castaldo writes: 

The first link is a 108 page essay written in the early 1960s by Ester Boserup , a European agricultural economist I have heard about before but don't really know. At this time many people were concerned that overpopulation was a big problem for the world. In this essay she argues that actually in some cases a surge in population forced people in an area of the world to improve their agricultural technology and make other changes that were beneficial. So (local) population increase was actually a spur to innovation and economic progress.

Jeremy Grantham on the other hand is a contemporary money manager from Boston (born in England) who is always somewhat bearish (except in March 2009 when he briefly and correctly turned bullish). He is very environmentally concerned and always worries that humankind is using too many resources or using them unwisely. Quote: "Grantham [believes] that the world has undergone a permanent "paradigm shift" in which the number of people on planet Earth has finally and permanently outstripped the planet's ability to support us."

So the Boserup thesis and the Grantham thesis contradict each other, and Mr. Depew is quoting Boserup to counter Grantham.

Victor Niederhoffer writes:

Julian Simon would turn in his grave, as would the author of The Improving State of Humanity.

Vincent Andres writes: 

If on the other hand, the most valuable resource is the human brain, a larger population is better.

Steve Ellison writes: 

I would rephrase, "if on the other hand, the most valuable resource is the human independent brain,"(Because globally, what's the use of similar brains ?).

The ratio in the brain distribution between the tails and the body probably matters. And the bigger the body, the bigger its reinforcement, and maybe (?) the bigger the crushing of independant brains.

… hopefully, this line of reasoning is wrong.



 So some more "how's business in the heartland" observations. I needed some new tires for my trailer and ended up at a truck towing/repair shop in southern, IL last week. Had a lengthy talk with two individuals, one (Randy) who was the owner of this shop and two others. The other was a stock broker turned truck driver for whom I have no name. Randy's observations (with a grain of salt, since it was 10pm and he struck me as someone who likes a good story…)1) Truckers are keeping their trucks longer. He attributed this to distrust in the new diesels which are designed to meet new emissions requirements. The new designs have proven difficult to maintain and expensive. He is doing a booming business repairing the old ones and "deleting" the emissions from the new ones (think back to the introduction of the catalytic converters). Those who want their new engines "improved" have to sign a waiver that the vehicle will be used for racing…. I suspect it maybe because the truckers can't get financing..

2) Randy's towing business is booming to the extent that he is turning away "road side service" contracts that would cut into his margins. This of course drives some of his repair business. The booming towing business would seem to indicate that the operators are delaying preventive maintenance until the trucks break as well.

3) The stock broker/trucker moved from Wall Street to the freeway in 2002-2003 to get away from the stress of dealing with clients. He is an owner operator under contract with one of the large brokers. He lives in Florida and is home about 1 week a month, though he mentioned taking loads to specific locations to visit his friends. Plenty of work, plenty of money to be made.

4) Also spoke to a tow truck operator who says the new Ford diesel pickups are dying like flies on the freeway. This is a new engine specifically designed by Ford to meet the new emissions standards and it is not doing well. Ford has done very well in the heavy duty pickup market in recent years (F350/450/550) and if their new engine does not hold up, it will affect their standing.

5) My observations about truck vs car traffic are holding up. Long distance traffic (inter city) is predominantly commercial/truck traffic. The hotels that are busy seem to be catering to the contractor/temporary worker market. The big trucks are definitely driving slower than the have in the past. I think I've only been passed twice in the last 2 days by a semi.

Jim Lackey writes: 

The important thing for Nat Gas as a fuel to work is stable nat gas prices. Fleet managers cant have the Nat gas go from 4-16$ back to 4$. All the new supplies LNG to CNG and the new transportation ships and lines are all nice. There is a need for just in time supply. Storage is a problem.

Yes! Nat gas works great as a fuel for cars and trucks. The problem is going from the pipe in the ground and compressing and filtering the gas at home or at the fuel stations. I looked into it for hobby use and it's a no go for me in the garage, so far. The fuel tanks to run a gasoline and nat gas system take up too much room unless you have a big SUV/ truck. If you're solo Nat gas it's then a round trip 300 mile only vehicle.

Westport technologies WPRT and FSYS Fuel system solutions are my idea for investments if this tech ever took off. It didn't. UPS and other fleets use WPRT at 10k a click for LA garbage trucks and 50k for long haulers. The costs would pay off if you had a route like UPS USPS and wanted to invest in the fueling station and systems to run all your tools..forklifts, trucks to tractors.

I am unsure on the delivery costs for LNG to CNG via trucks like they deliver fuels today. It only made sense to me to use the normal Nat gas lines, but then it needs to be compressed and water free. I don't want a CNG tank at my house. Perhaps when all my kids are driving and I own a fleet, Ill buy a Nat Gas compressor and build a shed refuel station. I do not want to burn down the house.

The Germans and Detroit Diesel spent a fortune in the emission tech. Mercedes and BMW use it in their small diesel car engines. Here is the gist.

Cummins, Detriot Diesel and all the engine makers had to deal with how to comply with the new rules set in 2007. Most bought new trucks right before the financial crises..so it was a double hit to production. In New Ford F series trucks the new engine is a 2009 design.. Cummins (for light trucks) is 2007, so lets say they have many of the bugs in the electronics, fuel and mainly the exhaust systems worked out.

The auto makers spent a fortune on Hybrid tech.. That is the gate way to fuel cells.. the cars are powered by electric.. The truck makers spent a fortune on clean Diesel tech. It's a hard lobby job to get all to say let's go nat gas.. even if it makes perfect sense..therefore don't look to free markets for solutions even if nat gas trades at a huge discount per BTU..

On Ford F-250-350 breakdowns…

The old school Ford 7.3 Powerstroke was the engine that went a a half a million miles. The new school Electronic fuel injection 7.3 to the mid 90's was even better with electronics and intercooled turbos.Ford made an awful 6.0 diesel in the 2000's that few liked. The 6.4 was the new engine for the 2008 rule change.. apparently it wasn't a good engine either.

The new Ford 6.7 'scorpion"is a killer engine. However all diesel truck engines suffer from soot clogging up the DPF.. This is how and why new trucks break down.. If you notice a new truck there isn't black smoke out of the exhaust.. here is how that task is accomplished.

"DPF Filters require more maintenance than catalytic converters. Ash, a waste product of burning away the soot during regeneration, builds up on the surface of the filter and will eventually clog the pores. This increases the pressure drop over the filter, which when it reaches 8 pounds per square inch (55 kPa) or higher it will cause a significant increase in NOx emissions and fuel consumption. Regular filter maintenance is a necessity."

and check out how this works.Regeneration is the process of removing the accumulated soot from the filter. This is done either passively (from the engine's exhaust heat in normal operation or by adding a catalyst to the filter) or actively introducing very high heat into the exhaust system. On-board active filter management can use a variety of strategies:

1. Engine management to increase exhaust temperature through late fuel injection or injection during the exhaust stroke
2. Use of a fuel borne catalyst to reduce soot burn-out temperature
3. A fuel burner after the turbo to increase the exhaust temperature
4. A catalytic oxidizer to increase the exhaust temperature, with after injection (HC-Doser)
5. Resistive heating coils to increase the exhaust temperature
6. Microwave energy to increase the particulate temperature

All on-board active systems use extra fuel, whether through burning to heat the DPF, or providing extra power to the DPF's electrical system, although the use of a fuel borne catalyst reduces the energy required very significantly. Typically a computer monitors one or more sensors that measure back pressure and/or temperature, and based on pre-programmed set points the computer makes decisions on when to activate the regeneration cycle. The additional fuel can be supplied by a metering pump. Running the cycle too often while keeping the back pressure in the exhaust system low will result in high fuel consumption. Not running the regeneration cycle soon enough increases the risk of engine damage and/or uncontrolled regeneration (thermal runaway) and possible DPF failure.

Diesel particulate matter burns when temperatures above 600 degrees Celsius are attained. This temperature can be reduced to somewhere in the range of 350 to 450 degrees Celsius by use of a fuel borne catalyst. The actual temperature of soot burn-out will depend on the chemistry employed. The start of combustion causes a further increase in temperature. In some cases, in the absence of a fuel borne catalyst, the combustion of the particulate matter can raise temperatures above the structural integrity threshold of the filter material, which can cause catastrophic failure of the substrate. Various strategies have been developed to limit this possibility. Note that unlike a spark-ignited engine, which typically has less than 0.5% oxygen in the exhaust gas stream before the emission control device(s), diesel engines have a very high ratio of oxygen available. While the amount of available oxygen makes fast regeneration of a filter possible, it also contributes to runaway regeneration problems.The new big truck buying push….

As of December 2008 the California Air Resources Board (CARB) established the 2008 California Statewide Truck and Bus Rule which—with variance according to vehicle type, size and usage—require that in-use diesel engines (in California) be retrofitted, repowered or replaced in order to remove at least 85% of particulate matter (PM) emitted from diesel engines. Retrofitting the engines with CARB verified diesel particulate filters are one way to fulfill this requirement.[1] In 2009 the American Recovery and Reinvestment Act provided funding to assist owners in offsetting the cost of diesel retrofits for their vehicles.[2]



"I love the AUD, it is up more than the S&P" - A DailySpeculations Reader

Below is a table with the Purchasing Power Parity "PPP" for some currencies as calculated by Bloomberg.

The US Dollar is approaching undervalued extremes that (historically) result in global macroeconomic shifts and realignments, and cyclical/secular bottoms. These realignments are beyond the attention span of most so-called professional traders.

So, buying the Australian Dollar at a 35% PPP overvaluation may be profitable for the next hour, but probably not the next decade.

Currency / % Over-Valued

Australian Dollar 34.76 %

Swiss Franc 31.75

New Zealand Dollar 30.53

Danish Krone 23.38

Euro 22.28

Canadian Dollar 18.9

Norwegian Krone 18.25

Japanese Yen 12.96

British Pound 12.31

Swedish Krona 1.07



I commissioned a statue of Atlas from Zura Bushurishvili , the artist who made my bull . And here it is. 

The subject of Atlas reminds me of a comment I read recently on an article about Bill Gates:

"I think the most admirable thing about Bill Gates is that he doesn't think that his children should inherit his wealth."

-From a comment to a Daily Mail interview of him.


























Here's a great Communist illustration from 1911 beating up on Capitalism. It's so beautiful that we should find a way to use it in the DailySpec. Of course it's wrong, but still beautiful in that pre-1917 Soviet influenced style that has artistic merit.



 Gregory Clark wrote an excellent paper analyzing the grain markets in medieval England. Many things can be learned about the efficiencies of this market, and the lack thereof. I was surprised to learn that in the 14th century it was illegal to buy wheat in one market and hold it over to sell in another for a higher price. I was not surprised to learn that the Crown had laws on the books that enabled them to purchase wheat at below market prices. Clark's paper gives one a very good insight into the sophistication of the markets and is a great read for those interested in history.



I like the semantics of the Scholarly Chair's remark "the recovery is frustratingly slow". There's something out of Mario Puzo in it. "I made him an offer he couldn't refuse" or "I don't think we'll be seeing those visitors from Chicago again". A cartoon showing a Thor Like Character with Hammer and Lightning in his belt saying something like, "I don't see why everyone is so slow to tell me what's on their mind" comes to mind or a man with a gun pointed at his wife saying, "Look dear, let's discuss this in a calm manner".




The speed of light is infinitely fast! Your calculations are an illusion, one caused by the acceleration in the expansion of all matter in the universe — a uniform, accelerating expansion so you don't notice it (akin to being a piece of dust, which too is accelerating and expanding, on a balloon being filled with accelerating force, such that you seemed to stick to it, and you mistake it for matter attracting).

This causes the speed of light to appear constant, and accounts for the fact that there is no "graviton," no particle associated with gravity, and, also in maverick fashion to the other 3 fundamental forces, moves in only one direction with respect to time.

Now, everyone back to their stations please!



It is interesting that the move on Monday after the last twenty five 20 day minima on a Friday had a standard deviation of 34 points versus a normal days' standard deviation of 15 during that 5 year period.

What an opportunity there will be for the weak to give chips to the strong.



 One wonders if the short sellers have some flexionic relations with certain publications. They seem to come up with more reasons to be bearish on our friend than any one. It reminds me of when I had Thailand long. First one rating agency then another downgraded them. It got so that if a man with a suitcase saying "fitch" was seen at an Asian airport, the Thai market would open limit down. 

Russ Sears writes: 

It would seem this week that the flexions have a fondness for driving down the markets the last hour so it can be reported by the news. But how to quantify this and make it predictive? 



 As a beach boy who doesn't much like to leave New York City, who has never owned a car and doesn't normally wear a watch, who thinks that meeting trains or planes scheduled to fixed times is strictly for neurotics, I've necessarily become a connoisseur, a gourmet really, of the beaches accessible by our Metropolitan Transit Authority. And I mean the real beaches available for swimming, serious swimming, not those crowded shorefront sunbathers' oases scattered through Brooklyn and Manhattan.

The most accessible, and always the most popular, has been the beach that runs continuously from Coney Island to the west to Brighton Beach on the east. Over two miles long, only one long block away from the elevated MTA stations, it has for over a century been a proletarian playground with a wide spacious boardwalk that runs from end to end. So convenient to public transportation is this beach that the walk from the boardwalk to the water's edge is usually longer than that from the subway to the boardwalk. Likewise conveniently, several subway lines once again (after reconstruction) service the four stations parallel to the beach: Brighton Beach, Ocean Parkway, Aquarium-W. 8th Street, and Stillwell Avenue-Coney Island.

The subtle truth of this beach is self-segregation, which is to say that the successively numbered bays (divided usually by rock jetties running perpendicularly from the shore into the ocean) attract radically different cultural groups. Nowadays, most of the people at bays 1 to 6 are Russian immigrants from nearby Brighton and Sheepshead Bay. By contrast, the bays in front of the Stillwell Avenue and Aquarium stations, numbered 10 through 13 or so, have hosted for the past few decades mostly Latino crowds. No signs tell prospective bathers where to go, but there are good reasons why, say, the sellers of mangoes wrapped in plastic bags, poked with a thin stick, and freshened with hot sauce rarely go east of bay 9. (I can recall a Russian friend asking me, "What are those?") Needless to say perhaps, most guidebooks don't acknowledge this segregation in PC times.

 I myself have favored Bay 8, between the two crowds, because it has always been comparatively emptier, which is to say that the number of people at bays 9 or 7 are roughly 50% greater than that at bay 8 on weekends as well as weekdays. Bay 10 is likely to have twice as many people as Bay 8, and bay 11 yet more. The best way to explain why bay 8 should be so empty is, simply, that "no one goes there" for some three decades now. The only signs identifying the individual bays are small medallions mounted high on poles on the ocean side of the boardwalk; but if you can't locate them, ask the lifeguards. They usually know the official number of the bay to which they are assigned. Since I once before recommended Bay 8 in print without noticeable effect on the beach itself, I don't fear mentioning it again.

On the other side of bay 13 are beaches yet emptier, if they are open, but often closed with a make-shift fence, especially before July 4th, and patrolled by uniformed people threatening to arrest you if you bathe there. When open to water-lovers, these are the cleanest beaches for the simple reason that fewer people patronize them—don't forget the truth that human beings make the most water trash. On the western end of this beach is Sea Gate, a community secure behind a forbidding fence that goes out into the water; but just before (or east of) it is a beach that attracts people visibly different from Coney Island proper or Brighton. I'm told they are mostly Italian- Americans, but am not sure. Not knowing anyone residing in Sea Gate, I've never sampled its beaches; but my father, who did a summertime rental there with his buddies in the 1920s, tells me that they were great then. (Yes, 80 years ago, and he's still around, though not swimming.) You don't need to subscribe to the Gaia hypothesis to believe that Sea Gate beaches fronting into New York harbor are no less hospitable several decades later. Since most of the people on the entire Coney Island-Brighton beach speak languages other than English, the proletarian beach has become an immigrant beach, which means that their beach small talk thankfully won't be understood. The atmosphere is also pervasively mellow, even on the hottest days, mostly because most people plant themselves among their own kind with sufficient space between themselves and others; and everyone is as pleased as I am to be near the water. Indeed, public beaches are my model for mellow anarchy, where everyone is equal with respect to visible wealth or power, few trying to put down others. Or as a portly friend put it, his arm sweeping across the horizon, "Fashion models don't hang out here." If only the whole world could be forever like a public NYC beach.

For swimming, distance swimming, which is what I do, this beach can't be beat. Go out far enough and you can swim (and think) without needing to worry, as you might in a swimming pool, about colliding with someone else. If you visibly demonstrate that you know how to swim well, the lifeguards won't hassle you, no matter how far out you go. When I pointed to a slow swimmer chugging far out from shore, the chief lifeguard replied, confidently, "We know him." Though the water comes from the Atlantic Ocean, Coney Island/Brighton is actually a bay protected on the southwest by Sandy Hook, the New Jersey peninsula that extends north into New York harbor. and on the northeast by Breezy Point, the westernmost end of the Rockaways. Therefore, on most days the water here is placid; only with the threat of a hurricane will there be waves high enough to body surf. Surfboarding is unknown here.

 Bear in mind that all New York City beaches are officially "open" from 10 am to 6 pm., from Memorial Day to Labor Day, which is to say that only during those times will they be staffed with lifeguards and ancillary City workers who give first-aid and scare away fisherman. However, since the beach isn't fenced off, people do on warmer days stay after six pm., when newcomers carrying fishing poles emerge. Since the temperature of the water is higher in September than in June, some patronize New York City beaches after they are officially "closed"–after the lifeguards (and garbage cans) have departed. Others swim into the winter. (A lady friend and I once celebrated New Year's Eve with a dip before midnight, preceding the "polar bears" photographed running gleefully into the ocean on New Year's Day. Prancing through cold water is easier to so than one thinks, if you keep the back of your head out of the water and don't stay too long.)

On truly hot summer nights, some try to stay overnight on this beach, which would be reasonable, did the City not send out noisy trucks in the middle of the night to churn garbage out of the sand. Awaking to these dinosaurs can be, I'm told, an unforgettable nightmare. Decades ago, people homeless and otherwise, both loved and loveless, could spend the night under the broad boardwalk; but this has become less possible since the Army Corps of Engineers raised the level of the beach sand roughly to that of the boardwalk, thereby making a windowless cave of the areas under the planks.

On the other side of waterfront houses east of Brighton is Manhattan Beach, much smaller, which is accessible by public bus from the Brighton Beach subway station. Perhaps on a crowded weekend a visit here is worth the inconvenience of a bus ride. I've heard of yet another public beach on the other side of Coney island, on the northwest coast, just east of Sea Gate, facing New York harbor with a spectacular view of lower Manhattan; but since getting there would require a trek from public transportation, I've never sampled it.

As the subways to the NYC beaches eventually emerge into open air, you can with your own eyes observe if, since you began, the weather has turned bad, as it does often in the summer. (Forget about what the weather forecaster "predicted." I'd sooner trust horse- touts.) If clouds threaten, you can simply disembark your train, sniff some fresher air, and go over the other side of an express-train track before returning home at no extra cost. One persuasive advantage of the main Coney Island-Brighton beach is its proximity to an MTA subway with continuous service; so that if the weather suddenly turns foul while you're at the beach, the elevated subway is only a short hustle away. Pity the day chumps on Fire Island waiting in a sudden rainstorm for a scheduled ferry to get them to a scheduled bus to get them to a scheduled train before they can connect to the MTA. Perish the nightmare.

 The Rockaway beaches are different because they front on the Atlantic Ocean, much like the beaches in Fire Island or even the Hamptons, which is to say that here is salt water essentially no different (and no dirtier) than that in the purportedly classier watering holes to the east. A century ago, the Rockaway beaches attracted the same sorts of folk who nowadays go further east. I have a collection of century-old photographs from the Rockaways, portraying people looking prosperous not only on the boardwalk but overdressed in the water.

Sometimes the water on the Rockaway Beaches is placid; other times there are waves—real high waves, when this beach can be dangerous, especially to non-swimmers. The lifeguards here make many more saves than those at Coney Island, and several people drown here every year, usually before or after the lifeguards work or in areas that aren't watched. This Rockaway beach is over ten miles long; its boardwalk, while much narrower than that at Coney, is several miles long and remarkably empty in comparison.

 Unfortunately, much of this beach is officially closed, sometimes purportedly for a lack of bathers, which is true, as the bungalows near the ocean between 35th and 72nd Streets were scandalously demolished in the name of "urban renewal" four decades ago, leaving miles of oceanfront property pathetically empty ever since. Other times they are closed for a "shortage of lifeguards," which seems dubious, given how little they are paid. Anyone trying to swim in these fenced-off areas will soon attract a visit from a uniformed official. When a local newspaper tried to make a photograph of me standing, but clothed, in the water at 67th Street last summer, a succession of guys in beach jeeps came by to ask what we were doing, until one assured us that he read the paper.

This beach too is self-segregating in ways reflecting two factors— the kinds of people living in the streets near the beach and the routes of public transport. The beach around 60th Street is roughly 300 yards wide, 50 feet deep, kept officially open to service a grim- looking low-rent housing project overlooking the ocean. Sometime last summer, an New York Times's intrepid beach reporter wrote that the project people didn't patronize this beach because they thought it "too dirty," which it isn't, or because they couldn't swim, which seems more true. Therefore, during the weekdays it might have two dozen patrons (at 2000 square feet apiece) along with several lifeguards. The water on one side of the dividing jetty I find best for body surfing; that on the other side of the jetty has 200 yards for continuous swimming. On weekends, Caribbean-American families arrive, crowding up the water; and in the playground behind the beach are generous barbecues, one mostly Latino Caribbean, another West Indian. This 60th Street beach is directly accessible from Manhattan and Brooklyn on the A-train marked "Far Rockaway," not Lefferts Avenue or Ozone Park, just three stops after Kennedy airport.

 The folks on the A-train with giant surfboards are probably going to the first stop, 90th Street, changing to the shuttle train that begins anew at Broad Channel, itself the first stop after JFK airport. The beach at 88th Street has been officially set aside for surfboarders. This shuttle train (marked "S") continues parallel to the ocean, only a few blocks away from the water, to its terminus at 116th Street, which is a shopping thoroughfare of sorts, with the only Rockaway stores offering beach paraphernalia (as well as Irish bars that are plentiful in this area, unlike, say, 60th Street, which has none). The beach at the end of 116th street is invariably the most crowded and boomboxy in the Rockaways, usually with teenagers and, I'm told, Brazilians. Older or quieter folks might prefer to get off at the shuttle stops at 98th or 105th Streets, the emptiest beach being around 103rd Street, or to walk west of 116th Street. The beaches in the 120s reflect the predominantly Irish-American population of Belle Harbor; those in the 130s and 140s the Jewish upper-middle-class of Neponsit. One reason why beaches here are under-populated is obnoxious street signs forbidding parking in the daytime during the summer months, which is to say that aspiring bathers driving here from elsewhere must either park in a friendly driveway or go somewhere else. The lack of public lavatories here also discourages outsiders.

Another way for the car-less to get to the Rockaway beaches is taking the public bus that originates near Brooklyn College, which is also the southern terminus of subways # 2 & 5. This bus # 35 proceeds down Flatbush Avenue over the Marine Parkway (aka Gil Hodges) Bridge to the Rockaways, where it swings east. The first stop is Jacob Riis Park, which is a large if aged New York State facility with lifeguards (some of whom wear spectacles, which are forbidden to NYC lifeguards) and locker facilities, as well as food concessions. Its 16 sections are likewise self-segregating. I've been reliably informed that at the eastern end is a beach favored nowadays by gays; two decades ago, it was the only nude beach within New York City. (Nowadays, those with Northern European "naturist" tastes go to Sandy Hook or eastern Long Island.) The section on the other, western end of Riis Park is reportedly favored by Italian-American teenagers who tend to get into fights among themselves. In between are a succession of crowds more subtlely defined. Need I mention that that entrance here, as in all the beaches mentioned favored by me, is free, that's FREE, which is my favorite price range, though the parking lot charges four bucks. Don't forget the inarguable truth of anarchist economics: the best things in life, in this case sunshine and surf, are free, absolutely free.

This # 35 bus can also take you through Neponsit and Belle Harbor, if you want to sample those sparse beaches, probably before walking down to 116th Street, where there is a public lavatory under the boardwalk, not to mention a subway home. Yet other public buses, # 21 and 53, come from Queens across Jamaica Bay over the other bridge to the east, Cross Bay, to run parallel to the shuttle train, likewise terminating at 116th Street.

On the other side of Riis Park is Fort Tilden, a sometime military base, which into the 1960s housed the Nike missiles facing out into the Atlantic. It has magnificent beaches that are officially closed and thus lacking lifeguards but nonetheless accessible. Indeed, several of us once celebrated Rosh Hashanah with a midnight swim here, and we were not alone on the beach at that time. Yet further to the west, well beyond public transportation, is Breezy Point, which is another gated community, much like Sea Gate, but far less secure, as its fences don't extend down the beach into the water. Here is certainly the most beautiful beach in New York City as well as the most isolated, separated by dozens of yards of sand dunes from the nearest housing.

 Breezy Point, at the western end of the Rockaway peninsula, miles away from any other residential community, is known affectionately as the Irish Riviera. With modest detached houses tightly packed next to one another, in the largest coop of single-family homes in the US, mostly owned by police and firemen, it is very much its own world, with its own rules, typified by burly folks carrying their cans and bottles of beer unwrapped, even though they would arrest you for doing the same in Brooklyn or Manhattan. Breezy Point doesn't take kindly to uninvited guests, even if they can legitimately enter it by walking along the beach or bicycling past by gate on the main road. Perhaps I shouldn't have mentioned it at all.

A friend recommends the beach at 25th Street, at the end of a row of classic bungalows still occupied, which is also accessible from the direct A-train. "It's quite wide with dunes and that same wave energy," he tells me, "protected from erosion by Atlantic Beach," which is the western tip of the barrier island called Long Beach. (The barrier strip beyond it has Jones Beach; the next extending out into the ocean, to the east, is Fire Island.) However, I don't claim to know the beaches east of 60th Street, because, not unlike others in the Rockaways, I tend to regard everything east of a certain point to be fearsome. (For those residing further to the west, the cut-off points can be 88th Street, 103rd Street, 116th Street, or even 132nd Street; but that's another Rockaways story.)

 Because the New York City beaches are thankfully so accessible, I find that I can spend the morning writing, hop around noon into a subway where I read for an hour or so, swim for an hour and even take a nap before returning by subway home for dinner, an evening out or with my computer, and a night in my own bed. The only other cultural capital in the world where that is possible in my experience is Berlin, which has several comely lakes; but I'd rather body surf or swim in the ocean with its extra buoyancy than lap around a lake or a pool. And, accustomed to the easy access of MTA subway stations, my Metropass in hand, I'd prefer not to navigate all the hideous obstacles of Penn or Grand Central. Believe me, masochism need not be a prelude to the pleasure of a summertime beach.




 The Edifice Indicator.

From AFP:

Once-bustling Dubai will open the world's tallest skyscraper on Monday, boasting new limits in design and construction, hopeful of polishing an image tarnished by the debt woes afflicting the Gulf emirate. Emaar, the giant property firm part-owned by the government and which developed the needle-shaped concrete, steel and glass structure, has declined to reveal Burj Dubai's exact height. Apparently wanting to maintain the suspense, the company will say only that the tower exceeds 800 metres (2,640 feet), putting it far higher than Taiwan's Taipei 101 tower (508 metres).

Here is an interesting article about the Tokyo Sky Tree.

Then there is the interesting history of the Jakarta TV Tower.

And check out this video about the design of Apple's proposed headquarters.  Perfect Circles AND Underground Parking.



 The greatest Constitutional crisis:

The actual language of the Constitution gives Congress the exclusive power of legislation and its enforcement; the President only has the power to veto legislation and to act as Commander-in-Chief. Until the Civil War/WBTS this was never questioned. Cabinet Secretaries reported to their Congressional committees, not to the President. This tradition continued throughout the war; the President appointed commanders but Congress and the Committee on the Conduct of the War looked over his and Stanton's shoulders every day.

If Scott and Pete and our other Mises-istas want to find the roots of our present clerical tyranny in that period, they should not blame Lincoln but look to my hero, President Grant, who established the precedent that cabinet officers would serve at the pleasure of the President, not the Congress. Grant's reputation for "corruption" stems from this; by establishing an actual Civil Service, he not only pissed off every Congressional chairman by taking away his patronage but also began the investigations that discovered the Congressional cheating. (Once again, no good deed goes unpunished.)

But Grant never presumed that he and his Cabinet members had the authority to write quasi-laws through regulation except for the military under the President's authority as CIC; for all other areas of law the legislative authority remained entirely with Congress. Presidents who wanted to extend their imperial authorities had to find justification for their actions by relating them to war; Wilson's literal nationalization of the U.S. economy was upheld using the justification that Congress had given him that authority by approving a formal declaration of war. Franklin Roosevelt used the same rationalization for nationalizing the country's gold (the Trading with the Enemy Act), but even his administration's efforts at bureaucratic tyranny were hopelessly mild compared to what followed and they were subject to serious judicial review. (Under our current rules for administrative law the cases challenging every New Deal rule-making would not have been struck down by the Supreme Court; they would have been considered "reasonable" exercise of Presidential authority.)

If you want to look for villains, I suggest 2 Democrats (Truman and Johnson) and 1 Republican (Nixon). Their enthusiasm for the Administrative Procedure Act and Code of Federal Regulations (all to be justified in the name of the Cold War) has spawned the Orwellian nightmare that we keep trying to pretend is nothing but a temporary fright.



 On a weekend trip.

1. We head to the Watchtower by the Brooklyn Bridge and they don't have the sign up any more that says, "the dead will rise". But it's there in my mind from the 1970s still. And eventually it will apply to tech.

2. Williamsburg itself is thriving with all the old factories now being converted to condos and family residences and boutique shops. If there is a good infrastructure and the buildings are strong, they will eventually find a good and productive use. The same thing applies to Coney Island where the crowds there now rival what they were in my day in the (I look around 3 times ) thirties. How to differentiate this from the situation in Detroit where the buildings sell for $50 or so. Is it just the unions?

3. We go to Zura's loft where hundreds of immigrants are doing sculptures out of metal working that they learned in Russia and making a good living, and they build model motorcycles and chandeliers among other things in the Mill building which was converted from a Mill 100 years ago when I was a boy. The immigrants are the dynamic entrepreneurs that make jobs for everyone and do things that enable us to augment our horizons.

4. We go to the Hall of Science in Flushing and the circus science is very good, and it shows that things are seldom what they seem. All the contortions and balancing can be learned with practice and family training. A contest between two balancing acts in Niagara Falls in the 1870s shows the importance of competition. One of the balancers had no hesitation in carrying Prince William across on his back as he crossed Niagara on a one inch thick tight rope successfully and dipped down to get a drink from a passing paddle wheeler for sustenance. The unusual is always the usual for the market, and what seems impossible will ultimately happen.

5. As we go home, our door snaps open and grazes a Russian's car, and he extorts us for hundreds as time is not meaningful to such. They were laying in wait for such to happen like a spider in his web. Time has a different value to all, and along with their low service rate, is the key determinant of why the Asians have and will surpass us.

 6. "Times have changed"

"In olden days a glimpse of stocking was looked on as something shocking but now the Good one knows. Anything goes".

Aubrey and I saw Anything Goes.

I am thinking of 10 lessons we can learn from Anything Goes. You can help if you will. The first lesson is that in old times if you beat earnings estimates, nay, if you just reported a positive quarter, it was enough, a glimpse of a rise was sufficient. Now you have to beat the earnings estimate, you have to beat the sales estimate, you have to give an upbeat guidance for the future, and your margins have to improve.

7. Also, like in Anything Goes, the crooks are considered honorary captains of the ship. Many admire Madoff 's market making operation and his capacity to lead the auditors to think he was going to be the next head of the agency. The heiress Hope Harcourt (any relation to Jov?) has to marry the wealthy English Lord because her family has lost everything in the depression. However, her father jumped off the ledge of the stock exchange like a Yale man, so his death was honorable.

To be continued.

Rocky Humbert adds: 

 For what it's worth, the Jehovah's Witnesses sold the Watchtower building some years ago, and it's now an NYU dorm. Notably, they didn't replace the "Dead Will Rise" with ""Perstando et Praestando," …

The lack of signage might be due to infighting between the dead (and not rising) faculty of Brooklyn Polytechnic (whose campus was absorbed by NYU)… as they are still lobbying for Virtus Victrix Fortunae. 

Useless fact: Brooklyn Polytechnic may be the only US university that produced Nobel Laureates AND went out of business.

Jason Ruspini adds: 

 Have they have already surpassed us? It looks more like American/European technologies and institutions have just diffused over to their many people. What are the innovative contributions to world society coming out of Asia? They have some tall buildings and big casinos.

If long-termism manifests itself as rigidity, that is a weakness. Not to extrapolate the Fukushima situation to all of Asia, but it does give a general impression of flimsiness under a facade of success and technical prowess. (Japan needed our robots. They will never live that down.)

Math/science that is actually innovative will win in the long-run, but America hasn't been bowed yet.



 I find Tyler Cowen to be a very interesting, stimulating individual and am looking forward to his upcoming talk at the NYC Junto. I read his latest "The Great Stagnation" in preparation for the talk. It is a quick read, and well worth checking out. While I enjoyed it, I disagreed with many of his arguments put forth in it.

The premise distilled is that the US was in a unique spot in its younger days to take advantage of a large variety of low hanging fruit due to a variety of factors resulting in increased prosperity, and that since the mid 50s the pace of innovation has plummeted and the rate of return of technology has diminished greatly, requiring more and more dollars for less and less life altering discoveries. I take full blame for any misinterpretation in putting forth Tyler's arguments, but the above was my take away.

He references the work of Jonathan Huebner in attempting to quantify innovation rates, and put forth the argument that things are ugly from 1955 onwards. I believe there are major problems with Huebner's methodology despite a laudable effort, including a very subjective measurement of exactly what an innovation is by definition. He uses patent data also which while not without problems is at least measurable in some form compared to the other method he uses for counting innovations.

Here is one review of said work.

 Tyler also argues that "current innovation is more geared to private goods than to public goods…with only slight additional benefits to the majority of the population" and that "the basic material accoutrements of life (again, internet aside) haven't changed much since he was a kid."

I don't believe I am wearing a pair of rose colored glasses when I say that there has been tremendous amounts of innovation and technological progress since the 50s in the US with great benefits to large swaths of the population. The progress in integrated circuits and computers alone is absolutely amazing in my opinion. Materials science has also made great strides. Despite the BP mess, the oil and gas industry continues to innovate. These are just some areas I can think of right off the bat. There are many more, but I've got to call it a night soon.

I found the whole line of argument reminiscent of the perennial naysayer Paul Ehrlich.

I'm not sure if anyone else on the list has read the book yet, or has any opinions, but I'd be interested to hear what others think. I believe science and technology have delivered and will continue to deliver advances that improve our lot. I also believe there is plenty of innovation still happening and that will continue to happen which is a net positive to the majority of the population.



I found this article quite fascinating: "Are Artists Liars?"



 My wife and I are making our way from Houston, TX to central OH and back over the next 2 weeks with our truck and fifth wheel trailer. Sunday was Houston to Dallas, yesterday was Dallas to Little Rock, today was Little Rock to Sikeston, MO. (I45, US380, I30, I40, I55). Because of time constraints and the size of our rig, we tend to stick to the interstates, but explore when we are unhooked. Just thought I would share some business/market related observations with the list.

1) Traffic composition. I typically drive 40-50K miles a year, mostly interstate, and would say I have a good feel for what traffic looks like. I've been struck by the composition of the traffic so far. It is very truck heavy, more like what I would expect for late night (midnight to 6 AM). I did some estimating and would say it is about 60-70% trucks, all apparently well laden (ie, no bouncing trailers). Good mix of flat, van, reefer and tank. So companies are ordering stuff and it is being delivered. There are enough loads that the trucks do not have to run empty. People are not traveling casually; in particular, the RV traffic is very light. I've been making reservations as we go, but no park has been full yet. Hotel/motel parking lots are vast waste lands. Think the travel industry is in for a rough summer.

2) Truck speed. Typically a good percentage of the trucks have the "hammer down" and are traveling well above the speed limit. Not so the last 3 days. My cruising speed with the trailer is 65MPH (or the speed limit which ever is less). I've yet to have a truck blow by me at 75MPH. And East Texas and Arkansas are prime speeding zones (flat and straight). A good number of the trucks are running 60-65, even when the limit is 70. Very unusual. My guess is that they are all looking for the sweet spot (RPM, engine, transmission combo) where they can milk the mileage allowance for an extra penny or two a mile. No more racing to be an hour early. The price of fuel is starting to cool the American racing tradition. This might have the effect of reducing demand considerably. Depending on the driver, you can vary from 6 to 10 MPG with a semi (I have 2 children who are/were drivers). So if a significant number are being incentivised to save fuel rather than deliver on time, it could have a major impact on diesel consumption. I'm also seeing a lot more trucks with under the trailer skirting and tight fenders over the tractor rear tires, which are both fuel saving devices. The under the trailer skirting almost all looks hand made (ie, semi pro body shop). Again, the truckers are facing tight enough margins that they are willing to sacrifice some load capacity as well as maneuverability (the skirting will hit the ground on railroads, etc) in order to gain a few pennies per mile. If this works, then the big fleet operators are either going to retrofit their trailer fleets or replace them.

3) Small town death While we drive mostly interstate, we do get off for food, fuel and sight seeing. Small town rural America is in deep trouble. Lots of empty stores. Many towns appear to have done some 'revitalization' or 'historic district' which all appear to be failing. Pretty banners, nice signage and empty store fronts sandwiched between antique shops, hair salons and second hand stores. The nicest building is usually the offices of the "economic development commission", or the bank. Was there Federal largess doled out in the last few years for this type of activity? If so, it has failed and appears to have dried up. While not strictly a "small town" North Little Rock has a beautiful riverfront trail and minor league baseball complex. The homeless seem to appreciate the nice grass to sleep on and the restrooms to cleanup in. One intersection appeared to have a section of bleachers for the homeless/pan-handlers to sit on. Not sure if the bleachers (one section 4 rows high) was provided by the city, or if the users had the gumption to haul it in from somewhere.

 4) Agriculture Crop planting is WAY behind. I already knew this since my brothers in central Ohio are just now planting corn, which should all be in the ground by May 15. I can just confirm it based on my own observations. The numbers say that they have already lost 25% of their yield potential by missing the optimum planting season. In years past, significant acres would be switched from corn to soybeans (which get planted later). I need to get the details from my brothers, but I think the government "price support/insurance" programs have become so lucrative, that it is better to plant the corn, harvest what you can and collect the difference from Uncle Sam. If this is true, then there will be extra payments due from the Treasury in the fall that are probably not accounted for anywhere. And in the great scheme of things, it is probably only a few billion (rounding error). Perhaps more importantly is what a 25% crop short fall will do to the world and domestic supply, demand and pricing. I am not really in tune with agriculture anymore, but it should make for an interesting commodities futures ride.

5) Outdoor advertising. Lamar (the most common name I see) and similar are in for a rough time. LOTS of empty billboards, or billboards touting the advantages of bill boards. Also a lot more of churches, hospitals, public service announcements, short term (gun show, event, concert). I take all these as indicators that the market is still very soft and that the billboard companies are dredging the pond looking for new customers, and adjusting the pricing to fit.

6) Replacing rest stops Texas, Arkansas and Missouri are all redoing rest areas. It seems to be driven by green/ecology forces. The new ones feature "eco friendly" designs, solar power, recycling toilets etc. Again, is there Federal largess involved? Or are the states just trying to save some operating costs by reworking old high maintenance rest stops into lower cost "green" ones? I doubt that this is a very consolidated market, probably lots of one off designs.

7) Arkansas Freeways. The state appears to be figuring out how to build smooth freeways. Though stretches of I40 still make you want to walk. And it is not potholes, they just did not understand how to lay 2 slabs of cement beside each other in a level fashion! I've been on gravel roads that were smoother than the remaining bad sections of Arkansas interstate.

Scott Brooks writes:

 If you pass thru Sikeston, MO again, you MUST stop at Lambert's Cafe (Home of "Throwed Rolls"). It's something that must be experienced at least once!

If you are passing anywhere near St. Louis on your way back, stop on by my house and I'll throw some pork steaks and venison (from my farm) on the grill and give you a real St. Louis treat!

And as always, all specs are always welcome to stay in my guest house anytime they're in St. Louis!

Rocky Humbert adds: 

Revisiting this post, a little bit of arithmetic puts point #2 into clear perspective, and allows one to calculate the optimal truck speed versus truck driver hourly earnings. The Kenworth Truck Company website says: "A general rule of thumb of thumb is that every mph increase over 50mph reduces fuel mileage by 0.1 mpg" See this paper.  

That means reducing the average MPH from 75mph to 55mph will increase the average fuel economy by 2mpg.

Let's assume that a typical day's journey is 500 miles. That means the journey will take 9.1 hours at a speed of 55mph or 6.7 hours at a speed of 75mph. And increasing one's fuel efficiency by 2mpg will burn approximately 16 less gallons of fuel. So, if diesel fuel costs $4/gallon, reducing the speed takes an extra 2.4 hours of driver time, but saves $64 in fuel. So the incremental driver time is worth $26.66/hour.But if fuel costs $4.5/gallon, reducing the speed takes an extra 2.4 hours of driver time, but saves $72 in fuel. So that's worth $30/hour.Everything else is ceteris paribus. Conclusion: if the trucker's salary is less than $50,000 per year (and most are, based on industry surveys), then it makes sense to drive slower…. and the pivot point is likely somewhere around $3.75/gal … which is EXACTLY the current national average diesel price.



 The gangster banksters were out in force in Atlanta's Buckhead today. The Ritz Carlton, Buckhead holds a special place for me. Started running my first Peachtree Road Race there in 1989, spent my wedding night there in 1991, lived a mile away for a few years, enjoyed many an adult beverage at the bar, met William O'Neill's first CANSLIM poster boy, David Ryan there for a meeting and truth be told, enjoyed the finest meal in my life in the Ritz Main Dining Room when it was still open, having a piece of chocolate covered venison that had been cooking for three days with my family. Today the Ritz was all about Bernanke the Banker so I headed down with my home made sign and stood in the heat for a couple of hours across the street. I hydrated well and threw on the Maui Jims and headed out on a lethargic day in the stock market. I figured there may be others; like-minded, youngsters, Generations X and Y'ers shouting with signs. Wrong, not a soul with me.

I felt powerful standing there watching the big limos roll up with the men in black. They would like us to believe a default is a bad thing for us. It's actually a bad thing for the banks, not most Americans. Pain would be sharp, but it would end. I thought about our debt ceiling that will be raised same way the TARP passed; with threats of financial, govt and economic collapse, maybe even martial law. It will be the same ole song & dance. This is silly, why call it a "debt ceiling"? Just call it what it is, an increase in the rate of borrowing.

The security detail fanned out watching me across the street. Getting blank stares from drivers far too concerned with making a living than reading anything about Bernanke. I felt sorry for America today.

Today, the Japanese and Australian tourists had questions or maybe they just liked my orange shirt. The Americans seemed to be worrying about their next text message, tattoo and hook-up. I am glad I went but more scared for America from what I saw at that intersection today. Savings and retirement are not institutions. They are matters of personal responsibility. They are an attitude - not some external organization or person to blame. The key word in retirement planning is not retirement. It is planning as in; plan to have your house paid for, plan to have your car paid off, pay off the credit cards and have enough saved to generate a steady income in your later years.

In the coming years, our debt is projected to grow to more than three times the size of our entire economy. This will be ugly down the road.

Today, do they really care? Not sure. I do. That's why I went. I wanted to do it my way, just like my Dad.

Originally posted on the Chippewa Partners blog



 Uncle Ben says that high prices curtail demand.

He reminds me of one of the Duke Brothers in "Trading PLaces".



Gary Rogan writes:

What's more important, he is speaking to the lawmakers in the language they understand, "stock market" just like in '08. He hates the idea of curtailed spending so now he wants drive the stock market lower (which he is in general so eager to keep high) until the Republicans cry uncle and approve the debt limit increase without preconditions.

From some AP article:

"Bernanke also issued a stern warning to lawmakers in Washington who are considering aggressive budget cuts, saying they have the potential to derail the economic recovery."

If this isn't a "soft dictatorship" I don't know what it is. A highly-placed official is using credible threats (or implied credible threats) that threaten the economy in order to get his way. Or at least that's my interpretation of an unclear picture. "Approve the debt limit increase or this puppy gets it."




 It is being reported by none other than NPR that Chinese tennis star Li Na has an independent streak and has negotiated her "tax" on her winnings down to 8-12% versus the normal 65%.

It is amazing to me they can report this in one segment and in the next gleefully report on the plans to "tax the rich".

Having had certain states withhold a "athlete tax" from my past merger running winnings, one wonders if the tax rate to athlete matter much more than geography. Does investing in states that produce more professional athletes per persons equate to higher new business and higher returns.

Also to comment on the Soviet system letter writers, It would also seem that when there is no financial incentive to produce, the people are left with producing wealth that the government can not monetize, education, intricate crafts, art and sports talent.

One reasons those governments that allows people to fly higher than others, before they demand total submission to the state, will always have an advantage over those states that only let individuals small enough to fly under have any independence.



 The racquetball Big Game is drive serve and shoot, which I call blitz racquetball. The first blitz player in 1974 when we were housemates betting mile runs on the outcome of his blitz vs. my conservative game- the 'year of the pivot' when Marty Hogan, ridiculed for his deep cannon stroke that tended to loosely fly all over the court- was Smokin' Hogan after he honed the powerful stroke and grew facial hair.

The reason Hogan was the Big Game firstborn is he was the first with the physical power and grace to allow it; the previous champs Bill Schmidtke, Bud Muehleisen, Charley Brumfield and I were tennis shod string beans who 'pushed' the ball around the court and a tediously effective strategy of waiting in prey for the opponent to error in 3-10 shot rallies, and then the final stroke.

Hogan was the first to force the error with booming drive serves, or his 142mph service return while the rest of use were clocked in the mid-70's at 110mph.

A cascade of factors enlivened the Big Game in the ensuing decade.

The mid-70's ball got so fast that we judged one acceptable if a ceiling shot didn't bounce over the back wall into the gallery and they started netting the upper decks. It was like substituting a hardball for a softball without moving back the outfield fence, and the result was the fans descended into the courts to imitate the pros blasting serves and shots.

The late 70's fitness craze spawned court clubs with the back racquetball courts filled with gym equipment, and bruisers strutted out the gyms and onto the racquetball courts to explode the Small Game.

In a blink, Power Racquetball of serve and shoot evolved new players and play.

 The first Eketelon Contra big-head racquet in 1984 reinforced the power game, squatter players took to the courts, strokes abbreviated to rapid loops, and strong junior players started hitting the ball at 150mph.

It so happened that year the Big Game was locked in forever by a match rule change from 21-points to 15 per game, with an 11-point tiebreaker. This guaranteed national champs to eternity using a big head with serve and shoot strategy, to blitz anyone in streaks without fear of fatigue.

Racquetball as it was invented and intended by Joe Sobek in Connecticut, pioneered by Carl Loveday, Bud Muehleisen and Charley Brumfield at the Pacific Paddleball Association court, and developed at San Diego Mel Gorham's Mecca became a travesty in one season.

The sport shifted from aerobic to anaerobic.

The next alignment for the Big Game was the 1980's side glass and often front glass at tournament courts that guaranteed a seeded bltizer need only breeze through the early rounds on solid wall back courts to make the semi’s aquarium where his his Big Game had a 5-point advantage in games to 15 points.

The One-Serve Rule of 1994 tried to divert the cavalier ace… or did it? The elite players overnight ciphered and experimented in the next tournament to discover that the attacking serves when they were not fatigued was the only winning strategy.

The axe was lengthened by a 1997 USRA rule change to allow the oversized frames to extend to 22'' long.

What mutated sweaty chess to a blitz racquets? The associations and sponsors sped the sport to make it easier for youngsters, seniors and females to play the Big Game like pros. That is the racquetball evolution of ball and racquet, serve and return, forehand and backhand, player physique and psychology, and strategy in a nutshell.

 How did the ousted pioneer champs react? All-night hashes at private courts across the country and shared at tournaments produced countless variations of new strokes, serves and strategies, but nothing jibed. The greatest old-timer, Brumfield, hung on for two years with warmed over gamesmanship and a new crack ace. The aging champs' bodies and personalities couldn't bear the Big Game and they curtsied off the courts to the new champs Mike Yellen, Dave Peck, Jerry Hilecher and Bret Harnet.

The first operant serve and shooter I met after Hogan was John Foust, who as a kid had multiple corrective leg surgeries and retains a gimp. His attacking strategy in a match at the Denver Sporting Club, home of early big tourneys, was such a shock that I would have lost at the peak of my career had not a patented backhand wallpaper serve eked a win. Foust wrote to me later to reciprocate for the wallpaper that he added to the arsenal, and to explain his Big Game. I realized he had sketched the perfect instruction that applies to the modern blitz of serve and shoot for all players.

I had a foot in two racquetball worlds, so to speak. One was able-bodied that you’re used to playing, and the other in a wheelchair. In the early 80’s, the wheelchair game was coming on and though I was legally handicapped from polio in youth, I never dreamed of myself as that. I managed the Denver Sporting Club and was a consistent able-bodied winner in A division, and once won the 25+ Open Regional. Luke St. Onge, the USRA executive director, asked me to play in the wheelchair division alongside my normal event, and I replied, ‘I spent time in a wheel chair when young, and may again when I’m old, but I don’t want to in-between.’ However, Luke persevered.

 It was bizarre going from the regular events where I was perceived as the ‘good guy’ with the game leg who beat most the field, to the wheelchair division where I was the ‘villain’ because after the match I could rise and walk with a limp from the chair. I grimaced before each match at having to approach another player to beg his chair. I was third and fourth ranked in the world from about ‘85-87 by virtue of my able-bodied racquet skills, but always lost in the finals to one of the top two wheelchair champs (Chip Parmelly or Jim Leatherman) because of their familiarity with the chair- Understand that the chair is equipment, just like the glove, racquet and shoe.

After that, I entered only able bodies tournaments and walking into the court feeling as if I could win until proven otherwise. I practiced and taught myself how to kill the ball from everywhere. Defense wasn't my strong suit. The longer the ball was in play, the better chance I was going to lose the rally on a dope shot of which I simply could not get to. I relied on the drive serve to start the ball low into play to force the shooting game.

The blitzkrieg won the 1983 AARA regional championship in the 25+ division in going through three Open players to the finals. That was my biggest personal racquetball accomplishment- I beat three players who were very good. The closest I came after that to winning anything of substance was the Tournament of the America's in Santa Cruz, Bolivia in 1988. It was the first of five times I was part of the U.S. National Team. At that time, although not originally qualified as part of the team as a true player, I had the ability to score points for the team as a manager /photographer /low level coach. It was clear early on no one from the others teams were going to give me any credit- why should they? Not like anyone in Bolivia knew who I was, or had a resume to stand on. I completely understood. In the long run it worked to my advantage in getting to play. I made it to the semi's before getting beaten by a better player. The U.S. team was gracious enough to vote me to accept the Championship trophy.

Three parts to my game come to mind in any success I've had at racquetball. I felt I could serve with the best of them. That was my great equalizer and something I put a lot of effort into. I had the ball, I knew what I was going to do, and was a master of disguise about where. Drive serves were my forte. I used them on a first and second serve. It wasn't until later in my playing days I learned the value of a lob. I hated lobs.

In the event an opponent was able to retrieve my drive, I did the best I could to put it away quickly. If I couldn't serve 3-4 untouchable serves in a game I was toast. For the most part I did. My able-bodied style is to shoot the ball from everywhere, because the longer the rally the less chance I have to get to the opponent’s shot because of my game leg. I practiced hundreds of hours shooting from every conceivable court position, and to drive serve to earn weak returns.

In the rally anticipation was key. Unlike a Hogan I didn't have all the tools necessary to play a complete game. I was good at the bait and switch. If focused in, I knew before my opponent what he was going to do. They would say, 'You're a lot faster than I thought,' a kind compliment but not true. I was quick in a short space. It appeared I was fast- smoke and mirrors.

My forehead was strong if I had time to set up. However, with a weak left leg, it was difficult to transfer weight. Hogan, as it appeared to me the visual learner, hit a lot of forehands off his back foot. I had no choice but to do the same and was comforted by the fact that's what he did well. On the other hand, a backhand was my natural shot with a stronger than normal right leg, I could step in, transfer weight, hit, and do what needed to be done. And, because of the situation. I moved to the backhand side much more easily. My backhand was something I visualized as being a lot more like it happened in the real world as opposed to my mental world where I was moving like everyone else. I think they call that dreaming.

Based on how Hogan whipped me, Foust had lectured me, and how fresh players came on strong with the Big Game in the late 1980's, I revamped my teaching style. The traditional instruction learned from Bud Muehleisen and expanded in The Complete book of Racquetball taught to aim for the bulls-eye, and later add increments of power. Now I teach first the power killshots from any position on the court, then the drive serve, and slowly hone into the target. The learning curve of blitz is just one year given a strong young body and daily hour's practice and another hour of game time. As the errors are dropped out of the attack, and greased by confidence, by year two a dedicated athlete may become an open player, and in another a pro.

The greatest upsets throughout racquetball history have been blitz serves and shootouts beginning in 1977 with Davy Bledsoe over Hogan, in 1983 Mike Yellen using the big head Contra over Hogan with his contract autograph model, and topples by Sudsy, Cliff Swain and King Kane all owed to the Big Game school.

Today the Big Game is the only game in tournament town.

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