It is great to see Antoni (no d), ruining the Lakers by trying to get them to play a running, 9 second game with spacing that makes their big and old men superfluous and liabilities. It's like the player who tries to catch one tick in the market now, against the high frequency people. The vig is about 80% and the adverse selection is another 15%. Antoni should work for the exchange or the track.

The amazing thing was to see his smug grimace of resignation as he was being buried for the Knicks with his aloof "what can you do" expression now transferred to the Lakers where he turned down a thanksgiving dinner with Howard and the boys so that he could perfect his run and gun 9 second free flowing offense. How wonderful to see him ruining the happiness of the west coast rather than the east when we had to watch his sardonicism.

Pitt T. Maner III writes:


You should definitely enjoy watching the "Antoni and Anilo" reunion tomorrow night at 830 PM. $9.3 million salary for the "Rooster" in the Mile High City. "Gallinari is the only Nuggets' starter shooting less than 40% from the field for the season, the Denver Post reports. (about 14 hours ago)"

"Gallinari is hitting just 37.2% from the field, including a dismal 23.4% from beyond the arc, thus far in the 2012-13 season. Those numbers are well off his career averages but the 6'10" small forward is confident that he'll regain his touch, sooner rather than later. For the year Gallinari is still averaging 15.1 ppg, 6.0 rpg, 2.4 apg, 0.7 bpg, and 0.5 spg, while only turning the ball over an average of 1.4 times a game."



Specs should note that a new 0.20% tax on French stock purchases goes into effect on 12/1/12. This will provide a nice laboratory experiment of the effects of a Tobin Tax in the age of HFT.

If you like to arbitrage TOT against other global oil companies, consider yourself warned! The tax applies to ADR's too.



When they calculated the flock's heat loss, the authors discovered that their model huddle was very fair: every penguin lost approximately the same amount of body heat. But these model penguins were only programmed to maximize their own warmth, not to consider the warmth of other penguins or the group as a whole. This means that even if penguins are only looking out for themselves, the whole huddle stays warm, as the authors report in PLOS ONE.

"Math Shows Penguins Only Care About Themselves"

More on the "selfish herd" theory.

via Twitter Feed Zoobiquity



 I found this interesting post on Seth Robert's blog:

"The Emphasis on Education in China"

One of my students grew up and went to high school in Nanjing,
population 8 million. Her acceptance to Tsinghua was such a big deal
that when her acceptance letter reached the local post office they
called to tell her.  The post office also alerted journalists. When the
letter was delivered to her house, there were about 20 journalists on
hand. One of them, from a TV station, asked her to say something to
those who failed.

Russ Sears writes:

I found it a very sad piece of social commentary. At some point it becomes not about your ability to think, but only about what you know they want. It becomes less about answering the question than knowing what questions the test giver will ask and answering it strictly as they want. You begin by eliminating the questions that cannot be tested.

Where are the questions that take a lifetime to answer?

Where are the questions that do not have a standard knowable answer?

Leo Jia responds:

 Well, it surely does not find an Einstein.

But society is not all about geniuses. It requires the performances of normal people on a much larger scale. In that regards, one shouldn't underestimate the advantage of someone's ability in passing intensive multi-disciplinary tests on high scores.

It takes tremendous discipline, dedication, and hard work. But it is not simply about memorizing answers. More importantly, the abilities to plan, to achieve, to think smart, to always be confident, to stay away from distractions, and to beat out stresses along the way are all crucial. It is about winning a game, a mimic to some of the games that are crucial at various stages in life.

Is it worthwhile for all the kids to spend all the efforts in order to pass the tests? Definitely not to those who lost — a high percentage of the people involved actually. They are clearly not good at the game (perhaps they have learned a lesson through the failure). So overall, the society has wasted quite substantial energy — the energy spent by those on the wrong game. But perhaps that energy can not be saved anyhow. It is just like the market where there are winners and losers, and the losers are required there to supply the liquidity and to make the winners winners.

I fully agree about the deficiencies of the education system, in the sense that it does not serve individual talents very well.

But unfortunately, the modern education system since its inception in the Industrial Revolution is more on social conditioning than anything else. We perhaps shouldn't expect more from it. The Chinese, finding that it fits well into its own tradition, have just pushed it more to the extremes. I don't know how to abolish it all together and what to put in its place. Would a system that only focuses on producing talents (we have to define the meaning here) work? It most likely would for the talented individuals. But overall? Certainly, a lot people have various kind of talents. But don't we agree that a high percentage of the population don't have much talent? If a system is only for talent, then what to do with these people? Moreover, talented people generally tend to be somewhat eccentric. Can a society endure too much eccentricity?



Has anyone on this site profited from the political news flow the past year or two? I ask because I have found it has hurt my results. I am not asking how you do it. I am considering going back to where I began–simply ignoring all news flow. Problem for me is I had nice results on the "get the joke" on biz news flow from 99 to 2006 ish. Yet today I can't read a biz article with out the political being the theme.



 Shouldn't dividend paying stocks consider reducing or eliminating dividends, and instead use free cash flow for share repurchases? Assuming long term cap gains tax will be less than tax on dividends.

Gary Rogan writes:

They have to consider that many of their holders are sub-250K and many hold in tax-shielded retirement accounts. "Widows and orphans" still rely on dividends to some degree, so there is probably some sort of a Laffer-like curve where the post-tax income total return averaged over all the holders is optimized by a particular dividend policy.

Mr. Krisrock writes:

You can't turn on a financial news program without hearing about special dividends. Companies are also rewarding employees with 15% dividends as a year end bonus. Even better is issuing debt, which is tax deductible and buying back stock when ITS is not at a market peak?

This will likely happen sometime next year…not now. Most liberal Californians haven't figured out how Obama has tactically created the seeds for a republican internal war in 2014. Boehner has made sure his entire house leadership is comprised of supporters, and he can cut a deal that enrages the tea party whom he despises. Now tell me who defends personal property rights, when there is a rebellion among republicans. Obama can get back the house in 2014 simply allowing the brain dead rep establishment to self destruct. They are really that dumb…and he is really smart …he won re-election no matter how he did it.

It would be a waste of corporate cash to buy stocks here and now and the more special dividends from companies like Home Depot, the more we can confirm the worst is coming.

Jim Sogi writes:

Isn't the threat of dividend tax a good way to shake out accumulated cash held by corporations? Wouldn't a better way be to get rid of the dividend tax? Equities would go through the roof.



I may say that this is the greatest factor—the way in which the expedition is equipped—the way in which every difficulty is foreseen, and precautions taken for meeting or avoiding it. Victory awaits him who has everything in order — luck, people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck.

— from The South Pole, by Roald Amundsen"



His view of what cheers people up on the Today show:

MATT LAUER, TODAY: So bottom line, would raising taxes on the wealthiest Americans have a chilling effect on hiring in this country?

No, and I think would have a great effect in terms of the morale of the middle class, who have seen themselves paying high payroll taxes, income taxes. And then they watch guys like me end up paying a rate that's below that, you know, paid by the people in my office.



 Rome: an Empire's Story By Greg Woolf gives and excellent review of the reasons and history of the rise and decline of Rome's empire which was kept relatively intact for 1500 years. The rise he attributes to efficiency, trade, and military success. The fall he attributes to weak alliances with neighboring countries to rule the provinces, and lack of incentives to produce from the provinces. I find many parallels to the present. The good news is that it took 1500 years to disintegrate.

Steve Ellison writes: 

I am partway through volume 1 of Gibbon's The Decline and Fall of the Roman Empire. There was little incentive for the emperor to rule for the benefit of his subjects rather than for his own pleasure. Rome became a military kleptocracy after the murder of Commodus in 192. The armies knew they were the source of power and demanded an exorbitant price for their support, beginning with the Praetorian guard's murder of Pertinax and subsequent auction of the throne to the highest bidder. Frequently contending for rival generals to seize the throne, Roman armies put more energy into fighting one another than fighting the enemies on the frontiers.

Stefan Jovanovich writes: 

Details, details:

"Romans imagined [the empire] as a collective effort: Senate and people, Rome and her allies, the men and the gods of the city working together." This continued as Rome passed from the Republic to the Caesars, who were kings "even if [Romans] could never bring themselves to call them by that name." It is "a history of remarkable stability. If it was largely true that (as one historian has put it) 'Emperors don't die in bed,' it was also true that the murders of many individual emperors seem to have done little to shake the system itself."

Since "decline and fall" is the current meme, one should hardly be surprised that publishers and their authors want to cash in on the latest craze. (That is all publishers ever do; and authors, poor things, are usually desperate to oblige.) Professor Woolf should have resisted the impulse. He certainly knows better. The "collective effort" he describes is a complete fairy tale. The Empire never even developed a common language; our "classical" education notions are based entirely on the fact that rich people had too know Greek because that was the commercial language of the eastern provinces — which was where the money was. Latin was for the inscriptions on the public buildings and for the official orations and the school examinations but the "common" people continued to speak their own tongues. Even the Army relied on whistles, drums. and flags for its "commands" when it took to the field. This explains why Latin itself became almost instantly obsolete even south of the Rubicon. No one writing about the Hapsburgs, who did manage to keep their own Empire running for a good long while, would ever have offered up such fictions about "court and people, Vienna and her allies, the men and gods of Vienna working together". But, we have enough information to know that the court spoke French in that Holy Roman empire. The beauty of Roman history is that there are so few actual facts that survive that one can make the story whatever one wants it to be.

Jim Sogi writes:

The key is "1500 years". It's not going to fall apart in the next 100, that's for sure.

Gary Rogan writes:

The difference is that they couldn't do state borrowing in anywhere near the same proportion to their GNP as the US can. It also took less than 100 years from the peak, however defined to really difficult times. And as "mr. grain's" article demonstrates in less than 200 years from the peak free people were volunteering for slavery to avoid taxes, an inflation rate of 15,000% was experienced, free employees were essentially made into slaves at their places of work, and women, children, and parents were physically hauled off and abused to get to the tax evaders. All due to overspending and overtaxation.

Also for whatever reason they limited the free grains to a relatively fixed number of people, and the amount was small for quite a long time. Their modern equivalents today with a much more advance education in economics talk about redistribution with such excitement and such lack of concern for where this is all going that would make Nero proud (I mean the part about fiddling while the Rome burned, except they are not fiddling but setting the fires).

Vince Fulco writes:

I am still trying to understand how a society flourishes with reported median family incomes stagnant or below that of a decade ago? And there is no sign the worker is gaining any bargaining power. Sure the govt can artificially tinker with rates reducing the carrying costs but someday existing debt must be paid; at least at the consumer level. It is debt assumption for non-producing overpriced (after debt service costs are added in) consumer goods which will kill this country.

Tim Melvin writes: 

I agree with that to a large degree…..crony capitalism at the expense of everyone else is a cancer in any society….the problem is not capitalism exploiting the workers. it is the complex and intertwined relationship of business and government that does us the most harm. Eisenhower was right.

Anonymous adds:


I think the malignancy has metastasized much deeper than that, and now sits in a kind of acid bath (the pending "fiscal crisis') where all else is peeled away and we see it clearly (in fact, the fact that people seem to NOT see this clearly is evidence of its metastastization) and it is this: Our society — at every level — is characterized by a desire for more rules, and an exception of those rules for ourselves.

Talking different tax rates is a carve out. The argument that the elderly should get a carve out. The birth control carve out. The government worker's salaries untouchability as a carve out.

How about when the White House issues exemptions to Obamacare?

Affirmative action is a carve out. All corporate socialism is a carve out. Every bill passed by Congress does not apply to them. I call that a carve out!

The white lady's sinus-snort lament, "This is RIDICULOUS!" always pertains to her being denied her attempted exception carve-out to the rules.

That's the cancer. The cure would take a lot more than Mitt Romney, and likely cannot be cured by a single individual.

History doesn't exactly repeat, usually, an incident is followed by another incident of similar cause but differing results and often differing in duration. I don't think we're going into a 1,000 year long dark ages. I think we're racing headlong now to something far more sudden and shocking, and bigger than any one man or political party can purge from our psyches.

Jim Sogi writes: 

I used to think the revolution was just around the corner, society was fragile and was about to come apart. Not now. Look at NYC and Sandy: that was an amazing comeback. The recession was bad, but the economy is slowly coming back. Things are not bad now. In the 1940's there was nuclear world war. Japan, Germany, Europe came back. Russia fell apart, but now is back. China killed 10s of millions, but came back strong. People are resilient and social systems are strong. The apocalypse is Hollywood and journalistic bogus hokum ballyhoo.

David Lilienfeld writes: 

The same is true of the US post-Civil War. Nothing before or since has had the social and economic impact that that war had. The US is more adaptable than Rome was. As Peter Drucker often observed, the US genius is political.

One of the signposts that Rome was done was when it was no longer able to rely on client states for security. That isn't the case now with the US.

A better paradigm for guidance might be the Persian Empire.

Gary Rogan writes: 

I keep coming back to the debt issue, the current size, and the ability and desire by "the powers that be" to accumulate more at an astonishing clip. Four years ago I predicted a debt-driven collapse that Rocky chided me for so much, and while the timeframe now seems indeterminate, what IS the way out without a currency collapse and all that follows in those types of situations? The bond vigilantes are not too concerned, and they know all, but what is it that they see? Can they see far into the future or are they playing musical chairs? 

David Lilienfeld adds: 

I'm reminded of the comment by Jim Carville, Bill Clinton's political advisor. In a re-incarnated life, he said, he wanted to come back as the bond market. "It can intimidate anyone it wants to."



 First consideration, have a customer who is willing to pay. If you have that, you have a business. Without that, you have an idea and not a business.

Second, be willing to amend your plan(s) in whatever fashion in order to accomodate what the customer is looking for.

Third, don't listen to anyone–naysayers, govt regulators or other douchebags– just go, do it.

Jeff Watson writes:

It might be advantageous to consider the possibility of finding a business near bankruptcy and doing a turn around. Failing businesses like pizza and bagel shops and others can often be bought turnkey for pennies on the dollar (the owner is selling equipment before the creditors can attach it), moved to a new location and turned around, or liquidated.

Plenty of people go into business without enough specific knowledge, capital, a business plan, proper help, quality product, or a realistic price list. They compound these mistakes by not watching their pennies, mismanaging inventory, having over optimistic, unrealistic expectations. They also might place too much trust in their employees and not notice what's going out the back door. Many don't realize that running a business is 24/7 and every small detail counts. I've seen small business owners who don't even know their raw material costs or how to figure a gross profit. I've also seen people go into business not knowing the size of the market which can be as deadly in a brick and mortar business as not knowing how much wheat is for sale at any given time.

A further note, speaking of gross profit, if I walk into a small business that is always disorganized, messy, poor sanitation, dirty windows, I would readily make a wager that the business also has a gross profit problem and probably much worse. I am always on the lookout for these types of opportunities, since being a silent partner in a properly managed turnaround situation can be very profitable. It's the ecology of the business world, just like in the markets…the strong eat the weak.

George Coyle asks:


Re: your 1st consideration, I assume you just mean end market demand for whatever it is you are selling. If entrepreneurs waited for the end market demand to cover costs I would imagine the majority of businesses that exist today wouldn't.

Ralph Vince writes: 

I mean before you go to sell or market something, find at least one person who tells you, "yes I will buy THAT at THAT price," and tell them you;ll be back with it tomorrow, or whenever. But make the sale, whether you are selling vats of mustard or something that has never been sold before. If you are going to consult — don't go into the consulting business, get a customer to pay you for something. Now you are a consultant. Do not go into business and wait for a sale
– that's doing it backwards.

Vince Fulco writes:

Ralph- the latest craze in the start up world of 20 year olds is developing a minimum viable product. MVP, which is the barest of bare bones app/site/product, gets customers to sign on and then one goes about building out the real infrastructure. Think of fake storefronts with no sides or back walls. Frankly, some of the truth stretching to get paying customers on board makes me conjure up carny barkers. Similar to the HF/FOF world, most experienced business people never, ever, ever want to be the 1st customer. How do you surmount that hurdle?

Vinh Tu writes:

Look at Kickstarter. there's no pretense, really: people are pretty upfront about the fact that they're at a stage where it's mostly a webpage, maybe a prototype or half-baked product. And in some cases people are still willing to kick in the cash. 

Vince Fulco adds: 

This is a good list for a quick and dirty website idea.

And throw in reveal.js for your funding/customer pitches.




We are looking at the Vanguard study that mentions Shiller favorably and it's obviously flawed. The overlap, part whole correlations, and selected starting and ending points, as well as the intrinsic illogic of a 10 year horizon forecasting well but not a 1 year which means that the previous 9 years were much more predictive than the last year, or that the last 5 years are correlated differently from the prior 5 years, comes to mind. But of course, the lack of degrees of freedom with 10 year data with all the overlap, to say nothing of the historical data that Shiller uses, which is retrospective and not reported at the time. But of course one hasn't read it yet, and they purposely make their methodology opaque wherein one could have found the real problems with it.

Kim Zussman writes: 

It would seem that in the face of most long-term historical market conclusions the Japanese stock market must be considered an outlier; in terms upward drift as well as P/E.

Alex Castaldo adds:

The study we are talking about can be found here [20 page pdf].  The problem I see is this.  They evaluate forecasts over a 1 year horizon and over a 10 year horizon.  The one year procedure makes sense to me: You make a forecast, you wait one year to see how it turns out and then you make another forecast. The R**2 is a measure the quality of the forecast, or more precisely it is the percentage of the variance of returns explained by the forecast. The R**2's for one year are small, as one would expect, and nothing to get excited about.  But what is the meaning of R**2 in the 10 year case ? You make a forecast in 1990, invest until 2000 and the go back (how? with a time reversal machine?) to 1991 and make a forecast for 2001? I am not sure the procedure is meaningful from an investment point of view.  And statistically the return for 1991-2001 is going to be very similar to the return for 1990-2000; so if you forecast the latter to some small extent, you will probably forecast the former as well. It seems to me there is a kind of double counting or artificial boosting of the R**2 going on.

When the predicted variable has overlap it is standard to use the Hansen-Hodrick t-statistic which attempts to compensate for the correlation introduced by the overlap.  But because the study only gives an R**2, and not the Hansen-Hodrick t, we don't get any adjustment for overlap.

I am sure that the 10 year R**2 are not comparable to the 1 year R**2, they are apples and oranges. Someone suggested to me that it may still be valid to compare the 10 year R**2 to each other, as a relative measure of forecasting power.  I don't know if that is true or not.



A post purporting to show that buy and hold investing does not work has appeared on our list. It is reprehensible propaganda and total mumbo. They do not take account of the distribution of returns to investing over long periods that have been enumerated by the Dimson group and Fisher and Lorie. It is sad to see this on our site. The arguments against buy and hold seem to be that the professors found that short term investing didn't work so they erroneously concluded that long term investing must be the alternative. Shiller is mentioned and cited with approval.

Alston Mabry writes: 

To explore this issue numerically, I took the monthly data for SPY (1993-present) and compared some simple fixed systems. In each system the investor is getting $1000 per month to invest. If during that month, the SPY falls a set % below the highest price set during a specific lookback period (the 3, 6, 12, 18, 24 or 36 months previous to the current month), then the investor buys SPY with all his current cash (fractional shares allowed). If the SPY does not hit the target buy point this month, then the $1000 is added to cash. Once the investor buys SPY shares, he holds them until the present.

For example, let's say the drop % is 10%, and the lookback period is 12 months. In May of year X, we look at the high for SPY from May, year X-1, thru April, year X, and find that it is 70. We're looking for a 10% drop, so our target price would be 63. If we hit it, then spend all available cash to buy SPY @ 63. Otherwise we add $1000 to cash.

Each combination of % drop and lookback period is a separate fixed system.

Over the time period studied, if the investor just socks away the cash and never buys a share (and earns no interest), he winds up with $239,000. On the other hand, if he never keeps cash but instead buys as much SPY each month as he can for $1000, then he winds up with over $446,000, which amount I use as the buy-and-hold benchmark.

If the investor uses the fixed system described, he winds up with some other amount. The table of results shows how each combination of % drop and lookback period compared to the benchmark $446,000, expressed as a decimal, e.g., 0.78 would that particular combination produced (0.78 * 446000 ) dollars.

Results in this table

The best system was { 57% drop, 18+ month lookback }, or just to wait from 1993 until March 2009 to buy in. Of course, it's hard to know that 57% ex ante. The next best system was { 7% drop, 3 month lookback } coming in at 0.99.

This study is just food for thought. It leaves out options for investing cash while not in the market. And it sticks with fixed %'s without exploring using standard deviation of realized volatility as a measure. So, there are other ways to play with it.

Charles Pennington comments: 

Thank you — that is a remarkable "nail-in-the-coffin" result.

Nothing beat buy-and-hold except for the ones with the freakish 57% threshold, and it won by a tiny margin, and it must have been dominated by a few rare events–57% declines–and therefore must have a lot of statistical uncertainty..

That's very surprising and very convincing.

(Now some wise-guy is going to ask what happens if you wait until the market is UP x% over the past N months rather than down!)

Kim Zussman writes: 

Here are the mean monthly returns of SPY (93-present) for all months, months after last month was down, and months after last month was up (compared to mean of zero):

 One-Sample T: ALL mo, aft DN mo, aft UP mo

Test of mu = 0 vs not = 0

Variable      N      Mean     StDev   SE Mean  95% CI            T
ALL mo     237  0.0073  0.0437  0.0028  ( 0.0017, 0.0129)  2.58
aft DN mo   90   0.0050  0.0515  0.0054  (-0.0057, 0.0158)  0.92
aft UP mo  146  0.0083  0.0380  0.0031  ( 0.0021, 0.0145)  2.65

 The means of all months and months after up months were significantly different from zero; months after down months were not.

Comparing months after down vs months after up, the difference is N.S.:

Two-sample T for aft DN mo vs aft UP mo

                  N    Mean   StDev  SE Mean
aft DN mo   90  0.0050  0.0515   0.0054   T=-0.53
aft UP mo  146  0.0084  0.0381   0.0032

Bill Rafter writes: 

A few years ago I published a short piece illustrating research on Buy & Hold. It contrasted a perfect knowledge B&H with a variation using less-than-perfect knowledge using more frequent turnover. Here's the method, which can easily be replicated:

Pick a period (say a year) and give yourself perfect look-ahead bias, akin to having the newspaper one year in the future. Identify those stocks (say 100) that perform best over that period, and simulate buying them. Over that year you cannot do better. That's your benchmark.

Then over that same period do the following: Buy those same 100 stocks, but sell them half-way thru the period. Replace them at the 6-month mark with the 100 stocks perfectly forecast over the next 12 months. Again sell them after holding them for just half the period. Thus the return from the stocks that you have owned and rotated are the result of less-than-perfect knowledge. Compare that return to the benchmark.

Do this every day to eliminate start-date bias, and then average all returns. The less-than-perfect knowledge results far exceeded the perfect-knowledge B&H. Actually they blew them away in every time frame. It's really obvious when you do this with monthly and quarterly periods as you have so many of them.

The funny thing about this is the barrage of hate mail that I received from dedicated B&H investment advisors, who somehow felt their future livelihoods were threatened.

If anyone wants that old article, send me a message off the list. We called it "Cassandra" after someone with perfect knowledge that was scorned.

Anton Johnson writes in: 

Here is a link to BR's excellent study "Cassandra", as it lives on in cyberspace.



 In a discussion with Janine Wedel, author of The Shadow Elite, we discussed the prevalence of flexionism in other fields besides finance. She pointed out that big pharma has the same revolving door, and intersecting relations between consultants, government employees, university professorships, regulatory oversight, and profit making insider trading that so many of the graduates of my alma mater are so famous for and caused high officials to be fired after the payment of a 29 million fine for a friend. She pointed out that the military industrial complex is replete with such flexionism and pointed to such organizations as the BIA, and the directorships on military firms held by former high ranking generals. The recent spate of insider trading cases for hedge fundists who got information from Drs on the certification committees for drug efficacy, with more than 50 convictions so far shows how rampant this lapse is among Drs.

I immediately asked if romance was always involved in the rise and fall of such flexions and we discussed why pictures of the wife of one of the prime movers in my alma mater's foray into Russia, a hedge fundist, are no longer available on the Internet. And that led to a discussion of Petraeus's downfall and whether there is a invariable relation between flexionism and romance. Rumpole's famous lament "why is it always romance" was discussed. From my reading of economic history, I am currently reading e.g the pc book A New Economic View of American History by J. Atack and Peter Passell, I pointed out that our entire political history from the founding of America is replete with self dealing, flexionism and financial avarice influencing the course of events. We discussed the plight of holders of continental debt, and how relatives of Alexander Hamilton, then Secretary of the Treasury went to the south to buy the debt issued by the continental congresses at 8 cents on the dollar after southerners desperately needed the money for living expenses and were willing to take any amount for their worthless continentals, which Hamilton subsequently convinced Washington to redeem at par.

The history of the two Federal Banks of the United States also was replete with ample opportunities for financiers to profit, and the rise and fall of the Morrises and Biddle in conjunction with the fortunes of these banks, and their role in selling government debt before their fall was discussed.

A discussion of flexionism in Roman times could not be averred, and the self dealing of all the generals who were paid after political careers in the legislature with appointments to govern the provinces where they were expected to rekindle their fortunes with bribes from the merchants in the provinces, as well as the spoils of war was discussed. The Conway Rebellion where the revolutionary war almost ended with the sack of Washington by disgruntled soldiers wanting pay also came into discussion.

The questions arises—- what are the fields and times where flexionism must inevitably arise, and is it good or bad, and how prevalent is it in different economic systems and times.

Gary Rogan writes: 

Discussing the history of the world without self dealing and flexionism is like discussing human physiology without mentioning pathogens and immunity– it would be so incomplete as to not make any sense. Monarchy and aristocracy, the typical situation that humans found themselves in for almost their entire history in centralized societies, are basically codified and/or legalized systems of self dealing. The few attempts at democracy generally degenerated into flexionsims and self dealing with the passage of time. The short recent history of Egyptian democracy (one man, one vote, once) are probably at the short end of the spectrum and the unraveling American democracy is at the other.

It seems like there is no way to avoid self dealing altogether because human nature seems to be irresistibly drawn to it when the opportunity arises, but having a populace that is highly educated, full of enthusiasm and public spirit, and in some sense somewhat uniform in its composition, seems to control it to a degree. There is nobody to police self dealing and flexionism at the top but the population at large. The worst political systems will work better with a quality population, and that's one reason why the history of socialism is so different from one country to another.

Mick Tierney writes: 

On Nov. 19, the chair posted a theory put forward by Umberto Eco and his studies on mass media, culture, and interrupted romance. In respond to this most recent post, addressing flexions, prime movers, romance, etc., I suggest he once again visit Eco and his most recent "fictional" effort: The Prague Cemetery. It's a bear of a book - for the reader must first determine whether the narrators are, in fact, two individual in conflict, or whether it is a single schizophrenic doing battle with himself.

I placed "fictional" in quotes because all the events and participants [except for the narrator(s)] are real - and their exploits really occurred. Since I was to lead a discussion on the book, I spent hours Googling to fact check what seemed to be the familiar ramblings of the conspiracy nut. With the expected exceptions of the conversations, Eco lays out a history that makes it readily apparent that many of the events we once attributed to random occurrence and/or happenstance have been, in fact, orchestrated by individuals whose names you will most likely not find prominently mentioned.

His history covers most of the European countries as well as Russia. In his narrative, there is not a single country, nationality, religious or fraternal organization that does get libeled (although contrary to Russell Baker's contention, he doesn't even address wealthy white, Episcopalian males, much less slander them).

It's a monster book and not an easy read — if you're easily offended ignore it. If you want to witness an interesting account of the real causes behind "inexplicable events," it provides some interesting insights into powers that have always existed and that today's manipulators are, in fact, relatively ham-handed in their machinations.



 Did others notice that the media lavished fawning attentions on the incumbent this time as he swooped in for a post-Sandy look-see, versus the complete opposite, total opprobrium, against W when he humbly visited the post-Katrina landscape?

From the President of the Old Speculator's Club:

Having spent over 35 years in advertising, I look for campaign themes and whether or not they're effective. Once a successful one has been developed, it's important to study how it can be maintained, tweaked, or revamped to remain relevant. Frequently, this entails being somewhat less than completely forthcoming. The scriveners of the editorial department looked down upon us for this practice.*** (example at bottom)
Now they and their buddies who have been co-opted by the political establishment (hello, Messrs. Moyers, Stephanopoulus, Axelrod, Carney, etc. ), pretty much follow that same playbook. They take what's working, beat it to death, quickly abandon that which is not, and if it cannot be abandoned, it is re-fashioned into something that originally came from the other party (with years and years of congressional records, easy access to old speeches and videos. It's near impossible to NOT find a politician who didn't flip-flop on most issues…Ron Paul may be the exception but look what happened to him).

But there is one significant difference. When advertising a consumer product or service, all that is required is enough customers to make an acceptable profit — this number may be (relatively speaking) a very small percentage of the population. Historically, Rolls Royce, Remy Martin, Rolex, and Louis Vuitton have done very well with a small customer base. Chevy, Gilbey's, Timex, and Martha Stewart, on the other hand, need far more customers to turn a comparable profit.

Better quality goods, marked-up accordingly and marketed smartly ("at 60 MPH all you can hear is the ticking of the dashboard clock") will do very well, even in times of economic adversity. Goods of lesser quality, need a far broader audience and one more concerned with cost than quality or durability. Little wonder them that politicians require (by marketing standards) a staggering "50% plus 1" - one wonders that if it were not for the "two-party system," if anybody could ever get elected.

And here's where the current "rub" comes into play. Though the final result has been characterized in many different ways, the final numbers make it a very slim majority for the incumbent — slim enough, in, fact, that any one of several special interest groups (African-Americans, Hispanics, Roman Catholics, gays, pro-lifers, eco-friendlies, educators, union members, etc.) can claim their votes were the deciding factor.

In my old business, all we had to do, once the sale was made, was deliver the promised product. (If we didn't we could be prosecuted.) It's going to get real dicey when these various groups present the bill for their services (some already have). With a cupboard that's almost bare, the real fun is still ahead of us.

This is the post-Sandy problem that will have to be dealt with and the WH is going to need a magician more than a czar or mouthpiece.

***(I once received a nasty note from the Home Guide editor who chastised me for writing a nice review of a "terrible" restaurant. Well, of course, I wrote a nice review - they were a paying advertiser and I received, in addition to a free meal and copious amounts of gin, $30 tax-free - at the time I was making about $180 a week, my tax bracket was 28%, and I was paying close to a full week's salary in child support - so a free $30 was an incredible windfall. In any event, I pointed out that I had used about 400 of my 800 words raving about the establishment's use of anchovy stuffed olives in their very fine martinis. Another 250 words were devoted to the magnificent ambiance, prompt service, and large parking lot. What remained went to its pastoral location, extensive hours, and drive-out instructions - not a word about the quality of food. And, honestly, the food wasn't "terrible," but the Editor possessed a finer palate and a large enough salary to satisfy it…I got by at Franksville…with lots of sauerkraut and chili on top.)



 I recently read a great book: The Last Viking: The Life of Roald Amundsen.

Roald Amundsen grew up wanting to be an explorer. He always knew what he wanted to do with his life. He was the only man (at the time) to have stood at both poles of the earth during his career. As a youth, he slept with the window open in winter to condition himself. He told his Mother he liked fresh air when she thought it strange. He had a supreme physical body due to hiking and skiing and physical endurance training. When he saw a doctor as a young man. the doctor whooped and called in fellows to see such an example of muscularity.

He studied explorers and their texts his entire life and every dime went into expeditions. Early on he recognized that explorers always got entangled with the ship's captain–by that he meant there were two heads that often clashed, the explorer would have to defer to the captain–the expedition would be cut short, bold decisions would be muted, etc. He took the necessary time and hours working on ships sailing and studying and became a certified Captain in order to eliminate the friction factor–he also became more the expert in sailing than his contemporaries. In the same vein he decided to not take a medical doctor/scientific sailor candidate on one of his voyages even though from a previous experience a doctor came in critically important during a rough time in the arctic. The reason to omit the doctor is that men on an extended trip of isolation confuse a doctor as a leader–the doctor becomes a force that may override an explorer's leadership.

Amundsen always was a student of technology. He was an observer of indigenous peoples of the arctic and he used their techniques for survival and success where his rivals seemed more wooden and resistant to change. Using Inuit clothing, hut technology, ice house forms and dogs as transport over ice where others did not were key to his success. He had to leave a lot of the business part of his career to family and close friends–which eventually soured in the end. He was always at odds with money –never having enough, always fundraising and one step ahead of creditors. His famed persona (like a rock star of today) was always in the papers–his exploits somehow always paid off his debts but then the cycle would repeat itself. He had to go on the multi continent lecture and talk circuit (early 1900s) to make money–a grueling life worse than being at -minus 50F in an ice crevasse.

Bown, the author, did his homework. The bibliography is basically every book out there, plus he did a lot of his own work in extensive newspaper story research (NYT–predominantly). There is a lot of controversy about this man and his methods–a lot of bias that Bown seems to navigate around. 

If you haven't read about polar exploration it's a good book to read since it relates the entire history of man's search for the final fabled lost lands or undiscovered sea lanes that would make trade travel quicker and cheaper. The book came out to mark the 100 year anniversary of the south pole discovery by Amundsen in 1911. You also will get a good sense of the flavor of the times–airplane technology, dirigibles, engine design changes. Amundsen also designed his own polar ship with hull designed for ice, special auxilliary motor equipped for special maneuvers.

There is plenty for the spec to think about here in relation to goal setting, using tools that others ignore, attention to details, what areas of endeavor should and should not be "farmed out". Also, there's a lot of stuff on how to plan for all potential problems, how to size up talents, and how to pick a team.

Sometimes the tedium of trading can be thought of as waiting day after day in an ice house for the weather to turn favorable. Amundsen was a big proponent of routines, small incentive contests and the shunning of idleness during his arctic times with his men–much here to think of and use for your own purposes. In this day of constant communication the book acts like an escape of sorts to a time when years would go by between shoving off on an expedition and returning–where and when and in what condition was always a surprise.



 The case for doctors and vets to share even more information is being made. In Palm Beach it is not unheard of for favorite pets to have thousands of dollars spent on procedures (i.e. chemotherapy) to further extend their lives. One imagines that in some cases data useful to humans may be produced. Dr. Keely no doubt can provide further insights:


"Zoobiquity springs from a simple but revelatory fact: Animals and humans get the same diseases. Drawing on the latest in medical and veterinary science—as well as evolutionary and molecular biology—Zoobiquity explores how jaguar breast cancer, dolphin diabetes, flamingo heart attacks—and more—are transforming human medicine."


"Horowitz's central claim is that this failure to make connections between animal and human medicine is robbing us of vital insights that could improve health and even save lives. "Zoobiquity" is the cheesy neologism given to the approach that makes just that link.

Horowitz and Bowers give several striking examples of why this link is needed. For instance, the reluctance in 1999 of the US Centres for Disease Control and Prevention to listen to the counsel of a veterinarian led them to falsely conclude that a mysterious disease that had broken out in New York was St Louis encephalitis, when it was West Nile virus. The delay this caused almost certainly cost lives."



 Nate Silver is the guy at the NYT who called the election using statistical analysis. His book The Signal and the Noise is NOT at all like I expected. It's about baseball, weather, earthquakes, poker, economics, stock markets, politics and elections.

Baseball uses statistical quantitative data (stats) and qualitative subjective data (scouts). Silver says you can quantify the subjective data by assigning it a score, or even a rank, which can be statistically analyzed. This is similar to the idea in the Predictioneer's Game, by de Mesquita, in which he takes subjective values, assigns a value and ranks them, and using the resulting spreadsheet can make statistical conclusions. Its the plus/minus pro/con column idea of decision making.

When looking at a player's potential they ask, among other things, "does he want to win enough to overcome the fear of losing." It's a good question to ask a trader as well. There are some great quotes in it. For example, "major league memory" i.e short term, forgetting of slumps. And from Bill James, "Our weaknesses and our strengths are always very intimately connected." He says in the most competitive industries, like in sports, the best forecasters must constantly innovate.

Silver discusses the advances in weather forecasting with huge computers taking up rooms. The human addition of judgment can improve forecasts by 15%, for example by incorporating the scouts impressions of players with pure statistics. Weather forecasters improve on the computer models with human judgment. They have achieved 300% increases in accuracy and can give you up to 36 hours advance notice of a storm. But after that forecasts become worthless. The time or place of Earthquakes can't be predicted, only their frequency and severity over a long periods of time.

He discusses the problems with economic forecasts with 4 million metrics retroactively adjusted. Statistics show that economic forecasts are worthless and can't tell if we are in a recession or not. He discusses poker and the use of probabilistic thinking. He espouses the rational market view which is not going to be well received in this forum.

One interesting point he makes is that aggregates of forecasters are more accurate than individual ones due to the wisdom of the masses effect. He uses this to good effect in political forecasts and polls.

All in all, I don't recommend the book. It's a aimed at a popular audience at a low conclusory level with little meat for stat oriented dailyspec members. I barely made it through it, due to lack of interest, (not inability to understand).



 I am reading the excellent book P.J O'Rourke's On The Wealth of Nations. He gives a general introduction to the wealth and then goes chapter by chapter illuminating the relevance for today of Smith's ideas. Four of the fundamental insights that I find helpful in looking at the present are.

1. Consumption is the sole end and purpose of production. This is a nice thing to keep in mind with all the rebuilding after floods and natural disasters.

2. Self interest is good and natural. Incentives matter. People work harder when pursuing their own interests. In the old days, people had to subject their egos and aspirations but in modern times the breakdown of feudalism has allowed people to pursue happiness.

3. The way to increase wealth is through specialization and division of labor. Eveyone has a comparative advantage at some trade or fancy.

4. Trade creates mutual benefit. Bettering the position of one person in a trade invariably tends to better the position of the other person in the trade. Wealth is not a pizza.

If only those who wish to take from one class like the rich and give to another like the middle class would understand these 4 principles, the world would be a much better place.



 Vladka Meed, who smuggled weapons into the Warsaw Ghetto and, after improbably surviving the Shoah, made sure we remembered what had happened, has died.

It was my great honor to have met her on a number of occasions. She was the definition of heroism.

A great article about her is here.



Here is a common explanation of the small-stock January effect (should it still exist) is tax-loss selling: Late year dumping of losing stocks resulting in an "over-sold" condition.

From a tax-strategy standpoint, the 2012/2013 transition is currently the most uncertain in many years. Unlike most years capital losses may be more valuable to push to the future (assuming capital gains tax rates jump in 2013). In addition, some of 2012's biggest losers are not small cap and are widely held.



 It's instructive to read the comments to this NYT blog post "Is Rush Limbaugh’s Country Gone?" which notices with glee the ascendant coalition of victims and their rising power. There are themes that emerge by seeing the same memes repeated, such as:

The rich have brought this upon themselves by making it impossible for a regular person working a regular jobs to support themselves and their family.

Socialism isn't so bad, and as we move farther away in time from the Soviet bogeyman as it's positive aspects are severely underappreciated by the rich.

3. Captial gains rates are the biggest giveaway to the rich.

4. Rush Limbaugh should not be allowed to speak. All he does is peddle treasonous rants grounded in hate.

5. "We" allowed the rich to take more of the nation's wealth, so "we" need to make sure they share it for the good of the people.

6. The immigrants are well justified in their expectations for various societal benefits such as good free public education, roads, bridges, free health care, etc.

A couple of days ago Rush Limbaugh himself agreed with the conclusions of the blog entry itself, but of course not the positive point of view of the results. The most interesting part of the post is the numerical study of how much capitalism is despised by many sub-groups and how well socialism is liked.



 I have a renter and a good worker at our local Auto Zone. Many go there to do their own vehicle repairs. Due to an improving local economy his hours have been severely reduced. He tells me people don't have the extra cash at present to fix their own cars!



Jim Lackey writes:

When I was a kid, the local parts store, like the local ace hardware, was owned by a neighbor. They knew what they were doing. It wasn't difficult. There was only a few brands and few suppliers. The first push to cheaper is better and super sized stores wasn't all bad. Chains of Western Auto/ Sears auto parts is now Autozone, O'Reilly's bought up the regional chains over a Pep Boys that attempted to take the service business from the local car dealers service department near affluent neighborhoods. My dad's buddy got rich by selling out. Those that fought the trend, went bust.

The prolific professor Haave has pointed out many times the local retailer didnt do much for the customers on his way to the country club. How many times have we heard, I can order that for you and it will be here in a couple of days? They cashed out, sold to the chain stores and went to country club full time.

The big box stores offered lower prices on the same brand names with a huge stock. The crash of 2008 changed the way Home Depot, Sears, and too many auto parts men stocked the stores. In the rush to reduce costs and raise margin, there is a limited lowest price stock. The staff is a kid that will run around in circles attempting to figure out the puzzle of where a tool, part, or product may be located. The nice working mom is best as she quickly goes for her radio. She calls the manager in charge and he replies, we are out but will have it in a couple of days.

The current box stores are worse than the local retailer that we lamented as kids. The new toy wasn't in stock 30 years ago. Now the simple tools that have been produced for 50 years are hard to find. No one works on their own stuff anymore. Everything seems to be produced as cheap as possible. When it breaks we toss it in the garbage. I've been married for 18 years and I have bought 5 vacuum cleaners and never once changed a belt. In their genius to lower costs and close stores, the auto parts men are circuit city- ing their way out of business. Auto Zone and O'Reilly have spent a fortune on their websites offering free shipping. Once a do it yourself shade tree mechanic is at that level, it's the same as shopping at Best Buy and ordering off Amazon, with a bonus. Now we find out where the auto parts are manufactured.

A problem with do it yourself, (DIY carz) was having the correct proprietary tool for each make and model car. Many can't comprehend why cars are so complicated and difficult to fix. They are designed to be produced cheap and quick. Car models have a different so called upgraded part for every model year. That, coupled with low cost aftermarket parts, did away with many rebuilt, remanufactured, go to the junk yard and buy a used part for your beater car. The cost of replacing a damaged car with goofy insurance rules on salvage titles has created a business. There is a flood of rebuilt titled cars on Craig's list. The demand for totaled cars by shops that rebuild a crashed out Camry with cheap after market Chinese knock off parts has left the junk yards picked bone dry. (This post was wrtten months ago before the storms, do not even buy a flood damaged car unless you rewire the automobile. That's a big job, I've done it twice.)

The dealer buys his network and charges premium shop fees for high skilled labor. The pep boys of the world or chained repair shops buy non branded premium OEM parts, with a skilled man and a few apprentices and offer slight discount. Many times a Honda dealer charges a lower price to change a timing belt than a chain store. A V-6 Honda timing belt, water pump and seals are the same in most Hondas. The dealer can buy in bulk and have a few mechanics that are so efficient they can do a few per day vs. all day yourself to save 200 bucks. Dealer, 499$ on mailer, me/parts 300, local guy, 500, chain shop, 800 bucks. The dealer is competitive on sale and puts the local guys and chains out of that service. DIY shade tree mechanic says, why bother. It's worth the 500.

For brakes, at over 100k miles you need, rotors, pads, some brake clean and maybe a few tools, impact driver to get screws out of rotors and a air hammer or drill bits when one strips out. We can do autozone duralast branded cheap parts, or made in China and save 50 bucks. O'Reilly brake best which are Affina same factory as Raybestos. You can buy good ceramic or premium Wagner coated rotors and your confusion and parts bill is 300-400 bucks vs 600-800 complete OEM from the local shop, which has their parts delivered from the local Napa store. There is no way a DIY guy will pay 400-800 to have his brakes done, when he can buy the OEM for 300 shipped to his door and have the job done in a few hours.

The DIY guys say give me the cheapest on sale brand for the beater 3rd car or truck. We go OEM for the daily driver and aftermarket premium for the hot rod. What we learned many years ago was a Western Auto parts store electrical switch or new cheapo alternator was junk. It was much smarter to buy a rebuilt Delco or new OEM. One would have never thought this would evolve to all car parts. What is a brake rotor? It's a cast chunk of steel machined to spec. My gauche, they have been making disk brake rotors for 60 years. Brake pads have evolved. The newest cheapo metallic pads slice up a cheap worn brake rotor in a year. Ceramic brake pads are awesome if the rotors are aligned. Guys claim all sorts of problems,with the cheapest pads and rotors from autozone, yet its usually a bad caliper frying one corner of your car. Mechanics swear what were premium brands years ago are now junk as they must file off bad stamping before install.So, what does a car guy do? Go to Now we can buy premium products at low prices. We can buy OEM parts at discount prices. We can know where the parts are made. They tell you strait up where the factory is that makes the parts.If the local parts store doesn't have OEM quality parts for the daily driver in stock, one can buy premium parts for daily driver for the same price. Most likely what I will do from now on is buy OEM quality for daily driver and now the beater eats OEM, no more junk. Buy all filters, seals, that we will need for fall and spring maintenance at once vs stopping at the parts store a few times a year.

The guy at the autozone may be suffering from the Internet. After all they tell you at the checkout to look at .com and the parts can be delivered right to your door for free. Once you go net, do you ever go back? In the old days you could go to the parts store and tell the guy the problem, show him your parts as we always had a core charge,so you took the car apart before you went to the store. They would look, test offer some advice on how to fix a big problem. Now a days we go strait to YouTube, bust out the list and have it shipped UPS or Fed X. One or two parts chains will survive. Perhaps napa as they supply the locals. I do not see a need for the three other big chains, Autozone, O'Reilly and Advanced auto parts. One will be around forever to sell the cheapest priced batteries, oil filters and brake pads and proprietary tools. There is demand for cars that need a jump start to drive directly to the parts store and have a new battery installed. I dunno why jiffy lube doesn't do it.

Every 3-4 years you need a battery. Kids with the subwoofers and amps need optima yellow top, 150-200 bucks and most likely a more powerful alternator. It's amazing how interested a 17 year old will be working on his own car vs the family truck. When he talked stereo equipment it took me an hour to figure out all he wanted vs how many amps of power it would use. Which reminded us how to calculate Mr OHMs how much power watts a stereo would really produce amps x voltage as they don't advertise the loss in heat. Talk about confusing! Car audio equipment is hilarious.

Sure son I can save you the few hundred in install fees and the overcharge on wiring kits and we can wire the car. Yet I have some bad news for you. The 600$ you were quoted turns out you need more electronics to be correct, so the boom boom doesn't drown out the vocals. Dad I do not want real loud. It doesn't matter, just add up the head, amplifiers max amperage and think of driving on a hot summer night with headlights and the air con running and explain to me how a big amp draw is going to work? Your boom boom with be a click click next time you go to start the engine. You need battery and alternator or go with low amps draw big buck class D. I think he has decided to save for a good car and listen to his headphones.

These stereo stores must make a fortune selling mono amps for subwoofers as the kids must come back for a good amp and speakers for the interior of the car then an alternator and battery for when it all dies. I see 2,000 dollar cars cruising around with 1500$ dollar stereo systems. These kids today! We had 1,000 dollar cars with 3,000$ engines. You may ask where did the other 500$ go? We didn't have cell phones.



 This is from historian Paul Johnson's review of Black's book A Matter of Principle:

In addition to Black’s understand-able desire to set the record straight in his own case, the book has the more important public object of exposing the faults in the American judicial system, which make such a miscarriage possible. I had for some years been worried about the deterioration in the American process of criminal law, and I am gratified, and also profoundly disturbed, to find my misgivings confirmed by this account. The process of decay seems to have begun in the 1970s, but it has reached the point where it now constitutes the most radical weakness in the entire American system and one which must be addressed as a matter of urgency. The fault can be summed up in a sentence: America’s criminal courts now insist on convictions at the expense of any other consideration, above all of justice. They are more like a court martial than a civilian establishment of law. The presumption of innocence has been abandoned. . . . The assumption of guilt is sanctified in law by the grotesquely unjust plea-bargaining process, which saves the accused from total financial ruin by forcing him to plead guilty to some of the crimes with which he is charged, however innocent he or she may be. Plea-bargaining in turn leads to a multiplicity of indictments by prosecutors, which adds a judicial to the financial compulsion of the innocent to bargain. Hence the American prosecution practices are what the law calls ‘a derogation from honest service’. The US prosecution service, in heedless pursuit of convictions, does what it wants and prosecutes whoever it wishes for as long as it likes. Thus, over 90 per cent of prosecutions are successful, a higher proportion than in either Putin’s Russia or Communist China. America, as Black puts it, has become a ‘prosecut-ocracy’.



 I read an interesting article about using algorithms to break the old codes of the secretive 18th century Oculists (early opthalmologists):

These societies were the incubators of democracy, modern science, and ecumenical religion. They elected their own leaders and drew up constitutions to govern their operations. It wasn’t an accident that Voltaire, George Washington, and Ben Franklin were all active members. And just like today’s networked radicals, much of their power was wrapped up in their ability to stay anonymous and keep their communications secret.

Kevin Knight's Homepage.

Swedish page for the Copiale Cipher :

The Copiale Cipher is a 105 pages manuscript containing all in all around 75,000 characters. Beautifully bound in green and gold brocade paper, written on high quality paper with two different watermarks, the manuscript can be dated back to 1760-1780. Apart from what is obviously an owner's mark (“Philipp 1866”) and a note in the end of the last page (“Copiales 3”), the manuscript is completely encoded. The cipher employed consists of 90 different characters, comprising all from Roman and Greek letters, to diacritics and abstract symbols. Catchwords (preview fragments) of one to three or four characters are written at the bottom of left–hand pages. Transcription, transliteration and decipherment brought to light a German text obviously related to an 18th century secret society, namely the "oculist order". A parallel manuscript is located at the Niedersächsisches Landesarchiv, Staatsarchiv Wolfenbüttel.



Following DailySpec tradition we repost here our article on Thanksgiving  and economic incentives.  Happy Thanksgiving to all our readers!



 I wish all the specs and families a Happy Thanksgiving. We all have much to be grateful for. We have many friends that have had a rough year. A few specs deserve a medal of integrity for their actions. I had a bit of family drama. One trip to visit the VA hospital removed any doubt that I am blessed. Some guys do volunteer work. Some do mission trips with church. Many on this site are stand up guys and would give anyone the shirt off their back. For me, to see these kids just back from war, in the hospital, was a life changing event. I give my word to never complain or sweat the small stuff. For that I am grateful.

P.S. meeting the WW2 Vet, that was a card and was smooth talking the ladies cracks me up. There are 90 year old men still marching around telling all that care to listen, how blessed we are to be Americans.



Here is a pumpkin pi pun to wish you a Happy Thanksgiving.



 So here we are once again. Thanksgiving is fast upon us and the madness we refer to as the "Holiday Season" is upon us. Thanksgiving is like the feast before the slaughter in many ways. For one day we can eat, drink and watch football without worrying about gift giving or shopping. Unless of course you are one of the many dumbasses heading out for Black Friday shopping in the wee hours of the morning then it's just the pre-battle dinner. I cannot for the life of me imagine of anything I need badly enough to head out for Black Friday or pre Thursday shopping. I do not think I could look some poor minimum wage store clerk in the ye that had to come to work Thanksgiving at midnight so I could save a few bucks on a big screen TV and Tickle me (but not there without checking ID first) Elmo. Call me sentimental but I remember when Thanksgiving was about family, friends with lots of food and booze and not carb loading for shopping madness that puts WWE action to shame.

Tomorrow is the big travel today although some signs of the exodus have already started to appear. I am always that people will fight their way along turnpikes , through airports and jam into trains like sardines to spend a day with a bunch of folks they really don't like that much anyway. There is nothing like fighting your way up I95 to spend two or three days of hearing about all the things you did wrong 30 years ago and rehash all the wrongs done to your siblings over the years. It must be magical to do a Usain Bolt through the Atlanta or Dallas airports to be in time to once again watch Uncle Frank can shit canned on your dads good booze while your cousins new baby daddy explains the intricacies of the parole and probation system over dried turkey and mashed potatoes that could easily double as stucco and mortar. There is a reason most of us don't live that close to our extended family. Thanksgiving is a time to explore all those highly dysfunctional and unpleasant reasons while fueled up on liquor. Ah, the holidays indeed.

 We will see all those commercials and Hallmark movies that show families gathered to delightful dinners in a glow of soft candlelight. Most of us that have experienced the large extended family holiday gatherings over the years know that a far different picture usually emerges. Mom is frazzled beyond the breaking point after two days cooking and cleaning and is desperately trying to resist the urge to smother her younger single professional sister in the green bean casserole after the 19th story about her fabulous weekends, dad and Uncle Ernie are drinking Jack in the back yard an about to break into a fistfight over who won the 1972 Super Bowl, Aunt Ethel is puking in the potted plants, the baby has managed to obtain and eat an entire pumpkin pie, and although Johnny is home from the army no one has seen him or his 17 years step cousin in some time now although there is bright red thong where his car used to be parked. The TV is blaring a football game no one cares about and the youngsters are in the den watching 9 and ½ Weeks while Grandpa snores strenuously in the middle of it all and Grandma is slumped in the recliner with a bottle of sherry and a bendy straw. The great American family holiday!

After a few too many holiday gathering exactly like the one described above, along with threats of rectally inserted turkeys and full on food fights among unrestrained youngsters I have the misfortune of sharing a blood line with, the kids and I years ago came to the conclusion that we would rather say home and celebrate things our way. The Melvin way means tons of food, good wine and we only allow people we like to join us. My wife is of the same mindset so our holidays have become good times with people we actually enjoy being around. We admit no one we don't care for regardless of birth circumstances, social status or blood type. It makes for a much more enjoyable relaxed holiday experience.

 It is also a time of year when we really should set aside our worries for a moment and be thankful for all we have in life. There is plenty to worry about this year. Our government is heading away from a free market republic to more of a democratic big government form of socialism. There are plenty of historical precedents for this but that doesn't mean I have to like it. The economy sucks. Soccer is gaining in popularity. The Blue Jays just got a lot better and will be a threat this year. Taxes are going up. There is either global warming, climate change or a looming ice age depending which channel you have on at the moment. Honey Boo-Boo has her own show. Rush Limbaugh and Al Sharpton are still taken seriously be entirely too large a percentage of the population. Teen paranormal romance is now a section in Barnes and Noble stores. My Mother is coming next month. Rap music has not died off yet. The head of the CIA can't even have a covert affair. There aren't going to be any more Twinkies or ho-hos soon. There are plenty of things to worry about but this time of year is about being thankful.

 As always I have to start with family. I have been blessed with an amazing if somewhat eccentric and weird immediate family. I have no idea why my amazing wife would marry me but every day I am damn glad she did. She calms me, excites me, and makes my life better in every way imaginable. I have no idea what she sees in me. I am messy, absent minded, stubborn and difficult…and those are my good qualities. She is a saint of putting up with me much less loving me. Every day I wake up next to her is a good one. Lisa has grown into this smart confident young woman and Tommy is a businessman of the highest order without losing an ounce of his magnificent if crude sense of humor. Maeve is growing smarter and more artistic with each passing day. Each day I am reminded that I am a lucky man and that I blessed that these amazing people put up with me.

I am also blessed with some great friends. Many culled themselves off the list in the aftermath of the great IRR last year but those that remain are steadfast and true companions along the road of life. I don't travel as much right now so I may not be sharing bar adventures and dubious cocktails with the Chicago Curmudgeon, the Voodoo Professor, The world's only living Iranian Jewish cartoonist, the degenerate Kentucky Colonel, the Cheesehead or others but I talk to them frequently still through the magic of Facebook, twitter and other modern communication devices. I don't see the island crowd every other night at the bar like the old days but I am still in touch with people like the littlest firefighter, Tic-tac, Rag Lady, and others. I expect to see them when the snow is ass high in the Mid Atlantic this winter. I am in contact with great people like Baldy, the Beard, the Preacher and Granola on a daily basis during market hours and beyond. I have a solid group of friends and for that I am thankful.

When toy get right down to it at it is core life is magnificent. There is so much to be thankful for each year that we really should take time to express and explore our gratitude more often. My list grows all the time but among other things I am thankful for:

Each day I wake. This beats the living shit out of the alternative.

 The dog. I still hate pets but walking the thing around the neighborhood here in Florida has led to me walking a few miles a day and losing about 10 pounds since we got here. Still not a fan of picking up the steaming piles of fresh shit but at least I don't gag or throw up anymore.

Alligators. I love alligators. The dog and I see two or three a day and they are just cool. I may be grey and losing my hair but I am like a little kid when I see alligators.

Same for Pelicans. Have to drive to the coast to see them but I get a huge kick out of pelicans.

Books. Friends ,educators, entertainers, companions. Brain food. It's a lifelong love affair.

Wine. Rounds off the edges off a bad day and adds a sparkle to the good ones. Damn tasty too.

The fact that less than 1/10 of one percent of investors pay a lick of attention to tangible asset value. The faux value investors out there create opportunities for those of us who actually practice it.

Ben Graham, Chris Browne, Walter Schloss and all the other greats who paved the way.

Florida. Can't manage an election or field a decent professional football team to save their lives but this is a great place to live.

Did I mention my incredible wife?

Zombies, Bikers and Insane Asylums.

Newspapers. I still love an old fashioned actual ink and paper newspaper. My extraordinary wife actually got me subscription to the daily paper here in Orlando. That never would have occurred to me.

Twitter. I freaking love Twitter. If you set your feed up right its better than a news ticker most days. It's also a lot of fun to trade barbs and quips with people like @tangletrade,@byrneTSCM, @Brian Sozzi and others.

Greed. No matter how much my liberal friends deny it greed has been the source of much of human advancement. Rather it be greed for money, achievement or knowledge greed moves us forward.

Sunsets. I am sure sunrises are awesome too but I don't get up that early if I can avoid it. With a 9yr old who thinks 7 is late I see more of them these days.

Sleeping in. Its rare these days so I appreciate it even more

Naps. I love naps. You can never take enough naps.

Travis McGee, Doc Ford, Spenser, Hawk, Tomlinson, Agent Prendergast, John Cory, Thorn, Jesse Stone, Stone Barrington, Lucas Davenport, Horatio Hornnblower, Cletus Frade, Harry Dresden and all the other boon companions of the written word.

 Baseball, my life friend and obsession. The Orioles in the playoffs just makes the year better. The Red Sox sucking is just sublime

Football because who doesn't like barely controlled violence with half naked dancing girls?

Beethoven, Bach, Miles Davis, Wilson Pickett, Handel, Springsteen, Waylon Jennings, Jerry Jeff Walker, the Grateful Dead and everyone else who plays the soundtrack of my life.

My wife. My kids. My life. I am a lucky man and I know it. I have much to be thankful for again this year.

Now let's get the bird in the oven. Uncork the wine and get this party started. Happy Thanksgiving.



 I was looking around at crowdfunding sites. There are a bunch–there's even one focused strictly on Indian companies, another for Malaysian companies and so one. One caught my eye, though: Offbeatr. It's crowdfunding for adult entertainment activities–dollars for "rewards" (their term, not mine). Perhaps I shouldn't have been surprised that there is such a site. Maybe it was, indeed, the first crowdfunding site of any sort. (Adult entertainment frequently sets the trend in our society. For example, it largely determined the winner of the Betamax-VHS war. Betamax was a technically superior system, but Sony refused to license the technology to the adult entertainment industry–thinking the customer was the family gathered around the tv to see the latest movie offerings. Panasonic had no such qualms and let everyone–adult entertainment industry included–have access to the technology. VHS won–in no small part because of sales to the adult entertainment industry, which was the first major customer and remained as much for almost a decade.) There's always supposed to be a bull market lurking somewhere, and I'd guess one such place is in the adult entertainment industry. Has there ever been a bear market in adult entertainment?



 A Class with Drucker: The Lost Lessons of the World's Greatest Management Teacher by William A. Cohen

I've read much of what the late Peter Drucker wrote, including his two novels (which I try to forget). There have also been some books about Drucker that I've also found to be good reads. (For those unaware of Drucker's work, I suggest reading five of his books, in order: Adventures of a Bystander, Innovation and Entrepreneurship, Managing the Non Profit Organization, Concept of the Corporation and Management: Tasks, Principles, and Responsibilities; there are a bunch of other books, but they are essentially commentary on these five.) Cohen's book is the first to be written not as an interpretation of Drucker's writings but as a distillation of the experience of being in one of his courses. Cohen was privileged enough to have been taught by Drucker in the late 1970s. The book is abundantly readable. Cohen has an easy writing style, and at the end of each chapter is a summary of the salient points from that chapter. He talks at length about Drucker's teaching style, how Drucker conducted the class without notes, and that Drucker's instruction would continue into the dinner provided by the college while Drucker sat eating with his students. Within a week of the start of the class, Drucker had learned everyone's name, and by the third week, knew a bit about their families (and the students, his family). For Drucker, management was as much about people and how one interacts with one another as it was any prescriptive policies or approaches to the typical problems a manager encounters on a regular basis.

 This book has one limitation: Its focus is exclusively on management. You might wonder if I've lost my mind, considering that the book is about Drucker, considered to be one of the major management gurus of all time. However, Drucker's work as a management guru derived from his strength as a social anthropologist. Drucker viewed a business as a society. (This idea began with his "Concept of the Corporation" study of GM back in the 1940s.) That's the reason, I think, he was so concerned about the legitimacy of a company's management, the value accorded to the individual workers, and so on. I think that this is the reason Drucker picked up so quickly on the rise of the knowledge worker–that rise was a societal phenomenon moreso than a business one. Consider a baseball team–9 people playing 9 positions, and one manager. Each is a specialist in his field, each is a knowledge worker. Yet the team is a society as much as anything else. Its customers are the fans–not just those attending the games but also those listening on the radio/watching tv, etc. (All of which makes one wonder about the rising stars of the game who sign baseballs only for a fee and who never seem to be available for clinics or any other interaction with kids–the future ticket-buying customers. Maybe that's what made Cal Ripken so special–he was always available, and I can't tell you how many baseballs I saw him sign for free–even for two hours in the pouring rain. But I digress.) Ditto for an orchestra. Similarly, if one looks at governments, their customers are voters. Throughout our society, we have these groups of people with a common aim to be undertaken and completed in a coordinated way. Those are businesses, sure, but they are also societies in and of themselves.This may seem a trivial difference, whether one looks at a business as an organization or as a society. But in looking at a business as a society, one can begin to apply all the understandings we have about societies in general to businesses, which is what Drucker did.

There are lots of other insights that Drucker imparted during his career–and they derive, for the most part–from his observations about businesses as societies. That's the reason, I think, he saw himself as a bystander, much as any social anthropologist would. Further, by looking at a business as a society, he provided the means by which his teachings could resonate long after his death, rather than that influence be dependent on his presence. It's "catch a fish for a man, feed him for a day; teach him how to fish, feed him for life."

All in all, a good read. Not one I'd suggest for the holidays, but on a quiet warm beach in February, it will fill the void nicely.



 Have you heard about "The Untold History of the US" on Showtime, directed by Oliver Stone. With a touch of Jantelagen.

'So, why take the time to watch this documentary and read the book? In Stone's words, "We're going to go in the junk heap of history like everyone else at the end of time, and they're going to talk about the US Empire the same way that they talk about the Ottoman Empire, the Austro-Hungarian Empire, the British Empire, the Roman Empire. Six of them bit the dust in the 20th century. What makes us think that we are exceptional to history?"'

Stefan Jovanovich comments: 

Details, details.

The Ottomans,
at their height, controlled everything in Europe east from Vienna to the Black Sea beyond the Crimea, the entire Arabian peninsula, the southern coast of the Mediterranean as far west as Algeria, and what are now Turkey, Syria, Iraq, Azebaijan and Georgia.

Mr. Stone and his pet historian may wish to think that this all fell apart at the end of World War I just as the Austro-Hungarian, Russian and German Empires did; but the truth is that the decline and fall of the Ottoman Empire occurred over two and a half centuries. If one wants to look for lessons from history, it is that strong countries should not prey on weak ones. The Russians, British, French, Germans, Austrians and Hungarians, Italians all brought themselves miseries beyond measure in their efforts to pick over the carcass of the Ottomans. Only Bismarck had the sense of want to leave the dubious rewards of the Middle East to others, and he lost his job and Germany its imperial future because the Kaiser decided it was more important to make friends with the Turks than with his own cousin in St. Petersburg.



 Finger off the dike in France at Moody's.

Gary Rogan adds:

If brevity is the soul of wit than this:

Moody's Investors Service on Monday lowered France's sovereign rating by one notch to Aa1, stripping the country of its coveted triple-A rating. "France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labor, goods and service markets," said Moody's in a statement. The ratings agency also expressed concern over France's uncertain fiscal outlook and noted that its resilience to future euro-shock is becoming more difficult to predict. The rating outlook remains negative.

is much less preferable to

"The problem with Socialism is that sooner or later you run out of other people's money".



No one has ever accused the BBC of being balanced, or even honest, especially when it comes to Israel. British anti-semitism in full show, or just plain stupidity? A great example.

Mick Tierney writes:

It's kind of surprising how many on the left see the BBC for exactly what it is, but insist that NPR is the epitome of even-handedness. Ann Coulter (certainly no friend of the left) pretty much nailed it when she suggested that NPR stood for "National Palestinian Radio."

David Lilienfeld adds:

From the "You can't make this stuff up" file:

I turned on the radio about 30 minutes ago thinking I was catching the morning business news. Unfortunately, it was the end of the BBC report on our local NPR station. I thought the show was finishing, but it turned out it wasn't. An Israeli commentary was being questioned by the show's host, and the following was heard:

Host: Isn't it true that Israel has killed many, many Palestinians in this 6 day war?

Israeli: Yes, that's true. Also true is that Hamas fired hundreds of rockets at Israel.

H: But wasn't Israel's response out of proportion to those rockets? I mean, those rockets didn't have much ability to kill anyone. Some didn't even have any bombs onboard.

I: No, it wasn't out of proportion. Would your country have tolerated such an attack as well as Israel has?

H: My country didn't kill a leader of a government.

I: A terrorist organization. And he was killed after the rockets starting firing. They have been firing for a long time.

H: But isn't it true that Israel left Hamas with no choice but to do something militarily to break the blockade Israel imposed? Israel says it wants to see a Palestinian state form, but how can one form if it has no chance of trade?

I: Hamas is a terror organization. It kills Israelis. It has been doing so and it will continue to do so if Israel doesn't do such things.

H: No matter. Secretary of State Hilary Clinton is going to the region to try and broker a cease-fire.

I: Yes. Prime Minister Netanyahu has said all along that diplomacy is always better than military action.

H: I'm hearing from lots of our listeners that while they sympathize with Israel needing to do something about the rocket fire, they think the last six days has been an over-reaction. Andy in Lagos, thank you for that observation. Perhaps Israel should have tried diplomacy before sending in its military.

I: Israel took the matter to the UN and the UN had no interest in dealing with the problem.

H: Maybe Israel should have tried harder. Lots of Palestinians would still be alive if it had given the UN more time.

At that point, I turned the radio off. The business news can wait; better to get my blood pressure back to normal.



 There's a market lesson in this cartoon.  That lesson is that it is sometimes very dangerous or even fatal to believe in what everyone else around you believes. There are probably many more lessons here, but this one just jumped out at me.

T.K Marks writes:

On the perils of consensus, I recall standing uneasily in the silver pit one afternoon some years ago. The market had been probing new highs in recent weeks and on this day the entire ring had loaded up long going into the close. Visions of stop close-only buying dancing in our hopeful little heads.

But suddenly there was an eerie silence and a collective epiphany as it dawned upon us that we were all in the same boat.

At which point an inveterate misanthrope amongst us asked rhetorically of the pit, "When was the last time EVERYBODY was right???…"

His words had the same convulsive immediacy as James Baker's "Regrettably…", only this time it was said by a brawny Italian guy from Staten Island rather than a Brooks Bros. WASP from the State Department.

Seconds later the bell for the silver close rang and the bloodbath began. It's quite a spectacle to see 100 pit traders simultaneously try to dump longs for their own accounts, nary a bid to be found.

Been known to lead to some momentary inefficiencies.

As for the misanthrope whose mischief triggered the whole debacle, he was long too. But his value system valued mayhem as well as money and this was just too ripe an opportunity to pass up. You see he was a downside terrorist by nature — rarely met a collapse he didn't like or profit from — and on that occasion wanted once again to teach the wobbly longs a lesson.

Even if it cost him 20 grand.

Other than that little personality quirk he was a fairly upstanding guy. Generally stayed out of jail. Last I heard he was teaching a Lamaze class in one of the "tonier sections of Bensonhurst."



I know of at least 3 suicides from the action of the 2007 WZ/MWZ spread which bankrupted an entire class of grain speculator. I haven't heard of any suicides from the gold/platinum spread action the past 16 months.

Richard Owen writes:

Some funds will only short through long put options because of the non-zero probability of totally wiping equity with a margin balance. And simply reduce gross when vol / time value erosion is too costly (ie., just be long, albeit less long). Is this excessive prudence or sensible? I would argue that for some portion of assets at least, it is sensible. Large players can have a bankruptcy remote portion of their assets that will short and make margin.



 I have often thought that the lyrics of Oscar Hammerstein contained tremendous deep truths of the human spirit, and I always encourage those new to the American song book to listen to Hammerstein rather than Sondheim. Here's how his nephew, eminent author of An Empire of Wealth, put it: "Like all artists whose work endures, Oscar Hammerstein used aspects of his own life to provide a window through which less-gifted people might see more deeply into the human soul and learn better what it is that makes us human". I believe the Hammerstein lyrics are good for market people and we listen to them every day here.

Jeff Watson writes: 

You're right about Hammerstein's lyrics 100%. I listen to Hammerstein once a week, maybe twice (usually a favorite from South Pacific). I play a wide variety of music here. It can be very pleasing to the ear as well to the soul to successfully fit the music to the tone of the market, and it's harder than it looks. A wine steward pairs wines with courses, a successful speculator pairs the markets with music. Sometimes it's Chopin, sometimes it's Tony Bennett, maybe The Brian Jonestown Massacre, could be Frank Zappa, Celtic music, Cajun waltzes, East Texas Swing, and on and on. The grains alone sing a greater variety and styles of songs than all the musicians and songwriters in the world combined. Admittedly, this speculator finds it very hard to match the music with the market, and when I can't get it right, nothing beats the Overture from William Tell or March of the Valkyries to wake things up. 



 Umberto Eco, in his studies of mass media and culture, has an essay on popular new devices. His thesis is that they start out by being used by the wealthy and then get used by the common man, and lose much of their value from the law of diminishing marginal returns.

He uses the railroad and cell phones as examples. I have found that many new things like the smart phone have decreased their marginal productivity. Studies show that 30% of users sleep with their smart phone next to their bed. I have not had the displeasure of being interrupted in romance by a smart phone ringing yet and answered, but I am told it is common.

What are the implications of this for market analysis, especially of individual stocks.  I find that my past research which did not use "as is" files and was heavily dependent on compustat is deeply flawed. Indeed my approach seems flawed. I am trying to improve for the future. My kids seem to make money with their stock purchases based strictly on the future growth of popular products among the younger generation. I wonder how to improve.

Thomas Miller writes:

Maybe Peter Lynch was on to something although I don't see how his "method" can be quantified.



 This morning I used Amtrak's auto train for the first time. I went from Orlando to DC and I expected the train to be half empty. I was wrong. They kept adding cars until the entire unit was over a quarter of a mile long.

I have to say, I'll never make that drive again. While the auto train does not save time, it does save wear and tear on the car. Also, for the driver it's a lot safer to sleep on the train than sleeping on I-95. As far as cost, car and passenger cost $420. That included two meals, all the fresh fruit you can eat and no sleeper.

I saved 900 miles worth of gasoline and tolls [and speeding tickets]. I also saved one night at a hotel, meals and a lot of I-95 related stress. Amtrak's service was family-friendly and courteous. I also like big trains, so I'm biased.

Because everyone has different needs, I'm not necessarily recommending this option. But I am recommending travelers consider this option. The drive from DC to Orlando is BORING and long. Also, some of those southern boys love to ticket those damnyankees (yes it's one word)!



2012 presidential election voting data by state was obtained from this source.

States were analyzed according to income ratio of top 5% to bottom 20% using this data.

Regressing the ratio (top 5%/bottom fifth) vs. fraction voting for Obama did not uncover a significant correlation:

Regression Analysis: 5%/bot fifth versus Obama

The regression equation is
5%/bot fifth = 10.5 + 3.11 Obama

Predictor    Coef  SE Coef     T      P
Constant   10.496    1.507 6.97 0.000
Obama       3.111    2.992  1.04  0.304

S = 2.50077   R-Sq = 2.2%   R-Sq(adj) = 0.2%

Based on this one cannot conclude that Obama's election results were correlated with income inequality. (NS also regressing vs % voting for Romney) How does this compare to state's racial demographics?

State racial demographic data was obtained from the 2000 census; extracting the ratio of those identifying as "non-hispanic/latino white" to total population (% white).

Using this data, regressed fraction voting for Obama vs % white by state:

Regression Analysis: Obama_1 versus % white

The regression equation is
Obama_1 = 0.740 - 0.334 % white

Predictor      Coef  SE Coef      T      P
Constant    0.73967  0.07075  10.45  0.000
% white    -0.33382  0.09241  -3.61  0.001

S = 0.106100   R-Sq = 21.0%   R-Sq(adj) = 19.4%

In terms of state populations, there was a significant negative correlation between % voting for Obama and % white. A similar opposite) positive correlation was found for % voting for Romney (not shown).




There should be a statistic average absolute close to close move divided by high -low and another statistic average absolute open to close move divided by high - low.

Iit would tell how well the strong have done about scaring out the weak during the day only to have them eating crow and wishing they had done nothing during the day, i.e. the importance of sanguinity and gravitas in market play.

Anatoly Veltman writes: 

PIVOT has been widely used for decades = (H+L+C)/3

The most popular use of it is: if the next session is trading above, then PIVOT is a support area. Conversely, if next session is trading below, then PIVOT is resistance area.

PIVOT's strength took considerable leaking with onset of 24-hour sessions, as opposed to prehistoric DAY-ONLY sessions. The reason: of course, every price traded on volume IS more meaningful than every price traded on a few lots.

Over the decades, at least two distinctive intraday set-ups where also developed, for cases of overcoming PIVOT early in the session, and for cases of overcoming PIVOT late in the session.

Also, I found Weekly, Monthly and even Yearly pivots to be useful.

In any case, despite the ease of coding the conditions for algorithmic PIVOT trades, I found that best uses of PIVOT were by layering a second indicator into the mix, and sometimes even a third. I never had the resources to code that myself — but I'm pretty sure it has been accomplished by now; including by a number of shops that I had tutored.

Gary Rogan writes: 

Not knowing any of this stuff myself, I'm curious how something this simple can work when you have quantum physicists programming ever more sophisticated algorithms and I'm sure some of which are of the learning and self-changing variety. Even the simplest control theory is orders of magnitude more complicated than this and so are rudimentary digital filters. Without giving this more than ten seconds of thinking, if I were to code up something like this I would at least do a continuously adjusting filter that would backtest the coefficients for each of the three components to something other than one while still adding up to three, variable time windows for back testing resulting in multiple variable windows rather than some fixed monthly, weekly, yearly periods, and variable coefficients for however many windows I would wind up with.



Light, from Duncan Coker

November 18, 2012 | 1 Comment

 I am reading Isaacson's biography of Einstein and I promise a review in another 400 pages. But in the meantime, there a few ideas I found interesting from one of his early papers on light. He presented light as a mixture of physical particles and waves. Up to that point, no one thought light had physical quanta. Light, he theorized, has discontinuous particles as well as continuous wave properties. He was also very interested in the field through light moves, the "ether" from classical physics. He did not take for granted that space was made up of unspecified ether, but rather the space had very important properties of its own. It is similar to the study of water in understanding the waves which move through it. I tend to view markets as discontinuous quanta. Each day represents a discrete event. Others see markets as continuous moving waves. The field for markets was once a physical floor. Now it is much different. The field itself must have properties which affect movements.



 I just got back from a week at the Hilton Hawaiian village on Waikiki beach. Upon entering the hotel room for the first time, the phone indicated an "urgent message/package/etc." for us. Dialing the number for said urgent item, no one picks up on the other end after multiple attempts. Maybe by design?

Knowing that barring a national emergency, everyone important can get me on cellphone, email, text or twitter and it being the end of a long journey, I wait until the next day to inquire about it. Since the front desk is jammed, I ask at the concierge. We're given a tote bag of nominal value and then the staffer proceeds to offer us 2 tickets to the hotel luau so long as we are willing to sit through a 90 minute sales presentation on the timeshares in the next building. When did the concierge become a full blown pitchman? "Sheesh", I think, just when I am looking for some peace & relaxation, I experience the first of numerous efforts over the next couple of days to be offered "a piece of the big island". It would seem the whole staff is incentivized to push guests into the process.

Thankfully we had a rental car and escaped to the beautiful and pristine North shore with its great snorkeling and food trucks.

As an aside, we were told that Japanese travelers have slowly stopped coming to the area. I kind of expected as much given what I thought I knew about their economic malaise. Contrary to expectations, the young Japanese 20 somethings still seem flush with disposable income and were partying like rock stars. I guess 2/3 of the people in the restaurants, hiking trails and beaches we visited were Asian with the vast majority Japanese. Relatively hard currency and a foreign destination makes for a raucous time. For those with continental US sensibilities, $16 glasses of Barolo and $20 glasses of mid-range sake gave one pause. Luckily there were some excellent high end beers available. We can definitely recommend Alan Wong's, Orchids and Marukame Udon for a sample of the best Southern Oahu has to offer.

Next time, we'll hit some of the other less touristy islands but it was a great first intro to the region.



 I wanted to share my latest oped with dailyspec, as I thought you might find it interesting, and perhaps worth writing about.

In the piece, I explain why Dodd-Frank, the federal law designed to regulate Wall Street, is actually harming farmers — and could end up raising food prices for ordinary Americans. The law's ham-fisted approach to derivatives is wreaking havoc on the "swaps" that farmers use to guard against swings in the price of their crops.

The Dodd-Frank Net Might Ensnare the Family Meal

Federal regulators recently roiled America's farmers with the release of new rules for financial instruments. The Commodity Futures Trading Commission, one of the agencies charged with implementing the Dodd-Frank Wall Street Reform Act, officially announced the new requirements and said they would take effect by year's end.

What does Dodd-Frank, passed in response to the 2008 economic crisis and aimed at reforming a vast swathe of the financial sector, have to do with farmers?

A great deal. Among the instruments covered by the Commission's proposals are agricultural commodity "swaps." Basically, swaps empower farmers, ranchers, agribusinesses and other food suppliers to hedge against certain risks common to their trade, like bad weather or a crash in the price of a food item they sell.

Swaps might sound like they serve some distant, exotic purpose far removed from the lives of average Americans. But they play a key role in providing food producers with a basic level of financial security through tough times, which helps to ensure price stability for consumers.

Consequently, the way the Commission imposes Dodd-Frank rules on these instruments will have a profound effect on Americans' pocketbooks. And right now, all signs indicate the Commission's approach to implementing Dodd-Frank is going to inadvertently smother agricultural swaps with over-regulation.

In the rush to prevent another crisis, it has cast its net too wide. As a result, Dodd-Frank could make risk management significantly more costly for America's farmers, driving up volatility in the market and potentially leading to huge price increases for consumers.

The Commission's new rules affect agricultural commodity swaps that aren't sold on exchanges and don't run through third-party intermediaries –so-called "over-the-counter" swaps.

Consider a bread baker in Kansas City. He buys thousands of pounds of flour each year. Because of this year's droughts, though, he's worried that America's wheat supply will shrink, driving up flour prices over the next twelve months.

So, to hedge against a price spike, he buys $10,000 in over-the-counter flour swaps today to guarantee that next year he'll be able to purchase up to 10,000 pounds of flour for $1 per pound. In 12 months, if the price of flour is dramatically higher, he'll have saved himself a huge amount of money. The price could also be lower, of course, but that's the risk he runs in order to guarantee he won't go bankrupt.

Right now, over-the-counter agricultural swaps are mostly unregulated. But that shouldn't be a point of concern — these instruments had nothing to do with the financial meltdown.

Nevertheless, this new round of Dodd-Frank rules would impose a slew of new requirements on these instruments. Buyers and sellers would have to trade them on approved exchanges, and they would need to have a certain level of capital on hand to trade. Reporting rules regarding profits and losses would be ratcheted up.

There would also be mandatory "clearing," meaning swap trades would be required to run through certified middlemen. This is a particularly backwards idea.

The over-the-counter agriculture swap market has been running safely and efficiently for years without mandatory middlemen. No one — not even the regulators charged with implementing Dodd-Frank — claims otherwise.

On the other hand, the traditional futures market operating under mandatory clearing rules has been home to some of the biggest financial meltdowns of the last few years. About a billion dollars evaporated before the brokerage firm MF Global declared bankruptcy in October 2011. And Peregrine Financial had racked up a $200 million shortfall in customer funds before it was forced to shut down in July.

The clearing rules regulators are so eager to foist on over-the-counter agricultural swaps were in full force for both MF Global and Peregrine. And yet, the system still suffered massive losses. This regulatory structure is obviously broken.

So implementing Dodd-Frank as planned means forcing agriculture swaps to move from a regulatory environment that is universally acknowledged to be working well to one that has failed repeatedly to prevent fraud and abuse. That's just senseless.

Overregulation can be just as dangerous and costly as under-regulation. And in this case, these invasive Dodd-Frank rules could dramatically drive up operation costs for farmers, ranchers, and others involved in food production. The rise in expenses would, in turn, be passed along to American consumers in the form of higher food prices.

Some farmers would no doubt be driven out of the swaps market altogether. With no way to manage financial risk, the next hurricane or tornado could put them out of business.

At the very least, regulators need to give themselves more time to study this issue by installing a three-year moratorium on the Dodd-Frank rules governing agricultural commodities. Blindly marching ahead and imposing strict new requirements on these instruments would wind up doing substantially more harm than good.

*Don Coursey is Ameritech Professor of Public Policy Studies at the Harris School of the University of Chicago.



 I found something interesting and unusual today that I thought would be most appropriate on your site.

An exploitable arbitrage opportunity is developing on the eve of the US Presidential election on some of the more active prediction markets. The following quotes are as of Nov. 5 8:19 PM EDT:

- Intrade sells Obama to win at $6.76 (meaning you can buy a binary futures contract that pays $10.00 in the event of an Obama victory for $6.76). There is about $50,000 worth of unmatched contracts ready to be sold instantly between $6.76 and $7.00.

- Betfair has matched 1.28 odds on Obama (meaning you can win $1.28 for each dollar bet on Romney). There is about $60,000 worth of contracts ready to be matched instantly between 1.29 and 1.31.

Assuming you buy $50,000 of Obama above market on Intrade at an average price of $6.88, and sell $58,140 of Obama at an average bet of 1.3 on Betfair, your payoff at expiry (i.e. most likely within 48 hours) will be as follows:

Obama victory: $(72,674-50,000)+(58,140-75,582) = $5,232 profit. Romney victory: $(0-50,000)+(58,140-0)*0.95 = $5,233 profit.

That's a 4.8% *risk-free* return in two days (note that this is after all transaction costs), which is a conservative estimate since it assumed that you play aggressively and snap up market orders at a significant premium. If playing with more than $100,000, say $1M, the return goes down to about 3%, which is still nothing to scoff at considering the time-frame is two days.

The reason that this arbitrage exists is that, unlike more conventional markets, this one is difficult for US citizens and some Europeans to exploit for structural reasons. The IRS, for example, won't allow tax write-offs for losses on either market (in fact the activity altogether 'may' not even technically be legal for US citizens). For this reason, a law-abiding American would wind up paying so much in taxes on the winning side that the net would be negative.

But for someone from a country with less hostile online gambling laws, and a little quantitative know-how to find the right asset mix, there is free money to be extracted from this preposterously inefficient market. If I weren't the law-abiding American I am, I'd be picking it up right now; having to watch others do it because of my country's puritanical laws is more than a little annoying.

Maybe your readers would enjoy this little slap in the face to efficient market theory, even if not in time to make proper use of it. Thanks for your time!


Igor Z.



 Hello everyone,

I visit my local McDonalds a few times a week for coffee.

Today for the first time i was asked if I wanted to contribute a dollar to the Ronald McDonald House and I said yes as it is a very good cause.

I wonder if their usual donations are now down due to a weak economy?



Jack Tierney writes: 

Alan, you can almost bet that contributions are down — maybe significantly. In the past week I've attended two board meetings. One at my church, another at our local Help Center. As you might expect, church contributions are down quite a bit — but that can happen for a variety of reasons. The real "tell" is reflected in the participation by those who tithe. This is an important number as those who practice it, keep it up even in hard times. When that figure drops noticeably, as it has, the most dependable sources are making less or nothing at all.

The situation at the Help Center isn't much better as many regular contributors are also church goers and their first contribution goes to the church, what's left to the Help Center. A big percentage of our money comes from big and small local businesses. That, too, has taken a hit — and despite several seasonal appeals has met with poor response.

The situation is particularly acute at this time (for all agencies like ours) because of a change in the Food Stamp payment schedule. Up until October of this year, most recipients received their electronic deposit on the first or second of the month (a major reason why Wal-Mart has revealed that the first of the month is usually their busiest (with many stores reporting their busiest hours are immediately after midnight). However, the recipients now receive their payments any time between the 1st and the 20th of the month. Since most barely scrimp by on a 30 day cycle, those who found themselves having to wait an additional week or three, flocked to our doors - and pretty much stripped us of all our stocks.

With little time, fewer dollars, and less enthusiasm, this will not be one of our better Thanksgivings (and we receive a lot of help from the local grocery stores who leave bins in prominent places for canned good and other non-perishables; the Library, Police, and Fire departments also give us a lot of help - yet things remain bleak. Generally,we dispense anywhere from 150-200 turkeys (9-12 lbs.) As of this morning we have only 71 available. So I wouldn't be at all surprised if McDonald's is experiencing smaller donations.

And after reading the Robert Reich piece that Kim submitted this morning, suggesting that 501(c)(3) charities could be run more efficiently and "equally" by governmental types like himself, I wouldn't be surprised to see usually generous individuals become reluctant to contribute to causes where the proceeds are re-directed to more "deserving" recipients.



 Going to the chemist, known locally as the Apotik, down here in Indonesia, normally located in tourist areas, there are two or three relatively attractive girls who man the doors and ask you what you need as you enter. This puts them right between you and where you want to go, which is the pharmacist at the counter at the back of the shop. So you answer politely you have a cold, or whatever may be the case, and the girls walk you over to the most expensive "solution or non solution" to your problem there is in the shop. Finally if you can duck and weave by this interruption and  get to the counter, there are pill strips you can buy for normally 3-4 dollars to solve the problem though it pays to google your need first and present the "pharmacist" with your drug of choice.

If the girls nail you at the front of the shop, (as they would many tourists, thinking they were being well advised, not used to what is available in country) the products they flog you are marked up sufficiently that the pharmacist doesn't care what you buy since they still get a cut, and the girls, no doubt on commission only, get a hefty slice of the action, so all are happy.

Sounds like some investment banks around town….

No doubt, also, it may be similar to some execution tricks played by some , that guide you, on the other side, in the wrong direction, due to your need to get a fill quickly (due to health reasons:-) only to find out with a bit more effort and patience and knowing what you need, you could of saved much money.



And thus the stock vigilantes force a harmonious resolution by knocking the stocks below the stone wall of 1350.



 I can't help but think of markets when I hear terms like "brood parasite"…

From Discover magazine:

"Fairy wrens teach secret passwords to their unborn chicks to tell them apart from cuckoo impostors":

In Australia, a pair of superb fairy-wrens return to their nest with food for their newborn chick. As they arrive, the chick makes its begging call. It's hard to see in the darkness of the domed nest, but the parents know that something isn't right. Whatever's in their nest, it's not their chick. It doesn't' know the secret password. They abandon it, flying off to start a new nest and a new family somewhere else.

It was a good call. The bird in their nest was a Horsfield's bronze-cuckoo. These birds are "brood parasites" – they lay their eggs in those of other birds, passing on their parenting duties to some unwitting surrogates. The bronze-cuckoo egg looks very much like a fairy-wren egg, although it tends to hatch earlier. The cuckoo chick then ejects its foster siblings from the nest, so it can monopolise its foster parents' attention.

But fairy-wrens have a way of telling their chicks apart from cuckoos. Diane Colombelli-Negrel from Flinders University in Australia has shown that mothers sing a special tune to their eggs before they've hatched. This "incubation call" contains a special note that acts like a familial password. The embryonic chicks learn it, and when they hatch, they incorporate it into their begging calls. Horsfield's bronze-cuckoos lay their eggs too late in the breeding cycle for their chicks to pick up the same notes. They can't learn the password in time, and their identities can be rumbled.

This is one of many incredible adaptations in the long-running battle between birds and their brood parasite. As these evolutionary arms races continue, the parasites typically become ever better mimics, and the hosts typically become ever more discerning parents.



One noted a big increase in claims today on Thursday, conveniently not one week, but
two weeks after the election.

"Keep it gradual or else Suzy will let Jack out of the widows walk again".



 "Mark Rothko Painting Crowns New York Art Sale":

A painting by abstract artist Mark Rothko has fetched $75.1 million (£47.2m) at an auction in New York.

"If you want to talk about the market being happy, healthy and well, here it is," said Sotheby's auctioneer Tobias Meyer, worldwide head of contemporary art.

"That's probably about as good as it gets." Further high prices are expected at a second Sotheby's contemporary and post-war art sale on Wednesday, with two Christie's sales focusing on the same period also taking place in New York this week.



Mumboism is to trade flexionics as Petraeus' wife is to Petraeus?

Available ex-ante mumboism mined trading signals is useful even to anti-mumboists?



Like most things the market is worried about, like decreases in economic activity or the inevitable coming decrease in consumer sentiment which follows the stock market like the sage the feigned humility, I wonder if all the Greece news is of a similar color. Would it be good or bad for the market if Greece were more or less austere and the EC, IMF, and other central banks were to buy their bonds at this or that price at the expense of others? The hypothesis that stocks can't go up unless the Greek crisis is settled with buying bonds and austerity is in the meme. When it is broken with a rise, infirmed, a new paradigm of rises related to the fed model will be available. Or at least I think this is a reasonable way of looking at future.



 Whether it's politicians or bankers or previously highly regarded journalism i.e the BBC, it seems no amount of cutting sacrificial heads will vary the course of the ship. The culture has changed, and whether it's due to changes in morals, etiquette, the transfer of private to public companies, or an attitude of extreme competitiveness, I'm not sure. Listening to an interview I believe on the BBC the other day, they mentioned something they could have been sued for, and said something like, "yes we overstepped the mark yadda yadda", all the while staying very business like…. The interview finished with the memorable last line of "we got away with it!", which showed their true colors of course.

I don't have an answer, but I know that the BBC has been inviting problems for years in its transfer from high end to mass appeal, and as one paper editor mentioned recently in West Australia, words to the effect of "after all the masses are not that bright", they want more goss than substance….maybe that is the conundrum across the board.

Market wise…well…the need of most to think about themselves first and foremost, especially in times of chaos, will always provide the cane swinger with opportunities.

Richard Owen writes:

Like so many things perceived to be a linear spectrum (eg. left wing / right wing), at the extremes it bends round in a circle. In an attempt to achieve equality of opportunity, the world is now bending round to extreme disparity from that.

If you allow people access on a meritocratic basis, you need measurement. But all reasonable measurement systems exceed the patience of the professionals concerned.

It is everywhere, from employee measurement systems within General Electric a-la Jack Welch; political voting structures; the index measurement of asset classes. The aspiring middle class has become subject to as much whipsaw as Ed Seykota's SPU contracts.

In politics, you have 10 year duration policy being set in response to sentiment on 2 hour rotation news bulletins. Churchill used to read and paint in the afternoons to give him perspective during the war — can you come close to imagining that for a PM now?

This means the well held canes of family capitalism are stronger than ever.

Add in the fact that branded education and prime property is on the way to being repriced only for that family elite, and you have something quite pernicious in effect. If you look at where Hittlerite Germany really took off, the legitimacy came not through working class populism, but when the aspiring middle class goat soaked by currency default. It's when the 80-95-%tile (who have worked their asses off to always get grade B+) get their hands slapped down that things get really ugly. They are smart enough to create real havoc.

And I think what Craig points out is another symptom of this development.

Anton Johnson writes:

It is human robustness that is undergoing what could be termed reverse-evolution. Numerous historically attenuated genes, ranging from those coding for hemophilia to astigmatism, are now proliferating. Consequently, as a species, we may well morph into that frail, technology dependent brain-vessel depicted in the advanced alien species of science-fiction.



 When I was out at Purdue at my final residency last week, my professor, an unapologetic Keynesian and MIT classmate of Punxsutawney Paul, argued that inflation was nature's way of getting out of debt because of old reliable forces…

He based it on the notion that we "Still haven't paid for WW2". We grew our way out and "inflated our way out."

And while that may be well and good, given that we've had massive game changers to our economy — roads, internet boom, faster transport of goods and information, facilitation of trade on a massive scale –what exactly will be the driving innovation that will get us out or this situation to help us grow.

Growth and inflation seem like natural partners to our economic professors. But growth is sitting on the sidelines. We are still using the same plane technology as the 1950s, the same highway strategy as the 1950s, the same internet moving at the same speed of light. How can we move goods faster with more expensive sources of energy, and not be able to move cash or information faster than we already are. So, how do we grow, expand trade, and do so economically?

And then at the same time, I'm hearing that Bernanke's experiments in economic alchemy aren't stopping deflation and the Lost Decade under the past two administrations will stretch on til 2023. Now I'm just downright confused…

Will good rum be more expensive in 2014 or not. I have to put money aside. I just hope there aren't carbon taxes added to the VAT on said rum.

Stefan Jovanovich writes: 

Great phrase - Punxsutawney Paul.

Those of us who prefer currency debasement as the description of what how the U.S. fixed - temporarily - the liability side of the balance sheet, agree with Garrett's professor - we "still haven't paid for WW2". We never will. The Keynesian notion that the organized breaking of windows in Dresden and Tokyo somehow "boosted" the wealth of the United States of America remains the great Big Lie of our nation's history. Our relative wealth increased dramatically and allowed the U.S. public debt to become what it was for the next 5 decades and still is - to a lesser extent even now - the primary obligation against which the world measures debt and foreign exchange instruments. Those seignorage profits were and - at least for now -still enormous; but it is, as Garrett notes, questionable whether that alchemy now offsets the fact that, measured in money savings, the "average" American is now as broke as he/she was in 1938.

If the rum is really good, it will most certainly have greater relative value in the future than it does now - for the simply reason that, in a world of debasement, good "old" things become that much more scarce. It seems just as likely that energy will be less expensive in the future because efficiencies in the use of generated electricity and transportation and production fuels will outpace growth in demand.

The "driving" innovation will be the one Google is working on; the application of machine intelligence to the steering, accelerating and braking of automobiles and trucks. What warehouses now have as the default setting - forklifts and other moving vehicles guided by sensors - will someday soon happen on roadways - but only after the D.O.T. and public ownership of the roadways monopoly finally crumbles under the weight of its collective stupidity.



 As noted previously by a spec, and confirmed in today's WSJ, trendfollower John Henry is leaving the money management business — having had his assets dwindle from 2+ Billion to well under $100 million.

JWH will be ensured a footnote in financial history if only for his purchase of the Red Sox. As to his money management, his latest disclosure document is here. Interested specs might want to download it for posterity — so the facts and track record will never be in dispute…and before he shuts his website down (which will presumably happen forthwith.)

There's a lot of grist for statisticians in his track record — including the fact that he has no visible, continuous track record from his launch in 1982 to his retirement this year. The closest thing to a track record is his financial & metals portfolio which launched in 1984 and which closed in 2011. And even here, the results have an asterisk (reminiscent of certain baseball hall of fame members' asterisks). Henry claims a 252% return in 1987, but the asterisk reads, "The timing of additions and withdrawals materially inflated the 1987 rate of return. The three accounts that were open for the entire year of 1987 achieved rates of return of 138%, 163% and 259%.

Anyway, for this fund, he claims a 27 year compounded rate of return of 19.8%. And if you eliminate the home run in 1987, I reckon his lifetime record is around 14% — which isn't too shabby. His worst years in this fund were 2009 at -17%, 2005 at -17%, 1999 at -19%. So his average 19.8% compounded return over a lifetime matched his maximum drawdowns — and that's pretty darn good in my book — certainly hall of fame material for a 27 year run.

Unfortunately, his other funds have not performed anywhere close to this fund. He shuttered a bunch of funds that were disasters (and doesn't report those results) ; and his other open funds have returns nowhere close to this fund (and much higher volatility.) So a skeptic could rightly attribute the aforementioned 27 year return to a combination of luck and survivor bias. I am agnostic. It is what it is.

More interesting to me is the fact that from 1985 to about 1996, his returns really were consistently excellent. You can see them on page 43 of the pdf. Then something happened. And so the point of this entire post is for people to consider the question: WHAT HAPPENED AFTER 1997? Did the world change? Did he change? Did he have too much capital?

I have some theories, but before I weigh in with my theories, I'll allow others to chew on this… There's many meals to be found in correctly answering this question.

Richard Owen writes:

A component seems to have been the purchase of a groin guard: Beginning in August 1992, the position size in relation to account equity in this program was reduced approximately 50%.

Anatoly Veltman writes: 

Some great points, because I believe trend-following died exactly when the leverage left the regulated exchange trading, which went all electronic; and moved to exclusively OTC derivative biz, which is more flexionic. An easy example, a rule that used to work well in futures of the open outcry era: surprise (i.e. big intraday price change) follows trend. Don't try to fade a market that's been gradually and continually trending, as you are likely stepping in RIGHT IN FRONT OF FORCED LIQUIDATIONS. But since electronic execution prevented over-leveraged position-taking, this rule muted up: nowadays, it may well be a profitable strategy to fade prolonged trend - as more surprises began to SUDDENLY correct overdone trends

anonymous writes:

Hard to tell without analyzing the cash flows, but I propose JWH followed the time honored tradition making great returns on a small assets base then poor returns on a much larger asset base.  The compounded annual rate of return may look very good, but in absolute dollars making a large contribution of investor funds to the market infrastructure.  Paulson is carrying on the tradition more recently.  On the performance degradation I sense from interviews I have read he developed his trading ideas in the 70s and did not modify much since then.



An article excerpt is talking about the lawyers' argument on an unsolved persons case. I find it interesting from a position of how to quantify a tradeable market.

"Mr Evenden admitted police had uncovered some inconsistencies in the evidence, but he told the Deputy State Coroner Sharon Freund this was not enough to prove the family was involved in a ''cover-up''.

''Some of them provide a basis for suspicion - but even if one put them all together, they don't raise that suspicion above speculation,'' Mr Evenden said.

I'm wondering, what allows suspicion to be raised above speculation and beyond reasonable doubt?



 It's now been 12 days without electricity. And unlike Bo (who lives in
boxcars), I'm still paying the highest real estate taxes in the nation.
So, turning lemons into lemonade, here is a list of things I've learned:

1. A recession is when your neighbor loses his job. A depression is when
you lose your job.  A storm is when your neighbor loses his electricity
for 12 days. A catastrophe is when you lose your electricity for 12

2. ConEdison has a real time outage map. It is updated every 12 minutes. But you cannot view the map unless
you have electricity. Ironic. It provides the date and time of
restoration to the nearest minute. Their precision is eerily reminiscent
of companies that guide earnings to the nearest penny.

3. Beware of the weakest link. Where we live has no town gas. We have a
well. So without a generator, we can't flush toilets.  But the generator
runs on propane. And that's the weakest link.  Getting a propane
delivery is almost impossible.

4. Bad incentives create bad behavior. Our propane company told us that
they are only making deliveries to customers who have run out of fuel.
But we were running our generator only a few hours per day to CONSERVE
fuel so we would not run out. Hence our responsible behavior was not
rewarded. And profligacy was rewarded. Only after I pointed this out to
the propane company manager and threatened that I would make it a
personal mission to go door-to-door afterwards and convert all of my
neighbors to a competitor did we receive an 80 gallon delivery. (The
generator burns between 2 and 4 gallons/hour.)

5. People don't change. Our neighbor who built a 12,000 square foot
McMansion (that blocked our view) was running his generator 24/7 and
running his landscape lighting 24/7. I was looking forward to a good
night's sleep without his lights coming into the bedroom window. No such

6. Send more food gifts to our troops.  They were distributing beef stew
MRE's and water bottles at the local firehouse. After things return to
normal, I'm going to send more food baskets/etc to our troops. Those
MRE's are rude.

7. Traffic lights are optional. On the first few days, there were
horrible traffic jams since all of the lights are out. However, by day
5, a self-enforced ritual developed at 4 way intersections where people
yielded to the person on their right … and things actually
worked…not perfectly, but surprisingly good.

8. Francis Galton lives. Next week is the deadline for the Intel Science
Talent Search (formerly known as the Westinghouse Science Competition.)
My daughter is submitting the results of a 3 year research project in
an arcane and slightly bizarre topic. As we sat by candlelight reviewing
her hardcopy for typos, I discovered that she had made a reference to
Sir Francis Galton's work in her paper and she cited him. There is some
irony that in 2012, a promising young scientist is editing a paper by
candlelight that cites Galton. I pointed out the irony to her. She
didn't smile. She just said that all of her friends have electricity.

9. Some people like to complain. Some people lost a few trees. Some
people had trees crash through their roofs. Some people literally lost
their houses. Some people have no generators. Some people were annoyed
that school was closed for a week. A few people lost friends and family
to the storm. Listening to people, there was little self-awareness of
relative fortune and mis-fortune. Lots of people asked how we were
doing. My answer was: it sucks. But a lot of folks are much worse off.
And this too shall pass….
Que Sera Sera

10. Out of state line crews are nice guys. I've now had the pleasure to
chat with crews from Wisconsin, Maine, Atlanta and Alabama. All of these
guys are part of the mutual aid system. Sure they are getting paid time
and a half plus a per diem. But these guys are clearly aware of the
importance of their mission. And they are proud of it.  And they don't
bitch and moan. They get the job done. And that's what makes America

Are there any market lessons here? We report. You decide.

Scott Brooks adds:

Speaking of traffic lights and/or stop signs…….

At my university, there was an intersection in one of the parking lots that was a bit of a bottle neck (actually, it was a big bottle neck). Vehicles
approached the intersection from directions. It had no stop sign, or light,
or anything. But the students developed their own system wherein each car
would take their turn pulling out into the intersection. Your turn came in
a clockwise fashion. It actually worked very well. It was all on the honor system and there were no posted rules.

Conclusion: people will figure things out on their own over time, and not a single law was passed by a bureaucrat and not a single regulator was needed
to make it work.



 One has found that there is an electronics circuit that almost always retrospectively provides a great description of price action in markets. I wonder if there is an electronics circuit that compresses the voltage output keeping it in a range, sort of like the finger in the dike, but then after the compression is over on the negative side, e.g after the negative feedback is taken away, the voltage doesn't immediately lead to tremendous negative voltage. I seem to remember such a circuit with op amps.

Jon Longtin writes:

There are a variety of electronic circuits that perform such a role, depending on the application. One common application is a voltage regulator, which provides a (nearly) constant voltage, regardless of the load applied to it. The circuit monitors the actual voltage currently being provided and compares to a pre-set reference value. The difference between the actual and desired (setpoint) values is called the error, and is used to adjust the current provided to the circuit to bring the voltage back to the setpoint value. For example if the load increases (more electricity demand) the load voltage will drop and the voltage regulator will provide more current to bring the voltage back up. Same goes for a decrease in load.

There are some limitations and compromises in such a circuit. First is there is a finite amount of current that the power supply/voltage regulator can be provided, and if the error signal requests more than this amount, the output will not be maintained. Also of importance is the time response: a circuit with a very fast time response will respond more quickly to fluctuations in the load, but can also result in so-called parasitic oscillations, in which the output oscillates after a fast change in load is made. By contrast a longer time response provides a slower response to a variation, but tends to damp oscillations. This same behavior, of course, is seen in countless financial indicators, and is part of the art in deciding, e.g., how many prior data points to include in a signal.

A somewhat more complex version of the above, and perhaps more closely aligned with the behavior of a market signal, is an audio "compressor/limiter". This is a device that constantly monitors the volume (magnitude or voltage) of an audio signal and makes adjustments as needed. A limiter is the simpler of the two and simply sets a threshold above which a loud signal will be attenuated. The attenuation is not (usually) a brick-wall however; rather a signal that exceeds the threshold value is gently attenuated to preserve fidelity without overloading the audio or amplifier circuitry. A compressor is a more complicated animal and provides both attenuation for loud signals AND amplification for quieter ones. In essence a HI/LO range or window is established on the unit, and signals exceeding the HI limit are attenuated, while signals below the LO limit are amplified. This resulting output then (generally) falls within the HI/LO range. This is used extensively (too much!) in commercial music. Humans naturally pay attention to louder sounds (ever notice how the volume universally jumps when commercials come on TV? They are trying to grab your attention with the louder volume). Pop music attempts to achieve the same by using aggressive compression to provide the loudest average volume for program material without exceeding the maximum values set by broadcast stations or audio equipment. The result, however is that the music sounds "squished" and doesn't "breath" because the dynamic range of the content has been reduced considerably. With such devices there are a variety of adjustments to determine the thresholds, time before taking action (the attack time) and how gradually or strongly to attenuate (amplify) signals that exceed the envelop range.

Here' s a fairly decent article that describes this in more detail.

Incidentally both of the above are examples of a large branch of engineering called Controls Engineering. The idea, as Vic stated, is to monitor the output by using feedback and make adjustments accordingly. There are countless different algorithms and approaches, as well as very sophisticated mathematical models (people build careers on this) to best do the job. Like most complex things, there is no single approach that works best for every problem, but rather involves a balance of performance, cost, and reliability.

I highly suspect such algorithms have already found their way into many trading strategies, one way or another.

If interested, I can suggest some references for further reading (though I am not a Controls person myself).

Bill Rafter writes: 

 Think of your voltage regulator as a mean-reversion device. If a lot of this is being done, then your trading strategy must morph into simply following the mean.

In light of recent changes in the investment climate we suggest that one should tighten up controls in which one is long a given market. Perhaps that might also or alternatively mean (a la Ralph) tightening the size of the positions. The result will be taking less risk and incurring less return, but taking additional risk would seemingly not be rewarded in the current milieu.

Jim Sogi writes: 

Dr. Longtin's description of compressors and limiters was
fascinating.  A compressor on my guitar signal chain prolongs the
sustain on a signal in addition to smoothing out the volume spikes and has less fade as the signal weakens.  With added volume, one gets a
nice controlled feedback.

Sometimes in the markets one sees a sustained range with the spikes being attenuated reminiscent of a nice guitar sustain.

On a different note, one curious thing is that people cannot  discern differences in absolute volume.  It's very hard to hear the differences
in volume between two signals unless they are placed side by side.



 Along comes a series of scholarly studies in The New York Times: "Get What You Pay for? Not Always". They report on studies that through 2008 show that S&P companies that spent more on politicking performed worse than those that spent less. They also point out that the flexionic firm with 3 chief executives at Treasury or Governor spent unwisely this time as they moved from the party that can never lose again to the other side. They point to a study from 1981 to 2004 that showed that companies that contributed to political action groups grew slower than those that did not. Furthermore it didn't matter if they picked the winner or loser. And then the proverbial Harvard professor Coates is quoted that the jump in spending led to a deterioration in market performance. Anecdotal examples are given pointing out that banks are big political contributors but they performed badly. Jamie Dimon says, "he's hardly a democrat any more". And finally they show how AT&T tried to get their merger with T Mobile approved with letters from 76 democrats and 56 million in contributions over the preceding years, and yet it wasn't approved and they paid a 5 billion break up fee.

Well, all these studies are of the kind "your own man". Political contributions are necessary these days as the % of workers and their suppliers and G expenditures as a % of GNP goes up. Also, one would posit that the companies that made the greatest contributions were most in need of it, and would have done much worse had they not greased the wheels of G. Also, one would hypothesize that the relation has changed since 2008 as the idea that has the world in its grip has become more prevalent.

Indeed, some good questions arise. With the increased need of having the forces of the weather gauge at your back with government aiding and abetting you, one would think that the companies that give the most to politics are those that have the most government business. And they would seem to be the ones that the best chances of prospering in this environment. So one would hypothesize that a proper study of political spending controlling for whether it was necessary because your company was in the radar, would be very a propos these days and would show a conclusion that is opposite from the picture that summarizes the article with Jamie Dimon shaking the Presidents hand who "was once one of the Presidents favorites" but is no longer the fair haired boy despite their enormous political contributions.

Jim Sogi writes:

The question whether payola for government contracts or regulatory
largess is or is not beneficial to the specific company making the payola, or to the economy in general is related to the broken window
syndrome.  Government spending, especially with Sandy, is repairing
broken windows.  There is no real benefit to productivity overall, thus no real benefit to the companies seeking this type of work or
largess. This might help explain Chair's hypothesis.



If the market were to go down 200 points right after the election, some liberal analysis 4 years later would say that the market does better during democratic presidentials. They'd start it at the end of November or at the end of December or the beginning of the term depending on what works best, and how much the decline on the news of the election was and then they'd have something like Washington Native American indicator and it could be used as propaganda to keep man small.



My analysis of every announcement until end of year will be in the context of a conman who just stole tremendous money from a mark. And he's on the train with the mark. And he doesn't wish to look too exuberant or spend the money. E.g. the report of claims today. They didn't want to increase it too much, because then the mark would have known they had the finger on the dike for all announcements before the election, i.e. there will be no saluting of the Russian Flag until the inaugural ball where certain groups are known to be very poor at maintaining balance in the presence of non-sweet grapes.



 So the lines for gas around NYC continue. Few stations have gas and those that do quickly run out. However gas is available. People are selling on craigslist for $15 per gallon. A guy near me brings a truck from upstate with gas selling for $9 per gallon. We pay up to avoid the time of searching for stations with gas and then waiting in line.

I imagine this is what life in the Soviet Union was like, where the price at the store was not allowed to rise creating shortages and lines in order to buy something as simple as bread, or you could pay a premium on the black market for a market value created by lack of competition due to lack of incentive.

I'm sure if the politicians removed the price gouging laws, gas would be readily available at the pump. It might cost more in the short term, but at least you can get it if you need it.

Would a politician be more popular with gas at the pump being more expensive and available or low priced with lack of supply?



 I voted for Gary Johnson, but come on, Romney didn't commit all kinds of blunders. He ran a decent, energetic campaign. Far better than McCain or Dole or probably even the Bushes. It took Romney until late in the campaign to hit his stride, but by the end he sounded far better on the stump than did Obama. And of course he won the debates.

But every time Romney opened his mouth, the press crucified him for a blunder. When he made a very mild and presumably knowledgeable comment in London on preparations for the Olympics, the nationalist, socialist English press cried he had insulted their country and the US press piled on that his foreign trip was a disaster. When he happened to mention being supplied with binders of women, it was absolutely the worst, most anti-women comment anyone could every make. When he questioned the apologetic US reaction to the Libyan riots, the press said he was politicizing a tragedy. Meanwhile the President could ignore pleas to send support for our diplomats, resulting in the murder of our ambassador and shorted-handed former Navy Seal security team, and the press was totally uninterested in looking into or even reporting the matter.

But the real trouble was structural, as Vic pointed out. It is now, and certainly will be in the future, impossible for a Republican presidential candidate to win.

Based on exit polls, Romney won 58% of the White vote, Trouble for him was that Obama won 93% of the Black vote, 67% of the Hispanic vote, and 75% of the Asian vote. BTW Romney also won 60% of the married vote of all races — an incredible figure never mentioned in the blizzard of commentary about Romney's "war on women." These are figures that would have resulted in a landslide for Eisenhower or Kennedy or Reagan.

All in all, Romney won the traditional American vote. What Obama won could somewhat unfairly but not totally unreasonably be characterized as the anti-American vote — the alienated minorities, those on the dole given Obamaphones and such, the capitalist cronies, the lefties and naive young, the Hollywood dabblers, the academics and a large chunk of the intellectuals.



It seems in the market there are times when participants come into the auction and in doing so present worthwhile opportunities for more astute traders. Maybe this is after lunch, after a big ball game, after a holiday period, and the market has whipped around somewhat over this time period. Traders watching the screens through this period will see a market totally different to the johnnie come latelies. They will have seen the mine/ yours already played out and a market potentially in equilibrium. The latecomer will see a market which needs to be stopped out of, leveraged up on, faded…you name it, an interpretation will be there, due to a lack of "vibratory sense". (new term)

This presents an opportunity to trade value for the astute cane toting old timer, who will quite happily make a market for the new flow.

John·ny-come-late·lies or John·nies-come-late·ly (jnz-) Informal

1)A newcomer or latecomer, especially a recent adherent to a cause or trend.

2)a brash newcomer, novice, or recruiit



Going back to 1984, checked SP500 returns for the two day interval including presidential election day, and the following 3 day interval returns:

One-Sample T: 2D prior, 3D after

Test of mu = 0 vs not = 0

Variable N    Mean   StDev   SE Mean     95% CI             T      P
2D prior  7   0.0105  0.0145  0.0054  (-0.0029, 0.0239)   1.91  0.104
3D after  7  -0.0162  0.0372  0.0140  (-0.0507, 0.0181)  -1.16  0.292

N.S. (low N), but a trend toward reversal.  Here is the regression:

The regression equation is
3D after = - 0.0025 - 1.31 2D prior

Predictor     Coef  SE Coef      T      P
Constant   -0.0025  0.0168  -0.15  0.889
2D prior    -1.3125   0.9868  -1.33  0.241

S = 0.0350644   R-Sq = 26.1%   R-Sq(adj) = 11.4%

>>Still N.S., but negatively correlated.

Buying rumors and selling news?

Date 2D prior 3D after
11/4/2008  0.038 -0.074
11/2/2004  0.000  0.031
11/7/2000  0.004 -0.046
11/5/1996  0.015  0.023
11/3/1992  0.003 -0.006
11/8/1988 -0.004 -0.026
11/6/1984  0.018 -0.016



As with many news events, the market's reaction is not always what one expects. The reason is that the predictor's assumptions may be wrong, or the wrong premise is being held. In the current election, it appears it is not the substantive political positions that matter, rather it's the certainty or uncertainty of the outcome.



 For hurricane preparation, a flashlight with rechargeable batteries that can be replaced is good to have. It is also essential to have a second back up flashlight since flashlights are unreliable and batteries corrode. A hand crank flashlight or a cheap flashlight with extra batteries might be good backups. Head lamps are very handy. We have one or two at all times for each of us. A Goal Zero solar battery charger is a good tool for camping, survival and hurricane preparedness.

I would also suggest water purification. The Aquamira tablets are a good backup emergency purification. Filtration systems are a good first response. Its surprising the water that can be treated to be potable and safe.



To answer my own question.

Using the last 100 daily returns of SPY as the "x" and HDY (ishare High dividend ETF) as Y I got the following linear regression:

y = 0.6279 x + 0; with R^2 of 68.2%

and today .52% - 1% (.63) gives negative Alpha… -0.11.

Certainly within statistical significance bounds, but negative none the less.

Jack Tierney writes: 

I hold a number of dividend stocks and find that although there are more up than down, none of the moves is substantial — certainly smaller than those of the general averages.

What interests me right now is volatility — something that has never been very good to me, but I took a TV break this afternoon to see what the CNBC wise men and their guests think. It would seem that many are expecting Obama to win, the Senate to remain Democrat, and the House to remain Rep.

If today's market is reflecting that expectation, it would take only a couple of votes going the "wrong" way to upset this equilibrium. If the surprise is at the presidential level, the move could be huge…but not necessarily positive as many believe. On the contrary, there is a sizable portion of electorate that not only feels the President should be re-elected but that it is "owed" to him. If they are disappointed, I would expect them to demonstrate their unhappiness in no uncertain terms.

Almost equally disruptive would be a "no-decision" result - at least until a recount (or several recounts) are completed. All this is supposition, but not entirely out of the question. In any event, at least according the Art Cashen, it's not unusual for an election day bounce to be followed by a following day re-tracement. The Chair with his many readily available facts and figures would be able to affirm or deny this.



 The problem with polling is because of the response rate. A generation or two ago people were honored that someone would solicit their opinion. No so today, for whatever reason. Two days ago the Pew Foundation revealed the percentage of those persons contacted who are willing to give their opinions. Take a guess as to what that percentage is: According to Pew, their "success rate" is nine percent, or one out of every eleven persons they speak with. Thus they cannot get a reasonable random sample and the Central Limit Theorem does not apply. Therefore most polls are GIGO.



 One has to believe that the realization that we will be living with the idea that has the world in its grip from the executive office for another 4 years will become accepted today with the exit polls and that a certain revulsion will take place. Yet stocks are still very low relative to the fed model for all time frames so that the revulsion should not be catastrophic.

Rocky Humbert writes: 

As I have previously demonstrated with regard to the monthly job reports, EVEN IF one can predict the data, it is impossible to consistently predict the terminal market reaction with any statistical significance at a given/terminal moment in time. And making predictions that X price will be hit (when X isn't statistically significantly far away) is an empty statement. Hence I submit that The Chair should acknowledge that his comment below is an illustration of a statement that cannot be wrong. At any given moment in time, there is a high probability of some revulsion. 365 days per year. And the definition of "catastrophic" is a function of leverage, not price. And that stocks are low relative to the fed model is an empty statement unless he believes that bond prices cannot go down. Lastly, the Average True Range of the S&P is currently about 15.5 points. So any statement that predicts a move of up to 15.5 spu points is most likely to true. I'd say that one needs a move of more than 31 spu points to be "revulsion."

But for proof and in the Franklinian spirit — I will send a unique prize of dubious monetary value to any Spec who can predict BOTH the winner of the presidential election AND the closing SPX price for tomorrow (Wednesday) within 3 SPX points. All submissions should be mailed to the speclist.

HOWEVER, I will make a final prediction. IF Romney wins. And IF Wednesdays close is more than 16 points below today's close, then there will be a very substantial decline between now and year end. How substantial? Enough for the Chair to call "catastrophic."



 I am on Al Arabiya's twitter feed given the likelihood of portions of Arabia/Africa to flare up and potentially affect us. Yesterday, there was a small bombing attack in Bahrain which killed two foreign workers. What was so remarkable about the event was upon linking to the website, the front page had a full on side picture of one of the poor souls who had lost his life. The pic's distance was from no further than 1-2 feet and the lethal and grotesque damage to the victim's chest by the blast was immediately apparent.

It struck me that such gritty, realistic footage would rarely if never be shown by the western media. Is there a huge divide in the way events are homogenized for our citizens by the powers that be while the Middle East experiences the true consequences of war and smaller sporadic conflicts? Perhaps I am harping on the ongoing attempts to keep US citizens small and distanced from reality. Not that the ME is a bastion of individual freedoms & liberties.



 I am currently reading Nate Silver's book The Signal and the Noise : Why So Many Predictions Fail-but Some Don't.

I really enjoyed the piece on weather forecasting by the government and how computers and humans play. Apparently meteorologists take very detailed notes on their individual performance over the computer to make sure they are "adding value." In the process, they have significantly improved their own weather predictions. It also touches upon traversing the massive amount of data humans have access to and how people are not obsolete…yet,

I uploaded the pages from the book here (pages 120-122).

Seems like there are many links to trading here.

The forecasting done in weather is incredibly complex and it's quite amazing the leaps that they've taken. The fact that they could give a small radius of where Sandy would land when it combined with other storms and fronts was absolutely amazing. Weather forecasters could evacuate areas and save lives with time to do so. Weather is incredibly difficult and computationally expensive to simulate and predict. So for them being able to do that….just wow.

And on another note, I do not think forecasters misled the public at all on Sandy. News here (lower Manhattan) was very concerned about the upcoming storm and they encouraged everybody to evacuate. They had constant feeds and were constantly changing their forecasts based on new data coming in, which I hear is more prudent than what many novice traders do.



 Many have seen the paper by academics (from Utah!) attempting to explain the observation of empirical intelligence in Ashkenazi Jews. [Cochran, Hardy, Harpending 2005].

Synopsis: Jews of eastern Europe were excluded from mainstream society and gathered in Shtetls. In these villages, exceptionally intelligent boys studied Torah — and the most talented were skilled at debating meaning between themselves and with the elders. The most intelligent grew up to become religious scholars, who in these societies became wealthy — and the most desirable for marriage to village nubiles.

Unlike many Christian religions, young Jewish religious scholars were expected to reproduce in quantity. Thus conserving and proliferating genes for memory and reasoning, and possibly explaining disproportionate representation among pre-political Nobelists.

It is also possible that the successful among the tribes in Pogromal Russia also favored reproductive survival for the wily in coping with an oppressive state bureaucracy.

One could posit that such selection pressure could explain a measure of Jewish affinity for the heavy-handed state, including an instinct that this environment is rich with opportunities for equivocating, lawyering, and fertile profit.

Mick Tierney writes: 

 I'm somewhat familiar with the study you refer to, Kim, as well as similar conclusions reached by Charles Murray. But what interested me most about your post was this: "…young Jewish religious scholars were expected to reproduce in quantity." It caught my attention because of a battle that flared up back in June between "Commentary" and "Forward" - both, apparently, Jewish journals with significant influence. Their dispute turns on issues with which various Christian sects are familiar.

The below excerpts (and the entire article) seems to suggest that there might, in fact, be an "affinity for the heavy-handed state" among some of the faithful, but certainly not all. (I understand that there while there're differences between the Ashkenazi and the Haredim, both groups place a heavy emphasis on education.):

"In a city like New York where 74 percent of all Jewish school-age children are Orthodox, there is little question the traditional dominance of secular and liberal Jews is not likely to persist in the long run.

"That this would upset liberals is understandable. But that ought not to excuse the willingness of the editorial page of the Forward when discussing the Orthodox community to engage in the sort of language it would never excuse were such words directed at non-Jews."

"And that is what has apparently goaded the Forward into publishing a rant whose only real purpose is to stigmatize Orthodox Jews as an expanding horde of lazy welfare cheats who ought to be denied assistance as they out-reproduce more responsible liberal Jews."

"…it is one thing to express concerns about the future of that community, it is quite another to write in a manner that speaks of the rising Orthodox birth rate as if we would all be better off if those children were never born.

"…when a critique of the welfare state crosses over into prejudice against specific groups or language that resonates with bias that sounds more like eugenics than political analysis, a line has been crossed."

If it is true that being fruitful has been a successful mechanism for maintaining intellectual superiority (and it's hard to argue with the current "facts on the table") then the current NY contentions could have serious long-term consequences.



 "Professional Fisherman? I didn't even know there WAS such a thing!"

There are many niches in the fishing world for a man to make a living.

There are:

Professional angers who compete in international fishing tournaments where the prize money can be $100k, plus side bets

Professional fishing captains who run the boats to fish for big game fish

Commercial fishermen who fish to sell to stores and restaurants

Professional guides who guide clients on rivers and streams to fish

People who own fishing stores, sell lures and info

Subsistence fishermen

Crabbers, lobstermen, oyster farmers

Farm fish in aquaculture.

Duncan Coker writes: 

I have a friend who has carved a nice life for himself as professional fishing river guide. His home water is the S. Platt in Colorado where he guides and teaches. Fishing and writing complement each other well. He has written several books on fly-fishing and is an editor at large for Field and Stream. They send him all over the world for stories which he dreams up, salmon in Scotland, rooster fish in Baha, tiger sharks off San Diego. Fishing and writing by fisherman have a long history. Some of the favorites on my bookshelf are by Hemmingway, Norman Maclean, MacQuarrie of the Old Duck Hunters, James Duncan's The River Why. It is good to have a backup plan. So if the fish aren't biting perhaps you can craft a good story about the day your fly box floated away on the first cast, or secretly borrowing your friends waders for two years, or instinctively yelling "save the rod" just as your wife slips into the rapids holding a brand new 6 weight.



 Today's little relief mission to the hard hit Rockaways area was very telling. Fema and NYC relief crews were nowhere to be seen, and everything was being run by a local city councilman and an army of volunteers.

The folks who run the public library down there had decided to turn it into a makeshift relief center, and we were able to get them a much needed generator and some other supplies. The most relief was provided by millionaire hedge fund manager Roy Niederhoffer, who in 1 day managed to put together an army of people to bring down cars and even a 26 foot u-haul truck with enough pre-sorted food to support 100 families of 4 people for days. Note he didn't just write a check, but he actually quarterbacked the entire operation (for the second day in a row).

Oh, and when we were leaving trucks for the New York Daily News (owned by billionaire Mort Zuckerberg) rolled up to drop off much needed blankets.

I wish Mitt Romney had written a check for $10 million bucks and called up his other wealthy CEO buddies who run companies like Costco or Home Depot and had them divert a bunch of trucks down to the hart hit areas. That would have been the best answer to the constant ridicule by liberals that he's just too darn rich.

Mick Tierney writes: 

Just to provide a little balance to the "1% big government" post, here's a story I heard just this morning.

Our 73 year-old pastor takes three weeks off every Spring and Fall to re-visit small churches in Virginia, West Virginia, and North Carolina (a routine he established about 17 years ago). He takes another four weeks each summer for a church/school/medical facility he has established in Haiti (a project begun about 20 years ago).

This year he was asked to make a first visit to a small church (35) in the vicinity of the SETI Institute — obviously in the middle of Nowhere, WV. While there he and his wife were invited to dinner by one of the church members. After discussing various local issues, he asked if his hosts had ever met any of the SETI staff.

They replied that they had receive one visit. Late one afternoon a gentleman knocked at their door and announced that he had a heating blanket for them. They thanked him kindly but refused as they already had one.

He informed them that he was aware of this, but that their current blanket had developed a short. They checked and discovered he was right - without explanation he gave them the blanket and left.

Now you can return to the possibilities of election day computer hacking.

keep looking »


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