I think DailySpec baseball buffs will really like this history on the greatest to ever play the sport.

"Ty Cobb: Anger in Athletes"

Stefan Jovanovich writes: 

I have my usual quibble. Dr. Mirkin really has no idea what he is talking about when he writes that "the only reason that (Cobb) was not among the home run leaders was that he played before the age of steroids and weightlifting." Cobb was stubborn. He stayed with the small taper thick-handled bat to the end of his career in 1928. That allowed him to have a broader hitting zone (in the same way modern tennis rackets have expanded the "sweet spot" with their much larger string area); but he had to pay the cost of reduced bat speed (something aluminum and then composites saved tennis players from having to sacrifice). One theory (that I subscribe to) is that Babe Ruth was able to achieve his revolutionary change in hitting technique because he was a pitcher before he was an everyday player. When he started experimenting with the "toothpick" bat (because of his its handle that shifted weight to the middle of the barrel), none of the baseball purists minded because Ruth was a pitcher and a left-handed one at that (everyone knew Southpaws were crazy). It also helped that he was already "The Babe" - a kid the size of a polar bear who was always having fun with everyone, including the manager.

Steroids had nothing to do with it. By the early 1920s the rest of baseball had caught up, and Rogers Hornsby - as good a hitter as Cobb - had gone to the toothpick. Hornsby hit 42 home runs in 1922, nearly twice as many as anyone had before then in the history of the National League. That helped the Giants beat Ruth and the Yankees 4 to 1 in the World Series. 




 With all the market soaring again and panic out of the air for a time, it's good to gain equilibrium by turning to the endless store of 10,000 Wiswell proverbs he created for checkers, life, and markets at our weekly meetings over a 20 year period.

Here are some of my favorites from volume 5.

The Speed Artist

One thing you can be sure of, the faster you move, the sooner you'll lose.

Double Time Player

The real secret of patience is to continue thinking while it's your opponents move "tomorrow never comes"

If you want to become a good player, there is one thing that you must learn to do: you need to analyze the games before, during, and after the playing. Don't put it off till tomorrow.

A Cardinal Rule

A move once made can never be unmade.


The player with a strong double corner is double hard to corner.

Your Daily Prayer

Before every game say the following: "I can defend myself from my opponent but who will defend me from myself".

The Trading Game

Every exchange makes a fundamental difference in the character of your game. Therefore every trade should be made with great care regarding the new formation.

The Shadow

Some of your best moves were moves you never made and they saved you from many defeats. What you don't do is as important as what you do.

Jumping to Conclusions

If you jump to conclusions you can lose at checkers, chess, or commodities.

Stop Look and Learn

The player who hesitates is often saved Friend or Foe.

Having the opposition in chess is comparable to having the move in checkers (or having the swings in your favor in markets, or having one extreme after another make you money). Both can be very friendly and at times very unfriendly. Trust and verify.

Treasure Hunt

All the right moves are there on the board, waiting to be made. Your job is to find them.

anonymous writes: 

I've found with regard to waiting that when a market moves out of bounds of regular activity, wait until you are no longer eager to make the trade and then buy. The first impulse is too early many times. If one is early one lets the forces of capitulation out of their error too easily. The waterfall can last longer than one thinks. Eagerness is a killer.

Steve Ellison writes: 

I am guilty of such "one-way thinking" because I have difficulty finding situations in which the forward expectation for the S&P 500 is actually negative. I won't say that I have never found such a situation, but they are hard to come by.



 "U.S. to prosecute high-speed trader in first criminal spoofing trial."

Has it ever occurred to anyone that some of these "spoofed" orders were put out there, not as spoofs, but as real orders to get filled? The markets are still a game of deception, and spoofing is a valuable tool. I knew guys that would bid for 3 mm bushels a half cent under the market and would pull the bid when it got close (it was a primitive spoof but it worked). Sometimes traders put out the "spoof orders", got hit and were able to adjust their position, whatever way it was, and the counterparty has no clue what's going on.

There's always someone out there that, for whatever reasons, will always take the other side of a huge order. There is also an idea going around that if you can hit and fade a spoof order you will make money, and this is not necessarily true. As an aside, in the grains, it's usually easier to get your price for a half million bushels than if you were are trying to buy or sell 5,000 bushels where you will get dicked around for a quarter cent. There is always a big commercial, grain company, hedger, or large spec willing to take the other side of a big order, and there is a good chance you will get filled at your price.. 



 When does a western movie become a horror movie. Or, when does a horror movie become a western?

I just watched Bone Tomahawk at the suggestion of Scott Brooks. (87% on rotten tomatoes)

Many years ago on the spec list I wrote about the movie 1900, which is a great movie despite only having a 47% Rotten Tomatoes rating.

At the time I likened 1900 to the wedding scene in Deer Hunter, where you get sucked deeply into a cultural scene that you have to want to be a part of or else you find it boring.

Bone Tomahawk
is a two and a half hour movie. The first 1:45 is like 1900 or the wedding scene of Deer Hunter. There isn't much action but if you cut out other distractions you are deeply sucked into the time and place. The last 45 minutes however is sheer horror.

The movie has Kurt Russel at his best, along with Matthew Fox, the star of the best TV show ever and like myself and Omega Fiji.

I am a big fan of the Adam Carolla podcast, the number one podcast on the internet. During the time I have listened to him he has made two movies, both apparently break-even.

Between him and his guests he talks a lot about the process of making a movie. That is, having an idea, getting it funded, produced, etc. A lot of hollywood is about minimizing risk and only going with idea that have already been proven, which is why you see part 2's and 3's of series even when the part 3's are lame on the surface.

When I watched Bone Tomahawk part of what I was thinking is whose idea was this movie? Who pitched it to a studio? Who at the studio gave it a greenlight? Who approved the 2.5 hour cut? Who accepted some of the incredible violence? Whoever these people were they had incredible balls and should be applauded.

It's really a sight to see and appreciate.



I found myself doing a new book.













 When I was a young man I had all the boldness to be a great trader, but was lacking in skill, tools and talents, yet I made some pretty serious money at this trading stuff.

Now as an older man with skills, talents and tools, I find the easy money is more difficult to come by.

Boldness usually trumps brilliance is the best answer I have to this.

Jim Sogi writes: 

Before when you had nothing to lose, it was easier, because you could only gain. When you have more to lose and less time to make it up, it feels different. Also, weren't you smarter and didn't you know more when you were younger? I know I was, or at least thought so at the time. Part of it is never having failed. It takes a couple failures to show you, oh, yeah, maybe I'm not so lucky and not as smart as I thought.

Gary Phillips writes: 

I remember Cher telling Barbabra Walters in an interview, that there was nothing positive about getting older. However when it comes to trading, the one advantage to being old(er) is that one has a long-term perspective of the markets. Now in my fifth decade of trading I have come to the conclusion that it is not boldness that trumps brilliance but creativity. Einstein himself placed much more emphasis on intuition, imagination, and a "feeling for the order lying behind the appearance" than intellect. Trading opportunity mean different things to different people, but over the years these opportunities have adapted to current market conditions and paradigms. Information technology and the internet has accelerated that process dramatically. Information is no longer arcane; it's on 0 Hedge, Twitter, ad infinitum. Ironically, the repetitive dissemination of information renders it uninformative.

Paul Marino writes: 

I've found the market mistress is at her flowering best by making enough small players a lot of money quickly to keep itself going with fresh meat through wall street bar lore (now internet) like the 25 yrd old analyst who made $60k on GOOG options on earnings day, after buying them three days prior for $3k, etc.

To really be in the mix daily at any level for a long time and survive puts one in the highest echelon like most on this list. To gain the great heights of the the likes of the Palindrome you need a survival instinct on par with the highest of humans. I have read that Soros would exit a big position if it gave him a lower backache which was his pivot point to survival.

I get a neck pinched nerve type feeling like I slept wrong and that is my body's stress sign to me that there is too much information to digest to make a rationale decision so just fold and reload.

Survive. You're of the fittest just reading this.

Gibbons Burke writes: 

In the words of the venerable John Hill of Futures Truth, with a classic North Carolina twang in the saying of it: "No speculator dies rich. A trader who dies rich has died before his time."

Larry Williams writes: 

I so disagree with John on this point. Lots of speculators went to the great mystery wealthy, and at the right time.

Speculators are not losers. Gamblers, thrill chasers and rest of that ilk pose as speculators but are no such thing.

Gibbons Burke replies: 

I agree, but could not pass on the opportunity to quote John, whom I admire. His delivery of that line is classic, and still rings in my ears.

My contribution, which is similar to your point, is this rule of thumb for distinguishing a spec from a plunger: Gamblers are willing losers who occasionally win; speculators are willing winners who occasionally lose.

That is, a gambler, consciously or not, willingly plays a game he knows is stacked against him, so at some level he is willing to lose his stake. His rewards for doing so are non-monetary. Specs are more mercenary. They do not play a game where they have no reasonable positive expectation before they place the bet. They play to win, but sometimes pay the price of risk.

Boris Simonder writes: 

Perhaps it was just "easier" to make it as trader back then, quite a different landscape from now. If you lacked the skills, how does boldness explain that you made serious money, or differently put, at what point was it not pure luck as oppose to boldness?

Rocky Humbert adds:

Methinks that there are at least two different questions here. The first is whether the markets have gotten more difficult over the past 30-odd years. The second is whether a particular individual's ability to harvest market opportunities improves/declines with age.

It is plausible that the declining abundance of "easy" market opportunities resembles the world records in sports.  Sports records show asymptotic declines. This is conjecture and cannot be easily tested.

As to an individual's abilities, there is no doubt in MY mind that is less "easy money" today than 30-odd years ago. For example, 30 years ago, trading the bond/futures basis/switch and the gold carry trade (vs libor) and the backend tender arbs were all "easy" ways to earn decent returns without taking much (if any) risk. These trades are long gone and nothing has taken their place that is accessible to someone with just a phone and a calculator.

Additionally, 30 years ago, the risk free rate was ~8 percent. Hence one had 800 basis points with which to buy optionality without risking permanent capital. The implied volatilities of assets were not much different then than today. So that 8% was "free money" to a speculator. With the risk free rate at 0 percent today, EVERY trade requires risking permanent capital. I believe that this makes speculation more difficult psychologically, if not also practically. (Academic economists will highlight several flaws in this theory. But that doesn't mean it's wrong.)



 The notice of the anniversary of this special date in the year 1800–"The Great Moltke's birth"–is being sent to the DailySpec because the Field Marshal was a dedicated speculator. His family lost all its wealth when the French burned their estates in Mecklenburg-Schwerin (north of Brandenberg, east of Prussia) during the War of the Fourth Coalition (1805-1807). Prussia lost half its territory and Napoleon and the Czar divided up the rest of Europe south of the Baltic between them at the Treaty of Tilsit.

The family moved to Holstein (then in Denmark) and sent Helmut to the cadet school in Copenhagen. By the time he was old enough to be a soldier (first in the Danish, then in the Prussian Army), all the fighting was over. In spite of his love and knowledge of art and music, von Moltke managed to be attached to the Prussian General Staff when he was 32. Over the next decade he produced the first German translation of Gibbon's Decline and Fall and traveled to Constantinople to serve as an adviser to Sultan Mahmud II. In his one direct experience of combat von Moltke and the rest of the Sultan's army were routed by Muhammad Ali of Egypt at the Battle of Nizib (1839).

von Moltke survived and returned to Germany to write, marry an Englishwoman, become a member of the First Board of Directors of the Hamburg-Berlin Railroad, which is still going strong.

And that was only the beginning.

Wikipedia has the rest.

One of Ulysses Grant's rare disappointments in life was that he did not get a chance to see the Field Marshal when he visited Berlin. He did get to see Bismarck and most of the other members of the General Staff. What they discussed remains almost entirely unreported; and–alas–what little is known is the fiction of the journalists–Adam Badeau, being the worst, who were repeatedly pissed off about not being allowed in the room.



 Yes, I think the following is relevant to trading, counting, regime changes, confirmation bias, the lizard brain, and the struggle to understand whatever we can define as objective reality.

"Placebo Effect Grows in U.S., Thwarting Development of Painkillers":

Drug companies have a problem: they are finding it ever harder to get painkillers through clinical trials. But this isn't necessarily because the drugs are getting worse. An extensive analysis of trial data has found that responses to sham treatments have become stronger over time, making it harder to prove a drug's advantage over placebo.

The change in reponse to placebo treatments for pain, discovered by researchers in Canada, holds true only for US clinical trials. "We were absolutely floored when we found out," says Jeffrey Mogil, who directs the pain-genetics lab at McGill University in Montreal and led the analysis. Simply being in a US trial and receiving sham treatment now seems to relieve pain almost as effectively as many promising new drugs. Mogil thinks that as US trials get longer, larger and more expensive, they may be enhancing participants' expectations of their effectiveness.

Stronger placebo responses have already been reported for trials of antidepressants and antipsychotics, triggering debate over whether growing placebo effects are seen in pain trials too. To find out, Mogil and his colleagues examined 84 clinical trials of drugs for the treatment of chronic neuropathic pain (pain which affects the nervous system) published between 1990 and 2013.

anonymous writes: 

The placebo effect is evidence of susceptibility of the population to influence. Past research shows that the more people are stressed, the more they are susceptible to influence. The original research was done by Pavlov (the dog guy) and the results had a major impact on brainwashing techniques in the last century. Stress people enough and you can convince them of just about anything. Brave New World Revisited.

Who does this benefit?

Russ Sears writes:

This of course is why an investor should not listen to the news in a down market. Once under the stress of losses, people look for "influencer" and all the perma-bears, con-men and fear mongers are lined up to offer their snake oil pain relief through the news media. 



 Here's Old Man Cutten's short book "Story of a Speculator." Cutten was bigger than life and was arguably the biggest individual wheat speculator in history. There are so many market and life lessons contained within, and it gives a glimpse of what the grain trade was like a century ago. His market lessons contained in this short read became my lessons when I was first starting out. His comments on liberty, government, and choices are priceless. So much of this is relevant today, which is an added bonus.

Stef Estebiza adds:

"None can dictate prices who cannot control production" -Arthur Cutten

Not all of what you see is GOLD.

Read to the end of the first page and the start of the second in "The Parable of the Rich Fool"

Larry Williams writes:

That widely circulated epitaph of speculators misses some key points as it did with Cutten.

Henry A. Wallace, the then United States Secretary of Agriculture charged Cutten with improper trading activities and tried to have him barred from trading on all futures exchanges in the United States. This ultimately went to the US Supreme Court in the case of Wallace v. Cutten, 298 U.S. 229 (1936) (decided in Cuttens favor over the issue "was Cutten guilty for violating laws that were passed—after—the acts of commerce/speculation were commited).

The government then went after him for income tax evasion. The tax suit would only be settled by the executors of his estate, because Arthur Cutten, his fortune vastly depleted by the stock market crash and the cost of lawyers to defend him from the government lawsuits, died in Chicago of a heart attack a few weeks short of his sixty-sixth birthday. His body was brought back to his Canadian birthplace and interred in the family plot in Guelph's Woodlawn Cemetery.

So we have gummint guys going after evil speculator and breaking the poor fellow. I'm certain Soros learned from this which explains is ability to fund politicians.

Most folks live for today or in the past, speculators live for and wager on the future. They are the builders of the future.



One corollary of Shirer's account: the danger of giving up our sense of selfhood for the illusory unity of a frenzied mass movement of devolving from human to herd for some homicidal abstraction. It is a problem that we can never be reminded of enough.

From Ron Rosenbaum's forward to The Rise and Fall of the Third Reich. One would point out that often great historical works have much insight to markets.



 Tan and lovely, when she smiles I don't know what will emerge.

'Carpenter ants are flat, but red ants are tasty and sting.' Her tongue and lips swelled, and she rubbed her tummy in satisfaction.

On another hiking trip to Yosemite someone slipped her a marijuana brownie, and she stripped to a tank top and tore redwoods apart looking for termites.

She carries duct tape to pull spines out her tongue after eating prickly pear cactus.

Spiders are snacks, while she cooks road kill.

While searching for bee larvae, if honeybees sting her, she snatches them, pulls the stingers, and ties them to strands of her lovely dark hair that they fly around like Medusa so I can no longer kiss her.



 When I think of all the banks of IBM computers with a large array of tape drives in the first floor of Mission Control, I marvel at the concentration of computing power. In the 1960s it represented the penultimate in computer power. In 2015 it is less than a smart phone. The on-board computer on the Lunar Module was less than a digital watch. I cannot imagine what it will be like 50 years from now. I'll ask my grandson. In 50 years he will be 80.



Yes, I think this is relevant to trading…and counting, regime changes, confirmation bias, the lizard brain, and the struggle to understand whatever we can define as objective reality.

"Placebo Effect Grows in U.S., Thwarting Development of Painkillers":

Drug companies have a problem: they are finding it ever harder to get painkillers through clinical trials. But this isn't necessarily because the drugs are getting worse. An extensive analysis of trial data has found that responses to sham treatments have become stronger over time, making it harder to prove a drug's advantage over placebo.

The change in reponse to placebo treatments for pain, discovered by researchers in Canada, holds true only for US clinical trials. "We were absolutely floored when we found out," says Jeffrey Mogil, who directs the pain-genetics lab at McGill University in Montreal and led the analysis. Simply being in a US trial and receiving sham treatment now seems to relieve pain almost as effectively as many promising new drugs. Mogil thinks that as US trials get longer, larger and more expensive, they may be enhancing participants' expectations of their effectiveness.

Stronger placebo responses have already been reported for trials of antidepressants and antipsychotics, triggering debate over whether growing placebo effects are seen in pain trials too. To find out, Mogil and his colleagues examined 84 clinical trials of drugs for the treatment of chronic neuropathic pain (pain which affects the nervous system) published between 1990 and 2013.



 I would posit that the Asian markets, and the emerging markets in particular have had a predictive and leading impact on the US stock market. They went down hard before our crash, and now are going up strong before the Dow and SPU close the year at all time highs. However, I ask a general question. Is there one market, anywhere in the world an any time in the 24 hour cycle that has a predictive and profitable impact on another, and if so how long will it be before the cycles change?

John Floyd writes: 

On a slightly more qualitative avenue I would consider the prevalence over the past decade plus to say the least of "bad economics leading to bad politics leading to bad economics loop"

The recent Portugal elections and ECB statements today are an upwelling of fertile information to consider in terms of Europe in the immediate future.

The extension could go to Asia as well where the capital outflow and reserve losses from China share some parallels with that of Russia in 1998.



I would ask an important question. In the marketplace when are the best times to wait?

Jim Sogi writes: 

Rocky said mean reverters make a little money a lot of the time, like 99% of the time, but on 1% lose big. Its those big big 100 plus point days or weeks that can cause great harm. Those day you wished you waited to the end of the day, until the next day to buy. Those days you wished you stayed in bed. Is there a way to avoid the ax, the falling knife, the big vol trend down weeks? Is there a warning, a canary to tell you, wait? When 99% of the time it's the opposite?

Our friend Seattle Phil used to say, its all about leverage and max expected draw down. Chair says it's about broker margin games. They're all right of course.

On the days when it's 40 plus down, it seems a bit easier, because you know it can't go much further, normally. The other days that are difficult are the low vol creep upwards week after week.

anonymous1 writes:

The Skew Index provider thinks there is an answer in measuring the market implied probability of an extreme tail event in the stock market. It carries the assumption that the market can evaluate the risk in its assignments of implied volatility up or down.

If it can, then you scale risk exposure levels to match the skew risk measurements. High skew means cut back exposure.

That said, I'd rather know the margin call levels available only to the brokers as a composite readig on all their customers. That can work better than skew for capturing the cleanup prints at the end of the day when increasing margins knock out the risk takers.

CBOE SKEW Index Introduction to CBOE SKEW Index ("SKEW") The crash of October 1987 sensitized investors to the potential for stock market crashes and forever changed their view of S&P 500® returns. Investors now realize that S&P 500 tail risk - the risk of outlier returns two or more standard deviations below the mean - is significantly greater than under a lognormal distribution. The CBOE SKEW Index ("SKEW") is an index derived from the price of S&P 500 tail risk. Similar to VIX®, the price of S&P 500 tail risk is calculated from the prices of S&P 500 out-of-the-money options. SKEW typically ranges from 100 to 150. A SKEW value of 100 means that the perceived distribution of S&P 500 log-returns is normal, and the probability of outlier returns is therefore negligible. As SKEW rises above 100, the left tail of the S&P 500 distribution acquires more weight, and the probabilities of outlier returns become more significant. One can estimate these probabilities from the value of SKEW. Since an increase in perceived tail risk increases the relative demand for low strike puts, increases in SKEW also correspond to an overall steepening of the curve of implied volatilities, familiar to option traders as the "skew".

anonymous2 writes: 

Back in 1994, during that memorable Fed tightening cycle, every time the Fed tightened, the market priced in a greater probability of more and faster tightening. Chairman Greenspan referred to the Eurodollar futures market as "A blind man looking into the mirror."

Similarly, I do not think looking at Skew index will help you systematically avoid risk and make money for similar reasons — namely, it is self-referential. At the risk of articulating an Epistemology, any market price that is set by market participants cannot correctly discount the probabilities of something that isn't correctly discounted. I know that sounds like a typo, but it isn't. It's the nature of arbitrage-free pricing.

To say that "high skew means cut back exposure" is way too simplistic and it is what gives rise to the high skew in the first place. It's similar to market participants who adjust exposure based solely on VaR — they take more risk when things "look" safe and reduce risk when things "look" dangerous — with the blessing of academics and statisticians and other wonks. In contrast, many successful investors do the exact opposite: they reduce exposure when things look safe and increase exposure when things look dangerous.

There are many paths to heaven.

Almost no one reading this post has invested a period of protracted 0% CPI or deflation in the USA. I'd suggest that one consider this possibility and its implications — as it is very easy to miss the forest from the trees. The Skew is the trees.

Larry Williams says:

On a different note, seasonality might offer a reason to wait.


Bill Rafter writes: 

If you compare SKEW and VIX you can get some good signals that predict the equities market. But those signals are not necessarily better than signals from other indicators. This coeval of signals is simply evidence that when a market is ready to go [fill in your choice, here], its intention to do so is writ wide across the landscape.

If you compare ratios or differences between SKEW and VIX you find that relative to VIX, SKEW is a pussycat. So essentially the comparisons are merely using SKEW as a benchmark with VIX doing the wild dancing. N.B. the series have different orders of magnitude, which means if you want to take their differences you should cumulatively normalize them.

We have always been suspicious of sausage and indices, as one frequently never knows exactly how they are put together. Those newbies studying VIX would benefit from a good understanding of its construction. Dave Aronson (we believe) had similar concerns, prompting his creation of a less theoretical measure of volatility ("True VIX"). The same can be done for SKEW by taking not prices, but ratios of volume and open interest of equity calls and puts and index calls and puts. We have done that and found profitable results, but again not enough to forsake our current algos. However, we have researched the data with the goal of improving equities trading. Someone with the resources to pursue a full blown options program (e.g. a large investment bank) probably would find further study of additional value.

This is our experience to date. We haven't checked everything as doing so is, to say the least, mildly distracting.

Ed Stewart writes:

Anxiety and waiting sucks. How much of winning is just being willing to wear the opponent down, exhaust them. Play the long game to when when no one else sees it. In markets but also business. It seems easy, but if you play that "long" game, everyone else thinks you are an idiot for along time, asking why, up to the moment you win. Then they get it, see you won, but don't see how. They say, "it was luck". That is why it's difficult. One needs to value results over accolades. 



 Obama is pressing for Congress to give Puerto Rico money to save USA SPEC investment.

anonymous writes: 

I don't know what the president's view is on this. But, I am fairly certain that discussions within branches of the government are entirely against any monetary support at the present for Puerto Rico. Consider the example it might set for other municipalities, states, etc.

But to be sure, Puerto Rico will be a growing topic going into the next election year. I believe I outlined here what I thought where some of the key macro issues in Puerto Rico several months ago. Specifically the key salient differences between Puerto Rico and say a Greece. I didn't see the whole piece but apparently Wilbur Ross was talking about this yesterday.

Since that time one particular meme has caught my attention. The general workout numbers developed by many on the degree to which Puerto Rico must right down the debt fall into the same trap the IMF and Europeans have. Here in lies one of the similarities with Europe as well. Both PR and Greece are in a currency union and cannot use the currency for stimulus and the fiscal tightening required to get the budge in order contracts growth for a very long time. Thus the future GDP assumptions several years out are inflated relative to what realistically can occur.

Further, despite the tax incentives, one might consider the population exodus at circa 3% of total population per year. Yet another key issue in the debt workout for the future as those leaving tend to make up a certain bracket of the population that has both financial and educational resources.



 I've found over my career when involved with matters that garnered news coverage (15 minutes) is that you have to manage the press and use them as your tool to further your agenda. You cannot let them control the dialog or agenda. To that end, press releases and limited information leaks are one of the tools to manage the press. Having an inside shill in the news system is also very helpful to feed the pack and keep them away from ripping out your throat which is the tendency. They are basically lazy and if you provide them with an easy to regurgitate package, they will tend to run with it. Managing public opinion is another matter altogether and it's extremely difficult. Both the news and the public crave simplicity, easy answers, and they follow the first knee jerk.

Andrew Goodwin writes:

The tactic the good journalists used, the limited times I had something, was to call and tell me that they had a story deadline in an hour. The story was to be printed with or without my input and their editor would not relent. Did I wish to make a comment?

That guerilla tactic usually forces unscripted replies. It was taught as basic field craft at Columbia Journalism School when I took classes there.

Having given it some thought, the counter to this maneuver works if you are a repeated source of information. The source should offer to give a scoop at some point if the reporter holds off until he/she can issue a statement. (Then the source has time to carefully prepare statements)

You also want the press to hear indirectly that you keep a favored and hostile list of journalists depending on how their coverage goes.

Nixon figured out how to get the last word when he was under fire during the Watergate reportage. The secret was to hold late evening news conferences that ended just before most people would go to bed. That way the news consumers would shut off their TV's before the hostile commentary could begin. That's a strong tactic still in use today. 



In obedience to the command of the Constitution, it has now become my duty "to give to Congress information of the state of the Union and recommend to their consideration such measures" as I judge to be "necessary and expedient."

But first and above all, our thanks are due to Almighty God for the numerous benefits which He has bestowed upon this people, and our united prayers ought to ascend to Him that He would continue to bless our great Republic in time to come as He has blessed it in time past. Since the adjournment of the last Congress our constituents have enjoyed an unusual degree of health. The earth has yielded her fruits abundantly and has bountifully rewarded the toil of the husbandman. Our great staples have commanded high prices, and up till within a brief period our manufacturing, mineral, and mechanical occupations have largely partaken of the general prosperity. We have possessed all the elements of material wealth in rich abundance, and yet, notwithstanding all these advantages, our country in its monetary interests is at the present moment in a deplorable condition. In the midst of unsurpassed plenty in all the productions of agriculture and in all the elements of national wealth, we find our manufactures suspended, our public works retarded, our private enterprises of different kinds abandoned, and thousands of useful laborers thrown out of employment and reduced to want. The revenue of the Government, which is chiefly derived from duties on imports from abroad, has been greatly reduced, whilst the appropriations made by Congress at its last session for the current fiscal year are very large in amount.

Under these circumstances a loan may be required before the close of your present session; but this, although deeply to be regretted, would prove to be only a slight misfortune when compared with the suffering and distress prevailing among the people. With this the Government can not fail deeply to sympathize, though it may be without the power to extend relief.

It is our duty to inquire what has produced such unfortunate results and whether their recurrence can be prevented. In all former revulsions the blame might have been fairly attributed to a variety of cooperating causes, but not so upon the present occasion. It is apparent that our existing misfortunes have proceeded solely from our extravagant and vicious system of paper currency and bank credits, exciting the people to wild speculations and gambling in stocks. These revulsions must continue to recur at successive intervals so long as the amount of the paper currency and bank loans and discounts of the country shall be left to the discretion of 1,400 irresponsible banking institutions, which from the very law of their nature will consult the interest of their stockholders rather than the public welfare.

The framers of the Constitution, when they gave to Congress the power "to coin money and to regulate the value thereof" and prohibited the States from coining money, emitting bills of credit, or making anything but gold and silver coin a tender in payment of debts, supposed they had protected the people against the evils of an excessive and irredeemable paper currency. They are not responsible for the existing anomaly that a Government endowed with the sovereign attribute of coining money and regulating the value thereof should have no power to prevent others from driving this coin out of the country and filling up the channels of circulation with paper which does not represent gold and silver.

It is one of the highest and most responsible duties of Government to insure to the people a sound circulating medium, the amount of which ought to be adapted with the utmost possible wisdom and skill to the wants of internal trade and foreign exchanges. If this be either greatly above or greatly below the proper standard, the marketable value of every man's property is increased or diminished in the same proportion, and injustice to individuals as well as incalculable evils to the community are the consequence.

Unfortunately, under the construction of the Federal Constitution which has now prevailed too long to be changed this important and delicate duty has been dissevered from the coining power and virtually transferred to more than 1,400 State banks acting independently of each other and regulating their paper issues almost exclusively by a regard to the present interest of their stockholders. Exercising the sovereign power of providing a paper currency instead of coin for the country, the first duty which these banks owe to the public is to keep in their vaults a sufficient amount of gold and silver to insure the convertibility of their notes into coin at all times and under all circumstances. No bank ought ever to be chartered without such restrictions on its business as to secure this result. All other restrictions are comparatively vain. This is the only true touchstone, the only efficient regulator of a paper currency–the only one which can guard the public against overissues and bank suspensions. As a collateral and eventual security, it is doubtless wise, and in all cases ought to be required, that banks shall hold an amount of United States or State securities equal to their notes in circulation and pledged for their redemption. This, however, furnishes no adequate security against overissue. On the contrary, it may be perverted to inflate the currency. Indeed, it is possible by this means to convert all the debts of the United States and State Governments into bank notes, without reference to the specie required to redeem them. However valuable these securities may be in themselves, they can not be converted into gold and silver at the moment of pressure, as our experience teaches, in sufficient time to prevent bank suspensions and the depreciation of bank notes. In England, which is to a considerable extent a paper-money country, though vastly behind our own in this respect, it was deemed advisable, anterior to the act of Parliament of 1844, which wisely separated the issue of notes from the banking department, for the Bank of England always to keep on hand gold and silver equal to one-third of its combined circulation and deposits. If this proportion was no more than sufficient to secure the convertibility of its notes with the whole of Great Britain and to some extent the continent of Europe as a field for its circulation, rendering it almost impossible that a sudden and immediate run to a dangerous amount should be made upon it, the same proportion would certainly be insufficient under our banking system.

Each of our 1,400 banks has but a limited circumference for its circulation, and in the course of a very few days the depositors and note holders might demand from such a bank a sufficient amount in specie to compel it to suspend, even although it had coin in its vaults equal to one-third of its immediate liabilities. And yet I am not aware, with the exception of the banks of Louisiana, that any State bank throughout the Union has been required by its charter to keep this or any other proportion of gold and silver compared with the amount of its combined circulation and deposits. What has been the consequence? In a recent report made by the Treasury Department on the condition of the banks throughout the different States, according to returns dated nearest to January, 1857, the aggregate amount of actual specie in their vaults is $58,349,838, of their circulation $214,778,822, and of their deposits $230,351,352. Thus it appears that these banks in the aggregate have considerably less than one dollar in seven of gold and silver compared with their circulation and deposits. It was palpable, therefore, that the very first pressure must drive them to suspension and deprive the people of a convertible currency, with all its disastrous consequences. It is truly wonderful that they should have so long continued to preserve their credit when a demand for the payment of one-seventh of their immediate liabilities would have driven them into insolvency. And this is the condition of the banks, notwithstanding that four hundred millions of gold from California have flowed in upon us within the last eight years, and the tide still continues to flow. Indeed, such has been the extravagance of bank credits that the banks now hold a considerably less amount of specie, either in proportion to their capital or to their circulation and deposits combined, than they did before the discovery of gold in California. Whilst in the year 1848 their specie in proportion to their capital was more than equal to one dollar for four and a half, in 1857 it does not amount to one dollar for every six dollars and thirty-three cents of their capital. In the year 1848 the specie was equal within a very small fraction to one dollar in five of their circulation and deposits; in 1857 it is not equal to one dollar in seven and a half of their circulation and deposits.

From this statement it is easy to account for our financial history for the last forty years. It has been a history of extravagant expansions in the business of the country, followed by ruinous contractions. At successive intervals the best and most enterprising men have been tempted to their ruin by excessive bank loans of mere paper credit, exciting them to extravagant importations of foreign goods, wild speculations, and ruinous and demoralizing stock gambling. When the crisis arrives, as arrive it must, the banks can extend no relief to the people. In a vain struggle to redeem their liabilities in specie they are compelled to contract their loans and their issues, and at last, in the hour of distress, when their assistance is most needed, they and their debtors together sink into insolvency.

It is this paper system of extravagant expansion, raising the nominal price of every article far beyond its real value when compared with the cost of similar articles in countries whose circulation is wisely regulated, which has prevented us from competing in our own markets with foreign manufacturers, has produced extravagant importations, and has counteracted the effect of the large incidental protection afforded to our domestic manufactures by the present revenue tariff. But for this the branches of our manufactures composed of raw materials, the production of our own country–such as cotton, iron, and woolen fabrics–would not only have acquired almost exclusive possession of the home market, but would have created for themselves a foreign market throughout the world.

Deplorable, however, as may be our present financial condition, we may yet indulge in bright hopes for the future. No other nation has ever existed which could have endured such violent expansions and contractions of paper credits without lasting injury; yet the buoyancy of youth, the energies of our population, and the spirit which never quails before difficulties will enable us soon to recover from our present financial embarrassments, and may even occasion us speedily to forget the lesson which they have taught. In the meantime it is the duty of the Government, by all proper means within its power, to aid in alleviating the sufferings of the people occasioned by the suspension of the banks and to provide against a recurrence of the same calamity. Unfortunately, in either aspect of the ease it can do but little. Thanks to the independent treasury, the Government has not suspended payment, as it was compelled to do by the failure of the banks in 1837. It will continue to discharge its liabilities to the people in gold and silver. Its disbursements in coin will pass into circulation and materially assist in restoring a sound currency. From its high credit, should we be compelled to make a temporary loan, it can be effected on advantageous terms. This, however, shall if possible be avoided, but if not, then the amount shall be limited to the lowest practicable sum.

I have therefore determined that whilst no useful Government works already in progress shall be suspended, new works not already commenced will be postponed if this can be done without injury to the country. Those necessary for its defense shall proceed as though there had been no crisis in our monetary affairs.

But the Federal Government can not do much to provide against a recurrence of existing evils. Even if insurmountable constitutional objections did not exist against the creation of a national bank, this would furnish no adequate preventive security. The history of the last Bank of the United States abundantly proves the truth of this assertion. Such a bank could not, if it would, regulate the issues and credits of 1,400 State banks in such a manner as to prevent the ruinous expansions and contractions in our currency which afflicted the country throughout the existence of the late bank, or secure us against future suspensions. In 1825 an effort was made by the Bank of England to curtail the issues of the country banks under the most favorable circumstances. The paper currency had been expanded to a ruinous extent, and the bank put forth all its power to contract it in order to reduce prices and restore the equilibrium of the foreign exchanges. It accordingly commenced a system of curtailment of its loans and issues, in the vain hope that the joint stock and private banks of the Kingdom would be compelled to follow its example. It found, however, that as it contracted they expanded, and at the end of the process, to employ the language of a very high official authority, "whatever reduction of the paper circulation was effected by the Bank of England (in 1825) was more than made up by the issues of the country banks."

But a bank of the United States would not, if it could, restrain the issues and loans of the State banks, because its duty as a regulator of the currency must often be in direct conflict with the immediate interest of its stockholders. if we expect one agent to restrain or control another, their interests must, at least in some degree, be antagonistic. But the directors of a bank of the United States would feel the same interest and the same inclination with the directors of the State banks to expand the currency, to accommodate their favorites and friends with loans, and to declare large dividends. Such has been our experience in regard to the last bank.

After all, we must mainly rely upon the patriotism and wisdom of the States for the prevention and redress of the evil. If they will afford us a real specie basis for our paper circulation by increasing the denomination of bank notes, first to twenty and afterwards to fifty dollars; if they will require that the banks shall at all times keep on hand at least one dollar of gold and silver for every three dollars of their circulation and deposits, and if they will provide by a self-executing enactment, which nothing can arrest, that the moment they suspend they shall go into liquidation, I believe that such provisions, with a weekly publication by each bank of a statement of its condition, would go far to secure us against future suspensions of specie payments.

Congress, in my opinion, possess the power to pass a uniform bankrupt law applicable to all banking institutions throughout the United States, and I strongly recommend its exercise. This would make it the irreversible organic law of each bank's existence that a suspension of specie payments shall produce its civil death. The instinct of self-preservation would then compel it to perform its duties in such a manner as to escape the penalty and preserve its life.

The existence of banks and the circulation of bank paper are so identified with the habits of our people that they can not at this day be suddenly abolished without much immediate injury to the country. If we could confine them to their appropriate sphere and prevent them from administering to the spirit of wild and reckless speculation by extravagant loans and issues, they might be continued with advantage to the public.

But this I say, after long and much reflection: If experience shall prove it to be impossible to enjoy the facilities which well-regulated banks might afford without at the same time suffering the calamities which the excesses of the banks have hitherto inflicted upon the country, it would then be far the lesser evil to deprive them altogether of the power to issue a paper currency and confine them to the functions of banks of deposit and discount.

Dylan Distasio writes: 

Thanks. The failure of Ohio Life Insurance and Trust in the panic is slightly reminiscent in broad brush strokes to AIG. The naive, good old days of specie, eh? No parallel there unfortunately.

Stefan Jovanovich replies: 

The Ohio Life Insurance and Trust Company's failure did not come from doing an AIG - extending massively leveraged bad bets with financial counter-parties. Its failure was pure fraud: it was an Enron or, if you prefer, a Madoff. The insiders had literally looted the Cincinnati bank while publishing fictions about their outstanding loans to farmers and merchants. Its failure is one of the main reasons that Cincinnati lost out to Chicago as the center for the meat trade.

Anonymous comments:

The excerpt above is apparently from President Buchanan's annual message of the president to congress, December 7, 1857.



Out of 17 headlines, all 17 bearish and negative, with bonds and stocks way up.

Gary Phillips writes: 

Paul Lynde in "Bye Bye Birdie" comes to mind. Mr. Eisenstadt must read those headlines in wondrous amazement and think to himself…"Kids".



 Monday, October 19th is the 28th anniversary of the 1987 crash. As I was a young pup in junior high school in Queens, NY at the time, I certainly remember the reaction around New York be it media, neighbors, etc. I even watched my father pretty much chug a scotch when he got home that night and he is an Accounting Professor who never drinks and is certainly not of the speculator ilk. (He likes his drift nice and slow) For participants who lived it, what is the best thing to do in that situation? Certainly, taking out the canes is warranted for best of breed stocks. But does one start thinking differently, would a past in a form of martial arts training, boxing, or Krav Maga be of help? I can't help but think of the value of situational awareness as is taught to fighter pilots. Any insights would be appreciated.

Jeff Watson writes:

That week in '87, the grains had a magnificent sell off, which made many locals millionaires. I know that I had a good year in a 7 day trading period. That rout was almost as good as the Chernobyl disaster a year and a half before when one was able to sell as much grain as their account would carry……at the top. However, Chernobyl had some tectonic shifts which caused mini quakes for months. Lots of newly minted millionaires on the 19th, and the existing trade didn't get hurt that much so it was good business for all.

Russ Sears writes:

This, I believe, is a great question for sports psychologists. Visualizing your actions in a stressful situation and deciding ahead how you are going to react is very helpful. Then when the pressure comes your instinct is much more likely to go with what worked in your visualization rather than choke, flight, or freeze. You are even able to choose your fight tactic.

If I would have known this in 1992 at my peak in running but novice at the marathon, I could have been an Olympian. The USA competition was weak that year and I was at my prime. But when I hit 20 mile mark in the LA marathon at 1:41 time of change but also hit the wall soon after and crashed and burned because I eased up rather than pushed through it. That pace was easily the fastest pace for a USA runner up to that point that year if I could have head even close to it.

On active trading I found though that much of the stress comes from watching the market too closely so that every jump seems to need preparation. But basic risk management says to have a cash contingency stored for a short emergency use whether it's a stock crash or a bout of unemployment.

Mr. Isomorphisms writes:

Five minute miles. I just can't wrap my head around that.

Russ Sears writes:

Easier for those who run 65 second 400's than those who run 11 minute 2-miles, imo.



 I just discovered today that there is a book authored by Charles Murray called "Apollo", about (of course) the Apollo missions, especially the engineering, infrastructure, and how Apollo became a possibility. I ordered it for kindle.

Haven't yet read it so can't review it, but seems like it would have to be good if it's by Charles Murray.

I was recently pondering just a single step in the whole operation. Armstrong and Aldrin had to blast off from the moon and then re-attach their module to the main ship, with Cooper in it, as it continued to orbit the moon. That's seems like jaw-dropping technical feat. And of course if anything goes wrong, there's no hardware store nearby.

Marlowe Cassetti writes:

Let me add my 2 cents, as one who was with Apollo almost from the start. At NASA we had grand plans to extend and enhance the exploration of the moon. The near fatal Apollo 13 mission was a show stopper in the minds of NASA headquarters and the Washington elite. Why risk the lives on further missions? The orders came down from the top to wrap it up without further risks. NASA sent me out to UCLA for a short summer course. I made friends with an Air Force Captain and we shared stories. I recall he stated that manned spaceflight should have been assigned to the military instead of a civilian agency. He bragged that 100 test pilots were killed testing the F-100 fighter and NASA was conservatively testing Mercury spacecraft worried about one astronaut.

Having said all of that I need to load Murray's book on my kindle.



"Yangon Stock Exchange will open in the first week of December"

It will open just one month after the historical election in the country.  If the election turns out real, and the result is carried through, then the exchange may offer an investment opportunity in decades in my mind. Any other thoughts?



 Weird being here again. Country is vastly different–don't know if you in the interim have been back. The luggage carousels at the humongous airport numbered 25! It was an endless walk, using some 8 moving sidewalks and plain corridor traipsing, to get anywhere. Very impressive air terminals they have now, on the same order as Hong Kong and Orly or Paris. Our airports seem drab and confined by comparison but for the brand new sections.

Was rolling around the Thai phrases I knew, and still know, and they are coming in handy. Impressing the natives. Oddly, I seem to know more Thai than Chinese, tho I lived in the PRC much more recently and actually studied Chinese with a tutor while there.

I note on the local Thai TV that there is representation from Hispanic voices, French, German, Russian, many from arab states–al Jazeera is only one of the local offerings– and of course sports stations and CNN. There is no Fox or Fox Business (there is Bloomberg); nor is there anything from Israel. I listened to German TV to get some idea of what was happening in Israel–pathetic I had to do that, but I never trust CNN on Israel (or anything else, most of the time).

The temp is a toasty 86F at 1:31 a.m. In the day, it will be swelter-time again.

I don't see kitois, or maybe I do, but they dress even better now. With elderly white gentlemen of means. Sukumvit is "close" my driver tells me. "Only 8 Kilometers from here…" (Royal Orchid Sheraton.) I have a high room, with a spectacular view of the Chao Phrya from the huge picture window, with colorful barges plying the water in magenta, yellow, green and purple outline strung lights, no two boats the same. Dubai has the same thing, big barges with colorful electric signatures. Come to think of it, a recent run around NYC at night also had the same type of euphoric Crayola-effect barges.

Too many niqabs for my taste, walking invisible-pitch-black behind or to the side of their swarthy and physically unencumbered mates. [I wonder how they can tell it is their wife scuttling alongside, and not some random PVC-garbage-bag-covered something shuffling along.]

I am delighted that this time, I was able with only token emails warning me that "someone is trying to access your account," to get on my account–it took only 2 hrs, here. rather than, as with Abu Dhabi and the Emirates, 5 days of pleading and filling in intrusive questions. Of course, in HK, I was blocked immediately by ideograms telling me I needed additional layers of 'security' and so I wasn't able to penetrate the mysteries. Chinese security, BTW, was quite thorough, confiscating a folding pocket knife with scissors and toothpick and all those gadgets, that I had forgotten I even had anywhere.

En route here, or rather HK, I saw 8 films, some sort of record. Now I might save some time in the NYC theatre houses, if these films open up there. Pacino in "Danny Collins" struck me as a family film, with some touching moments; Jennifer Garner, the wonderful Bobby Canavale and Christopher Plummer. Also, the terrific Annette Benning, always a standout. Who reminds me of my friend Deam.

The hotel offers an extensive menu of wraps and body rubs and massages, or, probably, "massages." Foot rubs cost 1,200 baht; Thai massage, traditional, sets you back 1,500 B. The rate is better than it was–instead of 20 B to the $, it is now 33 and change. You can get a "journey of joy" for a mere 6,600 B (3 hrs); "Romantic getaway–couple" for 4 hrs, only 14,500 B. A "Mandara delight" for 2 hrs is just 4,700 B, a true m'tziyah.

There are body scrubs, 3 types, 45-60 mins, ranging from 3,000 B to 2,500 B. body wraps, also 3 kinds, all an hour, range from 4,500 to 2,800. In the massage department, one can get a thai traditional; Luk Prakob/hot compress; "elemis aroma therapy"; stone therapy; Swedish, aromatic, sport, Balinese, Indian Head massages High iof 4,500 B to low of 2,200 B. There are facials for both men and women, differently priced, promising different benefits.

One of the body scrubs looks like a typo: "Detoxifying green tea crub," it says, probably erroneously.

I will take in some "fresh" air after I do more emails. Cathay Pacific is, as advertised, a rather terrific airline, far superior in service and amenities to the US carriers I have taken of late. Plus they seem to be quite kind, and genuinely helpful. Nonetheless, no one stoppered the child of 3 or so who cried for hours without anyone telling him to chill. For one meal, the dessert was Haagen Dasz deep chocolate-enrobed vanilla pop bars, frozen and delish–I checked the price in HK: $56. HK dollars = about $8 per. And they serve meals even on short hops, unlike American carriers, who give you stale pretzels if you're lucky, on flights under 24 hrs (well, 4).

Will write more as days permit, if computers give me access. Please hold emails while I am afield.



 As anticipated, the heat during the day is oven-ready, in the very high 90s, without a breath of breeze. And humidity at 200%. It is the tail end of the monsoon season, so it spattered this afternoon, not dissipating the blanket of bake at all.

The bath in the bathroom, though spotless, is designed for an Olympic decathlon– the high jump. It is inordinately high to get into, and it is deeper than the floor when you have to set your 10 little shrimpers on the porcelain. Not only that, but the way the shower is constructed makes it impossible for a non-simian to reach the faucets to turn on the bath or shower. You have to actually get in to turn everything on, getting wet in the process.

A small annoyance, but why design such a confounding splash contrivance?

The sheets are clean, but feel slick and somehow…slimy. Fresh but slimy. Not like cotton. But after many hours running around to Emerald Buddha Temples and flower markets rich with alluvial shorn petals and wires, and women smiling invitingly, Buy, Buy! what the hay, a bath seems anodyne. And sleep should be a snap, after 5 or 6 hours post running around the place and assorted travails. The Sheraton hangers, happily, are not tethered to the closet bar. The minibar is a joke, with a single container of shorty short Pringles, one bag of chips, and a price list to turn you off snacks forever. The drinks are on top of the tea-maker, and they start with a squat bottle of Chivas, but nothing the average stressed-out scrivener would want to down for $30, B1,000 Thai.

That I never managed to set foot into this thrilling field while I was living here is mystery enough. The temple is, somehow, madly amazing–you cannot help but wonder how much upkeep these myriad glinting and sparkling stupas and sacred buildings take? And since they are open all days of the year, how do the Thais keep these garudas and monkeys and animal spirits so golden-y gold, these columns so stunningly straight and fully adorned with glass and mirror in all the ROYGBIV rainbow.

Irritating that I had to buy a pareo to sheathe my lower limbs–my skirt was too short, and the legs must be properly covered. I had to buy a ridiculous length of fabric to tie around my waist to curtain my legs and legging'ed lower extremities. Women selling these fabric must-haves were doing a land-office business. They were selling for B3, or 10 cents. some places inside the Emerald Buddha compound, you had to remove your shoes, your hat, so as to honor the custom here. In Myanmar, I am informed, some worship sites insist on removal of both shoes and socks, too.

It is bloody hot, there are way too many muzzies, which, you are correct, when I was here last, there were none. Too many women in hijab–enough to make you cringe in anticipatory distress.

So I finally corrected the historic omission and saw the Emerald Buddha, that vast compound of electrifyingly brilliant buildings and columns and stupas and associated holy edifices. which somehow, while I lived here, I never managed to see. Damned crowded and impossible to get a fix on the greatness, as the heat was overwhelming and the people-crush ditto. Like with the Forbidden City, one needs to take one's time with this visit.

I looked at the King's guest house, locked behind a heads and a half tall fence. Bill Clinton apparently stayed there. And the rich drama of the "King and I" –with Deborah Kerr and Yul Brynner version, was filmed right in the uildings near this guest house.

Just ate at Soen Daeng, an old time place in the region of Praed Na Kong, with an old timey chanteuse singing classical torchy Thai songs for the whole lunch.

Lunch consisted of terrific shrimp on chopped apple and dressing on lettuce bits. Then an hors d'oeuvres plate of waffle cups with stewed local vegs, wedges of shrimp 'pizza' with local honey sauce for dipping, a fried shrimp dumpling and carrot shreds. Then coconut milk soup with lemongrass and wonderful chicken parts, fabulous. Then some unspiced, unseasoned fish called Gaupra with legumes cooked in brown sauce, wonderful shitakii mushrooms and odd braised cherry tomatoes.

Dessert was divine watermelon balls, really superior wedge of pineapple, some unidentified apple-like but not apple fruit harder than apple with finer texture, and mouth-watering papaya. Then local tea with real milk, quite enchanting despite its yellowish hue.

While I ate lunch, thousands, thousands of cyclists rounded the Democracy Monument (like the Place de la Concorde, or L'Arc de Triomphe circle) across the street, all in powder blue and yellow club or team outfits. Wow. Shortly followed by a hornet's nest of motorcyclists bent on their own, separate, agendae. There are far fewer mopeds and motorcycles than I recall, and many fewer than when I visited Saigon/Ho Chi Minh City. The noise level is much lower than erst.

The flotilla of cabs buzzing the busy streets are a gorgeous candy gumball machine of bubblechew pink, persimmon orange, clear grass green and mixed yellow and loden. They dress up the little alleys and byways like a horde of huge water beetles dressed for their first prom.

Flower market was less remarkable than I recall, and less eye-glazing than the Singapore fresh market that was a highlight of my travels. This city is practically unrecognizable–it is not recognizable, in fact.

But people are delighted and surprised by my [little] Thai, and try to woo me, catch my cheery eye, sell me things
–to sidle up to the farang who speaks pasaa Thai tai dai…

I resisted buying any glittering stuff–I saw no clip-on earrings, and those are what I seek. I will try to find some in the five or six Burmese cities I hit. The prices inside these air-conditioned polished teak elaborate emporia are fearsome. And apparently get a rake-off for the guide or whomever brought the hapless sho-peh. (Shopper in English.)

Anyone with the slightest inkling of a sniffle or Galloping Gravidity Gravlax syndrome or its nearest kin wears a medical mask in cotton, to prevent transmission of the bug or bugs. Many faces are almost entirely swallowed in these paltry efforts to stave off contagion. The effect is one of being in the unwell ward of some blemished country. Surely these ambitious shield-sneezes are not the panacea.

And so, to supper and walking around outside to examine the neighb.



 Coming to a grocery aisle near you:

 "Forget Amazon gift cards: Give Someone Public Stock with Stockpile"

"There are plenty of people who'd happily become shareholders in companies like Apple and Facebook if the process of buying stock were simpler. They are plenty of people who'd prefer to give the gift of stock but who hand out money or retailers' gift cards for the same reason. Stockpile, a five-year-old, 15-person, Palo Alto, Ca.-based brokerage services firm has a solution to that problem: Stock gift cards. They say they'll be everywhere soon, too, thanks in part to $15 million in Series A funding the company has just stockpiled from Sequoia Capital, Mayfield, and actor-investor Ashton Kutcher."

Stockpile's tagline is: "the world's first gift card for stock. You pick the stock and dollar amount. They get fractional shares of real stock. Even kids and teens can do it!"



 There is a nice passage in Jack Schaefer's Old Ramon, who by the way is one of my 3 favorite American writers of the 20th century, that talks about the stupidity of sheep. He says "the individual sheep is stupid, but the herd is very smart. They always know the right way to go, the right thing to do (especially when guided by the dog and shepherd).

The stock market reminds me of that every time there is an earnings report of a major company. It originally does something stupid, as if the company reporting like Intel, Netflix, or Goldman $achs were the only company. But then after a proper time, it does the right thing.

Andrew Goodwin writes:

The Chair's points on reversals after single company earnings and upon the law of the ever changing cycles make great sense in light of the discovery of the hacking of the earnings release sources and the subsequent sale of the information to traders.

One phenomenon that likely would revert would be the predictive property of price moves in minutes prior to announcements of earnings. If the regulators can shutout the hackers from the news wires that hold the earnings reports for a release time after preparation of the news then a much smaller batch of insiders could use them.

One thinks that the true insiders would have to act earlier than in the brief intervals before releases that allow the hack info buyers to take less time risk in acting close to the news event.



 Amazon has 45 million people who are subscribers to Prime and roughly the same number of regular customers who are not Prime members. The current estimates are that Prime members spend $1500 a year and non-Prime members spend $700.

Alibaba claims that it now has 400 million customers on AliPay who spend between $1000 and $1100 annually.

The per capita GDP in China is estimated at $7500; for the U.S. The figure is $56,000.




Today (10/16/15) is like 50th day in a row that USD/JPY traded 120.00; and finally it looks to my eye that the pair is ready to depart this magnet.

It's official: today is the first day in over a month that USD/JPY hasn't traded 120.00.

anonymous writes: 

Meanwhile, 5 years later, KOSPI is still at 2000.



Counting the number of trades at a certain price or price range over certain times or look backs should have information. It's the idea of consolidation vs thin long bars the TA guys use. Seems like there is some sort of blockage effect. It also ties in with rounds. If someone tests this, I'd appreciate results.



 When I meet with prospective clients and talk to them about their portfolio, I ask multiple questions to determine their tolerance for risk.

Three questions I ask are:

"How much money did you lose in 2008?"

"How long did it take for your portfolio to recoup those losses?"

"Was that loss a lot of money to you?"

I've pretty always asked a version of those questions (i.e. prior to 2008 I asked about the same questions about the tech bubble).

As we all know, the market took a massive hit in those years and loses were rampant and widespread.

When I asked those questions in 2009 - 2013 people would regale me with tales of how much they lost (40%, 50%, 60%+). Even people that held a lot of bonds "for safety" spoke of the losses they experienced.

Almost everyone spoke of how many YEARS it took for them just to recover their losses (most took 5 years just to get back to even).

And almost everyone would talk about how the loss they experienced was a LOT of money to them and they'd rather never experience that kind of loss again.

Now, let's flash forward to 2015……And it's a completely different story.

When I ask them how much they lost in 2008, the majority of people say, "I really don't lose much". Some will say "I lost maybe 10% - 15%".

I am hard pressed to find a single person who lost any money worth mentioning.

Further, when I ask them how long it took them to gain back their losses, I hear things like, "Oh, maybe a few months, I really didn't lose much to begin with" or, "I think it took me maybe a year or a year and half".

When I ask them if the loss was a lot of money to them, I hear things like, "Oh, I really don't know, it was no big deal."

What's my point of mentioning all this to the group?

I know for a fact that the rank and file people of the world (the people that I deal with) lost a lot of money in the 4Q07 - 1Q09 housing debacle. I know this because they told me so and they told me they were scared and and that it took them 4 - 6 years just to get back to even and that they lost a LOT of money….more than they were comfortable with.

And now……..they've all forgotten.

Out of sight, out of mind.

All they see (again) is the magnificent rise in the stock market and they all just know that it's not likely to ever correct again in any appreciable way, and if it does, it doesn't matter….it will come back in a very short period of time.

Yes, I know this is anecdotal, but I can tell you that this is based on hundreds of interviews with prospects over many years.

And yes, the story I've written above applies exactly to the experience I had when I interviewed prospects from 2003 - 2007

They all experienced great losses in 2000, 2001 and 2002 that were beyond their comfort zone that caused sleepless nights…..and as time went on, the losses became smaller and smaller and the time it took for the losses to recover became shorter and shorter and the pain they experienced became less and less.

I think a line of lyrics from Paul Simon's "The Boxer" are appropriate here: "A man sees what he wants to see, And disregards the rest."

Ralph Vince writes: 

Great post Scott, thank you.

I'm astounded by this same thing. If you took everyone in early '09 who were upset that they didn't liquidate their 401k plans, etc., the percentage of those who have now is very, very small. Especially in a ZIRP world.



 Kareem Abdul-Jabbar has a nice knowledge of Sherlockiana in this novel about the young Mycroft in boxing, rowing, boating, and caring for his companion of color in the caribbean with a femme fatale waiting in the background. Except for the contrived heroism and prejudice of the person of color, and the contrived observations of Mycroft on character and cryptography, the book can be recommended. I don't believe we have fully considered the insights of Sherlock and Mycroft, as they relate to markets, and I'd be interested in your thoughts. Perhaps the least insights are those emanating from the spiritualism of Conan Doyle.

Adam Grimes writes:

Interesting topic and idea. I recently re-read A Study in Scarlet and there were a number of spots that jumped out as having pretty direct relevance to markets. I'm sure I'll misquote, but (roughly):

"They say genius is an infinite capacity for taking pain. It's not a good definition, but it does apply to detective work…"

Also "the world is full of obvious things which nobody, by any chance, ever observes"

It will be interesting to think about this topic in more depth, but the connections to market "detective work" seem to run strong.

Gary Rogan adds: 

"The dog that didn't bark" has got to be one of the most important concepts in understanding how things really work.



 I read a few days ago on a website that no more evolution is possible beyond the human form, until consciousness is worked upon. I interpreted that nature kept forcing a biological evolution & brought us into human form and hereon for remaining relevant in the continuing evolution, for improving the lot within this and the next live(s), one will have to raise the envelope of one's consciousness.

If I connect this idea to another idea that we cannot let people press the wrong switches in our being, causing either morbid fear or fatal attraction, then I have a combined thought that for my evolution to continue I have to de-activate the wrong switches in my consciousness such as outside of me other forces cannot trigger them. Only inward flow of intelligence into any action or thought switch has to activate any.

This leads me to a thought that if God is the supra-intelligence design that Governs this Universe and every Universe, then there is a tendency for the human world to keep becoming more and more vigorous, intense in the stimuli each next generation will keep getting. The one effective in a world that will have more and more intense stimuli are then going to be those who are stronger in the face of such stimuli. The same way that progressive resistance training builds the muscles on our body, progressive resistance training to information stimuli may develop Emotion Intelligence.

More information, more TV channels, more internet, more books, more facilities, more attractions & eventually more frustrations and at an increasingly faster speed is the trend within this life. To evolve and become more effective than others is a goal of the process Darwinian Evolution, then each life we get is a preparation for the next one is one view. To be given birth in a much faster, more enticing, more opulent world one might be then actually getting eligibility by effectively training received in a lesser / simpler / easier world to respond less and less to external attractions and frustrations.

So if I let this process of imagination propagate forwards, undergoing evolution of the Emotionally Intelligent side of our brains we may one day become eligible to be given birth into Heaven and if we keep failing the tests of Emotional Intelligence we may keep receding into lower worlds and reach Hell too.

Yet, who knows if all universes are co-existent and time is a mere illusion that causes a sense of separated-ness and time provides a mythical yarn on which our mind travels, then Heaven and Hell may both be very well existent within this life and many have been to both several times within this life.

May I therefore conclude, those amongst the human specie that are able to restrain an impulsive response to stimuli more than others are on the way to building their Heavens, while those who respond more impulsively than the rest are accelerating their journeys towards Hell. This is felt most truly in the profession of trading, that provides unambiguous instant feedback with each piece of action and inaction, yet may be true in every human enterprise since this is the path of the ongoing evolution.

I am hopeful you will allow me an indulgence that, mere Intelligence is for those who are afraid of handling the journey to hell and emotional intelligence is for those who are making a successful trip back from hell with a determination to get to heaven on this leg. Perhaps, the passport to heaven, for getting in and staying there, is a high EQ and not a mere high IQ.

Gary Phillips writes: 

One can never count on the consequences of their actions, yet one can always count on the motive(s) of the action. The trader needs to take responsibility for the consequences of his own choices. The market demands objectivity and precision which is directly quantifiable. The ego is completely different from the market, and can only be measured subjectively and qualitatively. Why not simply, look at life as a flash of beta? There isn't any measurable premium to be paid to insure compensation or avoid retribution for the kind of earthly life one lead before one's option expired. Trite but true, "not everything that counts can be counted, and not everything that can be counted counts."



 When I was young I wanted to be a policeman. My father never hoped for more than a job to support us, and mom was busy stocking the basement bomb shelter with canned goods. It was instilled in us kids to get an education, and to obey the law. I wondered how it would feel to have a buck in my jeans and the spring of adventure in my shoes simultaneously, and that's why, before I found an abandoned dog and choose veterinary medicine, I decided to become an officer.

After recent encounters with the police, I'm glad I found the lost dog. In over two hundred fairly amicable encounters with the law, the three latest ones come to mind.

1. After last bell of teaching at Blythe, CA high school, I walked across the street at a corner without a cross-walk and was stopped by a policeman I recognized as a former student in a class that had thrown spitballs. He said that I had jaywalked, and doubled the fine because it was near a fires station. California had just passed a new law that one cannot go to court to appeal a ticket without paying the fine first. I complained to district attorney in the nearest city – never do it in the same town where the ticket is issued – and, after paying the $256 jaywalking fee, got the satisfaction of reading a letter from the Riverside DA ordering the officer to stay away from me.

In instance 2., also in Blythe, I was tailgated at 55 mph on a rural road for a mile by a semi-truck sunk on its springs with gravel. I tapped my brakes, causing the truck to brake sharply and swerve onto the shoulder. He caught up in another mile, in the school zone, and ran me off the road with his rig into the parking lot. I found an on duty officer and gave him the license # and name of the construction company, suggesting to advise the boss to warn his driver, probably another former student, to be more careful. A week later, the speed limit sign where I had been tailgated was raised to 60 mph, and that's the last I heard of it.

3. My most recent encounter has been with a string of eight Imperial Valley, CA sheriffs sparked by a robbery at my Sand Valley property. By tracking the thieves for days, culminating in a high speed chase across a bombing range, weaving in and out of house-sized craters and undetonated 6' bombs stuck nose first in the earth, to their doorstep, I solved the case. I provided pictures, names and addresses to the police while amassing a collection of their business cards. Finally, I convinced a detective to accompany me to the thieves' den, but mandated that he do it in his unmarked car. He agreed, but en route radioed a marked unit to join the queue, that was seen by the burglars. After the police left, they surrounded me on dirt bikes, revving them kicking up dust while their girlfriends thrust their middle digits. After this white knuckler, I went to Internal Affairs (the department that polices the police) and taped a one minute account that was transcribed and handed out to every deputy in the region.

Now I don't want to become a cop any more. In the old west, the sheriff's duties were to tame the wild west without nitpicking. His methods were direct without a legal tangle, and he was a spurred bedrock of American values. So, I think the officers in my recent meetings should be given a second chance. After all, though Wild Bill Hickok would later go on to hold other law enforcement positions in the west, his first attempt at being a sheriff lasted only three months.



 My wife and I were kayaking in Glacier Bay National Park this June and saw 10 bears during the trip. One black bear came up to our parked kayak on the beach about 80 feet away from our tent early one morning and started banging it around. The bear strategy is to speak to it in a firm loud but calm tone, so I said in a cop like tone, "Please leave the area immediately. Do not touch the kayak." It looked up at me and walked on.

In an earlier bear encounter a big brown with two cubs was walking along a stream on a beach where the two of us were camped. The rangers orientation had recommended standing two people together and try to look big. So we stood together and raised the paddles over our head. I had my guitar and was singing songs to alert the bear to our presence. When it saw us, it stood up 10 feet tall and looked at us in what appeared to be horror and sent her two cubs scurrying in to the brush and up a hill. I turned once or twice as it ran away. Once during the encounter when I ended a song my wife says," hurry sing another one!". But I couldn't think of another one. I should have sang, The Bear Went Over the Mountain, to see what he could see.



 This likable documentary tracks the unexplained deaths of two bull elephants who died with their ivory unplundered in Botswana. The Jouberts traverse the Zambesi in skiffs, using their cameras judiciously or withdrawing on occasion, when an elephant trumpeted and looked to be charging. They following pods of elephants –with unseen helicopter photogs doing some of the flyover filming, as well as other unseen ancillary cinematographers– watching as the megafaunae mourn the skeletal remains they pass, huge heads or jaws bleached white in the 100 F heat of the savannah. The elephants are of course seen to be soulful, and nurturing, and possessed of a sense of fun in the mud from time to time. I objected to the limited focus and range of the narrative, which omitted much of the psychology we know about these magnificent prehistoric megafauna.

They inform us that when they began their forays in filming elephants, there were some 5 million in the world. Now, hundreds are murdered for their ivory in many of the countries of southern Africa, every year. As are the fast-disappearing rhinoceros. The film is a plea for conservation of these magisterial animals, and a reminder not to promote the sale and use of ivory, or rhino horn—which do not, science has assured us, "cure cancer" or other ailments (including erectile dysfunction and infertility), which has been the popular myth for centuries).
Botswana is where one-third of all the Earth's elephants roam without hindrance or threat, protected by a thoughtful president, who is conservation-minded. Poaching is not the problem it is in Tanzania and Zimbabwe—but the shoot-to-kill rule against poachers is slowly—too slowly– putting a punctuation point to these lawless, enterprising ivory robber-barrens.

The Joubert film reminds us that every dead elephant with ivory intact is a cause for celebration: It means that the massive companion beast died not from poison, snares, nets, traps or rifle shot, but from old age.

One amusing note. At the screening, the charming ambassador from Botswana happened to be in attendance. He rose at the Q & A session to thank the filmmakers for their loving pictorial of his beloved Botswana, as well as to invite the packed audience (most, if not all, PBS supporters) to visit his country. "And do not fail to notice, " he added with enthusiasm, if a bizarre memory blockage to note the message of the doc, "the huge elephant in the airport—it is made entirely of elephant tusks!"

We all shook our heads in disbelief.



 On a much more convivial plane, Matt Damon entertains with his cherubic optimism at being abandoned on the red planet, four years before he knows he can possibly be rescued from the mistake made by his manned mission mates at leaving him for dead on the arid wastes of Mars.

Most fortuitously, Damon, playing astronaut Mark Watney, is a botanist. So lucky, huh? So, very shortly after he finds himself stranded inadvertently, he manages quite well, as he says, be "Sciencing the hell out of the situation." Jessica Chastain, Kristen Wiig, Michael Pena, Kate Mara, Chiwetel Ejiofor, trusty Jeff Daniels and a bunch of other people fulfill roles that in the real NASA they would not be occupying, as 95% of NASA is white guys, many Chinese, lots of Jews, and a couple of Others.

Coming to mind with this premise are other kindred entertainments: Cast Away (2000) and Apollo 13 (1995 )—both, Tom Hanks vehicles; Gravity (2014) and, of course, Daniel Defoe's Robinson Crusoe (1719), which started it all.

Sadly, when we hung out at NASA down at Cape Canaveral a few years ago, NASA was a shadow of its former self, as the Obama Administration cut its budget, and its mission goals, to bare-knuckle withers. I saw only Caucasians everywhere. Male. But poetic license: We'll forgive the fact that Kristen Wiig seems to be in the background, grimacing appropriately, without any real job to do, and Jessica Chastain and Kate Mara seem unduly dewy and unscience-y to be in the positions they represent.

Actually, on this point, this is a family friendly movie, with a strong math and astrolabe component. Kids will be influenced to pay attention to their math classes and their botany, geology, agronomy and engineering classes, as these play a big chunk of the proceedings.

Kudos to the location scouts, who found somewhere in New Zealand the proper cratered, nubbled and craggy topography, aided by red gel screens for the proper planetary authenticity. Though the film has its share of suspense, we know Damon, even full of sores, and concave-starved after a year on quarter-rations. Won't be sacrificed to the gods of expediency and verisimilitude. Despite his pickle, the film offers quite a bit of humor salting up all the dire near-extinction tropes being leveraged.



 Steve Jobs was the Michael J.Lindell* of computers, as we all know. His genius in driving the industry changes, turbulence and geek revo is celebrated in some 6 films, including an unreleased documentary (STEVE JOBS: THE MAN IN THE MACHINE, 2015), and a recent one starring the attractive but spice-free Ashton Kutcher—JOBS, directed by Joshua Stern (2013).

This film, which excerpts just three incidents of the protean and largely unpleasant complexity called Steve Jobs, deals with the launch of three Apple products, over a span of 15 years. It is thus three highly schematized snapshots, and not a fully feshed out hagiograph of the man who fascinated us with his oddities, vaunted brilliance—and concomitant brittle personal interaction in business and private life.

Michael Fassbinder, a spectacular if not- yet-iconic-name in the Hollywood firmament (Shame, 2011; Inglourious Basterds, 2009;Prometheus, 2012), is outstanding in the eponymous role. He dares to be unlikable through the entire film, yet the steely grip he wields on the audience is electrifying. He is helped along by the remarkable and nuanced talents of a now-brunette Kate Winslet as his "work wife" (playing Joanna Hoffman ) for decades—who manages a slight but impactful Polish accent that blew us away, as she stood up to Jobs hammer of a personality; by a dead serious Seth Rogen, who seethes with resentment at the treatment he receives as Woz (Steve Wozniac, his partner in the start-up garage creation); John Sculley (played by Jeff Daniels, who appears also in a similar role in The Martian); and sundry other top performers.

We are backstage at all three launches, watching Fassbinder/Jobs threaten, excoriate and grind his people down to fine dust as he demands the impossible, within an immoveable time-frame. Only Joanna/Winslet stood up to him. She boasts to Jobs, en route to stage that she was voted toughest resister of his fierce lack of people skills, "three years in a row" by his far-flung staffers and experts in the computerverse. The digital revolution is rocketed to the country, and the world, as this sermi-portrait paints a fascinating partial portrait of this amazing man. Adopted, he never felt loved, and his lack of self worth (spoiler alert: Cheap mini-analysis ahead) drove his shocking rejection of his daughter, Lisa (one of several children, only one of which is seen and participant in this cabbage wedge of his life) and his coarse maltreatment of virtually everyone he knew, even those he liked. This unfinished symphony of clashes and conflicts was carefully chosen, of course, to highlight the peaks of those years, but leaves out much that is equally valid and equally involving.

The film ends in 1998 with the intro of the iMac, more than 10 years before the end of Jobs. The writing is a celebration-worthy feast of clever. Sorkin is a master of rapid-fire, coruscating dialogue, as was seen in many seasons of The West Wing—even if one grew irked at Sorkin's constant pro-partisan Dem skew. There's no denying the pleasure one derives, just listening to this wave after wave of cascading witticism, historical nugget brews, chewy news caramels and character-disclosing volcanic eruptions by all.

True, not everyone loves the film for this. My companion found all the full-frontal geek mulligatawny confusing and off-putting. Those in the market who followed the escalator highs and lows of the digital offerings will be in their comfort zone. Others, average movie goers, might not have a clue as to what all the ferment and agonized recriminations are about.

No matter: It is great film-making. Great writing. Recklessly impressive acting choices. And a glittering, thorny crown of actor jewels to savor for the two hours we eavesdrop on this tormented, terrific, arrogant tornado of a personality at the epicenter of the revolution we are all swimming in.

*My Pillow creator, as you no doubt knew.



 On Sunday, I walked into a Slab City, CA camp as the new guy in town for an introduction to the informal Mayor. Slab City is a popular winter haven for nomadic misfits set on the concrete slabs of General George Patton's training center for the WWII African invasion. In the early 1940s, Patton flew over where I met the Mayor and declared, "This is Hell! My boys are going to train here for the African campaign." Hence, the Chocolate Mt. Bombing Range, second largest in the world, sits spitting distance from where the Mayor, bearded and strumming a guitar, chatted. Helicopters fired machine guns at 300 rounds a minute, and 10000-pound bombs rocked the ground beneath us.

The Mayor suddenly eyed me carefully, and shouted, "Steve Keeley! I've been searching for you for decades!" He recounted how his father, a genius three-time loser, once loaned me his VW van while the dad installed a cruise control in my Leach van. The VW brakes failed at a MI RR crossing, and scooped up on the cowcatcher of a moving freight train! The van folded in half, and I sailed down the track clutching the steering wheel to keep from falling out the window under the locomotive 3' cookie-cutter wheels…another near death. The Mayor grabbed my hand and shook it, and now I'm a made guy in Hell.



 I have noticed a discernable change in the last several dozen Uber rides I have taken across many distances and locales. For example: greater price variability for similar routes, more frequent surge pricing, drivers less familiar with the most direct route, errors in estimated pick up times, drivers quicker to cancel your pick up because you are not at the exact spot and time and therefore collect a penalty fee. Overall the experience and service is good and I continue to use but this is a significant shift from where it was.

Questions to ask: Is there somewhat of an S curve effect in what is happening at Uber? What does this say about other similar technologies? What happens if the competition begins to use the technology more, such as taxis? What does this say, if anything, about overall market valuations and expectations in the future for other market classes, for example the biotech index (NBI) which are imputing certain levels of future growth?

anonymous writes: 

Drivers are figuring out that the normal fares paid by Uber in non-surge times are not commensurate with time, cost of vehicle, maintenance on vehicle, risk of accident and injury, and dealing with drunk inconsiderate riders, so the supply of drivers is not meeting demand. So basic supply-demand economics is causing more surge pricing to encourage more supply of drivers willing to drive at the higher rate.



 I rushed into a shop the other day, seeing a football logo drinking glass that I quite liked in the front window. I was rushed, as I needed to be somewhere, and was running late. I asked the shop assistant, do you have one in my team colours as I picked it up and he said no.

While still standing near the front of the shop, some distance from him I asked how much it was, while at that moment seeing a price tag on the item of $20.00. He replied $12.00, and I said $10, while simultaneously making a move to put the item back in the window. He said DONE.

It only occurred to me later, how many variables came together in my actions and words, totally non scripted, to get him to deal at a price half of what the label said.

I looked rushed, it wasn't exactly what I wanted, and I gave the attendant no time to sell the item to me and prove its value, ending in him hitting the bid, not me lifting the offer.

Some things to remember for trading or further purchases.

And yes, I can hear you, his deal price may of been $5 and he still got the better of me. Though I still quite like the lessons learned. 



 There appears to be a very rapidly growing area of business, and even magazines to help you with your player selections now fill the shelves of grocery store racks. A lower barrier to entry for those with less money to lose?


Sports betting has thrived despite a large skill gap between the average sports fan and the sharp bettor. The reason is that the lines are set by a large, liquid market. You can walk up to a betting window in Las Vegas, select a team at random and still win almost 50 percent of the time. Betting randomly, you will lose money over time, but your average loss will be only slightly over the 4.5 percent vigorish.



Last week, a DraftKings employee admitted to inadvertently releasing data before the start of the third week of N.F.L. games, a move akin to insider trading in the stock market. The employee – a midlevel content manager — won $350,000 at rival site FanDuel that same week.The incident has raised questions about who at daily fantasy companies has access to valuable data, how it is protected and whether the industry can — or wants — to police itself. They also say the incident is "what amounted to allegations of insider trading."This is huge news for fantasy sports, a multibillion-dollar industry that's legal in the US because fantasy sports are considered a game of "skill."



 I'm a strong believer in the Baby Bull theory where one adds a little at a time to become big and strong. A backpack filled with a pebble more a day makes an undefeatable hiker. Few think to apply the Baby Bull to their minds.

If you wish your child to become prodigiously wise before your eyes, feed his mind daily like a baby bull throughout his childhood. The two books I recommend reading a passage at each supper sitting are Ayn Rand's Lexicon, and Louis L'Amour's Trail of Memories. Each contains hundreds of short excerpts from their works that instruct as aphorisms.

The term Baby Bull derives from a theoretical baby who is introduced to a calf, and lifts it daily. As the calf grows, so does the child.



 The CME site says, "The CME Group Market Data Platform (MDP) disseminates event-based bid, ask, trade, and statistical data for CME Group markets and also provides recovery and support services for market data processing. MDP 3.0 includes the introduction of Simple Binary Encoding (SBE) and Event Driven Messaging to the CME Group Market Data Platform. Simple Binary Encoding (SBE) is based on simple primitive encoding, and is optimized for low bandwidth, low latency, and direct data access."

This sounds like a compression algo. Music is decoded into MP3, to lower bandwidth. I heard an interesting article on NPR about someone who analyzed what is missing from an MP3. Turns out quite of bit of interesting and valuable information that makes music more beautiful is dropped. They claim the full data can be extracted, but I'm concerned. It will cause a lag and delay. I use tick and execution data in my work. I am guessing there are players that can get full uncompressed data. I am concerned the compression will alter the true nature of the trades, their times, and other info. I use DTNIQ who says they can decode the packets to full data, but why do I doubt this? Who will benefit from this?

Anyone else have a take on this?

Jeff Sasmor writes: 

I was actually at a conference where the group that developed MPEG audio presented. Interesting place - Mohonk Mountain House in New Paltz NY; well worth checking out, it's iconic for a number of reasons. I think it was the IEEE ICASSP conference at the mountain house where I first heard about MPEG audio.

But I digress: MPEG audio is what's called perceptual encoding. The (basic) concept is that you can remove information that people won't hear anyway and they won't be able to tell that it's not there.

It's not the same as the sort of compression used when you zip a Word document. As you suggest, there is a delay due to decoding it, but it's short and generally not relevant for a typical use case.

Compressing a stream of 'ticks' is probably very different. There's a lot of repeated data time-domain-wise so you could use something like run-length encoding (which is sort of what IB does) although I'm sure it's more complex than that. As you suggest, one would want something that has low time latency in the decode process. Happily, it's much simpler to decode than encode for most types of data compression AFAIK. But there would be some delay. But it's most likely lossless.

Finally, I have read and find convincing the idea that an uncompressed data stream of tick data would overload the data transmission channel for any name that had any serious volume. If you're co located at the exchange or pay for a private fiber connection to the exchange it could be fine but not over the retail Internet. Even forgetting about the data rate you'd need to store it as it came in without overrunning buffers and the buffering itself would cause latency.

So if you have $$$$$$$$$ and an IT department you could make uncompressed work but probably not otherwise. But as the encoding of this sort of data is probably reliably lossless it may be less of an issue than you're thinking of.

My 2 cents.

Chris Tucker writes: 

If you are a person that enjoys nature, Mohonk has a very particular and endearing charm. Summer is nice for the family–swimming and hanging out at the lake, walking trails with amazing views–try the trail up to Smiley's Tower for incredible views of the Hudson River Valley. Autumn is spectacular as the trees change, cool nights on the veranda wrapped in a sweater and parked on an old rocking chair are delightful.

There is excellent golfing. But my favorite thing about the place is that it is ensconced in the heart of the Gunks. The Shawangunk Ridge is a focal point for serious rock climbers from near and far and I've spent some very memorable times there, including an utterly bizarre encounter with an Apache helicopter that must have been practicing popping up from behind a cliff. I could see my reflection in the pilots visor. Scary close.

If you enjoy mountain biking, I can HIGHLY recommend the nearby trails (relatively easy) at Lake Minnewaska. The views from Gertrude's Nose are breathtaking. Lake Minnewaska was home to two grand Catskill hotels until the seventies, but they both burned to the ground. See some interesting history here.



 GS just launched a smart-beta product which I believe is their first proprietary ETF.

They are charging only 9 basis points for the GSLC <equity> etf!!!

It's a large cap etf, rebalanced quarterly based on their scoring of value, momentum, quality, and volatility. A quick look has them underweight the largest 40 S&P names except for Gild, HD, CVS and WMT. Interestingly, they don't hold any GS — probably due to regulatory issues.

If anyone knows of a backtest of their index, I'd be interested in examining it. Without historical data, it's difficult to understand the attraction versus competitors (except their fees are extremely low and so they've undercut Wisdomtree and other smart beta products). Perhaps their inhouse brokers will sell this as an alternative to the S&P?

Ed Stewart writes: 

Have you continued to look at this product? at 9 basis points it seems like a reasonable core holding. I'm curious what the turnover will be given the rebalancing rules. I assume GS will make the money on servicing the fund such as trading, stock lending, etc vs. the direct fees.

anonymous adds: 


There are a number of similar products out there (so-called "Smart Beta") which charge between 9 and 20 basis points. So the management fees are only slightly more expensive than S&P or Russell Index Funds. I would argue that the Smart Beta products are themselves "index funds" — but they are tracking a different index! I think this discussion is very important and provocative. I'll provide my two cents below:

Rather than focus on a 5 or 10 basis point savings, I would focus on assessing the probability that one (or more) of these smart beta strategies (of whatever flavor) will outperform the S&P over the next 3, 5, 10 years. When you commit to one of these things in a taxable account, you also need to consider the tax effects of selling early/switching to another fund — as the capital gains taxes can really hurt your long term performance. And you need to consider the chance that the ETF is liquidated for some reason, because that will trigger taxes too. You also need to consider the chance of upward fee drift. For example, GS priced their fund at 15 bp in the prospectus, but lowered the fee to 9 BP on the offering. AQR is also cutting their prices. But at some point, there must be consolidation among these many fund complexes, and after that happens, they will surely start to raise prices — since the tax consequences of switching make the assets very sticky.


The academic literature for the anamolies which these smart beta funds exploit is, I believe, compelling. But equally compelling is the fact that their outperformance versus the S&P has been in secular decline. I did some back of the envelope calculations and found that the average annual excess performance for the past 15 years > 10 years > 5 years. That is, the market has woken up to the anamolies and with the advent of these low cost/smart beta funds, it's plausible that you'll see decreasing, if any, outperformance in the future. Cliff Asness at AQR recently wrote an essay on this subject. See: https://www.aqr.com/cliffs-perspective/how-can-a-strategy-still-work-if-everyone-knows-about-it


I think the right way to pick one of these funds is to understand one's own temperament and market beliefs. It's during bear markets and periods of underperformance that one's temperament is revealed and it's critical to be able to stay with these smart beta products during 1, 3 and 5 year periods of underperformance (however you define "underperfomance"). For example, do you love the "hot" stocks? Would you own Facebook/Amazon/Netflix regardless of valuation? Then the momentum strategy is the right choice. But if you like to own "quality" and feel comfortable with less sexy things (Johnson & Johnson, Microsoft, etc) , then you the Quality anamoly is your right choice. Do you like to be a contrarian? Then the "value" portfolios might make more sense. And if you think you are a trading genius, then you want to move around these different things as you predict the next flavor of the month.

If you put a small amount of long term capital into each of these funds, what's the probability of outperforming/underperforming the S&P on a compounded total return basis? I honestly don't know. But I'd guess that at any given moment — with a X month lookback — one of these smart beta funds will look really good — and one of these smart beta funds will look really bad. And therefore, it's no different from picking a stock or a fund manager or a sector. And consistently doing that is very difficult. 



If the last couple of years the DXY and the SP500 rose together, a parallel from the 80s was justifying that the US economy is improving and hence both money and the assets this money can buy can appreciate together.

Usually in the developed markets, say the G-7, a regularity has indeed prevailed that the value of money and assets do not move together.

So during the last couple of years, where indeed all key central banks have been steroid fountains (naah the throwing cash from helicopters is phrase that everyone has forgotten so I will use this one) pumping up their supremacy in dictating markets, there have been countries in Europe where equities went up despite the underlying Euro declining.

So this set of arguments is therefore either contradictory or inconsistent or incoherent.

In trying imagining (forecasting begins with an imagination which is eventually restrained with the aid of studying the statistics of data originating in the past) how this present world will find coherence, I have three questions:

a) Is the more important Money going to be gold for now, the super-currency that will get acknowledged as having this status with the reality cheque now being shoved up on every desk?

b) Can the steroid factories drive value of both Gold and Equities together now, while in the last couple of years DXY and Equities indeed drove together?

c) If Price of Crude is better visualized as anti-money and not money, since the world has to consume it to produce wealth, will it drive along with the prices of equities or against them, hereon?



 Apologies for my prolonged hiatus. I had a bereavement in December and sought refuge in the inspiration which has graced my life. I love still the noble art of trading, to which I have started to return, and there are structures in common which I use in each. However, just as in music, I doubt that the use of Fibonacci and Elliott are predictive; they can help in viewing what has happened after the event, or help a composer or painter in the process of construction.

Following my father's death, I worked through the musical and poetic ideas that came through me, leading to "The Spirit Free'd". This will be played tomorrow evening in London [last Saturday], and I would be happy to meet Specs who come. As a trader, I must point out there is a significant reduction in price to those who phone ahead of time for a ticket.

I designed this violin concerto to pass through the keys of D-(E)-A-D. What it means I do not know. My late father believed all his life in survival after death, and reincarnation. For my part, I have been true to the terror of mortality, my violin-soul ebbs away at the end in nothingness, offering no solace or religious message. Perhaps this existential view makes life the more poignant and beautiful. What really happens awaits us all, though my sequence is borne out by some NDE (near death experience) accounts.

There is an audio sim here.

The concert is at George the Martyr Church, in Borough, London, opposite Borough Tube Station, starting at 7.30. The soloist in my violin concerto is Godfrey Salmon. It is the second work on the program. The venue is near the Shard. For advance bookings ring 07765 147324 (this number not for the web please).

More info is at the Facebook event link.

All the best





 As of Friday, mining stocks make up the lowest proportion of the broader ASX 200 ( Australian Stock Index ) since modern records began.

One often sees hysterical market commentary such as:

"Market 'X' trades at the lowest or highest level since such and such a date"

In and of themselves such statements are best ignored.

One wonders, however, if it might not prove of some nourishment to test future expectations of sub components within broader indices based on, for example, if the dub component currently resides in the lowest or highest decile as a percentage of the broader index.

One is far from being a single stock specialist but straight off the bat I can see trouble with the fact that one is not measuring like with like and companies fall into and out of the sub- index.

Regardless, it can be tested against randomness/ throwing darts towards a dart board.

(Or a picture of the Captain of the English Rugby team in anticipation of their drubbing by Australia,  who are, incidentally and pound for pound, the greatest sporting nation in the history of Carbon based life. And YES that does include you America.)



Single time series statistical analysis or 2 variable correlations are easy to compute with limited data and standard formula and normal assumptions. However in real life situations there are obviously more than two variables. In practice everyone considers multiple variables. I've read and used Kendall's Rank Correlation methods, but am not sure how they work exactly. This seems like a way to weigh multiple factors or variables. Multiple things affect the price of a future contract. Real time data is available for a number of things that should affect price, other than just prior prices. Isn't there a way to factor more than one of these things in on a quantitative basis? Do them one at a time but simultaneously, and average it?

One way game theory way to make decisions is to have two columns, plus's and negatives. A factor can be added to each as to its weight or importance to the participants or its possibility or probability. Simply weighing the two sides can help with a decision and it can be quantified.

Steve Ellison writes: 

I sometimes use a machine learning technique called gradient descent to get an idea of which of many factors is more predictive. The (greatly oversimplified) general idea is to start with a default weighting parameter on each input, then make a prediction and compute a "cost function" (error) on the difference between the actual result and the prediction. As it sequentially processes each occurrence, the algorithm adjusts each weighting parameter up or down to try to reduce the cost function. The factors that end up with weights farther from zero (in either direction) appear to be more predictive. This technique helps me narrow down the possibilities, and I can then pick a few factors to evaluate using simple linear regression.

Mr. Isomorphisms writes: 

Linear algebra is the study of multiple variables interacting at once. However it's a difficult subject which requires multiple go's to really understand intuitively.

http://linear.axler.net is something I'm looking at these days. MIT OCW has a good first course.

Gram Zeppi made some interesting comments on Quora: the Jordan decomposition is the main result. (Or maybe it's factorisations.) Based on pure formalism and symbols, one can rearrange the interacting factors into smaller independent matrices which compose together as a sequence of simpler transforms rather than one big transform, but achieving the exact same result.

I still don't really understand how linear algebra is used in time series. One of the standard transformations is to swap dimensions. But this should be strictly disallowed in time series. (Differencing and then doing linear algebra would be a little better in this regard. Then, like with most choices of window, one implicitly assumes that the "pieces" all come from a statistical population.)



0.95 is lower than 1 /1.05. For this reason a 5% increase followed by a 5% decrease (or vice versa) results in a net decrease. *

In researching volatility drag, with respect to daily vs monthly ETF's (and levered vs unlevered ETF's) I am drawing near to the conclusion that the famous drag phenomenon might be due to a flaw in design rather than in execution. If you design a product to match *percentage* moves, you will induce drag.

The discussions I've read of this phenomenon all go too deep (AM-GM inequality, Jensen's inequality, geometric averaging, lognormal returns, ….) into maths to pick up what I think might be the root flaw of some of these 3rd-gen / 4th-gen ETP's.

* .95 and 1.05 aren't the best numbers to see the mismatch. 1 / 0.5 = 2, not 1.5.



 James Simons wisdom:

"I was just lucky to be good at two wildly different things. Maths and finance are not very alike."

"Tax strategy is very important." (Look at whom he hires.)

"My early success [I believe this is at Axcom] came from just thinking about things slowly, deeply, for a long time."

I've also heard the speculation that the fetish for hiring rocket scientists on Wall Street began with Simons. I would have thought it began with Meriwether. BTW, "Characteristic Classes" by Stasheff & Milnor is what to read if you want to understand Chern-Simons theory (imo).

Here is a video of Milnor discussing something where they come up in a way you might be able to catch from the context. To watch it you need to know that a solid disk maps to a spherical shell via the "drawstring bag". In general N-dimensional rooms map to N-1 -dimensional spherical-shells similarly.



Here is an old USDA working paper on the mechanics of wheat and corn price forecasting. It's a very interesting read, but flawed in so many ways, and I will leave it as an exercise to the reader to spot the numerous flaws. Still it does give insight into what and how the people at the USDA are thinking and there are market lessons in that.



 As the baseball playoffs begin next week with teams still alive or at least home field advantage being at stake this late in the year, I've considered what makes a good team or player over a period of time or a season. The colloquial term for the highest talent is known as a 5 Tool Player. This is a position player (non-pitcher) who possesses singular athletic and intellectual talent allowing them to hit above average, hit for power, run for speed (in the field and running basses) and the more defensive attributes, throwing arm and fielding.

I see today that MLB's statistical team has found the 8 five tool players for this season. It is a simplified yet seemingly important way to view a period of time arbitrarily. As they state:

"Let's lay out the rules. We identified the following five Statcast™ thresholds as stand-ins for the five traditional tools, and sorted by only the players who have had at least three qualified recorded data points in each of the five areas. That's not the same as being above average for an entire season, but that's not the point; we want to see the players who are blessed with the capability to do these things at all, and three times over six months didn't seem too much to ask."

Hitting: Batting exit velocity of ≥ 110 mph

Hitting for power: Home run distance of ≥ 425 feet

Fielding: Route efficiency of ≥ 98 percent

Throwing: Throws of ≥ 85 mph

Running: Top baserunning speed of ≥ 21 mph

The Statcast™ "Five Tool Players

Mike Trout

Andrew McCutchen

Carlos Gomez

Yoenis Cespedes

Lorenzo Cain

Hunter Pence

Ian Desmond

Marcell Ozuna

I disagree with certain aspects of what they were measuring. Exit velocity seems more tied to power than straight hitting but I digress. This rationale seems important for viewing individual markets and the speculator population.

What traits create the Five Tool Speculator?


Resources & Links