I needed a hook to start in business in 1962.

Perhaps an audited record of market predictions would help.

I enlisted Laventhal and Horwath to audit the predictions.

They were 70% accurate over a 3 year period but they weren't useful at all because there was no futures and they didn't take account of the Fisher Effect.

Many stocks only traded at the open the next day.

But a Hungarian Palindrome found out about the predictions and we started a 10 year partnership.

We played a lot of tennis and chess.

And my kids really enjoyed staying at his Hampton estate in the summers.

But the palindrome was always bearish and he hated free enterprise and speculation.

I was the opposite.

He severed his connection with me in 2008.

The last words he said to me were, "you are going to lose everything when the market goes down but just turn your positions over to me when it happens."

While we were working together a backgammon player introduced me to options.

I saw a big anomaly.

The vol of the out of the money puts was much higher than in the money puts.

What I didn't realize and what I believe no one else realized was the margin rules were such that those who were long the puts held all the marbles.

Among other things, they established the rules and the margins.

A very astute banker once told me whenever a relative asks him for a loan he always gives half and says "That way we'll both lose half".

I believe both players mentioned above lost at least half as well.


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