Oct
19
Racing the Stability of Markets, by James Lackey
October 19, 2011 |
Years ago we used the weather as a anecdotal guide to describe the markets and attempt to predict. I went on about air temps, humidity (water grains) pressures to make engine power. Radiant heat for the intraday markets, like sun on the race track or track temps for traction. The gist was how to make more power and when and how to use it. Yet, in heavy weather in racing or trading most have more power than the track can hold.
The get the joke was and still is that small investors have a bit of an edge over the big fish in sloppy or heavy weather days. The gist is simple, we can move quickly and the big boys can't. When its beautiful, those with the most power have the edge. A very strong, steady up market those with the most money, can deploy their huge reserves and win the race. The smaller traders must use leverage, a tonne of leverage to make a living wage in a small range but strong and steady market. The big fish know this and we see little duststorms in the markets. It may cause the over leveraged spec or racers to make a pit stop at best or crash and burn.
I can see and tell the difference in most forms of racing or trading Not that any of us can't tell who has the edge in the trading world. They make money every single day and rarely if ever have a huge trading loss. The form for specs is either we make small money almost every day and have too many huge losses…or brag about never had a huge loss, but seemingly do not make much on balance as they take little risk.
When the rules boards set the parameters for the next season, we all scramble to adjust. For trading it can be a simple margin shift. For racing that is a change in engine specs to reduce power for safety and or to keep the costs of racing down. Perhaps in trading these shifts in margin rules cause as many bad accidents as they cause in racing.
If they lower the power of the race car, we will find another way to go fast and win. We will use aerodynamics and ofcourse, they always change the rules the 2nd race in the season. My gauche, they are going just as fast as last year with less power. How that is done is suspension tech and taking downforce out of the cars. All cars have wings, whether you can see them bolted on or not. A trunk lid can be a wing and normally you will see a spoiler bolted on the car to cause the pressure over the lid to push the car down for traction. The size and shape of the roof changes how the air moves over the rear of the car.. On an Indy car it is obvious. They have wings.
If the rules boards lower the engine power, rule on how much downforce you must have in the car and or how much wind you must push (aero drag) this forces the race car drivers to run in the draft. What isn't obvious is how fast 1-2-3 or 10 cars can run in a draft until you get them on the track. What looks good on paper or in the wind tunnel test, can be a disaster waiting to happen in a real live race.
The most dangerous situation is when only a two car draft is the fastest. A single car is some 2-3 seconds slower than a two car draft, yet three cars is slower than the two.. This causes the 2nd driver to tuck under the lead car. He cant see. The 2nd cars driver's job is run on the tail of the lead car all day long. He fights all day not to lose his drafting partner. If he does lose the draft, he is solo and can't run with 2 other cars to make three as that is slower and breaks up the 2 car draft. He is a dead duck as a solo race car and so is his old partner. It will take them 2 laps to recover top speed. That is only if they all have the same power and must run full throttle all the way around the race track. Let's call it 600HP. Where 800HP they would have to let off the gas before the corners or lose traction.
Now what is seemingly dangerous is a single car that can run 235MPH lap speeds solo.. Oh my gauche they will be going too fast in the draft, maybe 255! So, they get them to run 215 solo.. but then they run 225 in a pair and 229 is the best pair.. Now the best pair is going some 14 MPH faster than a solo car.. Throw in a dust storm, the driver in 2nd, tucked into the draft, has no idea the lead car is about to get off the gas and he spins him out and they both crash.
That is not the real problem, they are all pros, the best in the world.. The real problem is no matter how hard a driver tries and no matter how worn out the other cars tires or brakes are at the end of the races..its almost impossible to pull out of the draft and slingshot past for the lead with an underpowered race car…well….almost..
When you pass a truck on the HWY you can feel the turbulence… But there is a spot right before you pass the truck where a side draft feels like its going to suck you over into the semi.. At 200+MPH that same side draft is used to shoot past a car. That side draft in open wheel racing which unlike stock cars if they touch, two open wheels make contact, one race car can be shot up into the air.. When all have the same power the same set up its like trend following.. one little hickup causes a jam and the chain reactions, cascades, cause a big pileup and at times, loss of life.
Now if all cars had 750 or 800 HP and could go 235 on good tires but had to slow down when on old worn out tires by letting off the gas and perhaps tapping the brakes at some point during that race, the engines power would be a huge help in completing passing in racing. The regulations to keep the power down for safety, actually cause crashes! Its not unlike dry powder in trading during a duststorm on the prairie… or those years where we are all pinned full throttle long… a little zig and zag is required..others are hitting the brakes and have no horsepower to recover their momentum. Those with the reserves can stand on the gas and have the power to overcome the pack.
Comments
WordPress database error: [Table './dailyspeculations_com_@002d_dailywordpress/wp_comments' is marked as crashed and last (automatic?) repair failed]
SELECT * FROM wp_comments WHERE comment_post_ID = '6876' AND comment_approved = '1' ORDER BY comment_date
Archives
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- Older Archives
Resources & Links
- The Letters Prize
- Pre-2007 Victor Niederhoffer Posts
- Vic’s NYC Junto
- Reading List
- Programming in 60 Seconds
- The Objectivist Center
- Foundation for Economic Education
- Tigerchess
- Dick Sears' G.T. Index
- Pre-2007 Daily Speculations
- Laurel & Vics' Worldly Investor Articles