February - 2017
 S&P +0.01
 USB -0.13
 S&P +0.90
 USB +0.04
 S&P +15.60
 USB -0.17
 S&P -4.50
 USB +1.17
 S&P +1.90
 USB +0.21
 S&P +1.80
 USB +1.03
 S&P +14.10
 USB -1.03
 S&P +8.40
 USB -0.09
 S&P +13.60
 USB -0.17
 S&P +10.70
 USB -0.24
 S&P +13.40
 USB -0.22
 S&P -4.80
 USB +0.28
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 USB +0.02
 S&P +0.90
 USB +0.02
 S&P +1.90
 USB +0.14



"For the first time ever, astronomers have discovered seven Earth-size planets orbiting a nearby star — and these new worlds could hold life."

This cluster of planets is less than 40 light-years away in the constellation Aquarius, according to NASA and the Belgian-led research team who announced the discovery Wednesday.

The planets circle tightly around a dim dwarf star called Trappist-1, barely the size of Jupiter. Three are in the so-called habitable zone, where liquid water and, possibly life, might exist. The others are right on the doorstep.

Scientists said they need to study the atmospheres before determining whether these rocky, terrestrial planets could support some sort of life. But it already shows just how many Earth-size planets could be out there — especially in a star's sweet spot, ripe for extraterrestrial life.

The takeaway from all this is, "we've made a crucial step toward finding if there is life out there," said the University of Cambridge's Amaury Triaud, one of the researchers. The potential for more Earth-size planets in our Milky Way galaxy is mind-boggling.

"There are 200 billion stars in our galaxy," said co-author Emmanuel Jehin of the University of Liege. So do an account. You multiply this by 10, and you have the number of Earth-size planets in the galaxy — which is a lot."



 In the same period of great adventure at the turn of the 20th century, two authors wrote of their travels to forbidden continents. Teddy Roosevelt, stepping down from the presidency, went to the foreboding Amazon and converted his journals into the book Travels through the Brazilian Wilderness, a few years after Mary F. Kingsley, a sheltered Victorian spinster suddenly freed from caring for her two sickly parents after they passed within six weeks of each other, went and wrote of the deepest, darkest Travels in West Africa.

In so many words, Roosevelt belly flops through the wilderness as Kingsley smashes through it.

Roosevelt writes soundly, and unfortunately, about what might have happened, did happen to others, and how dangerous it was to stand behind a rifle before a charging elephant, and hold a pen amongst whining mosquitos.

In the meantime, Miss Kinsley set out into uncharted regions and across treacherous swamps, going where few white men, let alone women, had ever been. She sometimes went in disguise, and preferred the uncovered cannibals to the cups of tea served by dignitaries. She learned the tracks, rivers, tribes, and tricks from the traders, and then vagabonded it. Once in a game trap set with spikes her voluminous skirts saved her from painful death. Alligators attempted to climb in her solo canoe, which she dealt with by crashing with a paddle. She got along well with practically every other living thing she met, drawn to life, and collecting specimens, and living to tell it in a lighthearted manner after sitting down with tired feet to a welcome pen and paper.



 A coffee shop opened six months ago in Slab City called Starbucks that served coffee that the people swore rivaled the real thing. The shop was erected on a slab with wood pallet sides and comfortable couches built into a Palo Verde tree, and a drive-through under a branch where clients could pick up freshly brewed methamphetamine.

Today the sheriff picked up the manager for outstanding warrants. After he was escorted to jail, his 'grandmother' burned the store to the ground, including two 8-week old Cocker Spaniel pups named Caffeine and Free. Starbucks is still hot and black, with a new smell.



 For the first time ever, astronomers have discovered seven Earth-size planets orbiting a nearby star — and these new worlds could hold life.




Rob Arnott et al has released a new paper on Smart Beta, a topic that has gotten some air time here.  His observations have analogs to other investing styles too.  



As one expected there is a huge coverup of the immigration problem in Sweden to humiliate the Pres.

Russ Sears writes:

Classic example of attacking the lack of formality in the delivery of the message rather than paying attention to the message. Attacking the credibility of the witness, blaming the victim, etc. Clearly this has business applications as I have seen this with insider action with dire consequences.



 "Donald Trump Appears To Make Up Sweden Terror Attack"

The crowd in Orlando understood what Trump was referring to - the "news" that someone had been set on fire in a public square in the country that (once upon a time) gave us Volvo and Saab cars.  Here is what the President said on the subject of "Sweden":

"Here's the bottom line. We've got to keep our country safe. You look at what's happening. We've got to keep our country safe. You look at what's happening in Germany, you look at what's happening last night in Sweden. Sweden, who would believe this. Sweden. They took in large numbers. They're having problems like they never thought possible. You look at what's happening in Brussels. You look at what's happening all over the world. Take a look at Nice. Take a look at Paris. We've allowed thousands and thousands of people into our country and there was no way to vet those people. There was no documentation. There was no nothing. So we're going to keep our country safe."

When the HuffPost and the former Prime Minister of Sweden and Boris and others "Fact check" Milo's Daddy, they are not doing what copy editors were once paid to do: go to the actual data.  But one has to make allowances.  What infuriates the educated Left, which includes nearly everyone with an advanced academic degree, is the man's language.  It is so maddeningly vulgar - just like "the people's".  

When I was in short pants wandering around Harcourt Brace & Co.'s offices on the weekends asking the editors to tell me about their WW II experiences in the early 1950s, Trump's syntax and vocabulary would have been scored as statistically average for 4th graders in the U.S.  (I have not seen raw scoring for "English" testing for American elementary schools in nearly 3 decades so I have no idea how they would be scored now; my guess is that it would be 7th-9th.)  If my guess for current standards is correct, that
same yardstick would score the language of Obama's speeches at College 1-2 levels.  

These facts raises two questions for List members: (1) How many of us have actually run for electoral office - at any level?  (2) And how many of us have won?  Those who can answer "yes" to the second question know that Trump has, for politics, nearly perfect pitch in terms of his level of language.  He knows this; even when he is doing his best to be "Presidential" - i.e. reading his speechwriters' College 1-2 level text - he interjects his own upper middle school diction.

Mrs. Clinton's fundamental mistake was to assume that, because Obama spoke at a "college" level, she could do the same.  She ignored the cultural truth that has always applied to politicians who come from previously shunned groups; they have to speak publicly at the next level of schooling to prove that they are respectable.  Eisenhower could mumble; Kennedy, as the one and only successful Catholic candidate, had to "prove" that he was "proper".  Obama, who has had a lifetime of race hustling, knows that he can never, ever be vulgar; he can be mean and insulting and grossly dishonest but he had to have the calm, "educated" diction that every successful "black" talking head in the news had always had.  

The truth of American history is that women, as a group, have never been shunned.  No party has ever run on a platform opposing women.  Even the people who argued against women's suffrage had to use the argument that women, as the superior gender, should not be sullied by joining the crude world of actual electoral politics.  

This raises a terrible challenge for the Democrats: where can they find a woman who comfortably speaks at no more than a 10th grade level?



"A strict analogy and well known explanation of all this is afforded by the well known conditions and uncertainties of political election. We have abundant experience that when a constituency is very varied, trifling circumstance are sufficient to change the balance of parties, and therefore, although there may be little real variation in the electoral body, the change in the character of its political choice at successive elections may be abrupt"

-Galton, 1875, in discussing the relation between siblings.



 I had a pet Trader Rat that came to me in a strange trade. He grew strong and smart under my tutelage and lack of my own biological offspring. A Trader Rat looks like a sleek rat with a Mickey Mouse face. The close proximity of his eyes over a pointed nose molded the rodent's brain into the greatest trader in the animal kingdom.

His best trades were:

•    A pile of coin wrappers for a stack of coins

•    A scorpion claw for a radio transistor

•    Cactus spines for a pair of gloves

•    A pyramid of stones outside the refrigerator for a carton of soymilk

•    Everything in my car glove box for hundreds of sticks and stones

I raised him like a kid with a baby book complete with fingerprints, a growth chart, and photos over time as he rode in my shirt pocket like a sidecar around the desert property. He looked forward to a workout in a gymnasium or school I had built, or to roam freely until I scratched a code on the ground, to differentiate me from the black day the nemesis rattlesnake would cock its scaly head.

He had come into my life on the greatest trade of all. The mother had abandoned her eye-closed infant on my trailer floor in exchange for a pair of reading glasses. I set a travel alarm and when it was taken by the mother followed the ring a few minutes later to her midden in the tool shed. I gave the baby back, and she returned it, hung in her mouth. That's how I became a father with a vasectomy.

One day, I received a terrible trade: my heartbreak for the desert diary scratched in the sand the night before of a rattlesnake's track winding up to my Trader Rat's prints. Now we are in each other's memories. My fondest is of him trading giggles for a good tickling on his belly.



 Reading some headlines, I see that Buffet has "dumped Walmart" and "bought airline stocks" both of which seem to violate his rules: 1. to keep a stock forever and 2. never buy airlines.

It would seem that the math of such a big fund has forced him to change. Buying a small market value stock and riding the exponential growth once it succeeds no longer adds much to his returns. Since he is so diversified with such big companies hanging on forever gives market like returns and one is much more efficient by buying an index. So it would seem he is left with trying to time the market, on big companies and/or sectors, to add value to his shareholders.

My question is has he been successful when he has violated his rules in the past? Or does he like most of us get humbled by the markets when we try something new?



There are 2 basic reasons that "modern" portfolio theory is no longer "modern". While the basic idea is still golden, diversity lowers risk.

First, there has been an explosion of asset classes in which one can diversify into, which are traded. However, the data on these classes are not long enough to have stood the test of time. For example do high yield bonds diversify or are they simply a mix of bond risk and equity risk with liquidity risk thrown in?

Second there has been an explosion of ways to game the model to make the manager appear to have added Alpha, but really has loaded up on some other risk not measured in the model, like liquidity risk (real estate for example) or model risk (MBS for example) or simply taking other risk besides measurable volatility risk. When the MPT is taken as gospel it often is taken to extremes leaving one vulnerable to misinterpretation, like any other scripture, one should beware of those claiming to help one understand that scriptures fine points, especially when money is involved.

Ralph Vince writes: 

I think there's a bigger question here, and that is, why hasn't MPT been applied to other similar processes (as that of the equity curve of a trader in capital markets or gambler) in the natural world.

This is the question I find most baffling — why, 75 years later (at least with regards to the Markowitz subset or geodesic) are the models floundering solely in these equity curve style exercises. There are more exercises and more important exercises where this can and by now, ought be applied to, specifically exercises in the natural world with respect to many things — some of which I have mentioned here in the past such as deficit reduction sans tax hikes or budgetary cuts, chemotherapy or other pharmacological dosing, spread of pathogens, etc. etc. any growth-feedback function wherein we seek to diminish growth in the natural world.

Given that MPT resides in the Leverage Space Manifold, and that each axis along each dimension in that manifold (minus 1) varies in the domain 0..1 representing, in the exercises we are more familiar with, the percent of stake being risked on that component, MPT itself, at 75 years old could, conceivably, be applied to such growth-diminishing exercises. The axes which each range from 0..1 in value can be transposed to reflect the cosine of the variance to the mean growth of the data used for that axes. Thus, any growth-feedback function can be mapped to the Leverage Space Manifold, and in turn, mapped to Markowitz's Efficient Frontier (the geodesic) provided the variance can be altered by human intervention (such as dosings, national debt accumulation rates, etc. there are some functions, like Sir Ronald Fisher's fundamental theorem of natural selection, which states, "The rate of increase in fitness of any organism at any time is equal to its genetic variance in fitness at that time," maps to this model even though we are not seeking to tweak an organisms genetic fitness).

And yet, dosages are not considered under such a model (and contemporary medicine itself stands accused of dosing in manners opposite those which this model might often suggest) , deficits continue amidst a seemingly intractable tug-of-war between budgetary cuts vs. increased taxes, and all of these can be addressed, improved, through the implementation of some relatively simple mathematics. There are ample meals here and research ideas.

The tragedy of MPT, and more generally (and to me, personally), the hyaline manifold of leverage space, is not that it is not seeing full employment in financial markets, but that it is not being used for beneficial ends in other physical and social sciences.

I'll shut up about it now.



 My daughter is starting her first professional job as TV producer. What advice would you give some one just starting?

Dan Grossman writes: 

Work very hard and long hours the first six months. Then she can dial back to a normal level, but she will have established in everyone's mind that she is a hard worker.

Vince Fulco writes: 

I would say, study your superiors ruthlessly and choose one as a mentor who is successful, well mannered, and genuinely cares for others. Working with a good one is a career accelerator. Working with a bad one especially your boss is an anchor which will affect you for years.

Also, get into a Toastmasters asap. I believe they have the most well structured program for both "Competent Communication" and "Competent Leadership", two of their formal tracks. It is an effective, cheap and low time way to boost your skills and resume. One of their meeting activities is impromptu speech giving of 1-3 minutes called Table Topics. It is a great exercise in thinking on your feet.

Stefan Jovanovich writes: 

Learn the mike heads and technicians' jobs well enough to understand what bad producers do that drives them crazy and what good producers do that makes their lives if she learns to do the actual job well Enough that the crews and reporters want her, the career will take care of itself.

Jeff Rollert writes: 

Having been in radio, "microphone sense" lacks in many. Learn how to use the different ones like lavaliere, unidirectional, correct cough guards etc. if your sound guy hates you, you are dead. Bad sound is worse than bad video to audience.

Toastmasters is also great. I'm a mentor in one here. Also, if she's serious take sone acting lessons so she learns how to direct and take direction.

Oh, and be very very lucky. Move markets, up the ladder asap. If she's good, she'll make a marine's travels seem modest.

Lastly, never ever date talent.

anonymous writes: 

Hit 'em hard,
Hit 'em low,
And if they get up hit 'em again

anonymous writes: 

I always liked this slogan: "Who must do the hard things? Those who can."

Business/career version: "How much are we going to have to pay the person who does the hard things? Whatever they charge."

anonymous writes: 

1. Avoid any and all social interactions with coworkers - don't even be willing to go to lunch with them. Completely separate work and social life, and leave NO intersection. If it was your son rather than your daughter, I would extend this to include not even making eye contact with females at the workplace, and, inasmuch as is possible, avoid interactions with them. Remember what country and century you are in. It may all sound a little extreme but there is nothing to be gained by violating these rules.

2. The moment she has the slightest hint of any marketable skill, find a third-party agency to begin shopping her around to the next job. Most upward progress comes from the outside, and she should always have aces to play, ever be without an offer sitting on the table. Jobs in the 21st century are wasting assets, vanish and disappear to those not nimble.

anonymous writes:

While it's not always easy to do, if you can listen to the people who don't like you, it can be very valuable because they won't sugarcoat it and they will give you feedback nobody else will.



Here's an excellent and exhaustive study on the speculative habits of 9000 retail grain traders from the years 1922-1932. From the look of it, nothing has changed.



Wherever I lay my hat is my home, as long as it's interesting. These are my 24 strangest dwellings chronologically from 1972 - 2017:

1. Attic that burned in East Lansing, MI - 1 year

2. Flooded basement in East Lansing, MI – 1 year

3. Closet in La Jolla, CA – 1 year

4. Garage with dogs in Lake Lansing, MI – 4 years

5. Chevy van with a 7' stuffed rabbit across America – 1 year

6. Boxcars across America – 3 years

7. Hostels around the world – 4 years

8. Storage unit in San Diego – 2 years

9. Home Depot backyard shed in Hillcrest, CA – 2 years

10. Hotel crawlspace in downtown San Diego – 1 year

11. Fishing boat in San Diego Harbor – 1 year

12. Laundry room in Encinitas, CA – 1 year

13. Attic in Solana Beach, CA – 1 year

14. Coffin in Michigan basement – 1 year

15. Stairwell in Weston, CT – 1 year

16. Barn in Laws, CA – 2 years

17. Ford Contour with all but driver's seat removed in Blythe, CA – 1 year

18. Truck container in the desert by Mexican border – 8 years

19. Underground burrow in the Sonora desert – 4 years

20. Flooded cellar in Iquitos, Peru – 1 year

21. Mattress in San Felipe, Baja dump – 1 year

22. Office rooftop in Miami – 1 year

23. Car camping in a Hertz rental in Slab City, CA – 1 year

24. Under a Mesquite tree in Slab City – 1 year



 Patrick O'Brian in his book A Book of Voyages reports on a 17th century voyage to Denmark from Russia. The necessity was to take a lead horse tied 30 feet ahead of the two horses pulling the chaise. If the ice broke the rope was cut and the lead horse drowned but the passengers and drivers were saved.

The lead horse was called an enfant perdue. The query is what analogy this has to market moves. It has to be tested of course. Also what other two word aphorisms are relevant. The Judas Goat comes to mind.

anonymous writes: 

Sacrificial lamb.

Loss leader.

Falling knife.

anonymous writes: 

Not an aphorism but market-related: Reading and listening to post-Super Bowl analysis, at the point when the Pats were down 28-3, many people weren't just thinking "the Pats have lost this one for sure", but "this is the end of the Patriots as we have known them", that Brady is too old and Belichick has used up all his tricks and it's all just over. Then the Pats come back and win the game.

This kind of situation happens all the time in markets, at every time scale on the chart.

Pitt T. Maner III writes: 

Flotsam found while surfing on the subject:

1) "After having led thousands of confiding sheep to their death, "Judas Iscariot," as he is called in the yards of Armour & Co., has paid the penalty of his treachery and has been butchered. For eight years "Judas Iscariot" has been the "leading" sheep for the company.

Last week Judas rebelled. He refused to work, and his execution was decided upon. It is said by stockmen that a sudden attachment for a snow-white feminine sheep among the victims is responsible for his rebellion and ultimate death."

2) This article is about "Assembly bombers" and "formation ships". New terms for me.

Russ Sears writes: 

It seems that every recession a few company's ropes are cut and then the other struggling companies can ask for a bailout or corporate welfare and money or tax relief for their customers, like the auto industry, etc. But I'm not sure how testable this is as recessions have not been too frequent. What seems to occur is that the lead horse seems to be voted on by the others for their aggressiveness, like Bear, Lehman.

Stefan Jovanovich writes:

A further tangent, on the matter of animal attachments and Brian. In the part of the Napoleonic Wars fought on land, horses were the essential element. They not only carried the supplies; they also were the killing machines. Without the horses to haul the artillery, Napoleon had no victories. The collapse on the retreat from Moscow came first among the horses; once the French stopped paying the proper attention to them (cleaning their hooves, wiping them down after each day's march, giving them dry ground to stand on overnight), their feet literally rotted. What all armies found was that only mares and geldings could be used as "war" horses; the stallions would become hopelessly unruly during mating season.



Amazing consonance of about 150 stock markets on my Bloomberg screen, all but Kenya is up with the median being about 5%. With the wealth of so many tied to stock markets in one way or another, many people must be feeling much happier and secure than in previous times.

Ralph Vince writes: 

The backdrop, at least for US equities, is 1982 - on steroids. A runaway market in its nascent stages (I see no end in sight from my indicators–in fact, my main intermediate term indicator, for the foreseeable several weeks, is still overSOLD).

99% of everyone I speak to or hear is looking for a top, a pullback, increased volatility–yet for those fully invested, it's been ripe for establishing defense–inexpensive hedges, etc…

The backdrop is certainly not one that could be characterized as "frothy." Yes, the decennial pattern of years ending in 7 would call for some type of serious selloff along the road here this year. If so, I don't see it on my radar screen yet. Frankly, if someone is in this business, and not very seriously long and have been throughout the past 12 months, they have no business in this business.



Here is a nice piece for skeptics:

"Who Will Debunk The Debunkers?" By Daniel Engber

In 2012, network scientist and data theorist Samuel Arbesman published a disturbing thesis: What we think of as established knowledge decays over time. According to his book "The Half-Life of Facts," certain kinds of propositions that may seem bulletproof today will be forgotten by next Tuesday; one's reality can end up out of date. Take, for example, the story of Popeye and his spinach.

Popeye loved his leafy greens and used them to obtain his super strength, Arbesman's book explained, because the cartoon's creators knew that spinach has a lot of iron. Indeed, the character would be a major evangelist for spinach in the 1930s, and it's said he helped increase the green's consumption in the U.S. by one-third. But this "fact" about the iron content of spinach was already on the verge of being obsolete, Arbesman said: In 1937, scientists realized that the original measurement of the iron in 100 grams of spinach — 35 milligrams — was off by a factor of 10. That's because a German chemist named Erich von Wolff had misplaced a decimal point in his notebook back in 1870, and the goof persisted in the literature for more than half a century.

By the time nutritionists caught up with this mistake, the damage had been done. The spinach-iron myth stuck around in spite of new and better knowledge, wrote Arbesman, because "it's a lot easier to spread the first thing you find, or the fact that sounds correct, than to delve deeply into the literature in search of the correct fact."

Arbesman was not the first to tell the cautionary tale of the missing decimal point. The same parable of sloppy science, and its dire implications, appeared in a book called "Follies and Fallacies in Medicine," a classic work of evidence-based skepticism first published in 1989.1 It also appeared in a volume of "Magnificent Mistakes in Mathematics," a guide to "The Practice of Statistics in the Life Sciences" and an article in an academic journal called "The Consequence of Errors." And that's just to name a few.

All these tellings and retellings miss one important fact: The story of the spinach myth is itself apocryphal….

Rocky Humbert writes:

Could this be a case of the myth of the myth, i.e. the metamyth.

Mr. Isomorphisms writes: 

Myths are interesting as social and (il)logical phenomena, but a good rule of thumb is that anything written by a network scientist is not worth your time. It's my opinion– that Ditto Santa Fe Institute, complexity science, cognitive science. (It's been remarked that any science which needs to call itself "____ science" is protesting too much–but this is wrong because it would exclude food science, life science, brain science, and natural science.)



A friend asked me, "What in your opinion is the thing or things that makes markets rise upwards the most?"

I think it's a pretty straightforward answer, and all three factors have shown high correlations, at least for the last 5,000 years, to the price of ownership of any private property:

x Change in man's upward progress
x Available stores of wealth (the aggregate amount of money)

The value of equities expressed as a line with respect to time, ever increasing as the factors comprising it ever-increase, about which the value at the moment fluctuates relatively mildly about.



 The 1989 box office smash Escape from New York is set in 1997 in Manhattan after the island has been designated a maximum-security prison.

Where a fifty-foot wall was erected around Manhattan to prevent escape, Slab City is geographically isolated from the rest of society and occupied primarily by criminals who cannot escape through the thick perimeter of blazing sand for lack of vehicles.

There are in both continual shouting, challenges, brandished weapons, gladiatorial fights, babbling men and methamphetamine zombies walking the littered streets, women screaming during drunken sex, biting dogs, gunshots, fires, and bombs rocking the lopsided shanties. Instead of the Trade Center there is Salvation Mountain, and in place of the sewers beneath NY there are catacombs including an underground bar under a cement Slab to cool off and forget the pandemonium above.

Both places are violent, scary, and weird.

There is great kindness in both too, and before you get trapped in Slab City you may want to get a preview by watching Escape from NY City.



 A nice piece for skeptics:

"Who Will Debunk The Debunkers?
" By Daniel Engber

In 2012, network scientist and data theorist Samuel Arbesman published a disturbing thesis: What we think of as established knowledge decays over time. According to his book "The Half-Life of Facts," certain kinds of propositions that may seem bulletproof today will be forgotten by next Tuesday; one's reality can end up out of date. Take, for example, the story of Popeye and his spinach.

Popeye loved his leafy greens and used them to obtain his super strength, Arbesman's book explained, because the cartoon's creators knew that spinach has a lot of iron. Indeed, the character would be a major evangelist for spinach in the 1930s, and it's said he helped increase the green's consumption in the U.S. by one-third. But this "fact" about the iron content of spinach was already on the verge of being obsolete, Arbesman said: In 1937, scientists realized that the original measurement of the iron in 100 grams of spinach — 35 milligrams — was off by a factor of 10. That's because a German chemist named Erich von Wolff had misplaced a decimal point in his notebook back in 1870, and the goof persisted in the literature for more than half a century.

By the time nutritionists caught up with this mistake, the damage had been done. The spinach-iron myth stuck around in spite of new and better knowledge, wrote Arbesman, because "it's a lot easier to spread the first thing you find, or the fact that sounds correct, than to delve deeply into the literature in search of the correct fact."

Arbesman was not the first to tell the cautionary tale of the missing decimal point. The same parable of sloppy science, and its dire implications, appeared in a book called "Follies and Fallacies in Medicine," a classic work of evidence-based skepticism first published in 1989.1 It also appeared in a volume of "Magnificent Mistakes in Mathematics," a guide to "The Practice of Statistics in the Life Sciences" and an article in an academic journal called "The Consequence of Errors." And that's just to name a few.

All these tellings and retellings miss one important fact: The story of the spinach myth is itself apocryphal….



Here is a good article relating to Scott Adams suggestion to write down positive things you wish to do 15 times each day and affirm it will happen. Try it with such things as I will not short stocks. The suggestion comes from Tools of Titans by Tim Ferriss. 



 The Big Lie about Andrew Jackson is that he made his money as a slave owner and producer of cotton. Wrong. Jackson's plantation, The Hermitage, like Washington's Mount Vernon, is, at best, mediocre cotton land. So, generally, is Tennessee except for Shelby, Fayette, Hardeman, Haywood, and Madison Counties in the southwestern corner of the state around Memphis. Memphis, not Nashville, is where Jackson made his fortune; Nashville is where he displayed it. The fortune itself came from land speculation and development, not from actually growing cotton. Jackson's slaves in Nashville grew corn to feed themselves and the livestock; what kept the plantation from being hopelessly unprofitable was the sale of meat. Jackson did grow cotton at the Hermitage but only in the same way Washington continued to grow small amounts of tobacco; it was a declaration of cultural solidarity, not a business decision.

The comparison of Trump with Jackson fails utterly when you measure their lives in terms of their experiences with death and destruction. But that has been, for the last century, a largely pointless comparison. If you exclude Teddy Roosevelt's showboating in Cuba (his being awarded the Medal of Honor is as much of a joke as calling John Kerry's a war hero) and John McCain's crash injuries and imprisonment, the last President or Presidential candidate who actually saw the splatter up close was McKinley. Among our current public figures, we do have a number of Congressman who have been to the sand pile; but, among broadly known public figures, there are only two who have been seriously wounded - General Petraeus (whose injury came at a rifle range) and Senator Duckworth.

What is useful is to compare Trump and Jackson's attitudes towards official Washington. When Jackson arrived in Washington, even his fellow Democrats in Congress were wary of him. Jackson was a proud Mason; and the anti-Masonic Party was, at that time, the only remaining stub of what the historians call the Federalists. (The Federalists never were an organized political organization but they had been the banner of the Adams family.) When John Quincy Adams ran against Jackson for his second term, Adams ran as an anti-Mason. Jackson's response to what was the 19th century equivalent of the current accusation of "racism" was exactly what Trump's has been; for every insult he and the Masons received, Jackson returned twice as much vitriol. Anyone who expects Trump to leave off with Twitter and to become less publicly contentious will be disappointed.

At least one public commentator agrees with me that Old Hickory is an appropriate historical analogy:

"Trump and his people know exactly what they are doing, and they are doing it the only way it can be done in the post-Obama environment: ostensibly ham-handed and tone-deaf, but really crazy as a fox and wise as an owl. Obama may have taken steps to remove Andrew Jackson from the currency, but no former President's portrait could have been more fitting for Trump to have moved into the Oval Office."



 Virtual Reality technology as it improves should be very useful for training purposes in sports and perhaps in many other game related fields or even the business world.

The opportunity to see what it would feel like to play against great athletes might be fun if not, however, in truth a completely frustrating experience.

That the programs can incorporate so much data obtained from years of actual play is fascinating though.

A futuristic racquetball type VR evidently is available but it looks like more of an entertainment arcade environment heavy on special effects, noise, and lights.

"Trinity VR's 'DiamondFX' Batting Simulator is Made for the Major Leagues"



The most important chart you ever look at may be your own. It's a simple 2-line graph that parallels your feelings with your thoughts.

Success is taking control of your moods. One of the most difficult yet doable means is to distance your feelings from your thoughts during important decisions. It is possible to completely divorce feelings, yet I suggest only a far distancing. Then you may act rationally … and arrive at success in anything.

The method of charting is each evening to recall your important thoughts and their accompanying feelings of that day. Plot them as dots on the X axis (time) of the building graph, as follows. The thoughts will be one color, and the feelings another. Chart as a dot the thought, and as another dot above or below it the associated feeling. The Y axis here is the importance of the thought and the intensity of the feeling during it.

Now you are looking at two somewhat parallel lines that connect the dots of your day's activities relative to their feelings. Over the week, some days may show only a couple dots in the lines, and other days several, as the graph extends horizontally for one month.

Most people cannot separate their feelings that accompany their thoughts and actions, and the graph reveals all. The more vertically volatile the feelings over the thoughts/actions, the less in control you are. A person in good control of his thoughts and mood swings will see two nearly parallel lines close to each other, and soon the feelings will even out below the thought line to show good control.

The graph after one month will become diagnostic, and inspirational to map your life of the interrelationship of thoughts and feelings relative to success.



 The big test in Slab City is SOP in underworld cultures. A newcomer or resident seeking to advance among the population is taken to the edge of his capacity, and there teeters to be judged … Yea or Nay.

It's the rite of passage in practice in African tribes, and American gangs, and akin in sports to taking an opponent to the rubber game before asking him to be your doubles partner.

Slab city is one of these places where everyone needs, but is afraid to ask for fear of betrayal, a partner.

The permanent population is almost all underworld, and the rest are non-testifying spectators. There are drug smugglers, drug users, illegal alien smugglers, ex-cons, men and women on the lam, terrorists, mercenaries, snitches, car jacks, and common thieves.

Each is intelligent, and physically capable in a drunken or drug stupor, to commit a crime, defend himself, or come you your aid. Each resident knows that you cannot trust anyone but yourself … or someone who has proven himself by an illegal act, or a test, or is a 'made guy' through relationship.

I estimate about 70% of the Slab city residents have served time in prison, 50% can be considered dangerous, and I'm trying to spin a decent relationship with all of them. Since no one else can do it so far, I'm the mediator.



 A visit to the Yale Bookstore is always educational and enlightening to me since I have so much to learn, once one gets past the 99% of the books there with Inequality, poverty, Picketty, Angela Davis, or Islam in the title. Or the other 87% of books for Dummies, and the thunderous advertisements for the Yale Repertory's production of Assassins. Here are some of the good ones I bought:

Shackleton's Antarctic Odyssey by Nick Batozzi

Gary Becker, The Economic Approach to Human Behavior

Macroeconomics, seventh edition by Olivier Blanchard

Microeconomics and Behavior by Robert H. Frank

Chemistry in Context, eighth edition by American chemical society

Eric Sloane, The Seasons of Americas Past

Investment: A History by Reamer and Downing

Applied Computational Economics and Finance by Miranda and Fackler

Introduction to Computer Graphics by Ganovelli et al

Shipwrecks in the Americas by Robert Marx

A Book of Voyages by Patrick O Brian

Octopus!: The Most Mysterious Creature in the Sea by Katherin Courage

The Greatest Stories Never Told by Rick Beyer   

Dead Companies Walking by Scott Feardon

An Introduction to
Medicinal Chemistry
by Graham L Patrick

Day Trading for Dummies by Ann. C Logue

An American History: from Barnum to Madoff by Edward Balleisen

And in my bag bought by Susan, Philanthrocapitalism by Bishop and Green, with an intro by Bill Clinton and a picture of Warren Buffett on cover, which I will try to throw out unless it turns out to be a parody.

The trip was augmented by a visit to the Mystic Seaport, where I stocked up on O'Brian books, and the Eli Whitney Museum where Asian Kids and one westerner were using some of the machine tools and modern make tools that Whitney used, and a visit to the Ocean House hotel, which has two squash courts and a professional Croquetists on the premises where I had a nice jog on the Atlantic shore and the second best brunch of my life, the Kerigan Palace in Istanbul being the only better one.



Let's not forget that some people only work for 5-6 months and stop after they make 8000 grand so that they can get the earned income credit. They then take the remaining 6 months off. It's a crazy loophole that exists.

Says the man on disability.

It sure feels like 10-15% of folks are just flat out unemployable.

anonymous writes: 

The gist of your last remark shows up in anecdotes and studies of the current labor market. The quality/skill set/attitude/demeanor of job applicants is a frequent cause for lamentation.

The latest NFIB (small biz) report says 89% of firms hiring/trying to hire see few or zero qualified applicants. And 15% of all businesses say finding qualified workers is their single biggest problem. Both numbers are high relative to history.

Rocky Humbert writes: 

There are many different ways to slice and dice these complex issues. It can be argued that the root cause is the labor force is now unqualified. It can also be argued that employers are reaping what they've sown by investing less into the workforce.

Where you stand depends on where you sit.

Personally, I think this is a secular evolution with plenty of blame to go around. The key variable is that the median job tenure has been declining for years. No longer is a job at IBM or GM or GE a career that spans a lifetime. This phenomenon can be sourced to Jack Welch at GE. It spread throughout the corporate landscape (including to the Bob Rubin/Steve Friedman era at Goldman Sachs).

Some economists will say that this is a healthy sign of a dynamic labor force. Some economists will say that it's a consequence of the absence of defined benefit plans and union power. Some will say its the Gig Economy. It was part and parcel of the loss of job security and the solid American middle class.

But it is also clear that if an employer expects a short employment duration, he is less inclined to invest in his workforce (i.e. training/education) etc.

Marion Dreyfus writes: 

That uptick of .1% is a reflection of hope–people who stopped hunting a job now feel hopeful enough to set foot to pavement. I stopped for months, and notice I started looking again this past month. Many are like me.



 Kenny Rogers comes to mind. Not having visible emotions or tells though would also seem to be a machine advantage over the mortal holders and folders.

"Inside the Poker AI That Out-Bluffed the Best Humans"

Through an algorithm called counterfactual regret minimization, it began by playing at random, and eventually, after several months of training and trillions of hands of poker, it too reached a level where it could not just challenge the best humans but play in ways they couldn't—playing a much wider range of bets and randomizing these bets, so that rivals have more trouble guessing what cards it holds. "We give the AI a description of the game. We don't tell it how to play," says Noam Brown, a CMU grad student who built the system alongside his professor, Tuomas Sandholm. "It develops a strategy completely independently from human play, and it can be very different from the way humans play the game."



Here's the most current disconcerting thing I have learned. If you take, say, a six month rate of change of price, it closely mimics the net long position of the commercials. This, to a supposedly COT enthusiast, is not good news as it suggests that all that the commitment of trader report reflects is price action. That would explain why there is almost a mirror image between the large traders and the commercials; commercials by weakness sell strength large traders, funds by strength sell weakness.

I will add, however, that I have noticed when there are differences between the rate of change of price and the commercial net long position, telling messages appear. But it is not simple, probably not terribly mechanical but certainly something one can look learn from.

I have found that to have the COT data reliable you can't just look at their net position or a percent R of their position you have to look at their position versus price levels they have supported/sold in the past.



Specs might find this interesting:

The Observatory of Economic Complexity is a tool that allows users to quickly compose a visual narrative about countries and the products they exchange. It was Alexander Simoes' Master Thesis in Media Arts and Sciences at the MIT Media Lab, which you can read here.

Orson Terrill writes: 

It's a wonderful example of taking a few concepts, and scaling them beautifully.

Here is a possible meal for a lifetime nested within the same body of work:

"…Moreover, we show that their nestedness remains constant over time and that it is sustained by both, a bias for industries that deviate from the networks' nestedness to disappear, and a bias for the industries that are missing according to nestedness to appear. This makes the appearance and disappearance of individual industries in each location predictable. We interpret the high level of nestedness observed in these networks in the context of the neutral model of development introduced by Hidalgo and Hausmann (2009). We show that the model can reproduce the high level of nestedness observed in these networks only when we assume a high level of heterogeneity in the distribution of capabilities available in countries and required by products. In the context of the neutral model, this implies that the high level of nestedness observed in these economic networks emerges as a combination of both, the complementarity of inputs and heterogeneity in the number of capabilities available in countries and required by products. The stability of nestedness in industrial ecosystems, and the predictability implied by it, demonstrates the importance of the study of network properties in the evolution of economic networks."



 Chernow's Washington does much humanize the otherwise stone and mythical Washington. He had his heroic faults but they were tempered. Some anecdotes demonstrate, for instance, in an early run for Virginia legislature, he asked that his brother and friends be allowed to cast the first votes to start some momentum in his favor. Most elections Washington participated in ( Commander and Chief, Constitutional convention, two Presidency's) were won unanimously so hardly mattered.

He was a land speculator in the Ohio River Valley region and used his status as French and Indian War veteran to buy on the cheap. In later years, however, much of this land was sold or donated to care for his very extended family or pay his may travel expenses in his goal to visit every state, no small venture in those days. In a similar way he befitted from the choice along the Potomac for the new capital just 20 miles from Mt Vernon as land appreciated. Some of theses proceed were donated to found a university. Also, he suffered an almost constant flow of visitors, many complete strangers whom he graciously fed, housed and entertained at great personal expense. A gentleman/businessman he was very focused to keep Mt Vernon a profitable venture and once had the largest distillery in the country on his farm. But his many years away left him with debt and at the mercy of weather and the many trials of agriculture.

He was not oblivious to the fairer sex and more than a few romantic letters exist to Sally Fairfax, Elizabeth Powell and others. He often noted in his diary the number of ladies attending ceremonies in his honor, Charleston holding the record at over 300. But it is highly unlikely he ventured any further than harmless poetic odes, and was faithful to his wife Martha. Far from perfect he was, none the less, a perfect leader and many of the precedents he set in office still stand today.



 I found one of the keys to understanding Bernanke and how he may act was to read his academic work and books. Once, not a direct quote and I forget the forum, the future Fed chair was asked something like "what will you do if we have a depression like scenario?" and the response was "that is not going to happen on my watch". Many brilliant minds articulated ideas on economic growth, inflation, and other factors that might drive Fed policy under Bernanke, but that one piece of information turned out to be very telling.

In a similar fashion I remember interviewing in the late 1990's with a Nobel laureate type economist who was an advisor to a hedge fund and arguing to him that Japanese yields where not going up anytime soon and the answer to reflating was to just absolve the debt. He disagreed and belittled me and I never got the job, but that is another lesson in my poor salesmanship. But, if you knew Japanese history and social mores you had an edge. I have been "Trumped" a few times by markets the past month or so.

To that end I am reading The Art of the Deal and also suggest reading other books liked by POTUS advisors. The overriding theme being to ask the right questions that are going to define a scenario and possible outcomes and take care to not get caught up in obfuscating noise.

Stefan Jovanovich writes: 

You will also want to read his other book The Art of the Comeback if you can find a copy. It is even more revealing. The basic rule is Never, ever give up! That does not mean go down with the ship but find a way to launch a lifeboat and get your lawyer to see how salvage law can work to your benefit.

Trump has no fear of the United States' debt itself. He believes that, if the government runs at a slight surplus in its basic operating account, it can carry its existing debt indefinitely, including the promises for Social Security. I don't know this for a fact, but my guess is that he thinks sending Medicaid and social welfare back to the states is a fair deal for releasing the states from regulation and lowering overall Federal taxation on individuals and entities. That still leaves Social Security and Medicare; but he thinks _ rightly - that Social Security alone is manageable and that Dr. Price will be able to cut Medicare's actual costs dramatically by ending the gaming of the system by the providers. (Senator Pocahantas' grilling of Price was revealing; she wanted him to pledge that he would never, ever "cut" Medicare spending, and he politely declined, even in the face of her reminding him that the President had made that promise. A "cut" in Trump's mind is a cut in what the customer gets, not what the government spends.)

Trump also has no fear of a rising exchange rate for the U.S. dollar. He actually wants a "strong" dollar because that will allow the U.S. to make any necessary trade "adjustments" through collecting tariffs. Fro him an ever "stronger" dollar means a shrinking deficit. That is why his statements about "currency" manipulation by other countries are to be read as an advocacy of tariffs, not a threat of a "trade war".



 One hour in Slab City equals a day in a jungle or skid row for action. The reason is that each of the 200 residents is a Reader's Digest 'Unforgettable Character', the underworld alphas who use this outlaw town as a buffer between them and what they consider an anarchist USA.

Yesterday a twenty-year old Road Kid rolled up on a bicycle and asked for advice, knowing that I was one of the clearer heads in town not using drugs or alcohol. He wanted an I.D., saying his was damaged. So, I drove to next door Niland and put the word out on the street, and was rewarded in front of the grocery store an hour later when a young lady ambled up and asked, 'What does the Road Kid look like?'

I described him physically, and she focused a reply, 'Does he have an eagle tattoo on his right calf?' He did, and I told her so. 'He's a child molester,' she claimed, and a bounty hunter has offered us on the street, and in Slab City, $500 for information leading to his capture.'

I returned to the Road Kid's camp, and asked him to raise his cuff, where appeared an eagle, like the curtain rising on an American newsreel. I explained that if I provided a photo of him to the I.D. people, that they would incriminate, thinking he is a pedophile. Then his story unwound.

He had been caught in a massive sting by the FBI on a drug bust in a neighboring state, gone to jail, his first conviction, and jumped $50,000 bail. He rode Greyhound to Slab City, and was living as a hundred of other outlaws on the lam do, in a tent under a Mesquite tree, swimming in the canal, learning the trade of criminal activity from his peers, and hoping that his problem would go away.

However, a week ago, a burly Bounty Hunter came to his door with a badge in one hand and a drawn revolver in the other, hiding behind a bulletproof vest, and demanded to see the Road Kid's I.D. The kid replied that he didn't have one. The hunter told him to put his hands on his head, and as he did, the hunter pulled up his pant leg and spotted the tattoo. As the cuff fell, and he felt handcuffs slip around a wrist, the kid took flight, risking a bullet in the back. He sped across the desert like a rabbit and escaped the hunter.

When I told him about the child molestation charge, he cried, 'I love kids the right way. If I get out of this jam I'm going to raise a family.' I was convinced, and on checking around discovered that the Bounty Hunter had fabricate the charge to mount a vigilante hunt among the locals to capture the fugitive.

The Road Kid is on his way to Mexico, the Bounty Hunter will be stopped at the border, and he'll probably raise a Mexican family of unforgettable character children courtesy of Slab City.



 Fights these days are not like in the Old West or even the Johnny Cash and Cool Hand Luke days when two guys duked, bit, spit, and brawled it out until one was beaten. Then, sometimes, he was helped to his feet and life went on.

The fights in Slab City are simultaneous physical and mental contests because the fighters, as they swing, observe the consequences of illegal slips that may be caught on a cell phone, videotaped, or witnessed and later brought up in court, where the fight winner could land in jail for years.

The informal law of brawl in the American streets and Slab City is that anything goes; but the bottom line of police law is that one may legally defend and retaliate in direct proportion to the assailant's tactics.

Yesterday's brawl on a concrete slab near Salvation Mountain demonstrates the ongoing spark and fire of a street fight on the two levels.

The concrete slab where the fight broke out is double the size of a boxing ring, where one tall man walked into the camp on the slab of another portly man. The escalation proceeded through the usual steps of: yelling, a mutual shove to the chest, and then the action began. The stout guy reached and hit the tall guy with the heel of his hand on his brow, and the tall man responded by picking up a 4' tree branch, and saying, 'You struck me in the face, and now I'm going to hit you with this stick!' He struck him in the chest with it. The shorter guy picked up a 6' steel pipe, and screamed, 'You hit me in the chest with a stick, and now I'm going to knock your head with this pipe.' He took a swing, missed, and at this pregnant moment I appeared, attracted by the yelling, on a bluff above the slab.

'Stop!' I yelled down, as they surged toward each other, and landed glancing blows. I used the tall man's name which got his attention, shouting, 'Jake, take one step back.' He did, somewhat mesmerized by my tone of voice. But then, unable to recall the short man's name, I stuttered, and felt foolish. My next thought was to swan dive off the bluff onto the concrete between the two, as an acquaintance had done off the second tier of a jail onto a card table to separate rival gangs coming to blows over a misplayed poker hand. However, the slab was too far down and my stomach grown too soft, so I started to rush down the bluff threatening to step between them if they didn't stop. That didn't work, so I bluffed, 'I called the cops and they'll be here in a minute.' That stopped them in their tracks, for each had legally covered himself in the melee, and neither wanted to face the other again but before a judge. They parted, and walked away.

One of my favorite pastimes is being able to stop fights. The usual technique is to ante up the intervention as the fight escalates, as follows:

1. Stay calm, and tell the fighters to stay calm.
2. Assess the situation quickly, to determine how serious it is and if I’m in danger.
3. Deduce in a heartbeat if either has a weapon or access to one.
4. Tell the fighters to each take one step back.
5. If they back up, you can step between the fighters.
6. Face the antagonist. Tell him to take a deep breath, and then the other to do the same.
7. If there are onlookers, tell them not to egg on the fighters, but to help separate them.
8. If the fight continues, either restrain the aggressor, or let them duke it out, stopping them only after one is grounded and can’t rise.
9. Most people do not want to fight, but to keep from losing face. Once the fighters are separated, tell each to be bigger than the situation, and take a walk in opposite directions to cool off.
10. If the fight goes on, call the cops, or pretend to do so.
11. As they walk away set the ground rules: they must not see or approach each other for one week.

In the Slab City brawl the two agreed to a one week mutual restraining order, but the next day came back to me asking that it be lifted because a night's sleep had left them with clearer heads for peace. But they had to be punished, and could not see each other for a week.



 Picking a favorite campsite in Slab City is choosing a home. Eager arrivals drive, hitch, bike, or walk in daily, discover it's really true they may choose a slab or lot for free, park a trailer, pitch a tent, or erect a home without permission or zoning. They may put up a perimeter fence, though few do, because they like their neighbors in this, their first day at Slab City.

When I realized I could have a new home in 24 hours, I spent the first hour driving the dirt tracks on the fringe of town for the perfect spot: walking distance to the Internet Cafe, Library, Oasis bar, music Range, hot spring, bombing range for spare change recycling, hiking the arroyos, and a big shade tree.

One spot fit the criteria, a half-mile from the nearest resident on the south side, under a spreading Palo Verde tree. I cut a stencil with my jackknife, spray painted 'Occupied' in mirror letters on an old tire, per the requirement for establishing a claim for a lot, and improved the track to it by driving my car back-and-forth a dozen times to harden it.

A family of Kit Fox were the welcome wagon, liked the site, and ate dinner with me, often staying overnight. Weekend visitors and snowbirds from the west coast followed my track and stayed for a week or month, and often left some of their belongings they no longer wanted after a few breaths of fresh air in Slab City. I inherited their clothes, tents, sleeping gear, a bow-and-arrow, violin, piano, motorcycle, and even a titled car, without having met the owners.

Newcomers began to settle around me, mostly due to the road I had created, and proximity to the big shade tree, so I began to leave camp to sleep elsewhere. Once I returned and found a Minnesota millionaire organic farmer had pulled into my spot, set up camp, and was so determined to make an organic start on his own life that I let him take the camp. The BLM kicked him out on Christmas day, and a group of five desert rats in jalopies set up a meth lab under the Palo Verde, and the place reeked of brew for a month before they moved on. I found that packaged meth needles go for a buck a piece on the street, and they had left 200. Probably they had been moved along by a wizened warrior who, once I had reclaimed my spot, walked up and identified himself as Eagle One, displaying a lanyard braided from the South Vietnamese flag, and a necklace of human teeth. He told me he had cleared an airstrip the previous week, and landed a Drone with a 30' wingspan capable of carrying weapons and supplies; and that he had a buried a van 'out yonder', pointing, that I soon stumbled on while hiking, but didn't touch because Special Forces equals explosives.

The turning point a few days later was when I got a strange Facebook invitation to 'friend' from a Pennsylvania physicist who described the Z-Machine, 1000-times more powerful than a nuclear bomb, and the manufacturer, it's location on the adjacent military base, and how he would be arriving in a week to investigate it. There was no profile picture, except a Pitbull, and one week later I spotted the dog near my camp, and things started to be rearranged. Whenever I returned to camp, something was out of place. The 'occupied' tires were turned upside down, so it no longer looked like I was demented, to thwart squatters. But a stuffed bear did squat, in one of the tires, watching me with glassy eyes that I checked for cameras.

It was time to move on, as in life, because there are so many favorite spots suitable to call home.



 At some point in the game yesterday (which I didn't watch), prestigious forecaster Nate Silver gave the Patriots a 0.5% chance of winning.

Offhand I'd say that the "prior probability" that a pundit for a prestigious newspaper is a charlatan is 20%.

Then that pundit tells me that the probability of event X is 99.5%, and he's wrong. What now is the probability that he's a charlatan?

His tweet:

"That Patriots drive took another 5:07 off the clock and actually dropped their win probability from 1.1% to 0.5%:"

Just for fun with numbers, here's a simple exploration of the fourth quarter:

Again, the score at the beginning of the 4th quarter was Falcons 28 - Pats 9. The Falcons had thus "averaged" 9 1/3 points per quarter, but had scored 21 pts in the second quarter, so let's make an assumption they could possibly have scored 14 in the 4th - again, #1 offense in the NFL.

So here are scoring possibilities for the Falcons in the 4th (leaving out safeties as unlikely, and 2-pt conversions as unnecessary since they were in the lead): 0, 3, 6, 7, 9, 10, 12, 13, 14. In other words, they could score 0 pts, or just gotten a field goal, or two field goals, or a touchdown with EP, and so on up to 14. For a total of 9 outcomes.

The Pats have to, at a minimum, tie the Falcons, so including 2-pt conversions, the Pats might score: 0, 3, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17 points, for a total of 13 outcomes. 13 outcomes

Now just create a simple 9 x 13 matrix, and only 1 cell in the matrix has the Pats getting a tie that goes into OT - all other cells are a Falcons win in regulation. So there's a naive model that gives a
0.85% chance of winning for the Pats at the start of the 4th quarter.



"After a certain point, waves are not measured in feet or inches, they are measured in increments of fear."

-Buzzy Trent, surfer extraordinaire.

How would this translate to the markets?



 It is good to see the market getting back to its musical roots. On Monday the market starts with an old-fashion musical overture playing a small part of each song melody giving a preview of what is to come later in the play. Then daily, one song is heard expanding on a theme. On Friday there is a Finale where the dominant songs complete the musical often with some fanfare at one extreme or the other.

Some evidence is in the fact that since 2006 Friday has the highest variance. Alas, the minima and maxima seems evenly distributed among days of week, but still believe there is a musical symmetry.



 In negotiations and martial arts it is strategic to get your opponent off balance. Outrageous behavior or demands are a standard ploy.

Musashi Miyamoto would come early or very late. Toshiro Mifune depicted him clowning around before a match and a kill.





 An Alpha Female is the dominant female of a pack of people or animals, including the females and males. She is always self-assured and strong, mentally and physically, with a gypsy's cunning that adds to her allure.

Other traits of the alpha female are persistence, courage, purposeful, hard working, perceptive, individualistic, inspirational, a leader by example, and often a center of attention. She is manipulative without being sexual but employs a sense of humor. The real she-woman can laugh at herself, and having really lived has stories to tell that everyone wants to hear.

In business, the alpha females are clever, confident, and with a high IQ stand less of a chance of finding a mate. So, she succeeds financially.

In romance, she dates as many people as she wants. Research shows that high-IQ alpha women are less likely to get married than their peers with lower ones. Men tend to steer clear of alpha females for fear they will not be in control. Biologically, they have no time to raise a child while busy climbing vertically in a career, rather than hoping for someone who completes them.

Slab City, being an anarchist town, has a lion's share of alpha females. The top four in no particular order are the Librarian, a clever, beautiful blonde with half her head shaved, with a pegleg, and grace of movement when she turns book pages or plays hard rock on bass guitar. Next, the Mountain Manager is as large as her title but people-manages with a quick wit and quicker tongue from her corporate media background. Then, the Thief is truly dangerous and knocks off camps like dominoes, disappearing into the arroyos like a wily coyote where nobody really wants to follow her. Finally, the Hermaphrodite brings a little of both sexes to alpha feminism, having the hormones and understanding of both genders.

No one, male or female, toys with the alpha females. Each is so dominant that when they meet sparks fly, and sometimes fists, as each is a talented pugilist. This is the only way a male can arrange to dominate them.



 The life of Ray the Pilot is a tragedy, perhaps except for this memory.

At nine his father, an Air Force pilot and crop duster, taught him to solo an airplane. At eleven years young Ray was crop dusting alone in a helicopter. He was an Eagle Boy Scout and, standing 6'9" with 300 pounds, was a high school football and basketball standout. He followed in the air steps of his father, a Lt. Colonel, and joined the Air Force. He flew jets and helicopters in three wars: Vietnam, Iraq, and Afghanistan. Then he taught flying for 14 years to cadets.

In one incident he crash landed and the paramedics took a pulse, found none, and stuck him in a body bag. En route to the morgue he 'rose from the dead', and punched his way out of the bag, astonishing the medics who re-diagnosed a concussion, with a tiny piece of shrapnel lodged near the spine. A hump grew to encase it, so large that he looked like a snail.

He fathered thirteen sons and daughters who joined the armed forces, and never called him on Christmas.

He had seen and done it all ten years ago, except Slab City, where he moved. People shunned him because he made the Elephant Man look like a pretty boy, but I enjoyed his war tales lowered into a raspy voice at eye level bent over with the hump rising like a glacier to the clouds.

Last week, Ray asked me for some Peppermint Oil through his window. He said the hump was freezing. The next day I followed the coroner to his camp, and now his trailer is empty of the most important thing. The Slab City yellow tape raises in one week, and the human vultures will scavenge all that is left.



 Our national pastime has three lessons of life.

I enjoyed the practice of the professional teams as they warmed up in Detroit, Yankee and other stadiums. The crack of the bat and the infield moving like ballerinas with gloves and balls around the dirt stage, with the machinelike execution of a Swiss clock. That's all I liked about the pros, but it was enough to inspire all walks of life.

I liked 'Workup' as a fledgling starting in right field and working the way, as the batters were thrown out, a half hour later through pitcher to catcher, and to lift a bat myself. Workup is a lesson in delayed gratification wherever you go.

My writing coach is Art Shay, whose 'Homerun' style is the model I adopted for my own writing of short adventure stories. He advised, "The story begins with the crack of the ball off the bat, the player rounds the bases in mounting anticipation, and returns where he began at home."

Other sports offer more, but these are the best lessons from baseball.



 An eminent columnist asked me how do you spot a charlatan. I would refer him to EdSpec the chapter on hoodoos or the OED definition of hoodoos: "A hoodoo is not confined to steam locomotives. I have know a hoodoo diesel rail car." (I have know a hoodoo personage or trait in markets). A charlatan never admits to a loss and gives false and misleading reports of his results, and threatens you when you try to test his results or ask him how to start a hurricane et al.

anonymous writes:

A tactic I have seen a lot is the attempt to get some initial, simple form of compliance, even as small as, "Excuse me, sir, may I ask you a question?" The con counts on the fact that many people, especially when caught off guard, will answer yes. One small act of compliance opens the door to the next, and then the next, and so on.

One advantage of running errands while listening to an iPod, is with the earbuds in, I can just practice ignoring people entirely. But that issue of getting small "gateway" acts of compliance certainly bears on many situations.

Russ Sears writes: 

Their significant other is too afraid (or perhaps in on the con) of them to admit the charlatan is not perfect. A good man's wife will talk him up, but if pressed will always admit some flaws they wish they could fix.



Big G, from anonymous

January 30, 2017 | 1 Comment

 I guess I'm oblivious of the goings-on in those 7 countries.

The map shows 7 really rotten (and now forbidden) apples, plus the 3 unaffected ones (whose citizens are more likely Western university educated):

"Google Tells Offshore Staff To Return To The US After Trump Executive Order"

How did the US hi tech sector manage to pick up all those enumerated in the story? And why would it rely on future inflow from exactly there?

Phil McDonnell writes:

A certain eponymous person was sent from the googleplex to Zurich to act as a liason to the home office software resources for all the many remote development offices. They had offices in all the major euro cities, muslim cities, Moscow, India, China and South Korea. Some offices were acquired when big G bought a software company like in Moscow. In china they built the local presence around a guru named Lee but it proved to be a disappointment and was closed.

The goal is two pronged. They want to attract world class talent and to maintain a presence in every country in the world. One has been to many lunches at the googleplex. In my estimation the majority of people there were not born in the US.

If one were to conclude that this is because Goog wants to take over the world I would respond that you are warm. You are just not thinking big enough. They simply wish to take over the universe.

anonymous writes:

Sounds like "Big G" is the IS (Information Services) strong-arm of Freemasonry. The new non-contingent being—one token ring to rule us all.



While everyone is in a lathered-up blather about executive orders and screeching, we gotta keep our eyes on the ball. I for one can't get sucked up into political noise when there's money to be made.

Nearly everyone I speak to is looking for three things:

1. A pullback in equities.
2. Interest rates have bottomed and will now approach more historically normal levels.
3. Volatility is bound to increase in the coming months and perhaps years.

And the degree of which I am hearing this makes me quite certain none of these are in the cards. Tomorrow may be a great day to sell equities, shorter term, on any strength. The month of February should be, by my reasoning, a gentle, sane chop with an upward bias, in a bigger, grander, continued bull market. As far as rates go–I don't know, but I am surprised at the lopsidedness of sentiment regarding #2, above. But as the late kid from another (classier, as it were!) suburb of Cleveland used to say, "Don't fight the Fed."



 Speaking of Bullshit detection, all men fall for one or another version of this:

"The Professor, the Bikini Model and the Suitcase Full of Trouble"

anonymous writes:

I had Prof. Frampton for a course in mechanics back in ~1983. I wouldn't have predicted this whole episode, but it's true that he seemed naive about, and even wholly segregated from, anything outside of physics. It's easy to envision his losing his wife because he probably didn't make an emotional connection with her. Then the "bikini model" came along, feigned an interest in his physics as well as him, and got him hooked.

I think it then became a mid-life crisis. He got caught up in the excitement of doing a drug deal, to the extent that he jotted "back of the envelope" calculations of the intended profits. Those jottings may have sealed his fate in the trial.



The goal to training is to teach your body to maximize recovery. Therefore most hard days are followed by an "easy" day, and I would try to sync my body to my training. On the hard days I wanted to feel fresh at the start and on the easy day to feel I needed one, but to be ready for the next hard day.

I generally also wanted to have a 7 day cycle where I completed speed work, tempo work (near race pace or a race), pacing workout (longer speed work) and a long run during the week. And then a 3 week cycle where, the first week I could introduce more or different hard work, and second week get comfortable with it and 3rd week build strength from it.



Life we take for granted,

we still horripilate at the scent of our end [Have a Will?]

When we think of the thanatic

We freq become emphatic

Docs, like folks of other sort

have devised abbrevs to retort

Thus a man deemed NGMI

Is a Not Gonna Make It guy;

ART, or Approaching Room Temp, means Dead

[or so it's said]

    Far less dire, SIO, now don't scoff

happily translates to Sleeping It Off

Contrarily, that mess covered with a bloody cape

Is a patient in PBS, Pretty Bad Shape

    Another way to put it <sigh>

    Is FTD, Fixin' to Die

Despite the best efforts of meds 'n' docs all day

He might still be GDA — Gonna Die Anyway

    Some patients then become GPO

    Good Parts Only: lungs, veins, scro'. . .

Should you find them sluggish, full of lead

They're now GRAFOB, Grim Reaper at Foot of Bed

    If patient expires, Paws Up, PU,

    Take a hard look at the consequent view:

His LRO, Luck Ran Out, his blood once red

now, alas, HBD, He just Be Dead

    "Discharged downstairs" means sent to morgue

    to celestial transfer. Please don't forgue

At scenes of accident, he's DOTS

Dead on the Spot, zero finesse

    If the crash was gruesome, no breath to spare

    he'll be DRTTT, or Deceased Right There, There and There

Beating Off Angels, or BOA, as docs arrive

Is CPR on hopeless folks who won't survive

    Yet there's hope, CD, as there's the Coffin Dodger

    eluding inept KHB, Knife-Happy Blade, a surgeon botcher

The hurt may prevail over horrendoectomy

the lasting surgical result of foreverectomy

    But sometimes, DTTM, the worst to bod or chromosome

comes to Don't Transfer to Me! patients with LWS –

    Low Wallet Syndrome



 Surfing Magazine, the 52 year old major player in the world's surfing arena, died the day before yesterday. After a long illness she finally died of shrinking circulation and disappearing ad revenue. Surfing is survived by sister publication Surfer Magazine, both owned by Ron Burkle's Source Interlink, a media company.

The business of surfing has always gone through boom or bust cycles among middle class Americans and is currently in a bust. Total revenues over the entire industry are way down…they're also down in the highly correlated skateboarding industry.

Surfing Magazine was founded in 1964. It competed against John Severson's Surfer Magazine, an older publication that was known as the "Bible of the sport.". Surfing was the brash young cousin of Surfer, often beating Surfer in key circulation and ad revenue indicators. Surfing quickly adopted and promoted the shortboard revolution, the influence of psychedelics in the 70's, the punk styles and hip hop influences of surfing in the 80's-2000's. Surfing Magazine was usually ahead of the curve, defining the Zeitgeist of pop surfing and promoting the hell out of it. She could never totally eclipse Surfer Magazine, no matter how much she tried. Surfing Magazine had a good run, but the internet and a finicky, low attention span public finally killed her. The internet hit both Surfing and Surfer magazines very hard, pulling reader's time away to other media, resulting in the print editions being composed of flimsy issues with few good stories and fewer paying ads. Surfing and Surfer Magazine's owner, Source Interlink decided to pull the plug on Surfing after owning the magazine since 2000. One finds suprise that they lasted this long, they're not even on the magazine rack at the beach convenience store. Surfing Magazine will exist as a brand with a reduced online presence. Meanwhile Burkle's company cut Surfer Magazine from 12 to 8 issues per year in an attempt to cut costs.

The surfing fad is over and will most likely go into hibernation for a few years or decades.

Fads can be finicky creatures. One never knows when surfing will be fashionable again to middle America, where the big money is. I am personally conflicted between the business and spiritual sides of surfing. The good thing is that no matter what the industry does, there will always be a hardcore group of surfers at every beach. There will be less overcrowding at our breaks. One will always find good boards and accessories.

Some companies will do very well during surfing's exile. Yvon Chouinard's socially conscious Patagonia provides fine surf apparel and outdoor supplies. They are a strong brand with a loyal, affluent following. Steve Pezman's elegant Surfer's Journal is reader supported and is published 6 times a year. Made of the finest paper, the photography, articles, interviews and stories are first rate. Pezman's magazine is geared toward an older, affluent group of surfers who can pony up the $66 bucks or whatever a year for a subscription. It's a minor irritation that Surfer's Journal promotes, as the Chair calls it,"The idea that has the world in it's grip." Many of the survivors in the surfing industry share that same "progressive" belief.



No one asked, but here is a qualitative list, some have been tested but not all.

10 reasons to be bullish US equities

1) stocks futures term structure is positive carry
2) term structure of bonds positive slope (1 vs 5 vs 10 vs 30)
3) overall CAROR of SP since 2000 of 4.6% is well below average
4) crude and natural gas near decade lows
5) credit is expanding
6) strong dollar good for consumers
7) global trade has doubled since 2000
8) ending of marijuana prohibitions
9) solar and battery technologies
10) prospect of tax reductions

10 reasons to be bearish US equities

1) 20 trillion in US debt to refund next decade
2) 16 years of war since 9/11
3) Inflation cutting into real returns
4) Euro affects on Southern Europe
5) tariffs or VAT hurt consumption
6) possible restrictions on flow of labor
7) poverty rates in US still high at 15%
8) entitlements underfunded
9) single party rule overreach
10) education cost/benefit in decline



Two Professors at the University of Washington are developing a course based on BS detection. The syllabus has some useful reading in the links.

Mr. Isomorphisms writes: 

I'm skeptical that professors can teach students how to recognize bullshit. This used to go under the name "critical thinking", which is what liberal education has claimed to teach for a long time.

Education levels are now higher than ever before; is there less bullshit or better critical thinking about it, than in decades past when education levels were lower? Why not?

And why is "big data", among all other bullshit, such a powerful buzzword today?

The Decline & Fall of IBM by R X Cringely has partially answered my questions about why a former economic keystone has abandoned all reason and now churns out cognitive "analytics", which I'm sure we can all agree does not make sense or exist.

"IBM tells the customer what to do, not the other way around" is Cringely's description of the dancing elephant. A partial answer to the obvious follow-up questions is that (as Herb Simon noted 50 years ago) the dynamics of large organizations/ teams are what drive output, not "market" forces as normally construed. Your promotion does not depend on whether the customer likes your work, but whether your boss's boss does. "Cognitive" and "behavioural" are good signals of bullshit.

It's fairly clear to me why Facebook and Google are funding the big-data-analytics-machine-learning movements: They're monopolists with large ad revenues and special share classes; they don't get punished by their shareholders for weird hires (eg, Ray Kurzweil).

There is a compelling case for the self-driving lorry, but really Google X is doing whatever it wants; that one or more of the blue-sky projects could theoretically benefit shareholders at some point is not the reason any of them are funded.

IBM, FB, and GOOG then hire academics who otherwise have no useful skills out of their universities, thus driving demand for machine-learning academics. Since (unlike in traditional scholarship–say the study of pre-Islamic poetry in the Arabian peninsula) having written good papers is less important to GOOG than the ability to commit clear code, and since their screening process is itself derived from academic bullshit (whiteboard exams asking about algorithms & data structures), they create demand for bullshitters with certain characteristics– a pipeline of demand for big-data machine-learning bullshit. See Laszlo Bock in the NYT or Steve Yegge on his blog almost a decade ago. These do not work — but the questions are already written, and everyone else is doing it. That's my personal theory.

Further questions:

- how does university-professor recruitment like the above differ from other examples of industrial research over time — Xerox PARC, Bell Labs, JPL, Salomon, etc?

- when will this all end?

- what will the HBR write about next?

- what "actually" teaches people to think critically?

- are science and mathematics classes antithetical to critical thinking? (I notice mathematicians are incredibly bad at critical thinking. Pascal made a related comment in his 1664 memoirs. Further comments could link Soviet scientism to poor critical thinking skills.)

- why did "big data" and "algorithms" (literally translated: ways of doing things) catch on among all the other kinds of bullshit in this particular zeitgeist? (My answer: we live in a scientistic age where money and technology have replaced religion's former role, eg in providing moral guidance– see for example the prelude to "The Right to be Lazy" )

Pepper White's interesting book Learning to Think at MIT recounts that interaction with industry is what "makes" M.I.T. a success. Though engineering companies may be bullshitting themselves in this requirement, asking for a higher degree before an experienced engineer can move up in the company drives experienced engineers into M.I.T. as they try to skill up, brand themselves, and raise their salary.

The contact between professors and managers-to-be is what brings real-world knowledge into M.I.T., as well as research money/contracts to do real inventive work for major engineering firms, when the master students do get those management roles.

So, another question:

- why is the interaction between "silicon valley" (broadly construed) and academia leading to "productive" interchange? This book –out of a university press, P.U.P.– mentions a 1982 essay and I'm sure, besides Orwell's famous essay on political bullshit, we can find innumerable screeds against lying and bombast going back as far as we would like.

A salient feature of the analysis of bullshit, to me, is that Universities do put out some of the most informed, solid, truthful, and well-researched books, as well as the bullshit everyone is surely familiar with, be it from finance academics, machine-learning academics, or cultural theorists.

It would be too easy and quite wrong to say that business professors, ML professors, economists, or cultural-theory professors are full of shit–even though we can observe credible causal mechanisms and a wealth of examples of people holding such posts, who are routinely full of shit. The answer has to be more complex.

Orson Terrill writes: 

Isomorphisms asked what teaches critical thinking skills. Rigorous symbolic logic with all the proofs, like that seen in any solid discrete mathematics course, and a hard study into philosophical logic, which has much of the same content, but without flowing into set theory, and instead has a hard look at fallacious thinking via the many fallacies.

Isomorphisms replies:

A distinction between "broad logic" and proofs is an important one. Most mathematicians lack common sense (logicians and PLT theorists even more so), and most forms of argument have not been formalised within logic. For example centuries passed between St Anselm's ontological argument and Gödel's formalisation of it within modal logic. Lawvere, an avowed communist, attempted to formalise Hegel over a century after Hegel's death. If you want to argue that proofs make one wise, you'll have to contend
with the inventor of category-theory's communistic views.

The people who impress me with their critical thinking ability often display a study of history (not necessarily a college major or war buff). Some professional anthropologists–Lumonier, Malinowski, Chagnon–have impressed me with their critical thinking. (Although of course academics of any stripe often get sucked into their irrelevant peer-only backwaters. Anthropologist backwaters just happen to be leftward of business professors'.)

Method acting, like art crit, subjects the student to painful critiques of their performance. To advance a thesis, it seems like hitting people where they care–their religion (philosophy class), their pocketbook (trading), their creativity (art & acting)–making them see they were wrong where it really mattered–may be part of the key to improving students' critical thinking. The things that students don't care about–their required essay about some boring book, a proof of a fact/about an object they never inquired about–don't seem to have any impact on the core person.



 Hamilton, as a merchant son of the Caribbean, probably understood what the Hanover's central bank had done for Britain in its wars with France for the entire 18th century. He wanted to do the same thing for the United States - to bind the saving and money hoarding citizens' interests to those of the Army and Navy's chronic need for funding. The City could buy the Crown's debt knowing that the Bank would always stand ready to be a counter-party. Ideally the Bank's notes would be convertible into specie but in any case they would be legal tender.

We seem to have come full circle. Just as Britain had nearly borrowed itself into debtor's prison, the U.S. has racked up extraordinary debts. But there is no reason to worry. The Fed can do what the Bank of England and the few surviving country banks had done: funnel all their depositor's money into government debt. The ironic result was to reassure everyone who had money that their savings would be completely safe. If that left businesses with no hope of borrowing from the banks, it also left them free to make whatever private deals they wanted outside of the Crown's regulations. It also meant that no usury laws applied. The notion of crowding out, which still holds sway, is based on the assumption that only banks can create credit. What Britons found was that they could look to shares and participation rights for speculation while keeping the bulk of their fortunes in the bonds that paid so many thousands a year to the eligible young men whom Ms. Austen used for heroes.

Now, if only someone could bring back a mind that could write about families and money and their sense and sensibility.



 This is an unusual paper on collective decision-making by bison–when herd behavior hurts. In which bison have a tough time with environmental cues, discernment of natural vs. man-made areas, and avoidance of ecological traps.

"Mortal munchies: For bison, collective behavior hastens decline":

"In a fusion-fission society, the herd frequently separates and regroups into new clusters. Just one animal who has located a tasty patch, and returned to tell the tale, can be the agent of bad information transmission for many." 


"Collective decision-making promotes fitness loss in a fusion-fission society":

"More generally, our results suggest that when the environment has changed such that environmental cues no longer reflect reliable determinants of fitness, collective information processing may actually be detrimental to fitness."



A study has shown that the behavior of wasps is affected by supply and demand.



What are the 10 things you would strictly warn a man assembling a comeback so as it's more or less guaranteed to happen.

Leo Jia writes: 


There is no where for one to come back to. 

Perhaps we can visualize someone lost in the hilly jungle. He was on a peak. Now, for some reason, he is lost in the jungle somewhere near the valley, feeling miserable and wanting to go back.  The reasons that could make him feeling miserable include: 1. he can't see the sun; 2. other creatures are bugging him; 3. it's quite wet; 4. his former buddies are all on the peak.

But he did not realize that 1. he does not get sunburn nor get bothered by wind; 2. there is a lot of fish to eat; 3. he won't get thirsty; 4. while his buddies are standing still, he is conquering the entire territory with peaks and valleys.

So one should strive to have life's fullness.



 There are some interesting observations in this little piece "5 Big Ideas in Education that Don't work":

1. Spending for education, as for health care, is high in the US, especially compared with the results.

2. All the thinking about charter schools and the like should probably be focused instead on other topics. In 5 days, of course, that won't much matter as we will have a SecEd who sees charter schools as one solution to the problems of the US primary and secondary education systems. Then again, maybe she may be too busy shutting the DoE down to care much.

3. Class size doesn't likely mean anything close to what advocates of smaller classes claim it does.

But hey, why let facts get in the way, right?

Mr. Isomorphisms writes: 

I believe if you look into those "facts" you will find they are contentious.

To orient yourself there was a counter-documentary produced against "waiting for superman" by some brooklyn area elem. ed. teachers.

Think about 3 things to start:

a) spending varies widely, covarying with parents' success/$

b) "spending on education" itself is ill-defined. do you pay teachers more (and for what? more degrees? VAM*?) or pay for better science lab? Or pay for support staff (which is what the counter-documentary advocates) to help keep the kids quiet? Greg Wilson posted a book claiming that "what works in education" shows the highest returns to removing the most disruptive child from a classroom.

c) the metrics for success itself are bad. You can read the College Board's own rhetoric about the S.A.T., which they say measures "college and career readiness".

* The American Statistical Association says value-added modelling is not sufficiently good for decision-makers to rely upon it.

There are several EconTalk episodes dealing with education. You can look into the work of the researchers interviewed; I found those analyses wanting. As with the economics literature on college earnings (eg David Card). There is a reason Angrist & Pischke call the study of returns to education an econometrician's pastime rather than a success.

John Taylor Gatto: "Trying to change education is like wrestling a pig. The pig is going to get away and you're going to get dirty." (from memory)

I recommend Gatto's book (lauded by the WSJ) An Underground History of American Education for those who are interested in the topic. There is also some Brookings research finding, eg, poor students with few-to-no family members who attended university, will apply to Harvard only (1 moonshot, and it's the same moonshot for all), when they would be better served applying at -1, 0, +1, +2 deciles above their SAT-score ability — for example a solid state school or the best community college. Those students often cannot tell the difference between 3rd decile and 8th. 

Stefan Jovanovich writes:

From Gatto's wonderful screed:

"In 1899, James spoke to an idealistic new brigade of teachers recruited by Harvard, men and women meant to inspirit the new institution then rising swiftly from the ashes of the older neighborhood schools, private schools, church schools, and home schools. He spoke to the teachers of the dream that the entire planet could be transformed into a vast Chautauqua."

James' Chautauqua dream is what textbooks, in fact, became: the sanitized politically-acceptable consensus opinion. Those made my father his - at one time - considerable fortune; and had almost nothing to do with his own education.

At the end of his life my dear father fully came to terms with how he himself had actually been "taught". He had had tutoring from his own father almost from the day he was born. As soon as he could wear pants, he would set out every morning with grandfather and his work crew; he would be sat on the porch of whatever house they were working on, literally with an apple and a reader. When he was 5 1/2, he got rheumatic fever so he was spared having to go to school; instead he spent the next 2+ years at home, reading. By the time he was ready to go to school, he was doing a daily reading for his father and mother and two older sisters in whatever newspaper or magazine they wanted to hear that evening, whether it was in Polish, Serbo-Croatian or English.

"I had a 19th century aristocrat's home schooling," he told me. By the time I actually had to sit in class each day, my mind was already fully formed so I could learn from the good teachers and ignore the bad ones AND follow the cardinal rule for both."

That brought the usual laugh from both of us. For those who don't know it, the cardinal rule in schooling is: "write down everything the teacher says and then write it back down again when you take the examinations."

What was sad, for him and for me, was that his John Stuart Mill education was not to be repeated.

What saved me, at least somewhat, was growing up in post-WW II Bronx and Harlem. The schools were on double-sessions and the education bureaucracy that now rules almost every school district was already in place. If you really didn't care about your "permanent record", you could literally skip out on entire semesters and go to the Polo Grounds. I didn't have to "go to school" until Dad started earning a respectable executive salary and we moved to Westchester. I don't think, until recently, that I ever fully forgave him for the tortures of being sent to "good" schools.



 It is mandatory these days to show the bio of a businessman in movies as evil and duplicit. Such is the case with The Founder. This one was apparently designed to highlight all the defects that the Pres. is supposed to have. Also to show the business itself in a negative light based on theft of ideas, cheap products, and breaking of contracts. Apparently an agreement with McDonalds to pay them what they wanted from a blank check was reached and a side agreement to pay a royalty was also discussed. The movie makes it seem like KRoc cheated the Mcs. But there were teams of lawyers in the room, and the written agreement didn't contain any such language, and since the sums involved were in the hundreds of millions, there's no way that the agreement wasn't litigated and found wanting.

There is very good footage of what it's like to be a direct salesman and how the sale begins when the customer says "No". Also, if you can get behind the biased anti business propaganda, for someone who understands business, there is much to enjoy about the details that go into success. I particularly liked the training on a tennis court to get all the logistics of preparation efficient. Also liked the back and forth between a supportive and admiring future wife, and a virago, or as Jeff would say, a termagant similar….



 That video showing Jahangir Kahn working out and some (Championship) tournament footage of Jahangir's matches? That's a great video! … along with the scene of Rocky Balboa-like training, excellent.

I agree a rope skipping workout is key, weighted or not, because it teaches a player the value of the little low hop, being up on your toes between hits or cover runs, and jump rope trains you or readies you to learn the amazing split step feetwork maneuver.

Split Step Basics

My preference is the one foot step in, push off (liftoff) the court floor off that foot, spread and bring feet level or parallel to land softly into a below athletic body position height, with springy bent knees and feet on the pads ready to support a cut or step off and go where the ball is or where you read you should be tracking it down. A split step to return serve is also a solid technique.

I'd put the 2.5 pounds or more in a weight vest or even in the pockets of a player Vs putting on ankle weights that pound the ankles bones pretty badly (as I personally learned the hard way).

Running down hill, fast feet training drills and sprinting build speed, too. Highish reps in drilling, along with variations in intensity or what is referred to as interval training using a system, like the one I like which includes going very hard (then short rest), then soft (short break), then medium (breathing exercises training break), and back up to hard again is a good form of leg and endurance training.

That interval work along with periodization or training to peak for big events or chosen timeframes or even athletic seasons are invaluable training techniques.

Weight or resistance training for the legs, core + upper body is good with free weights and machines once a certain age is reached, say 14 or 15? Body weight until then. I'll send my body weight only exercises if u'd like? Next year light weights, huh?

On Court training and drills are really good because the mechanics turn into their being on auto drive, with efficient, sophisticated feetwork, hand eye coordination enhancements, and finding personal rhythm and trust, which happens both there on the practice court and is enhanced by playing competitive matches of varying challenge levels (soft or weaker, equal and pushing, and teacher or inspiring). That drill that Jahangir demo'd where he's angled off to one corner is great training ground stuff. Volleying the ball with the forehand then switching to the backhand is great, especially factoring in possible grip changes, racquet take backs and feetwork adjustments that could even surpass what you see from J.

Definitely feetwork IS also eyework taking in everything and watching opponent + reading the spin and bounce of the ball, and it's almost meditative mind work in training it (your feetwork). Moving your feet efficiently and effortlessly becomes almost instinctive or second nature. Whenever time is short, pressured, shrunken, or stolen when up front, it does make it seem like then in the middle of the court closer to the "T" and especially in the backcourt things seem like they are going in slow motion. I use 20-28 feet back middle of the court training to push RB players to not retreat and to dominate that area and steal time from their competitor with cutoffs while also being very much closer to hallowed center court after hitting balls to place it in front or in back of that middle court area.

Another feetwork builder is running stairs or the stands in gyms, stadiums or colosseums. One step at a time, 2 smaller steps in stadiums, 1 then 2, knee pads lol

Split Step Drill

Do feetwork skills drills. One I like a lot is sort of like a game of hopscotch. The player faces and steps along a line alternating one foot stepping and then the other. Land one foot to then push off the ground into a low leap up with both feet leaving the court, split the feet apart, softly land feet adjacent to one another wider than shoulder's width apart. Then keep going along the line switching feet. Repeat all along the squash service line, moving east to west a couple reps, rest, repeat.

Another is reaching the "T" and stepping in and using the one foot split step, my favorite over the 1-2 step in and after 2nd step lands hop, split and land. That's slower in games, too. As the player jumps and is off the court I toss a gettable ball within range of a lunge or cross step … now more cross steps because they're so amazing. Expeditious feetwork.

Another drill is to work on a sort of grapevine move. Face the right sidewall and using a first step crossover in front and past the lead left foot with the right foot to move along the "rail" while facing it. Follow the first crossover step with a crisscross left foot behind right cross step. Then continue with a right foot crisscross and finish with a left foot crossover and then swing with a skeleton, ball-free motion. That's a really good drill and it can be a very effective way to learn how cross steps work specifically for you. That kind of movement helps you learn biped balanced feetwork and how it can be combined into feetwork moves that can set up the player to hit the ball and shoot disguised, accurate, versatile shots in tough situations. Cross steps can also allow a player to make amazing digs or gets. And they can set the legs to hit shots, like a superpowered boast from deep on one side into that sidewall that diagonally crosses the court into either the front wall then sidewall or sidewall then front wall or even right into the crack or crotch of the front wall - sidewall corner. Strong legs opens up greater stroking power potential. Strong feetwork brings that power to life and makes your court movement and stroking confidence soar.

Janangir won 555 matches in a row, Paola Longoria 150, Kane in the 130's, was it 136 or 137? Yeah he, Jahangir IS amazing, but J just might say Hashim, the patriarch of the Kahns was better in his day based on his artistry with a racket in hand and his amazing longevity. Who knows who the G.O.A.T. really is? Fun to ponder though. I'd match my backhand serve against any …



For those interested in pharma/biotech investing, or simply interested in innovation or public health, here is an interesting, easy-to-read study recently published by the FDA: "22 Case Studies Where Phase 2 and Phase 3 Trials Had Divergent Results".

To paraphrase the political scientist cum statistician Andrew Gelman, the problem with the Neyman-Pearson statistical decision framework (set a null hypothesis, perform a statistical test to accept or reject it) is that the difference between statistical significance and non-significance is itself non-significant. Computer models are often inaccurate, and even animal surrogates may not be predictive either. We often don't understand how a drug really works until it is put into clinical use.



 1. All the Fed governor speakers have become bearish for the stock market as they are fish out of water and can't believe that the elected doesn't share their view that central planning and regulation and higher service rates are good.

2. The years ending in '07 have had an inordinate number of big declines in the stock market since 1847.

3. There are hoodoos in the market and basketball. Noah has a tremendous negative number of points against while playing for the Knicks, and now Yellen has that same negative number for the stock market.

4. The statistics on sports now are much better than the statistics on the market. When are the market sabermetricians going to calculate + and - numbers for each market while another one is up or down the way they do routinely in sports. For example, how do stocks do when crude is playing up at noon?

5. The grains are beginning to be affected up by the gravitational influence of the big rise in stocks.

6. The thing that always leaves me in a foul mood is when someone comes up to me and says "I've read your book and I want to say that Reminiscences of a Stock Trader and your book are my favorites."

7. The best history book on a city ever written is Gotham by Morrow and Wallace.

8. The palindrome has been bearish on stocks for 90% of all days since 1980. How much has that attitude hurt his returns since year end 2008 for example.

9. I can't open up to a page in Tim Ferriss' book Tools of the Titans without coming up with at least 2 great ideas that I wish I had practiced. However, Ferriss seems very naïve and many of his gurus are charlatans.

10. Jahinger Kahn they say is the best squash player of all time, but he seems relatively slow on his feet, and his way of skipping back to the center after every show seems dysfunctional for a fast player.

11. The biggest canard relating to fixed income is that crude price moves are ephemeral and don't effect the long term rate of inflation or ppi or cpi.

12. The Hong Kong market and Japanese market and the money supply have big but neglected influence on the US markets.

13. Every ring of market makers with a handful who set the price has been shown to be involved in self dealing activities that on average when investigated has lead to 9 figure fines without much attempts at repudiation.

14. The stock bond ratio has gone up about 25% during the last 6 months.

15. Many markets go up on very light volume to the European opens and then crater.



 I took cues as a youth watching The Rifleman, Gunsmoke, Cisco, Zorro, and Texas Rangers ('one war, one Ranger') ride in and clean up a town of outlaws. I read the same in L'Amour, Max Brand, and Walter Van Tilburg Clark. Over the years, I've added a few tips of my own on how to infiltrate a lawless town, not necessarily to clean up, take over, or win the moll, but to just get along with everyone and learn.

I arrived in Slab City and in a glance knew it would be my laboratory. It was a matter of devising a way to penetrate. There were eight steps to the technique. The town is one-square mile of two hundred characters who seemed to have stepped out of a Shakespeare tragedy, so everything could be done by foot.

•    Identify the ten most influential individuals

•    Institute a method to win each over

•    Bump randomly into each

•    Tell each a different adventure story for rapport

•    Provide unique help such as medical or legal advice

•    Give matchless gifts, as others are forgotten

•    Accept nothing in return

•    Use the girls to get to their powerful guys, and vice versa

The targeted 16 included: the Mayor, Music Range proprietor, Salvation Mountain manager, the meth maker, drug dealer, his strong arm, leader of the bombing range recyclers, best thief, top arsonist, leading prostitute, ringleader of illegal alien smugglers, the hostel, library, and junkyard owners, primary crooked cop, and military chief of security.

The adventure stories circulated, and the recommendations by these powerful people trickled down through the population. Now, at the close of the second year at Slab City, the fruit of my labors are being harvested.

I'm having the time of my life. That signals the time to leave, as I did with jobs, sports, and teaching, at the pinnacle of success, to go on to the next laboratory.



 Thanks to my son in law I got a chance to talk with the trader, professor, and gambler recently. The interview ran on Benzinga.com and specs might find it interesting and of possible value

Edward Thorp is one of the most well known figures on Wall Street. Throughout his venerable career he's spent time as a mathematics professor, hedge fund manager, blackjack player, and author. "The father of the wearable computer," recently released his sixth book, "A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market." Marketfy's Tim Melvin recently caught up with the Wall Street legend to discuss his career and outlook on investing. Below is their conversation, slightly edited for length and clarity.

Tim Melvin: You're really considered to be one of the fathers of quantitative investing, which brings up a certain picture of a guy with a bunch of computers trading wildly. But as I go through the book, you really have a tremendous Warren Buffet-kind of Ben Graham influence on your approach to investing. Can you talk a little bit about that? Because that really surprised me.

Edward Thorp: I came at the securities markets without basically any prior knowledge and I educated myself by sitting down and reading anything I could lay my hands on. I began to get oriented, and then I discovered how to evaluate warrants, at least in an elementary way, and I decided that was a way that I could apply mathematics and logical thinking and maybe get an edge in the market.

Melvin: So you weren't trading like a mad man, like what we think of quants today. You were setting the trades and letting them run, right?

Thorp: Yes, initially it was slow trading. We'd put on warrant hedges and watch them and every so often, if there was a big move in the underlying stock, we'd change the ratio of warrants to stock. And then that evolved into revertible bond trading and we did pretty much the same thing there. So, then [Thorpe and co-author Sheen Kassouf] both went on to careers managing money.

I started a hedge fund in 1969, after meeting and talking with Warren Buffet for a while in 1968. He'd been running a hedge fund for about a dozen years, and he was just shutting down. And it turned out that stocks were at manic highs then. Which is why he was shutting down, and for me, it didn't matter because I was putting on market neutral hedges. Something people hadn't been doing before.

Melvin: Now, in the book you talk a lot about statistical arbitrage, I know you stopped doing it in about 2002, according to an interview I read. But it's a term that's used a lot. I don't think anybody really knows what it means that's not in the business. Could you kind of describe that a little bit?

Thorp: Sure. As you actually will have seen by reading my new book, "A Man for all Markets", the idea was discovered by us back at either December 1979 or January 1980. The root idea was a researcher discovered that if you took the stocks that had been the worst performers over the last two or three weeks and bet on them, they would tend to outperform over the next two or three weeks, and the reverse was true too. The stocks acted as though they had some unobservable true value that wandered along some unknown curve, and they set a range back and forth around this curve, and followed it. Sometimes demand would push them up too high, for a while. And sometimes supply would push them too low for a while. So he ran a simulation where he bet on the 10 percent that were the most up for the last couple of weeks, and sold them short. And then bought the ones that were the most down for the last couple of weeks, and set up a hedge portfolio.

Now you might say, "Where's the hedge?" Well, if you have a diversified pool of stocks that are kind of randomly chosen, they'll tend to track the market. So the ones that were up the most, we would short, and that group tended to track the opposite of the market. That is, it would tend to move as though you would short the market.

On the other side, we had a pool that were long and they tended to track the market. So when you put them together, the long and the short sides, the market effect was pretty much cancelled out. Now, of course, there were a lot of other effects, all these stocks were traveling around their own random way around their market factor or market component. Well, we got rid of the market part.

So we said, "Gee, this is an interesting new source of profit." We looked at this and found out that it was somewhat riskier than the other things that we had in our portfolio. So we put it aside. And then as I tell in, "A Man for All Markets," somebody at Morgan Stanley (NYSE: MS) came across the same idea about two or three years later. And Morgan Stanley turned it into a very profitable product.

Then that person was disaffected by his treatment at Morgan Stanley, he happened to answer an ad that we had put in the newspaper looking for people with good quantitative ideas. I interviewed him. I saw that what he had done was very much like what we had done, only he had improved it a notch because he used groups of stocks in a single industry separately, to set up these long short hedges. So the upshot was we went into business with him, it worked very well. Through the crash of 1987, for example, it made money during that terrible down day. Then it began to lose some of its power as Morgan Stanley and others spread the idea and also put more money into it. So, we devised a new method that got rid of not only the market factor, but lots of other things, oil factor, interest rate factor, that sort of thing. And that ran just fine.

That's the root idea, and it had a huge impact on the markets, because it's a natural sequence into the idea of high frequency trading. The reason it's a natural sequence is because you have computer feeds of the stock ticker. So, prices are pouring into the computer continuously, all day long for statistical arbitrage. Then the machines are recalculating what to bet on, and how to modify the portfolio. So, once you have a high speed data feed that you're processing all day long, you begin to think, "Well, are there other ways to trade to this data feed, besides putting on trades that are on for an average of ten days or so?" And you begin to look for patterns that are shorter. So there's a natural segue then into high frequency trading, you've got all the equipment, all the background and so forth. And I think that's probably how people got into high frequency trading.

Melvin: As an individual trader, is it worth the extra effort to try to beat the market today?

Thorp: That depends on the person. I think to myself, "Gee, if I were 25 and I got interested in this, what would I do?" And I'm not sure, but for what I know now, I'd say the Warren Buffett way is a good way if you want to put your whole life into it. I'd probably decide not to want to put my whole life into it. So I would say if you wanted to get really rich and you wanted to trade your whole life for getting really rich, a trade I don't necessarily recommend, then I'd say that's the way to go. But if you just want to make lesser amounts of money, I don't know what to tell a person at this point because you can do so well knowing nothing in the market.

Melvin: In the book, you talk about a way to beat the market that you used at Princeton-Newport, buying deeply discounted closed-end funds and allowing the discount to narrow. Have you considered that much in recent years?

Thorp: I have thought about that. My experience was long ago when there weren't people tuned into this as much, but I think you could maybe make 15-20 percent a year pretty safely.

Melvin: In the early part of the book, it seems like you were such an intellectually, inquisitive child and pulled remarkable stunts. I love the one with the flare in the balloon, that just cracked me up. But as a parent and as an educator over the years, is there a way to bring out that natural intellectual curiosity in a child?

Thorp: Well, I can tell you what we did with our kids and it seemed to work. We made dinner time a special time, when everybody got together, nobody had any devices, or other activity or distractions. We all sat down, we talked about whatever was on anybody's mind. So the mean teacher at school, the bully, whether or not there's a God, whatever came up. The logic behind climate change, or the arguments against it, and so the kids learned to think for themselves. And this power of thinking for yourself is really formidable because it enables you to do many things. Whereas people who don't do their own thinking kind of have to key off other people to try to figure out what it is that they should be doing. They basically follow the crowd.

The second thing is that we try to give our kids opportunity, so they had choices, but we tried not to steer those choices. So just because I'm a science, math, gambling stock market type guy, doesn't mean that I try to steer my kids that way. So one kid became a hedge fund manager eventually, one kid became an architect, and one became a district attorney. They went their separate ways, they're all smart.

Melvin: You talked about that several times in the book. In fact, I have passages underlined. You attribute a lot of your success as an investor because you did it not just for the money, but for the love of the mathematics behind it. And at one point, you say that your discoveries fit in with your life path as a mathematician, leaving you largely free to enjoy your family and pursue a career in the academic world. So you weren't 18 hours a day bent over a screen. You were enjoying your life, because you enjoyed the work. Not because it was finance, because it was math.

Thorp: That's exactly right.

Melvin: Now 1948, you apparently spent the entire summer sitting on a beach reading 60 novels that you considered to be classics. Did that make a big impact on the way you thought, the way you approached the rest of your life?

Thorp: I would say yes. It gave me… I'd call it maybe more of a philosophical and humanitarian perspective on life. And it made me think about the big world of society, politics, history, geography and so on. And it gave me a framework for putting things in their place.

Melvin: You talk a lot also about the importance of education, and your concerns about the future of education. Can you talk about that a little bit?

Thorp: Yes. I think of education as a lot like the seed corn for society. And if people are willing to pay for it, if they're willing to be taxed and if they're willing to build a good educational system, then I see that the minds that are generated out of that will apply tremendous leverage to society, and society will grow and advance much more rapidly. And many good things will happen and get done. If you had a society that was devoid of education, it would just sit in place and do nothing. It would be the same thing decade after decade, perhaps century after century. It would be like the perhaps inaccurate image that we have of the dark ages where nothing much happens.

So in a place like California, for example, they made a terrible mistake back in 1978. They passed something called Proposition 13. What that did was bust the state budget. The biggest component of the state budget is education. And so education has gotten squeezed ever after in California, at both the elementary, the secondary, and the college level. And tuition has gone up enormously. When I went to the University of California, my tuition was $35 a semester. Of course, that was back in 1949, 1950 and you might say, "Well, inflation's changed the number quite a bit." It has maybe 10, 12 times, but just add a zero to $35, $350 a semester, but we're looking at instead of $700 a year. In today's dollars, we're looking at maybe $12,000 a year, or something like that for in-state, maybe $30,000 for out-of-state. So what happens is people can't afford to get as good an education.

They go to school and even if they can pay the tuition, they have to work in large part to supplement to get the money to pay it because it just isn't available in so many of the families. If you work while you're going to school, which I did, you don't do as well in school as you might. You don't learn as much. I can think back at the courses I took because I was working, I didn't learn the courses as well. And the rest of my life, I could feel the impact of that lack of knowledge, that I would have had if only I had been able to focus properly on the course I was taking.

So anyhow, to make a long story longer, I've seen charts of how much is invested in science, engineering, and education in a society, as a fraction of their GMP versus the rate of change of GMP. And it's quite dramatic. Societies that have a higher investment of education advance the growth in their GMP much more rapidly in societies that don't. And the obvious example is something like Silicon Valley. If we didn't have a Silicon Valley or the equivalent, or Redmond, Washington, or the equivalent, we wouldn't have all the computer advancement that we have. Apple would be a giant company in some other place, Japan, Russia, China, something of that sort as opposed to being a giant company in the United States. So anyhow to not spend money in education is a terrible mistake.

And another consequence of that mistake is gambling. There are lottery systems all over, and one of the ways of getting people to accept them is we're willing to fund education with lottery proceeds. But that's actually been in California bait and switch. What happens is they have signed a certain fraction of the lottery profits to education, but then they take away money from education with the other hand. So education doesn't end up getting any more money. California ends up getting more money in the general fund, and ends up with a major gambling problem on top of it.

Melvin: In the book, you think a flat tax might be the answer to solve some of the funding problems at all levels of government.

Yes, I do and there's an obstacle to getting it in, which is that the complicated tax system is one that's been made that way by politicians who are busy paying off special interests, who in return make campaign contributions to elect or re-elect the politicians. So that's why the tax code degenerates into horrible complexity over and over. Now flat tax would eliminate most of the power of the politicians to extract benefits from the tax code. So they would oppose it. But, you could probably get support from large parts of society if you made the flat, the change to a flat tax neutral.

So for instance, suppose you take away the carried interest benefit for hedge funds. Just to explain what that is, carried interest is a scheme which has been disguised by an obscure phrase, carried interest, a scheme to tax money made by hedge fund operators at the capital gains rate rather than at the ordinary income rate. And so they pay far less tax. They can also defer the payment of the tax for many years, 10 years or more. Let's say you took that away. You might get another $20 billion in tax collections that way. What to do with it? Well, go to the politically unconnected rich, the ones who don't have benefits built into the tax code from bribing politicians. Take the top tax rate down. Apply that $15 or $20 billion tax savings that you capture from the changing the carried interest toward their income, apply that to the top rate. So it comes down from 39.6% to maybe 39% or 38.5% or whatever that comes down to. My idea would be that you keep making changes that are revenue neutral, and if you brought a flat tax in all at once, that would be a massive change that if were done in a revenue neutral way, would have as many winners as losers, so you'd have a lot of people rooting for it.

Melvin: Yeah. I agree. I've always said to the first part of your statement, that taxes are not just about raising income. It's also a very complex reward and punishment system. And that's been the biggest reason it's developed into the nightmare that it is. I was surprised to see you comment on it in bringing it out in the book, happily so, but we're in complete agreement on that.

Thorp: Well, one of the reasons I have some, I'll call them public policy commentary in the book, is that if you have a math and science background like I do and you believe yourself to be a rational thinker, you end up applying it to as many things as you can. And with a large part of my life spent in finance and economics, I naturally ended up applying a lot of this thinking to public policy and other things that I see in society that have a broad impact. That's where a fair amount of this is coming from. I believe that if people just learned how to think instead of letting other people do the thinking for them, that we could work our way to a considerably better society.

I've got one last question for you, and this is the big one. It's one that I try to ask everybody I run across. What books are you reading now?

Thorp: Right now, I'm reading a book called "The Accidental Superpower" by a guy named Peter Zeihan. And the reason I'm reading it is because one of my friends who I mentioned in the book, Gary Basil, who was a professor of economics and finance over at UCI when I first met him, sent it to me thinking it was going to be interesting, good to read. We had been talking about the election of Donald Trump, what we thought that meant for the country. This book looks at things much differently than I do, and I find that if I read things that may not agree with the way I look at the world, than I'm more likely to learn something than if I just read things that keep telling me, "Yes, you're right" over and over and over.

This is a geopolitics type book, which basically thinks that geography in demographics are major determinants of how things evolve for societies. It's an interesting historical perspective, and it has predictions of how the future's going to go. I'm enjoying working my way through that and seeing where I agree and where I don't agree with it and what I've learned from it or haven't. That's one interesting book that I've been reading.



One of the truest axioms of trading is that the thing you worry about least is the thing that will bite you in the rear. As others have noted, expectations are extremely positive now and few are worried about the downside. But whose expectations?

Something we have written about previously is the length of historical data being watched closely by professional traders, particularly when juxtaposed with that being watched by those who sit in the bleachers. The best bull moves occur when the pros are looking long term and the amateurs are nervous nellies. Right now we have the opposite. With tonight's close we see the amateurs being complacent; they are looking back at what has happened since Election Day. The pros meanwhile are monitoring prices in a 4-day window, a most tenuous stance.

Stefan Jovanovich writes: 

One of my dubious theories is that the internal correlations that we all see in "the market" are largely a product of the development of the New York Banks becoming the clearing house for the nation and their converting that dominance into the "need" for official central banking. The data from the 19th century, which is limited enough to be within my meager mathematical capacity, suggests strongly that the business cycle was much more a matter of the fluctuations of particular businesses than one of the movement of the "economy" as a whole. Weyerhauser's fortunes and Swift's were not on the same cycle. The movements of "Timber" and "Pork" were largely independent.

I wonder if that is becoming the case once again. Optimism may be the general news, but the prices of retail companies, particularly those in the clothing business, very much fit the opposite of Bill's description of the general mood. The general assumption is that everyone will lose their business to Amazon.

Russ Sears writes: 

"One of the truest axioms of trading is that the thing you worry about least is the thing that will bite you in the rear."

I call this the fundamental law of risk management: What risk you ignore or discount incorrectly are the risk you over-load your portfolio with, thinking you have found the "key to Rebecca"/free lunch or at least you have optimized your risk metric such as sharpe ratio. This is what happened to the modeler of RMBS, unknowingly overloading on model risk.

Alston Mabry writes: 

I have often thought (but been unable to effectively implement) that if you could determine what factors the market is not paying attention to, you could place some profitable bets or at least put on some good hedges.

Which leads to a non-quantifiable definition of a bubble as a big move up that continues even after a critical mass of players have become aware of the fatal risks - everybody knows they're playing musical chairs, but it's too profitable to stop.



I was reading Goetzman et al paper "A New Historical Database for the NYSE 1815 to 1925: Performance and Predictability" where they try to gather historical data for the NYSE stocks for the period before CRSP started (1815-1925). There are many questions regarding their data quality and especially the dividends (there is no good source for dividends before 1880 when Cowles data starts) that I will not get into. Nevertheless, one graph/observation that stood out was the distribution of stock prices. There is a clustering around 100 (stocks used to trade at par) and a smaller clustering around 10. Apart from the round numbers, one is reminded also of Benford's Law.



There is a basketball movie that looks interesting: "Israeli filmmaker Dani Menkin's new documentary, "On The Map," recounts the tremendous achievements of a team nobody thought could win, and captures the unique charisma of the players who inspired a nation."



Sometimes you hit the wrong shot in a game and it goes in. That leaves your opponent completely demoralized and usually is good for a win. The people who thought that Hillary would win were wrong, but they bought stocks and sold bonds [as the election approached]. They made a fortune for the wrong reason. How often does this happen in markets and can it be quantified. Morgan Stanley made billions in their bond trading presumably through this error.



There is some merit for investors to approach the markets as a good collector approaches his collections. Start by building a good understanding of business and economics and then slowly start to accumulate the greatest pieces, be it the best stocks and/or bonds. As time goes on he continues patiently to accumulate the pieces he wants while re-investing his dividends/coupons especially during periods when others are looking to sell because they don't understand their value. Every 5-10 years he looks back at his collection with satisfaction knowing that he has a great collection that would pass to his kids.



Since Jan 1st 2000 to Dec 31st 2015

Total $SPY returns for all days 92.71 points

returns on 1dom + fed day (most important days) are 89.02 pts (about 97% returns captured by doing hard work on 322/4025 days (8%))

The year gone by 2016 is a different story.

Total $SPY returns are 23.95 pts and on most important days the returns are a mere 0.71 pts (20 of them out of 252 days)

So where did the returns shift to?

answer -> 11-15th trading day

2016 $SPY returns 23.95 pts

Returns on 11,12,13,14,15th trading days combined are 24.14 pts (60/252 = ~24 % days)

Conclusion, work load increased in 2016 from 8% to 24%, a 200 % rise in work hours. A 2017 wish is reduce in the lower working hours!

Kim Zussman writes: 

I also checked whether the past 16 years were trendy for stocks.

If today's close was above 100D moving average, return from today's close to tomorrow's close. ">100DMA" (mean)

If today's close was below 100D moving average, return from today's close to tomorrow's close. "<100DMA" (mean):

Two-sample T for >100DMA vs <100DMA

                   N     Mean    StDev  SE Mean
>100DMA  2766  0.00025  0.00824  0.00016 T=-0.06
<100DMA  1394   0.0003   0.0179  0.00048

>>almost the same.  However, as expected daily returns were less volatile when the market was going up:
Test for Equal Variances: >100DMA, <100DMA

95% Bonferroni confidence intervals for standard deviations

                   N       Lower      StDev      Upper
>100DMA  2766  0.0079943  0.0082355  0.0084912
<100DMA  1394  0.0171828  0.0179134  0.0187065

F-Test (normal distribution)
Test statistic = 0.21, p-value = 0.000

Levene's Test (any continuous distribution)
Test statistic = 540.84, p-value = 0.000



These photos of NYC brought back many nice memories. I was born (Feb 1941) and raised in Manhattan.

The missing dimension are the smells. New York burned its garbage. All apartment buildings were equipped with garbage chutes in each apartment. Scraps, paper, plastic, bottles all went went down. Every two or three days the superintendent would burn it all in the basement incinerators. Acrid odors and black greasy soot spewed out of the smoke stacks and spread onto every window sill. Along the lower west side there were slaughter houses daily supplied by train with carcasses. The rotting renderings added another lovely aroma. Everyone was used to it and didn't notice it until you went to the countryside. Upon returning you knew when you hit the outskirts of the city.



 And you plan, hell or high water, to go. Once-in-a-lifetime, Divine Intervention miracle result, TG not to see that woman lie for four more years. Etcetera. So: What to do. How much will it cost? Can you do what needs to be done to make it through the dollar blizzard?

There's the train, if you're coming from a distance. Major bucks more than the bus. You can take the Chinese buses, not guaranteed to arrive on time, but only $30 each way, and reasonable as these things go.

Or the military skirmish-level of flying, squished seating, also sold out, and inadequate luggage space. And the pat-downs and stink-eyes of the airport Homeland Security types. Plus the major layout for last-minute ticketing, unaccompanied by your loved ones, since you have to pay extra for a
1. choice seat on the aisle, and
2. Seat next to a friend or spouse.

Then , where to stay. Pretty much every hostel, now $100/night for the executive manger straw and bunk-bed starvation accommodation, is all sold out. Compare and contrast: Back in 2009, there were supposedly 1.8 million hysterically thrilled up their leg visitors to the Obama Inauguration. The estimate for this year, 20 January 2017, is a shaved 440.000, poor-man's carnival visit list. (That lowball is probably going to turn out wrong, like the mavens of missing who got the election results 98% wrong.)

But now, all the big-buck hotels are pretty much filled by one week prior. So scrambling for guesthouses, B & B's, people you know who have a cousin whose sister has a nephew with a house in the 'burbs with a spare bed.

That costs $175-295 for 3 or 4 sharing. They involve a 20-minute ride from the outskirtiest skirts to a mere 15-minute hike to the parade grounds. If it's the cheaper alternative, you'll need to rent a car, or hire an Uber, or (my humorous alternative, which I have done in the past) bring along a bike. Once in the heart oof Inaugural region, you'll need a trainride to the spot. This all assumes traffic is moving, and that your 'short hop' from outside DC will not become a grueling hur in stuck traffic lanes and fraying nerves.

You have to eat. So if you don't pack a cumbersome suitcase or backpack to haul food, on the astringent diet budget spectrum, then you have to rely on local fare, all genially jacked up for the occasion. At least two or three or four meals, tip and tax, and not looking chintzy with your companions or spice. Figure another $200 for those blue-plate specials.

Hey, restaurateurs gotta eat, too, right?

If you can't cope with these details, as they say, then for a mere $2200, even, you get viewing rights, a nice bed in a good place, and a few invites to galas where your fellow Republicans will be jolly with wassail and beers. Hoisting a tankard or two, you'll justify the extra piracy for the day or two of rejoicing. Then, if you nix the Gala Package for "00 (low end: High end—unknowable digits), you can shell out $300 per gala. So don't forget your gay apparel, in that suitcase you have stored somewhere a headache away when you go back home. You can't be expected to wear your fancy duds all that stand-up time as Donald J. takes the oath of office and you freeze your tootsies waiting for the festivities to begin. The duds are for the nighttime fiestas. So you have one or two changes of clothing to think about packing.

These galas will of course provide tranches of delicacies, tables groaning with terrific stuff. (Even the Dems, when they celebrated, forwent the PC tofu and alfalfa sprouts to knuckle under bevies of branded luxe seafood and tenderest of tenderloin. And so on. So you'll chow down to hold you all the way back to Keokuk or Wainscot or Albuquerque.

Then home, not forgetting to race back for your stored bags and accumulate. Even without the Special Package, you're still in for a couple of thou.

Worth it?

How delighted are you we have finally prevailed over the terror of seeing that pant-suited panther for four extended Obamayears?

Letya know. I'm on the list.



Here is a nice invidious reference to Galton on herd like behavior.  



This is rather amazing:

"Ultra-low-cost, hand-powered centrifuge is inspired by whirligig toy"

"A high-speed camera showed that the human-powered centrifuge could reach rotational speeds of 125,000 rpm, generating centrifugal forces of 30,000 g. This is faster than many commercial centrifuges, yet the device costs just a fraction of a dollar to make."



What were memorable round numbers breached during the week? Gold played footsie and breached 1200 the 30 year went above and below 3% yield with abandon. Dow made abortive runs toward 20,000 but didn't come that close. What else, what are the predictive properties? Nice move down in bonds on Thursday of 1 full point in afternoon after 30 year auction and then again in morning next day.

Anatloy Veltman writes: 

Well I didn't notice anyone contributing examples of footsies yet, so I'll pitch a humble question.

I just glanced at raw longer term price charts (just price history, no internal indicators or anything else), and this is what struck me: if (Ralph, for instance) says it's a great buy at this stage, then when is it EVER a sell?! It seems to follow that (likely) never… Somehow, I'm not convinced there is no alternate answer

Ralph Vince writes: 

When the back end of the yield curve, especially the 20 yr constant maturity is above the 30. That's a good time to sell…..and look to start slowly building the position back again as it drops, for the relentless, upward climb of man's resourcefulness, as expressed in the broad indexes themselves.

The yield curve gives a great picture of the health of the market If there is multiple inflection points (another one outside of that 20 year point) that's even more negative, and if the far left, the short durations, start flippering madly, quickly…..you definitely want to be out of. People look to see if it is flat or inverted, but there is much to be gleaned by the finer details of its personality.



Brett is always endlessly speaking of market cycles, I found this to be an interesting take and an analysis I had not thought about before:

"During the first quarter of 2000, the dotcom bubble famously peaked after setting a new record high for corporate equity valuations. Today, we haven't quite matched that record in terms of equities, though, by some measures, we are very close. And when you look at corporate valuations more comprehensively, including both debt and equity, we actually have now matched that prior period. The chart below shows the value of nonfinancial corporate debt and equity relative to nonfinancial gross value added (data provided by FRED), essentially a measure of enterprise value-to-sales. I'll let you come to your own conclusion about what this might mean going forward."

Dylan Distasio writes: 

This is interesting, thanks. However, shouldn't duration and average interest rates on the debt have some relevance to using it to calculate valuations? I'm asking the question, not necessarily drawing that conclusion. Just wondering if my betters have an opinion on the linked chart.

Larry Williams writes:

So what if we have matched the all-time high valuations of 2008? Provided that the all-time valuation high was in 1960 8C would've stopped investing in 1995?
I am convinced there is one and only one thing that really causes bear markets– recessions. That's the key, certainly not technical analysis.

Happy bullish trails to all.



"Sorry, the ‘January Barometer’ Is a Market Myth"

John Bollinger comments: 

I applaud the work of Messrs. Harvey and Hulbert and others of their ilk and I encourage them to be even more vociferous. Over the past several decades I have successfully used many of the tools and techniques that they denigrate. Investing/trading is a hard business and if they want to scare off the competition and help me maintain my edge I say "Go guys, go! Give it your best.".

As for Yale: It is true that Yale included the sample in the forecast in the early versions of his work, a forecasting no-no for which he has been tarred and feathered. I had the pleasure of meeting him on several occasions and my impression was that he was quite bright and capable, so I always wondered if he didn't do that on purpose, deliberately throwing a wrench into the works…

Good trading,



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