The Web Site of Victor Niederhoffer & Laurel Kenner
Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place.
Write to us at: (address is not clickable)
Weightlifting, by Allen Gillespie
In lifting weights for maximum strength gain, it is wise to use a spotter. The
presence of a spotter allows one to work out to one's max (the maximum number of
lifts before exhaustion). Upon exhaustion, the spotter helps to lift the weight
to prevent injury, but only after allowing you to struggle.
I suspect in the market there is a similar propensity for one final failing push shortly after a max or min, and that these might make for good trade entries in the opposite direction.
Dgard expounds on Weightlifting:
This is a post I have been working on for some time, but the recent
message from Allen has spurred me to complete it. A theme on the List
is to "Write what you know". In this regard the subject is well within
my field of knowledge. Those on the List who know me have only seen a
shadow of my former self. I was an amateur bodybuilder, and in my prime
weighed 225 with single digit body fat percentage. Does this illustrate
knowledge? Not in itself, but I have trained several champion
bodybuilders and Olympic medalists. I hope relating the Markets to
Weightlifting will impart some new perspective on the Markets, and maybe
impart a new appreciation for the importance of exercise for one's
Aaron Krizik adds:
Stick to basics. Master the large movements (squat, clean, deadlift, bench press, rows...analogous to statistics, math, macro, micro) before venturing to more exotic movements that isolate specific muscle groups. (master options before venturing into swaptions)
Do not overextend. Progress from lifting is equal parts exertion and recovery. Lifting requires tremendous discipline not to "go for it" on days when you feel you can complete the labors of Hercules and at the same time not quit on days when you feel like the "98 lb. weakling".
Use a Spotter? - analogous to stop losses, and we know how the chairman feels about those measures. Use them only when you are going for maximal effort. This should be a rarity. Work your muscles, not your ego. Spotters encourage you to use leverage to complete a lift as opposed to using your muscles achieve a specific goal. This does not sound like a significant distinction, but when this habit is multiplied by thousands of repetitions, injury and stagnation is inevitable. Get a training partner. You will let yourself down before you let your training partner down. We see the benefit of this list everyday. Peers inform and serve as fraternal competition. Have them observe, critique and encourage, not spot. If you have three training partners, the odds that one of you will be in fine form (serving as additional motivation) on a given day is very good. Be humble. No matter how hard you train, There is always a Russian or Ukranian (former Soviet Bloc countries dominate weightlifting in all of its forms) who lifts after he works in manual labor for 14 hours a day who will step on a platform and break a world record wearing tattered clothes and worn out lifting shoes. Be open to his training methods. Be balanced. Lifting has a tendency to consume your life. This tendency is exacerbated by the personalities who are attracted to physical progress via myopia. Schedule interruptions. The greatest powerlifter in history (whom I know) is in his late 30s and still lives with his parents. He was injured recently, and you can imagine what this does to someone who is non-diversified in his interests.
Michael Cohn contributes:
Now lets not all start laughing but this is a subject I know a lot about. Practice is another story. Many of you know that I use to play tennis and had a series of leg injuries and surgery that necessitated me to go to the gym and lift weights for my legs. Of course, I started playing around with the other bits as well. Turned out that I was very good at pain management and the ability to focus energy/will. Also a large differentiation between body builders and weight lifters in the gym. Body Building and Strength Training not the same thing. What football players do is quite different from bodybuilders There are no judgments here as to the relative merits. (The story of how my weight bar traveled trough the wall to the apartment next door is a story for another spec list party.) The parallel for the market is perhaps the difference between hedgers and speculators in futures markets. Too often we seem to forget the hedger in our calculations.
Bodybuilding is different from strength training? Not really. The very best bodybuilders spend most of their time strength training. I have all my trainees spend at least 6 months of the year doing power cleans, snatches, clean and jerk, power high pulls, etc... just like a football player. There is no way you can build the kind of mass necessary to win championships without these exercises. And we never go without squats, deadlifts, bent over rows, and weighted dips. The difference between the true bodybuilder and the football player is the amount of leanness the bodybuilder achieves. Of course, if you look at the modern football player (Shannon Sharpe a couple years ago, John Lynch, etc...) one would hardly notice a difference in the two regimens. Perhaps this is yet another similarity to the Markets: the assumption a trader is different from another market participant because their timeframe (physique) appears to be different. There are some who would say the difference between an investor and a speculator is one has more idle time on his hands.