|
|
|
|
 |
Daily Speculations 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)
9/22/04
Speculating and Driving, by Anson Fredricks
While making the unavoidable trip from New York City to New Haven CT, I contemplate the similarities between the Art of Driving and the Art of Speculating. To be a superior driver who minimizes time on the road and maximizes the efficiency of one's vehicle, one must think like a speculator. Using a strategy of going "long" on off-ramps, and "short" on on- ramps throughout the entire journey from New York to New Haven during rush hour saves me twenty minutes. Going "long" occurs when I move into the right hand lane when an off-ramp is approaching, and the cars in the right hand lane are moving much quicker relative to the majority of traffic as they exit the highway. As soon as I pass the off-ramp, I am forced to short the "on-ramp," for the merging traffic causes an immediate back-up. Each time I switch lanes, it is analogous to buying and selling securities. Constantly, I am changing between going long and short and looking for the optimal time to "change lanes" in my investing strategy. When one lane becomes too crowded as investors/drivers converge on the opportunity for success, another avenue is opening slowly to those individuals who can see the new traffic pattern. By going long and short on the road, I am able beat the average driver, just as many of us are able to navigate the market and earn consistently better returns by staying ahead of the "traffic." The aggressive nature of my driving is a problem though. Just as aggressive driving is more apt to land your car in the repair shop, aggressive investing can land one's portfolio in the junk yard. While looking over my shoulder for the next opportunity to "change lanes," my current investment strategy can come to a crashing stop. While looking around for an exit point, one can forget about the obstacles ahead of them, and entangle themselves in a costly wreck. Conservative driving and investing will eventually get me to my destination, but at what cost? There is a much lesser risk in conservative driving and investing, but will I be able to enjoy all of the luxuries of life at the age I would like, or will I arrive later than I should? The more time that I am on the road, and the more time I spend around the market ultimately takes away from my true passions of sports, family, and friends. Any Specs with advice on how I can drive and invest at the speed that is appropriate for a fledgling 21 year old would be greatly appreciated.
James Lackey comments:
It takes an hour of five men working to rebuild an engine after every pass. The driver races for less than 5 seconds. All that effort with all that energy released burning nitro methane fuel in such a small machine in a short duration of time. The only thing that compares to that is day trading, romance with a new lover and finally, sex." Lack