Daily Speculations
The Web Site of Victor Niederhoffer & Laurel Kenner
Dedicated to the scientific method, free markets, ballyhoo deflation,
value creation, and laughter;
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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner
Dedicated to the scientific method, free markets, ballyhoo deflation,
value creation, and laughter; |
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An
aesthetic Spec waxes philosophic
3/14/2004
1. There are no systems that will work forever, as the market
mutates to consume easy gains
2. The simplest, most direct analysis often works best and
data envy often covers a cloudy view
3. In the beginning, 'everybody' is right
4. Near the end, 'everybody' is wrong with the most arrogant
views the most wrong
5. In between, 'nobody' knows
6. One man's value security is another's loss
7. One man's growth security is a pessimist's nightmare
8. Learning what style or analysis works for you often
requires loss, lots of it for the slow or stubborn
9. The market can be very humbling and rewarding in the same
day and unfortunately the same trade
10. With enough time, a broken clock is right twice a day and
a trade may be right once
Corollaries
a. Over short periods of time, fundamental news doesn't drive
results but the positions of the market players does.. thus
the volatility is greater than theoretical prediction
b. Over the middle-term trends, in returns tend to be
positively auto-correlated and less random than theory would
like
c. Over the longer term, economics and behavior if we're
lucky, regulation and intervention if we're not, will take
positive auto-correlation into the negative
Knowing 1-10; respecting a to c; and, observing supply and
demand will keep you out of deep kimchee but you may still get
wet
When one studies wealth creation over time: results for
successful investing usually point out a consistent system for
both buying and selling positions and letting the longer term
work with an emphasis on sectors and industry sub-sectors that
will add value (ie. revenues and cash flow) at a higher rate
than than the market and economy as a whole....when that rate
declines, so do valuations