Nature

Alix Martin --- Having done my share of avalanche riding, I cannot concur in the fact that steep slopes are safer relative to avalanches. I can however try to find market-related wisdoms in them. - You are more likely to end up in an avalanche when you wear a beacon. I think Dr Brett's colleagues call this behavioral offsetting. Similarly, you are more likely to keep sloppy positions when you are hedged. - When caught in an avalanche, the best chance of getting out is in the first few seconds. Step up and let it flow under, or move sideways quickly to get out of the flow. - once you are caught, calmly remove your skis. Then, focus on not getting buried and avoid rocks on the sides. - you are more likely to end up in an avalanche when you have to choose between a quick descent in a couloir under a suspicious slope and a tedious circuitious way that would take an additional hour. - Don't always trust seasonality. On the first day of September 2000, after taking note that our planned rock climb was covered by verglas, Gaetane and I wanted to get up the Aiguille d'Argentiere by the easier "Y couloir". After opening our packs at the bergshrund, we were greeted by an avalanche. Good thing it didn't bring the brits that were higher up tumbling down on us. (Avalanches are not supposed to occur in september) - You have a better chance of understanding when avalanches are likely to occur after you've been in an area for a while, and you know what underlying layers of snow are there. Vic sometimes amazes us by his calls, but he has observed many more layers of market movements than most of us. - snow layers change through constructive synthesis (during cold nights, vapor comes out of the earth and freezes into above snow layers, making the more cohesive), and destructive synthesis where the sun and heat melts snow flakes into rounder shapes (more unstable, and weighing more). Fast rises makes a market layer weigh more on the same fundamentals. After some time of backing and filling (constructive synthesis), there are better chances for a further sustainable rise.

Duncan Coker --- While doing some hiking up in the mountains recently, I got to thinking about emotion versus logic when it comes to trading and skiing. I wonder if a good philosophy is to follow the most difficult and fearful path emotionally, and it will usually be the best and most logical decision. In other words, the easy route is often the most perilous. In skiing, avalanches occur most often on relatively low angle routes of between 30-35 degrees. The steeper more difficult terrain is much safer. In the markets, if you look at the vix as a measure of comfort level, then it seems to relax after a rise, have ulcers after a decline. The trap is thinking that the market is some how safer after a big rise, more dangerous after a big decline. In the backcountry, the best time to ski a pitch is after a recent avalanche. Although the recency of the event might make it a bit fearful, it is in fact safer. I saw the debris for a previous avalanche the other day while skiing, and after a deep breath decided to jump on in next to it. Conversely, long periods of time without a slide increase the snow pack instability and chances of danger. But the lack of recency lures skiers in to thinking it is safer. Back to stocks, I wonder how many portfolio are now under-weighted in stocks after nearly three years of declines because they are now more risky, no longer as "safe" as SP 1400.

Duncan Coker -- The shiny lure often gets the fish's attention, and they may strike at it even if it is a poor imitation of anything swimming in the sea or rivers. This usually works best during times when the fish are in a feeding disposition and are willing to take on risk or ignore risk altogether. But when they are not feeding, the imitation must be very close, if not perfect, to get them to bite. Right now, the industry is fishing in a market that is not really feeding, even despite the recent 15% rise. The fish are looking at the bait very closely (thanks to SEC, investment banking lawsuits, fewer stock offerings). It will be interesting to see what causes the fish to start going after those shiny lures again. Eventually, they're going to get hungry again. In the meantime, the angler will probably do best fishing the waters that haven't seen fishermen in awhile. (5/6/2003)