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)
Rogue Waves Thread
James Sogi on Rogue Waves
Thank you to Mr. E, who wrote:
Once dismissed as a nautical myth, freakish ocean waves that rise as tall as ten-story apartment blocks have been accepted as a leading cause of large ship sinkings...
Every ocean going sailor knows that Rogue waves are regular events in the ocean. Each day surfing, at some time during the day there will be one wave that is triple the size of the average size of the wave during the day. Waves this size come almost every year in Hawaii in the winter. At sea, the waves are sine waves running at different speeds and different directions. When one wave train catches up with another, the peaks match up and the wave doubles compared to surrounding waves. The valleys meeting up create "holes" in the water. When that wave matches up with a peak from a third wave train the single peak, made of three coincident peaks, can triple in size, and does so regularly. This phenomenon appears with regularity in a doubling as the "set " wave" or largest wave in a group of three to six waves every 15 minutes or so.
This has particular application to the markets. Prices appear to form in waves in sinusoidal patterns. These price wave patterns are generated by the various inputs driving price change from various sources, of varying strengths and directions and times. When one wave pattern set off by some market, political, fundamental, economic event catches up with another underlying wave pattern, there is a spike or peak and the price is amplified. When three or more price waves match, a; triple size price wave occurs. like yesterdays price action for example. Then occasionally, there is a rogue wave, a tulip craze, and internet bubble. The oceanographic statistical analysis could be adapted to predict the price wave spikes, and forms or condition in which they are likely. Rosenthal, in the article believes, ""Having proved they existed, in higher numbers than anyone expected, the next step is to analyse if they can be forecasted,"
Let's try contact The Principal Investigator, Susanne Lehner, Associate Professor in the Division of Applied Marine Physics at the University of Miami, who also worked on MaxWave while at DLR, with Rosental a co-investigator on the project, and see if they are willing to share their findings with the Specs. German Aerospace Centre (DLR) has a way to mathematically transform raw data into averaged-out breakdowns of wave energy and direction, called ocean-wave spectra and automatically search for extreme waves. If we knew the formula, we would know the conditions and time when the big SLAM will hit, and adjust our risk accordingly.
Mr. E on Rogue Waves
As someone who has spent years deep sea fishing, I can testify that huge singular waves can develop in a flat sea that are larger than my boat....this has happened when the boat was drifting close to and far from shore, often when trolling way offshore and in transit to the Hudson canyons 100 miles or so offshore...
The real dangers seem to develop at the continental shelf where the huge thousand feet drops off the shelf seem to create large waves with the help of invisible currents far below the surface ...
Being aware of this, tacitly, shapes ones intensity and grasp for the unexpected....
and it allows one to be highly critical of liberals who never see the "UNANTICIPATED" consequences of accepting unnatural actions...there are always consequences ....just like believing there are no rogue waves because you can see there genesis or their tracks or their victims.
Roger Arnold on Rogue Waves
I have briefly discussed here the Austrian school concerns about the economy this year. Mr. E recently assured us here that a depression will occur; as I recall. Bud now mentions Kondratieff for what I believe is the first time I have seen on the list. Last night I was at a seminar and at the conclusion the recently retired head of bank supervision for the federal reserve board came up to me, introduced himself and asked me point blank - "do you believe in the Kondratieff wave and if so where in the cycle are we now". I draw no conclusion from this and don't know if it is a good sign or a bad sign for the economy / capital markets, or just background noise.
Art Cooper on Rogue Waves
Darn shame you didn't hear Mr E's Depression scenario presentation at the Spec Party. He predicts a serious depression in the US w/in the next 6 - 7 yrs because:
Ken Smith on Rogue Waves
I have encountered three great wave situations. Actually many more, but these three are memorable.
One on a Mickey-Mickey tug boat in the Bering Sea. Others in mid-Pacific Ocean.
The Mickey tug boat was built of thick wood planks, maybe eight inches, have forgotten exact dimensions. Anyway, thick.
I was in the wheelhouse steering the tug, at the wheel it is said. The captain and first mate were with me. The wind was blowing over 100 mph. We don't know how hard the wind was blowing because the instrument that measures the wind had been destroyed by the force of the wind = it broke registering 114.
The wind was the cause of the wave size. The Bering Sea is relatively shallow and a great wind force of lengthy duration will kick up the sea and destroy fishing and crab boats and any thing it decides to drown.
We kept the bow of the tug heading into the waves, with power on so as not to broach, to get in the trough and run parallel with it. Got to have power, and we did, twin screws and two Fairbanks diesels of considerable horsepower.
When at the bottom of the trough and looking up the crest of the waves, all of them, were over 100 feet above our heads. It was like standing at the bottom of a mountain and looking up. We road up the wave, crested, some fear as the bow popped into open air then crashed down.
This kept up for something like 30 hours before it subsided. Many craft were lost; those which were not built to sustain such force and others just plain unlucky. Many craft had been able to foresee the weather and had gotten anchorage behind an island near the coast line, a sort of shelter, and these although badly beaten, all survived.
On the Victory ship, a freighter made for WWII and kept working long after, made of steel plates, quite thick, but brittle in contrast to the wood planks in the tug boats.
We entered a storm that lasted several days. At the worst of it we thought we were done for. Waves tore off the bulwarks on the prow, right down to the deck. Lifted the forward gun tub off its foundations and nearly tore it completely away. This was at the end of WWII as we were coming home to Seattle from New Zealand.
Also I was on a tug boat heading for Guam towing two huge barges loaded with construction equipment, mostly Caterpillar products. We got warning of one of those waves being written about on the list currently. It had been reported somewhere and was heading our way. Well, it came behind us - directly - and this steel 100 foot tug just rode up with the wave as if it were nothing. In mid-ocean in a deep sea the wave just rides underneath and lifts you up. No destruction. In a shallow sea or near the coast it would be devastating.
Tankerman B,C,D, and E
Bipin Pathak on Rogue Waves and the "Missing Wave"
The recent discussion about rogue waves on this August list led to a discussion here with some friends. One of them mentioned "missing waves" thusly: I once read about the seaman's dreaded "missing wave". In this scenario there is literally an entire wave of water missing from the progression. Seamen who have survived a missing wave tell of traveling up and down when suddenly the ship is suspended in mid-air, 10's of metres in the air, then crashing the full amplitude of the wave to the water below. Since water doesn't compress well, the ship is smashed apart.
He went on to state the following:
The wave pattern that was supporting it isn't there anymore. I'll give you a hint and let you do the homework.
Look at the difference between group velocity and phase velocity.
This is a good place to start...
Gibbons Burke on Rogue Waves
In the Gulf of Mexico, where I worked one summer as a deckhand on a crewboat, watermen told stories of giant natural gas bubbles, or a swarm of small bubbles released from the sedimentary layers below (or broken pipelines) which can cause a boat to suddenly lose buoyancy. My captain was meticulous about keeping the salon and wheelhouse companionways dogged down against such an occurrence.
Russell D. Sears on Rogue Waves
With all this talk of rogue waves occurring in economics, it seems strange that no one on the list has talked about the difficulties in synchronizing waves.
Generally in nature it appears that waves naturally diffuse, rather than synchronize.
It appears to me that these waves occur in the ocean by the massive structure of the continental shelf. While naturally occurring, there rarity and necessary conditions make it seems hopeless to predict or better yet harness the power of these waves.
Vacuum tubes where a breakthrough in synchronizing a waves to amplify a signal, then transistors, and finally computer chips. Very ingenious devices.
Finally, LASERS where predicted early in the 20th century, but took till 1960's to produce such a synchronized light. First it was trapping light in a pure ruby to produce a red beam. Now its reactions to very predefined electron emissions.
Point is, the question is not "do wave occur in economics?", but :
Perhaps I have stretched the analogy too far. Further because I don't have the sophisticated knowledge to see how such a economic LASER is developing, I snicker at what I see as crude nudes, not the highly refined abstract art. But in any case, I am not buying it.