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.

 

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7/30/04
Henry Carstens: The Trend Is Your Friend

Don Van wrote: "Finding trades with an edge is not where most fail"

I submit that it is indeed where most traders fail.

By definition, ever-changing cycles moves 'the edge' and when you find it, you have found only the echo of yesterday and the illusion of tomorrow.

By the time you get to today, yesterday's edge has moved silently on and whether or not it deigns to meet you at tomorrow is another story.

But it is a fascinating story,

7/30/04
Russell D. Sears Comments

The "trend" will always "be your friend" as long as bosses, investors in your hedge fund and any other authoritative antagonist has access to graphs an can judge you in hindsight. You never want to be on the wrong side of such a clearly "bad ideas", looking back. Thus you must set limits to your universe of acceptable trades, going forward. Sounds like an opportunity for those whoses universe of investments are not limited by the need to not look stupid in hindsight.

7/30/04
Yale Hirsch Responds

I made up something that I believe applies here perfectly: IGNORANCE + PERSEVERANCE = SUCCESS! Sometimes with some Mensa-type entrepreneurs with fantastic revolutionary concepts who continually commit self-sabotage over the years, I say they must have failed IGNORANCE 101 in college.

7/30/04
Russell D. Sears Responds

For example, many academics are afraid, and that's why they keep regurgitating similar paper that say nothing new. Learning is inhibited by caution in experimentation.

What a paradoxical world when you apply your rule to the study of risk management. Numerous personal examples is what gives me boldness in my charge into the world of finance. As I am armed with far less credientials, and clearly a duller sword than some of the sharpest minds in the world.

7/30/04
Ari Siegel Comments

IMHO: In every field, the greatest opportunity for lofty success goes to those who are not afraid of looking stupid. For example, many academics are afraid, and that's why they keep regurgitating similar paper that say nothing new. Learning is inhibited by caution in experimentation. Children who are afraid do not learn. Dogs who are afraid do not learn. Traders who are afraid do not learn. People who live in a world of 99% confidence intervals will have a tough time. Perhaps the recent reduction of the risk tolerance bands in our society may inhibit much new learning on many fronts...

7/30/04
James Sogi Responds

Ari Siegel wrote: "In every field, the greatest opportunity for lofty success goes to those who are not afraid of looking stupid." Yale wrote: "IGNORANCE + PERSEVERANCE = SUCCESS!"

Back when I was younger, back when I knew so much more than I know now, I was not afraid of looking stupid. While not lofty, things went ok. I never felt stupid. As I get older, I know what it is to look stupid. Its not easy. Though I am not afraid, I know now that events can require internal fortitude, bracing for pain. Yale wisely intones: it takes perseverance while enduring pain to keep moving forward toward success. Success is not just a place, but a process, with failure 6" away on every side. The /opportunity/ for success may come to those without fear, but many of the fearless have fallen by the wayside. Thus the loftiest success may not come to those with lack of fear, but to those who can take the pain of opprobrium, to persevere in the face of failure, to overcome defeat, to the grizzled old veterans of many battles.

7/30/04
Yishen Kuik Responds

Perhaps this partially explains the phenomenon of why a great deal of Nobel Prize winning work by scientists tends to have been accomplished before they were 30? Also true in Mathematics I believe. This is despite older scientists who have more experience, larger labs, larger grants and larger teams at their disposal. The recent departure of Crick of Watson-Crick DNA fame is a good example. Crick was a recent PhD and Watson was only 23 at the time I think.