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Daily Speculations The Web Site of Victor Niederhoffer and Laurel Kenner

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Daily Speculations is dedicated to the scientific method, free markets, ballyhoo deflation, value creation and laughter. The material on this Web site is provided free by us and our readers. Because incentives work better than no incentives, each month we reward the best contribution or letter to the editor with $1,000 to encourage good thinking about the market and augment the mutual benefits of participating in the Daily Speculations forum. Prizes are awarded at the end of each month by the Chair and the Collab.

This month's award winner:

10/19/2005
Shameless Ploy for 'Letter of the Month'

Dear Ms. Kenner and Dr. Niederhoffer,

The following is an shameful attempt to win letter of the month, but I swear every word is true.

I have been involved in the financial markets for about 15 years and have traded significant capital as a proprietary trader for the large banks on a "discretionary" basis for the last 10 years. Something started bothering me about the huge variability of my returns in about 1998. This coincided with my discovery of the likes of Victor Niederhoffer and James Simmons (Renaissance Technologies).

I decided at that point to embrace a statistical approach and have absorbed the works of Stigler, Niederhoffer et al., in addition to various works on multivariate comparison analysis -- so in a sense I am still "catching up."

Now to the point -- My beautiful wife has suffered through long hours/days/weeks of me buried in statistical texts and regaling her with tales of random this and non-random that. So it was that I prepared a scatter diagram for my wife (I know, I know!!) showing a negative relationship between my wife buying wildly expensive shoes and the "overplus" in our accounts. Well, the very next day, lying on my pillow, was another scatter diagram showing a PERFECT negative correlation (r= -1 with many observations) between my questioning of my wife's shoe buying habits and, ahem, marital intimacy that evening.

Her shoe collection has resumed its upward advance...................

Regards,

Shane James