Daily Speculations

The Web Site of Victor Niederhoffer & Laurel Kenner

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7/8/05
Dick Sears Commentary Riding the Current

 
I'm writing to you from my computer room, on
the third floor of a Victorian villa, overlooking
the broad sweep of the Hudson River.

The Hudson is an estuary, which means the
current flows in both directions. It is tidal as far
north as Troy, 150 miles upriver from Manhattan.
They say a log (or, I suppose, a wooden horse)
launched in Troy takes a year to reach Wall
Street. Twice each day it drifts down 12 miles,
but then the current reverses, and it gives back
all but a quarter mile of what it had gained.
But in time it reaches the sea.

The ebbs and flows of the stock market are quite
similar, though considerably less predictable,
alas. Nevertheless the market's flotsam (that's us)
does eventually get somewhere. The thing to
remember is that historically common stocks
produce a return of over a million percent per
century, as my friend Victor Niederhoffer is so
fond of citing. That wouldn't happen unless there
was a strong, reliable current under the market.

It's true that the market has been meandering in
recent years. Such periods are inevitable. But it
seems to me that at last we may have rounded
this bend in the river, and that the market's
natural current may now once again prevail. The
market's buoyant resiliency this week suggests
that may be the case.

Water, water everywhere, but not a drop to drink.

I say that because the tide seems to have gone
out in my post-GTI celebratory cocktail. As
Rumpole of the Bailey
would say, my blood
alcohol may be dangerously low. I'd best float
down to the kitchen for a refill.

The Week at a Glance

The London terrorist attacks had NASDAQ
futures down 35 points Thursday morning, but
by the closing bell the NASDAQ had turned in a
7-point gain. A robust Friday then followed. This
is a determined market.

Returns for the Week:
Gilder Technology Index (GTI):  + 3.7%
Nasdaq Composite Index (NSD):  + 2.7%
S&P 500 Index (S&P): 
+ 1.5%