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Victor Niederhoffer


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Review by Victor Niederhoffer: The Hidden Language of Baseball

I hasten to recommend The Hidden Language of Baseball by Paul Dickson. It's about how signs and deception have influenced the course of baseball. Did you know that there are about a thousand secret signs given in a baseball game?  The infielders signal the outfielders, for example, on where every pitch is going. Umpires signal their colleagues to come to their aid when a manager gets overheated. A squeeze play involves about 10 signs starting with the coach to the batter to the runner, back to the coach and the hitters, and then from the opposing catcher around the merry-go-round to his fielders, and then a pitchout or a strike -- and the whole thing starts over again.

The book leads me to consider the influence of secret signs on markets. Sure, there are the anecdotes about how spotters were paid to wait by the elevator and signal up to the floor when the silver and gold trader for the Hunts was on his way up to buy 1,000. On the IMM, a Nasdaq broker had signals in his shoes so he could front-run any big orders coming in from the public. And there are the white shoe brokerages that apparently make a business of reading signs from their research department and the customer order flow so they can steal the signal.

But what about signs that we can all read. in the first hour of trading on Monday, like the lead-off batter in baseball? Is it significant? Do things in markets occur that can be tested that have analogies to the transmission and stealing and reading of signals in Dickson's excellent book? I declare it open season for such studies and request my colleagues and others to contribute quantitatively and qualitatively to the fray.

Art Cooper replies:

It's more like quarterly window-dressing, in which small purchases are made (though they otherwise would not have been) in order to increase the market value of pre-existing major positions.

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