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3/16/2005
Victor Niederhoffer Discusses The Big Con

The Big Con by David Maurer is replete with insights that illuminate market activities. Most modern big cons evolved from the brilliant innovation of Ben Marks, who opened the first dollar store in Cheyenne circa 1870. The store served as a lure for small cons held inside. Amazingly. the market has evolved among similar lines, proving the concept's vitality and value. Consider, for example, the Mitt store where farmers were conned in Ben Marks' day:

"The Mitt store masqueraded behind the front of a legitimate business in the South, under the guise of an institute where farmers were to be instructed in the control of the boll weevil or some other agricultural pest. Old Farmer Brown sometimes used exhibits of cotton bolls in various stages of destruction, together with bottle specimens of the weevil showing its development from egg to maturity. A lecture was used as a stall for the farmers from the cotton states and served to lure unsuspecting farmers into his monte game."

Note how even in those days, the con used academic pretensions and credentials and pictures of destructive events to lure the mark into losing his money.

To me, the modern counterpart of the bottle specimens would be the PowerPoint presentation of destructive events in the market like the crises of 1987 or 1997. No need to note that all stock market indexes have shown narrow tails relative to a normal distribution with the same variance for the past two years. It must be emphasized over and over that "the big con offered the victim an opportunity to make money by swindling someone else; it employed shills to stimulate his gambling instincts. ...and a confidence man prospers only because of the fundamental dishonesty of his victims."

While a myriad of blatant forums have evolved in markets for stimulating the gambling instincts of the public, the fundamental dishonesty of the public is more the desire to make easy money, without work, without testing.