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8/4/2005
Briefly Speaking, by Victor Niederhoffer

The oak is well described in its contributions to civilization and survival strategies in the book Oak, The Frame Of Civilization by William Logan. While the oak is not the record holder in any niche, it seems to survive in all niches. "They are so successful because they never found a niche". They can survive everywhere, and their distribution throughout the world seems to be coterminous with civilization and trade. Further the oaks preceded the growth of trade and civilization everywhere rather than the other way around. In short, they are generalists that seem to survive with many of the same flexible strategies that humans have.

I was led by reading this book to conduct a study on generalist strategies in stocks in the OEX 100. I looked at the two months with the largest declines over the last 2 years: July 2004 and Jan 2005 (both about 6 percent). I next looked at the 10 companies that showed the greatest rise during those months. I found that during these two months, the average rise of the 10th largest gainer was approximately 5 percent. A list of the companies with their subsequent performance over the next five months to yearend for the July gainers, and the next six months for the 10 best January gainers is as follows:

July 2004 GainersJan 2005 Gainers
Ticker % Return
BDK35
ATI15
LTD15
BH6
VZ1
MCD18
HAL32
EXC32
SBC5
XOM5
Ticker % Return
MAY23
ROK-8
G3
HCA11
ATI23
AVP-10
MDT3
HAL43
EP20
MO5

The gains for the average stock for the next 6 months in both periods was approximately 12 percent. The gains for the July gainers appear to be about 1.5 as great as the average stock during the subsequent period. Note that this is a hand study, made during the period of the spec party, when invariably this firm loses considerable money but it is suggestive nevertheless and I believe the extensions of the strategies of the oaks to stock research with related more extensive studies might be fruitful.

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