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27-Oct-2006
One of the Greatest Men & More on the Fantasticks..., by Victor Niederhoffer

One of the Greatest Men I have ever met is Bill McCarthy, formerly a student of my father, and chief of the bomb squad in New York, commanding officer of the public morals squad, chief undercover cop, a professor at John Jay, a psychiatric nurse, a championship boxer, the author of Vice Cop, the best novel about police I have ever read or seen, and President of an international security consulting firm. The favorite musical of his wife, Millie, is the Fantasticks, and after Bill retired, she saw it 30 times or so. Often Bill would pick her up on Sullivan Street where it ran. Sullivan street was also the location of many of the clubs frequented by residents of the Italian underworld. Bill was well known on Sullivan street from his previous work in undercover, where he had made many of his thousands of arrests. And on each occasion that Bill met her on Sullivan street, the entire block would empty out as all the denizens of the club, warned by their lookouts, exited before the presumed arrests were forthcoming.

Acting in a self damaging way based on previous vivid memories (Bill had a patented method of making arrests by punching himself in the head hard in front of the criminal and asking if the criminal wished to resist), often occurs in the market. The October 19, 1987 crash has been a vivid memory that has kept too many out of the market since that time, especially around the anniversary of the event. As counted out here by Mr. McCauley, such anniversaries have been particularly bullish since that time. Indeed, it is no coincidence that on the 19th anniversary of the crash, the Dow closed above 12,000 for the first time in history.

Of course, now your average investor has a vivid memory of the breakthrough 12,000 on an anniversary, so one hypothesizes they will not be as wary of the October 27, 1997 anniversary today. One hypothesizes that weak longs still exist as of today, as compared to the aforementioned.