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6/15/05
Inspirations for Counting, by Victor Niederhoffer

  1. It's nice to be a poster boy for those who get their kicks from wallowing in someone else's misery. During my 1997 disaster, I mentioned that I find it hard to engage in romance when losing. The trendists and their followers had a field day with that one, saying things like, "It must have been a long time between drinks for Victor." It's now been 23 days since a -10 day for the S&P, and 17 since a +10, based on the last eight years of data. After a period of 15 to 20 days without a drink of a +10 day, if you wait for the next +10 day it's an expectation of +7 over a period of 14 days,  which turns out to be quite consistent with chance. After a period of 20 to 30 days without a decline of 10 or more, it's  slightly bullish, with an expectation of +16 over an average of 15 days to the next decline of 10 or more.
  2. The Henin-Hardenne backhand is the most beautiful tennis shot seen in many years. It is characterized by much bouncing on the balls of the feet, a backswing over the head, a drop of the racket head below the wrist, and then an accelerating unbroken follow-through with a firm wrist ending high above the right shoulder. (Here is where a video clip is worth a thousand words.) It reminds me of a week where Monday is down and the closes on Tuesday, Wednesday and Thursday are above Monday's close -- the expectation for Friday is down 0.5. The reverse pattern -- where Monday is up and the Tuesday, Wednesday and Thursday closes are all below Monday's close, is an expectation of down 1 with a Z of -0.6. Completely random in both cases.

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