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Mojave Crossing, by Victor Niederhoffer
I can never read a book by Louis L'Amour without finding a hundred things that the heroes of his story know and do that would be good for me to incorporate into my life, especially when it comes to reading sign, or tactics in war. Mojave Crossing is one of his rather minor books, that I have never seen as recommended among his top 50 but here's what I learned from just the first few pages of the first chapter. Tell is carrying some gold he bought on the cheap in Colorado on a speculation that he can sell it in California. "It was talked among the Arizona towns that speculators out there would pay 18 maybe 20 dollars an ounce for gold while in the mining towns a body could buy it for 16." L'Amour notes that the differential was caused by the risk of being killed by outlaws and Indians in transporting it.
I note that almost all arbitrages have that same kind of risk, and the Amaranth disaster was a case in point and this time the Indians and Outlaws were the members of the Merc and the big houses that knew of the route that natural gas arbitrages would take from spring to fall in an attempt to catch that 10% differential. I also note that the time was 1870 and gold was 16 an ounce and it's was 300 in 1980, a 20 fold rise in 110 years compared to the 10,000 fold increase in the average stock during that period. The power of compound interest in magnifying a 3 % a year return in the archetypical commodity versus the 10% a year return on the randomly selected stocks, and all that I have said about the differences between the long term returns of the two, and the terribly misleading academic studies that show commodities comparable to stocks, is illumined.
The instinct to trade as well as the instinct to throw a ball are perhaps the two characteristics that most distinguish a human from the other animals and even a novice like Tell, who "had never been dealt any high cards in society ", expressed that human tendency when he saw a 10% arbitrage differential. He also knew enough to take account of reducing frictional costs by buying mining equipment in California to take back to the Colorado gold seekers thereby completing a round trip with profits on both sides. The great increases in value that the companies catering to this trading instinct have had, including the recent acquisition of CBOT by the CME, and the performance of EBay show how catering to that natural inclination of humans can be so profitable.
L'Amour knows to start all his books with a gripping beginning which he learned from his days of stop them in their tracks immediately or else they won't read your story in the pulp adventure magazines he started working for. The openings of the markets serve the same purpose in inducing action and all the other emotions that lead so much to the frictional costs that so many of the ephemerals contribute to the higher trading firmament.
In this case, a beautiful woman causes Tell to remember that it's necessary in the hills to sleep with a bible under your pillow because before a bad one can count every word in it, the night is over, and there's no time for mischief. The adage is followed religiously by most good chess players, who are always ready to Schtaaaaaal by sitting on their hands, and writing their moves down before they move the piece, as well as rechecking before they move, a very good procedure showing the weakness of the Gladwell blink procedure in all elementary games. It's also a very good lesson for all traders who should count all their moves in advance to have a proper foundation for a trade. The beautiful woman's eyelashes in this case causes Tell , who "was more trouble than all the snares in the creeks of Tennessee" and that underlines lesson number 1 of trading " Romance and Trading don't mix. " .I have been very fortunate since my debacle in 1997 not to be able to afford a beautiful black haired woman with the "clearest, creamiest skin you ever did see, and a mouth that prickled the hair of your neck" although 30 years ago I did violate this rule with Susan Niederhoffer, and it's the exception that proves the rule. L'Amour is concerned not only because he doesn't have a bible handy for proper counting, but because he saw dust on his back trail like "maybe there was someone back there that wanted to keep close to me without actually catching up". How can that one be quantified? How about the small rise the previous day that started out looking terrible, but then really led to trouble the next day, when the decline caught up, like the Monday October 16 rise followed by the ambush before high noon on Tuesday, October 17 in S &P. These are just a few of the thoughts from just the first few pages of this great adventure which I listen to going back and forth to the trading floor, in the new Blackstone edition, which for once doesn't have the world's worst narrators, and actually enhances these classic adventure stories instead of ruining it the way so many of their previous narrations were likely to do.
Kind thanks to Ckin for supplying the photo of one of the main roads through Mojave on the way towards Kelso Station.
Bo Keely responds:
I'll wager that the Mojave Crossing that Vic describes that Tell traveled is the Mojave Trail that I walked four years ago and wrote about. It's the famous old Government Road that was the original passage for the Indians, then the soldiers followed by the settlers-- from Arizona on the Colorado River and on west toward Baker, California -- where today you can see the world's tallest thermometer that usually tops 110 degrees.
It was only 100 when I began the 150 mile trail from the Colorado River in September of '02. Look at the photo that Vic attached: The sky and shadows suggest that the pictured highway runs north-south and its appearance is like the only paved road that I crossed in my western passage. After crossing (I believe) the paved road and climbing a few miles into the scraggily hills, I stumbled onto a ghost town as described in my short story The Mojave Road:
Walking to investigate, there was a sign "Black Cat Bar" and another on an adjoining building "Riley's Hotel". Yet as I walked into the area all was still. I thought I had entered a set for an old West movie, which in truth I may have. Striding into the barroom a breeze entered with me. A card from a dusty deck blew from a card table and I gazed around with an eerie feeling. It was as though I had stepped through a century in time for the shelves were stocked with essentials from that era. Same with the Hotel. Nearby sat an outhouse with a sign "Judges Chambers" that made a good picture. I walked from the tiny ghost town not knowing quite where I had been.
Water was scarce, but there were springs every two days that sufficed. Like Tell in L'Amour's book, I was speculating but not for the price of gold. I was looking for land to settle. Old corrals and adobe houses dotted my trail usually near the springs where I hoped to pick up a parcel on the cheap. However, one thing stopped me short: The Mojave Rattler. This is the most venomous (neurotoxic as well as hemotoxic) snake in the USA, and I saw a couple very pretty lime green ones that paid me no trouble. At Marx Spring, however, I looked upon an abandoned ranch and squatted before a weathered adobe hut minus a roof to snap a photo. There was a clicking as I released the shutter; it was not the camera -- I had inadvertently framed a rattlesnake.
Crazy. I wouldn't buy dirt in that place where Tell had passed if you paid me in gold. I finished the trail in one week and caught a fast freight train home. But I recommend you read L'Amour's book before taking my word about the habitability of Mojave Crossing.