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01/14/2006
Patterns of Life and Markets, by Victor Niederhoffer

Of all the things I've learned from Jim Watson, the admirable discover of the structure of DNA and director of Cold Spring Harbor Laboratory, the most important is that the best biology book of all time is "The Way Life Works " by Mahlon Hoagland and Bert Dodson. The former is a eminent molecular biologist and the latter is a illustrator. In one of the greatest collaborations of all time, they combined their talents to illustrate the profound principles that unite all things and yet make them unique.

Amazingly, Hoagland admits he learned much from Dodson about biology in writing the book because the ballroom scenes, dancers, coffee-makers, chains, construction sites, laboratories and card games Dodson used in his illustrations are actually highly informative and realistic models of what goes on inside living things. My favorite picture, for example, is the Chloroplast Ballroom, where jitterbugging electrons at a party show how light energy is converted into chemical energy, setting up the ion shuffle wherein a bouncer grabs each man as he dances threw and throws him into a machine that "reattaches the end phosphate to spent ATP molecules." It's the kind of illustration, reminiscent of Norman Rockwell's best, that you'll remember the rest of your life. The amazing thing is it also teaches important principles of ionization, angular momentum, the conservation of energy and orbits of molecules.

The book starts with 16 patterns and rules of life that tie everything together from the smallest organisms to the most complex. I have waited too long to apply these principles to markets. The only excuse I have is that I knew it would take a lifetime of study and quantification to do a proper job. However, I hope readers will excuse me if I take a stab at applying the 16 patterns to markets, since I've spent 50 years studying market patterns and believe the things that make life go round also make the markets spin. I'll start with these four:

Orson Terrill replies with insights on the similarities between trees and the markets

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