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The Chairman
Victor Niederhoffer

This book by Patrick O'Brian is one of the novels, like Don Quixote that I love to reread and each time I find a new level of meaning and uplift from it. I find when I listen to the novels on tape, particularly the Patrick Tull reading of them on a Border's Book tape, the connotations and allusions open up deep layers of emotion within me like a good listen to a Beethoven Symphony. As you may recall, the Reverse is replete with allusions to speculative excess. It revolves upon a plot to snare Aubrey into naively ruining himself by engaging in blatant insider info on the end of war between the English and the Napoleonic French. Indeed the back and forth in the funds on the shifting likelihoods of Napoleon abdicating is very similar to what we just saw every day with our own elections.

The crowning glory of the novel is one of the most heroic moments in literature, akin to the railroad scene in Atlas, where Aubrey's former shipmates refuse to allow one stone to be turned against him as he is placed in the stocks on a trumped up charge. The scene is an embellishment of what actually happened to Cochran, who all the Aubrey material is based on after he was convicted of insider trading.

But on my most recent listening, today, the thing that stood out the most were the intricate webs of deception as the Surprise, a sweet sailing ship under Aubrey on its last legs tried to maneuver against the American privateer Spartan. Both ships tried to gain the weather gage on the other, (see the pres on this ), but without the other side thinking that they were trying to gain the weather gage. Similarly Aubrey had to disguise the Surprise so it looked like it was trying to pretend to be a man of war, but so that the disguise was off by a slight factor that would lure the enemy to think they were trying to disguise it but failed.

Okay that's an example of level 4 deception that was common among the fighting tactics of 200 years ago. From a cursory reading of Herodotus on the Peloponnesian War , and Keegan on intelligence, it was also common 2000 years ago. But thereby hangs a reflection on markets. One that one can never make too often. If war strategy and games strategy, and nature strategy, has this level of deception embedded within them as a matter of routine, of course the market has a similar level within it. That's why I eschew the opening breakout stuff, and the patterns that have worked for this speculator or that for 35 of the last 36 times et al. That's why I get so upset when an imposter 'snatches' a pattern they learned from us, performs a cursory test of it over the last 2 years without any stats on uncertainty or changing cycles. Not only do they ruin the pattern, but they lose so much money for others who follow it (witness the Reverse of the Medal), for example with Nasdaq up 9 days in a row with a nice 7% move to throw you completely out of symmetry and synch. In any case, it's good to reflect that things are seldom as they seem in warfare, markets, or patterns.

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