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The Chairman
Victor Niederhoffer

11/03/04
Revulsion

(with comment by Andrew Moe, Drs. Debra and Brett, and Daniel Flam)

When one realizes success in some endeavor, letdown often follows. "Life is no longer based on whether you're going to get it, but on whether you're going to lose it," Terrence Real, a family therapist in Cambridge, Massachusetts, told Psychology Today. A classic example was George Eastman, who ended his life after having achieved everything he had hoped for. I am prone to this kind of revulsion after winning a big tournament, and I hear that men sometimes experience this emotion after achieving the ultimate satisfaction. One is tempted to inquire whether the market might experience a similar letdown after achieving the supposed victory of its favorite horse and the concomitant 5% up open in drugs and the 15-point in S&P futures. One has succumbed to an acid test of that belief around the opening.

11/03/04
Revulsion Cont. Andrew Moe Weighs in:

An interesting study can be made of the time value of information. If the expectation of information is already built into the price, confirmation of the event removes its value. "Buy the rumor, sell the fact". However, there seems to be a decay function as the information is processed by the market (thanks to Mr. Rollert for decay).

Timeline:
K***y Calls B**h approx. 11:05 EST [ES 1143.50]
Market spikes 4 pts. in 2 min as the early adapters pile in
Followed by a 2 point drop in 2 min
Next a 2 pt rise takes 25 min..

Information processed (or perhaps absorbed), the market moves on. QCOM tonight.

VIX now below 14.

11/02/04
Revulsion: A Contribution from Dr. Debra

I agree. Any goal, be it the market, sports, politics, love has a built-in systems correction. It's basic physics: for every action there's an equal and opposite reaction and all that jazz. Conscious striving is so much more alive than goal reaching and its subsequent terror. I'm amazed that goal reaching has not been subliminally and behaviorally extinguished. Good fodder for self sabotage theory. Not many folks can speak to the agony of winning. Look at my dear little Red Sox. Of course they had to have such a dramatic and record breaking sweep. Seems outrageous, but not really. It couldn't have happened any other way. The sling shot will release in direct proportion to the degree to which it is held back.

But more to your point, the 86 year long despondency of Red Sox fans was really masked hope and bridled euphoria which is much better than what's in store now. Goals reached are the death knell of vitality. Perhaps my fellow Red Sox fans are now in for their biggest depression in 86 years. And Bush/Red Sox fans( however rare) are already at the ledge of the bridge I suspect. Ah, the agony of winning.

11/04/04
Revulsion: "Here is Dr. Brett"

"When one realizes success in some endeavor, there is often a sense of revulsion"... Section 277 of Nietzsche's Beyond Good and Evil translates: "It is too bad! Always the old story! When a man has finished building his house, he finds that he has learnt unawares something which he ought absolutely to have known before he began to build. The eternal, fatal 'Too late!' The melancholia of everything completed!"

11/04/04
Daniel Flam adds...

I know this may seem corny but this explains why the bible has to go to great lengths of text to say that each step of creation g-d looked back and said "wow this is good". No matter what your belief is, it is a great moral of nature - to be content with your creation, yet wake up the next morning and create something new. As a matter of fact the Jewish belief is that every minute the world is recreating itself (ever changing cycles anyone?) so it is a good thing in it's base, and every one of our moves is a good thing for nature. So there are no good or bad moves in the market, just another creation every day. Relation to market? Ever changing cycles creates something new every day, yet there is something fundamental about the market that allows us to make money there.

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