1/17/5
Larry Willams comments:

Vic's point on trees and the ABCs can be applied elsewhere; note how many best-selling authors' last names begin with a letter in the first half of the alphabet.

Then look on a book shelf how far down authors' names ending in, well, say, "W" appear, and you see a good example of stacking and lost in space (for sure it could not be the content of the book, could it?)

1/17
Yishen Kuik comments

A quick glance does suggest that Mr Williams' intuition is on the money but I do not possess the statistical acumen to properly interpret the counting results and hope someone else more proficient might take up the attempt.

A Quick Counting Study from Amazon's Top 100 http://www.amazon.com/exec/obidos/tg/new-for-you/top-sellers/-/books/all/boo ks/1/ref=pd_hn_us_b/104-5162431-8673563)

Number of authors in Amazon's Top 100 list with last names beginning with

ABCDE 35
FGHIJ 25
KLMNO 21
PQRST 25
UVWXYZ 5

Possible biases 1) What is the underlying distribution of last names by alphabetic order and is this study significantly different from that? Have we simply just described a bias in last names?

2) Multiple Author bias - multiple authors tend to be listed alphabetically, therefore a study that takes only the first listed author will have a hidden bias towards earlier letters. To avoid this, all authors listed were included, hence a sum total of 111 authors out of a Top 100 book list.

3) Outlier bias - Dan Brown of Da Vinci Code fame has multiple books on the Top 100 list, as does Malcom Gladwell and JK Rowlings.

Raw Data

a 8 
b 9 
c 9 
d 5 
e 4 
f 4 
g 10 
h 5 
I 3 
j 3 
k 8 
l 3 
m 6 
n 3 
o 1 
p 6 
q 
r 6 
s 10 
t 3 
u 
v 
w 3 
x y z 2 


Jason Goepfert comments:
 Looking at the current composition of the S&P 500, 
there is an average of 25 symbols beginning with one of the first 13 letters of 
the alphabet, but only an average of 13 symbols for each of the last 13 letters. 
Symbols beginning with A, B or C make up more than 26% of all symbols. 

The average one-year performance of symbols beginning with A-M was 5.9% while 
the average of N-Z was 9.3%. This is complicated by the symbol distribution, 
however (e.g. the two "Y" stocks, YUM and YAHOO, were up an average of 41%).
 
                                   

				
01/18/2005
Trees and Markets, by Victor Niederhoffer
				
				

                  The axiom of uniform stress is defined in
 The
Body Language of Trees  by Claus Mattheck and Helge Breloer as "the 
                  tendency for all self optimizing structures to make as 
                  economic a use of their material as possible, and to become as 
                  strong as necessary to perform their function." They allude to 
                  such mechanical systems as tusks of a warthog, a tree's root, 
                  a tiger's claw, a chicken's leg, the junctions of a branch. 
                  The authors apply the concept to every aspect of the parts of 
                  a tree, showing for example how geotropisms in trees are 
                  designed to fulfill a uniform stress load by bending the 
                  leaves and its crown in the direction of the wind: "This in 
                  turn reduces the whole area of its crown that is presented to 
                  the wind, which in turn reduces the wind load and therefore 
                  ultimate also the wind bending moment of the stem."
                  
The question we are wrestling with here is what are the 
                  stresses on the prices that a stock sell at. And how can the 
                  points from which the stresses occur be quantified. Does it 
                  relate to the thickness of prices that have occurred in the 
                  recent past or the maximum and minimum that it has set within 
                  the last period? How does it relate to the previous horizontal 
                  and vertical movement that has occurred and the strength of 
                  its root system? This seems like a fruitful area and doubtless some tests 
                  will emerge. Read more on 
                  trees and markets
                  
George Zachar comments: 
                  
I would posit that price is an artifact of the stress on an 
                  issue, with the stress itself exerted by buying and selling, 
                  to wit, volume. 
                  
Now, we know that volume has proven to be an infertile 
                  field of study, so I am left with a quandary. 
                  
Is there something about volume, or the distribution of 
                  ownership ("strong" hands/"weak" hands/concentration) that 
                  influences the distribution (pressure points) of stress?
                  
Russell Sears comments: 
                  
It would appear that the examples given on non-uniform 
                  stress optimization are due to non-uniform competition. 
                  
1. Trees by the river edge. 2. Trees competing with power 
                  lines. 3. Trees with more sun on one side. 4. Trees on steep 
                  hillside. 5. Trees with roots limited by rocks. 6. Trees 
                  facing high prevailing winds. 
                  
Such trees seem exposed to the shift in stress from a more 
                  uniform or new direction. Such as. 
                  
1. Erosion of the riverbed, flooding, shift of river bed. 
                  2. Ice or wind. 3. Rockslides or mudslides 4. Abnormal wind 
                  direction, ice or new competing tree protected by its 
                  pioneering efforts. 
                  
Given that stocks beta tends to decay to 1, uniform 
                  competition all reacting to the environment uniformly. 
                  
What effect does non-uniform stress have on stocks? Would a 
                  reversal of the non-uniform stress cause a break?
                                   

				
 
                  
01/19/2005
Tom Ryan on Tree Roots
				
   
There are generally 8-10 classes of tree roots: hanging, epiphytic; tap,
lateral, parasitic; stilt; banyan; buttress; breathing; reproductive.
the most spectacular tend to be the stilt, banyan, and buttress roots
because of their large size above ground.  Buttressing, however, is a
misnomer as counting has shown that these types of roots are most
prevalent on the windward and upslope sides of the trees, rather than
the downslope or lee side. From Menninger "Fantastic Trees":  "although
the term buttress is often in use to describe the habit of these types
of roots, it would appear to be an incorrect general description of the
development or modification of the root.  Observations show that the
function of these types of highly visible and often spectacular roots is
usually a pull against the stem and crown in cases of stress, therefore
they do not function as buttresses but rather as guys or stays. Leaning
tress have their greatest developments of these roots on the side away
from the direction of trunk slant. Similarly, trees growing on a hillside
have larger and more prominent roots on the upper side of the slope. in
such cases it is obvious that they are subjected to a tension rather
than a compression force."

This suggests that the principle of least rooting effort involves
development of a system of stays and that the trees readily recognize
prevailing wind conditions. In the spirit of the initial post by the
chair, one wonders if this has implications for stock prices, that is,
that the longer the price has stayed in a relatively narrow range and
the stock has been sending out its lateral root, the more likely it is
to regress back to its median of that range when a hard wind blows it
into the extreme end of the range (on either side), and whether a
substantial new high or low out of that range presages a broken root and
uplifted or crashed tree





             
                  
Russell Sears comments:
                  
A couple of Thursdays ago we had an ice storm, leaving the 
                  trees with about 1 cm thick ice on all sides on the trees. 
                  
A few observations from my runs. 
                  
1. The trees in the forest areas withstood the storm with 
                  very few branches broke, but the trees in the city suffered 
                  heavy damage. Yet the damage came from the mature trees. The 
                  homes built around these mature trees displaced them from 
                  their natural setting. Technology displacement come to mind. 
                  When the bad times come these solid companies find themselves 
                  unable to adapt to their environment. 
                  
2. Often the tops were snapped off the trees, especially 
                  near electrical lines. A tree pruned off one side for the 
                  lines left the tops unbalanced. Companies with unbalanced top 
                  pay may be in similar danger of snapping. 
                  
3. Friday and Saturday was cloudy and in the 30s, so almost 
                  all of the ice remained by Sunday. Sunday it was in the 40s 
                  but cloudy in the morning. I fully expected the ice to be gone 
                  before my long run in the afternoon, but it was not. 
                  
There was very little melt-off until the sun came out 
                  during my run. Leaving me to run through a sparkling crystal 
                  cathedral. Which was heightened by the quiet melody: Ice 
                  chiming like miniature church bells as it fell from the 
                  branches, racing to unite with its preceding duo cymbal of ice 
                  below. The west side of the trees soon restored their reach 
                  toward the heavens, while the more shaded, east side remained 
                  drooping. 
                  
All this left me speculating that cold harsh news is 
                  all-inclusive, but warmer, drier conditions still need the sun 
                  to shine on the individual branches before they awake. And one 
                  side often melts first. Small cap/ then large caps. Growth 
                  then value. But this needs counting.
				  
James Sogi comments: 
                  
Timber can be a good investment in itself rather than as an 
                  analogy to the markets. My good friend has a 150-acre tree 
                  farm 1/2 mile up the road up in the rain forest where he has 
                  planted rare species of mahogany, sandalwood, balsa, Spanish 
                  cedar, koa, ebony, Tune, teak, koa, bubinga, ebony and other 
                  rare hardwoods. In 10 years some have grown to 90 feet and 
                  over 14" diameter. Some will grow 1000 years to 400 feet in 
                  height and 6 -10 feet in diameter. 
                  
A mature koa tree 40 years old has 3000 ft which at $20/ft 
                  is worth $60k today. Assuming increase faster than the rate of 
                  inflation, not counting increase in land, add to that the 
                  value added of the dwindling worldwide supply, and the growing 
                  timber, the investment looks promising. Some large funds have 
                  invested world wide in timber operations. The risk is of a 
                  hurricane flattening it. The crop will take 30-40 years, and 
                  at 10 years he is harvesting smaller timbers and some balsa. 
                  He is growing organically with renewable techniques. He trims 
                  the lower branches to promote straight trunks for good lumber. 
                  He takes the trimmings and mulches the base to discourage 
                  brush undergrowth. He trims the brush until the leaf canopy 
                  grows over and cuts out light to the brush below that retard 
                  growth. 
                  
Companies, after reaching size have the power to grow a 
                  canopy and retard the undergrowth competition of the small 
                  entrepreneurs. Wal-Mart's canopy is not so dense that can wipe 
                  out the small specialty niches such as Soundwave Music selling 
                  pro music equipment, or Kimura's Lauhala shop, or Hilo Hatties 
                  Muumuus. Weeds will always grow under the rain forest. 
                  
The 
                  seasons are a big factor for trees. In the winter, in the east 
                  coast the leave all fall off. Even in Hawaii the leaves fall 
                  off in seasons. Coconut trees grow in barren sand near salt 
                  water at the edge of the ocean where almost nothing else 
                  grows. Their fronds give way and can handle hurricane force 
                  winds and survive and come back. The coconuts give food, the 
                  fibers give twine and cloth and the fronds give shelter. 
                  
When the ranchers cut down the forest for the cattle, it 
                  changed the weather patterns and the rain and water dried up 
                  desertifying the coast driving out the native dwelling on the 
                  coast. It's all part of a big system interconnected in many 
                  ways.
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