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The Chairman
Victor Niederhoffer

01/12/2005
Unobtrusive Measures

Unobtrusive measures are means of gathering data without the subjects' knowing that you're gathering it (i.e. without interfering). It's quite the thing in sociology and the book Unobtrusive Measures by Eugene Webb from Sage is a classic that will change your life when you read it.  The two major techniques are to examine traces of what people leave, like garbage or eating or interactions between genders. The second major method is to join a group sub rosa a la the Festingers in Keech or the Collab when she became a day trader, or the professors who join the police.

There are only 100 entries listed in Google for "unobtrusive measures stock market". But such studies (none of which are referenced) are better than all the others. I have for a long time said the Value Line studies of value completely override the retrospective things of the Fama-Frenchists and their blind followers. And they show value performing about 1/10 as well as growth over a long period, as adduced in PracSpec.

Joe McNay's portfolio management of the Yale endowment over a 20 year period from $250,000 to $125 million is another unobtrusive study that completely settles the question of risk versus return and the proper allocations for endowments. And perhaps one might be so bold as to say that the recent rumors of a certain expert's emphasis on future research activities might shed light on the white swan theory of investment so ably dichotomized by the layman Malcolm Gladwell.

How can one leave this subject without reference to Mr E? His results clearly unobtrusively show that the secret of pi unlocks a vast investment panorama and superior performance.

But what other unobtrusive studies completely deride the conventional wisdom of investments, upset the apple cart and serve as a valuable sword in the heart of those who use the retrospective and revised big files dauntlessly?

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