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Some Variations on Big Cons, by Victor Niederhoffer
- One of the tenets of movies about cons is that
it's always the con man that gets to eat crow in the end.
One sees many variants of this in markets but the losses
that the con man faces with his own trading is often to be predicted.
- Part of the big con, which always involves a big store with
fictitious actors, is the staged exit from the store, where such
things as bogus policemen are called in to arrest the actors and
mark unless they run. This often has the effect of bringing the mark
back for more, even after he has lost everything the first time. Again,
this reminds me of so many recent events.
- The con in con comes from confidence that the con man builds up
by convincing you of his integrity and legitimacy. Convincers such
as a track record making much money in the first year, when presumably the
trades were hypothetical or involved peanuts is a good convincer that we always
find in our field. Other convincers are the appearance at seminars with
lofty professors, and books and interviews in newspapers.
- The con is good at appearing to be wealthy, with limousines, fancy
offices, and odyssian vistas standard props, operating in some cases out
of a rented bank, just for the occasion. Wealth in the information age comes
from high powered mathematics, rubbing shoulders with Nobelists, great erudition
in seemingly academic articles, and fake humility.
- 'You can never con a honest man' is a standard adage of all such books,
the classic being The Big Con by linguistics professor David Maurer.
(I find it interesting that Maurer sued the producers of "The Sting" but
settled on the courthouse steps.) The larceny in the mark in the market is
their desire to get rich with a simple fixed system. It can't be done, and
marks become easy victims to the inside information con, or the other two
big con prototypes, the wire or the payoff.
- The big con evolved from a dollar discount store that served as a front
and a lure for a three-card monte game in the store. Since no one ever won
in the game, and everyone lost all their money, the store didn't have to
give away too many bargains. The store evolved into the big con where
fake betting parlors, stock exchanges and other elaborate scenarios were enacted.
An ironic twist is that one store became so successful at selling the actual
discounted dollar goods that it became the seed corn for a national chain
of department stores.
Perhaps some legitimate business will some day come out of the numerous
big cons that we are subjected to in the market firmament each day.
More writings by Victor Niederhoffer