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The Chairman
Victor Niederhoffer

3/18/05
Victor Niederhoffer on World Markets

One of the strange phenomena that buffers our encircling field is the amazingly high correlation among all markets -- as if an all-knowing almsgiver was standing on a platform suspended high above in space dispensing tokens of gain or loss to each country (T), which were by far the major component of gain or loss during, say, the year subject to a small adjustment for their own currency movements (C) and a small specific factor based on how far they eschew the altruistic spirit (A) that is the cause of so much mischief, plus a very small random component (R) just to keep the game interesting.

Thus, when C.M. is the annual % move  for a country:

C.M. =  a + b(T)+ d (C) + e(A)  + R is an excellent  working formula for a country's performance.

In this context, I note the inordinate number of countries that are up so far in 2005, year to date, sparked by Pakistan's 50%, as follows:

Country Yearly Move (%) Country Yearly Move (%)
Canada 6 Mexico 2
Argentina 5 Brazil 7
Chile 7 Venezuela 0
Peru 12 Colombia 0
Europe 4 England 3
Germany 7 France 6
Spain 2 Switzerland 4
Italy 2 Netherlands 6
Belgium 5 Denmark 11
Japan 3 Hong Kong- -3
Korea 9 China -3
Taiwan -2 Pakistan 55
India 2 Philippines 12
Indonesia 15 Thailand* 6
Singapore 5    

*I look around three times

The feeble performance of the US, -1% on the Dow and the S&P and -7% on the Nasdaq is truly terrible and anomalous in this context. I must tip my hat to the followers of the Prudent Bear US meme for their superb relative performance to date in this context. But I must also speculate how long the good one on the platform above will stand quietly for this. (But it all must be tested ).

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