May

30

Tipsters

May 30, 2022 | Leave a Comment

Wall Street Stories, by Edwin Lefevre, 1901. the book tells stories of personages very similar to today. the tipster and Pikes Peak or Bust are quite resonant of the useful idiots who proliferate today. In those day, the tipster and the plunger ended up at Trinity Church.

Tipsters in those days ended up in a graveyard, or walking aimlessly from New Street where the bucket shops were to the Brooklyn Bridge. Today they wear suits and are respected columnists and heads of research in big financial firms.

As the result of much thought about his losses Gilmartin became a professional tipster. To let others speculate for him seemed the only sure way of winning. He began by advising ten victims—he learned in time to call them clients—to sell Steel Rod preferred, each man 100 shares; and to a second ten he urged the purchase of the same quantity of the same stock. To all he advised taking four points’ profit. Not all followed his advice, but the seven clients who sold it made between them nearly $3,000 over night. His percentage amounted to $287.50. Six bought and when they lost he told them confidentially how the treachery of a leading member of the pool had obliged the pool managers to withdraw their support from the stock temporarily; whence the decline. They grumbled; but he assured them that he himself had lost nearly $1,600 of his own on account of the traitor.

For some months Gilmartin made a fair living but business became very dull. People learned to fight shy of his tips. The persuasiveness was gone from his inside news and from his confidential advice from Sharpe and from his beholding with his own eyes the signing of epoch-making documents. Had he been able to make his customers alternate their winnings and losses he might have kept his trade. But for example, “Dave” Rossiter, in Stuart & Stern’s office, stupidly received the wrong tip six times in succession. It wasn’t Gilmartin’s fault but Rossiter’s bad luck.

At length failing to get enough clients in the ticker-district itself Gilmartin was forced to advertise in an afternoon paper, six times a week, and in the Sunday edition of one of the leading morning dailies. They ran like this:

WE MAKE MONEY
for our investors by the best system ever devised. Deal with genuine experts. Two methods of operating; one speculative, the other insures absolute safety.

[ … ]

Little by little his savings grew; and with them grew his desire to speculate on his own account. It made him irritable, not to gamble.

He met Freeman one day in one of his dissatisfied moods. Out of politeness he asked the young cynic the universal query of the Street:

“What do you think of ‘em?” He meant stocks.

“What difference does it make what I think?” sneered Freeman, with proud humility. “I’m nobody.” But he looked as if he did not agree with himself.

“What do you know?” pursued Gilmartin, mollifyingly.

“I know enough to be long of Gotham Gas. I just bought a thousand shares at 180.” He really had bought a hundred only.

“What on?”

“On information. I got it straight from a director of the company. Look here, Gilmartin, I’m pledged to secrecy. But, for your own benefit, I’ll just tell you to buy all the Gas you possibly can carry. The deal is on. I know that certain papers were signed last night, and they are almost ready to spring it on the public. They haven’t got all the stock they want. When they get it, look out for fireworks.”

Gilmartin did not perceive any resemblance between Freeman’s tips and his own. He said, hesitatingly, as though ashamed of his timidity:

“The stock seems pretty high at 180.”

“You won’t think so when it sells at 250. Gilmartin, I don’t hear this; I don’t think it; I know it!”

“All right; I’m in,” quoth Gilmartin, jovially. He felt a sense of emancipation now that he had made up his mind to resume his speculating. He took every cent of the nine hundred dollars he had made from telling people the same things that Freeman told him now, and bought a hundred Gotham Gas at $185 a share. Also he telegraphed to all his clients to plunge in the stock.

It fluctuated between 184 and 186 for a fortnight. Freeman daily asseverated that “they” were accumulating the stock. But, one fine day, the directors met, agreed that business was bad and having sold out most of their own holdings, decided to reduce the dividend rate from 8 to 6 per cent. Gotham Gas broke seventeen points in ten short minutes. Gilmartin lost all he had. He found it impossible to pay for his advertisements. The telegraph companies refused to accept any more “collect” messages. This deprived Gilmartin of his income as a tipster.

Vic's twitter feed

May

29

you wouldn't know it from the chronic bears and pessimists but the S&P is at a 17-day high and bonds at a 30-day high up for the month.

nobody asked me but…if there is one player in the major leagues who has lost his temper and disgraced baseball more than Josh Anderson, I missed it. and the universal reaction to the latest is indicative of the idea that has world in its grip and other recent events.

terrible news for those who support the idea that has world in its grip this week. we got back 6% this week and end with S&P up on the month and bonds and crude at a high. we finally got a week up and 1600 S&P left for a new high.

chickens come home to roost. all the masters 100 support of taking away parents rites at schools leads to tragedy . and I still say with Donaldson-Anderson, universal condemnation of the former was a key.

to make matters worst for supporters of the idea, the betting odds are now 4 to 1 that one or the other of the top two against the incumbent will win.

Nobody asked me but…the increasing trend of equality and diversity in professional sports makes the average athlete feel anomie as to sports and loses all sense of healthy competition and makes him or her a leaf floating in the wind.

it's hard to feel anything but contempt for your team when your role model athletes are billionaires complaining about the National Anthem and Americanism. That's why I say Donaldson-Anderson had much wider repercussions. query: did recent fatherless give up sports?

Vic's twitter feed

May

29

i will give a cash prize and a signed book to the best answer to the question: Now that the coaches, announcers, and tv and radio stations have joined the masters 100, the disneys, and now the insurance companies, how does this influence the game?

Reply to: Vic's twitter feed

john G
@dukeofoakes
Less opportunity for the white or non-woke as they add no value for the 100. Level of play decreases as the talent/deserving get replaced by those that serve the 100s interests.

Konrad Kuciej - Value Masochist
@KonradKuciej
Over the last several decades, with the advent of cable tv, internet and all of its applications the amount of advertising revenues for sports has skyrocketed, ticket sales and merchandise sales have taken the back seat. Because of the amount of money being generated all sports outcomes have become more and more clustered around a mostly “known” or at least “presumed” outcomes that drive the most “interest/viewers” and that allow the audience to feel they are part of the spectacle…games have become less “random” and more “staged”, all participants know.

Leet1337
@clozzi_24
The suppression of players expression of free views…. Anti secular & anti political except for those that are pro “wokeness”…… Still basketball except for no meaning behind the game that don’t serve corporate media.

packmansam
@PackManSamm
chasing advertising dollars by subscribing to the current thing amidst a decades long decline in viewership adds to the urgency for the league and refs to make sure the large market teams make the playoffs and ultimately the finals.

DarkWeb Trader
@Darkweb_Trader
Wokeness is for winners. A strength that creates competitive advantage. And a prerequisite for winning the right way and future political candidates. The only game in town.

Rodrigo Sotomayor
@Soto888
Favorite teams tend to generate higher commercial and marketing revenues, putting natural pressure on the refs calls even if unintended./p>

Ox
@OxEquities
Please the advertisers.

john G
@dukeofoakes
The 100 would favor most any team playing against the outspoken vaccine critic Aaron Rodgers.

the winner of the contest is John G. He will receive cash prize of $1000 and signed book. All the other contestants were very good also. They will all get signed books. send me address so I can send it.

May

27

i haven't seen an update on this in 20 years. i believe its relevant.

The World in the Grip of an Idea Revisited
Socialism Destroys Institutions, Societies, and Individuals

chalk up the losses of the yankees to the unholy assuaging of the idea that has the world in its grip. its shameful that a manager can't support his players, but this is part of the idea that certain personages are entitled because of the masters 100 and disney syndrome.

Vic's twitter feed

Laurel Kenner writes:

I have long wanted to do a study of Sweden, the darling of US socialists.

Peter Saint-Andre adds:

I read an article in the last ~2 years about Sweden (perhaps in Reason magazine?) which argued that these days the country is not nearly so socialistic as "progressives" think.

Jeff Watson comments:

I like Sweden’s system of private roads, and the fact that everyone, rich and poor, has to pay the same rate of taxes.

Andre Wallin writes:

my parents immigrated to the US when Olof Palme was prime minister. they claimed they moved in large part because of his socialistic policies. he was assassinated in 1986 by "Skandia Man" who they only figured out who it was in 2020 posthumously. my uncles do pretty well in sweden as small business owners these days, but nothing compared to what is possible for so many in the US.

Henry Gifford responds:

Some years ago I attended a lecture by two people from Sweden, who argued that Sweden has high taxes, but it is worth it for all the services the government provides. But they did not convince me that they paid lower taxes than we pay in the US – sounds like we pay higher taxes here. They were shocked to hear about paying high real estate taxes with money that has already been taxed.

Yes, Sweden is the darling of socialists in the US. But most articles I’ve read say that Sweden is an example of socialism that works, then include nothing to back up that claim, and don’t even reference it later. I’ve heard that Sweden toys with socialism every 20 or 30 years, finds it is a disaster, and gets as free of socialism as fast as possible. If this is true, it wouldn’t discourage a socialist from claiming that Sweden is socialist.

One time I was talking about “government” schools in the US. Politically incorrect to call them what they are. I might have quoted Cato’s finding that government schools cost twice as much as private schools. A guy was talking about a wonderful “public” school, and I asked if it was a government school. He said he didn’t know. I asked if it was on land or floating around on a boat. He said it was on land. I asked him who owned the land. He said he didn’t know. I assured him that his level of dishonesty qualified him for being a very good comrade. He didn’t object. Some level of dishonesty seems a prerequisite for people who claim to believe that socialism is a good idea.

Bo Keely comments:

After traveling the world to 105 countries, I've concluded it's not a matter of Socialism vs Capitalism. It's a matter of people. Some peoples can make a socialism work and do it. Other peoples at their best cannot make capitalism work nor desire it. So, one should look at squares and circles before deciding which hole they should fit into. I personally prefer the lone wolf life.

May

26

a representative bearish story from the bearish data provided:

The Tech Rout Isn’t Just Cyclical—It’s Well-Earned, and Overdue

30-year shows amazing strength given strength in crude and stocks. only down 1 tick on a day at 20-day high.

in retrospect the bell weather for crypto was when it didn't soar in the face of big Florida convention and Rumpelstiltskin saying that crypto was his major bull thing. and laudatory article saying Rumpelstiltskin is always rite on the future memes.

Vic's twitter feed

May

25

last minutes were down 16 on day and -60 on 2 days. serial corr is -0.52 on one day and -0.44 on 2 day basis.

nobody asked but trash talk in other major sports like basketball and football is infinitely worse and more prevalent than baseball.

minutes apparently revised to help masters 1000 and professional sports and alphabet agencies and regulatory capture boys along—- but nice deception at 3915.

in old days a company currently an acquisition candidate reported earnings without deducting expenses for salaries. one notes that there is a negative provision for Service expense and negative operating revenues. query: are they still able to report with this largesse?

many lobogola:

i didn't know how to read that cryptic chart myself. like most brokerage houses i have been unable to speak to a human there. but their margins of 5% of the big options house is alluring.

so much disappointment that we will not have a seventh down week in row for sp. all because of backlash against donovan. everyone who plays a team sport is kidded with a nickname highlighting an exuberant or weak moment.

nobody — the mad dog sports announcer is about as useful as El Erian — and both are very knowledgeable and predictably with the idea that has world in grip. makes professor particularly useful tomorrow.

Vic's twitter feed

May

22

a page from past:

Fishing in Troubled Waters: What is a Selling Climax?

make mine an old fashioned…

how common are selling climaxes? I looked at it in multifarious ways. (1) it never happened on a non-quarterly expiration. (2) if one defines it as down 50 big S&P points from close to 1 pm, and up 50 big S&P points from 1 pm to close, it happened 5 times since 1996.

(3) you mite think I should use % rather than algebraic but I don't think so. You lose and make the same amount relative to margin and capital regardless of the % move. (4) what was particularly nefarious about this one was that it was down 120 big S&P points from open before closing up.

(5) Nasdaq closed down 1% on the day after being down 3% as of 1:30, and bonds closed at a 20-day high moving up continuously thru the day. (6) The S&P was down 7 weeks in a row. never before. (8) Putting it all together and looking at expectations going forward, what does one see and why?

many things that never happened before make predictions difficult. especially never before 7 weeks in a row down, and big reversal during afternoon during non-quarterly expiration. the one thing that trumps everything is stocks going down big because bonds going down big. but bonds way up.

the one constant is bonds are at a 20-day high in reality. that's extremely bullish for stocks. happened 29 times since 2019 and 81 times since 2011. S&P up 3/4 of time one week later. about 1-2% in magnitude.

you can almost feel the unholy desire of the establishment to see a close at a 20% low bringing us to an "official bear".

After Meltdown, Tech-Bottom Signals Have Yet to Scream ‘Buy Now’

the betting odds remain at more than 2 to 1 in favor of 45 versus 46. (39% versus 15%) and the one constant is no matter what a company does they are urged to unionize above all.

Vic's twitter feed

May

18

it was a time when the best brokerage houses of the 19th century hastened to get prices to their customers:

There were no tickers in those days. The quotations were circulated by men who got them from the brokers, wrote them down on pads and then went from office to office or from man to man with them. These men, who had the latest prices, were called pad shovers. They came up to you and shoved the pad with the quotations on it right under your nose, hence the appellative. They were the walking tickers. Rushing the pad, they used to call the process. It was not so quick as the ticker, but the brokers who furnished the quotations to the pad shovers were conscientious and careful, and nobody could or ever did question their honesty. The pad shovers were paid for their services by a commission on whatever business they took to the two-dollar brokers, from the offices of other brokers. They received one dollar per hundred shares; hence the term, split-commission broker. The Stock Exchange ruled against this kind of business eventually, and with the advent of the ticker the pad shover went the way of the fluid lamp and the stagecoach.

(from Edwin Lefevre)

The worst brokerage house today won't let you get current prices unless you pay $1000+ a year to the Exchange no matter how many times you're already paying for it. there were panic sin those days as in current. The best brokerage houses would carry their customers and allow them to be way below required margins on grounds that their customers were friends and would rise again. Some panics were the Northern Pacific where the stock rose from 40 to 2000 in one day, the start of the first world war and the 1907 "silent panic". The worst brokerage houses today will not give you the sweat off their testicles if you are under margin for a second.

Vic's twitter feed

May

17

It was the best of brokerage houses. It was the worst of brokerage houses. It was the age of brokers refusing to let their customers panic. It was the age of giving customers 1 second to meet their 10-times-as-high margins. it was the season of raising money for the great coming industries: the railroads, the autos, the chain stores. It was the age of assuring customers that there was nothing before us but inevitable declines. It was the time when brokers would fight for the best executions for their customers. It was the time when it was impossible to speak to a human.

one brokerage house was memorialized by Edwin Lefevre in The Making of a Stock Broker, written in 1909, and is apparently the forerunner of Merrill Lynch. The other is the notorious present day options leader.

Lefevre tells the story of a dentist. he was long steel at 40. it reached 39 7/8. the dentist did a 4-inute mile to the broker's office. "sell everything!" he shouted. he was still studying the quotation and smiling, not because he had lost but because everything had gone still lower. Next to making money is the pleasure of watching others lose much more. "what did you do with your patient? leave him in the chair?" "Like hell! He heard you say 39. He was long one thousand steel. He beat me to the building by 20 yards."

A lot of the business of the Street in my youth was done in the open air, particularly in Broad Street, where we had the original and real curb market. Business there began right after the close of the Exchange at three, and lasted about an hour and a half. It was a sort of postscript market and at times the volume of business was quite large, almost as much as we did on the floor. In a way it was like a big fair, where everybody was acquainted. The small fry may have admired the big fish, but they usually called them by their first names. Most of the habitués were members of the I-Knew-Him-When Club. The ticker did a lot of social leveling in those days. I might be walking down Wall Street and I’d hear somebody yell ‘J.G.! J.G!’ Looking up, I’d see one of the alert split-commission brokers hurrying after a dark little man with very bright eyes and a black beard - the great Jay Gould, one of the greatest geniuses that ever operated in Wall Street, the sinister figure of whom old Daniel Drew in a moment of financial agony said, ‘His touch is death!’ A very rich and very powerful person, and yet all a man had to do if he wished to speak to him was to yell ‘Jay Gould!’ and the great Jay Gould would wait for him there in the Street.

Vic's twitter feed

May

15

Friday close happened 8 times since 2015. bullish for monday.

it was unique week for markets: bonds up 2 1/2 big points, S&P down 100, crude up all-time hi at 110 a barrel. S&P down 6 weeks in a row as of friday. never happened before. much bear commentary. putting it all together, very bullish. especially 5 weeks in row down-very bullish, only 5 times since 2011.

The Winds of War, by Herman Wouk - very good audible - shows FDR to be completely duplicitous: "i will say again and again, your boys will not go to Europe." against certain faiths. Like 43. very shrewd, only 300000 lost very similar to current. highly recommended.

nobody asked me but there is a terrible flaw in analytics that suggests closers like Chapman for Yankees rather than letting the pitcher from the eighth inning pitch one more good inning. same is true for markets. stay with it. (recency bias for Yankees re Riviera.)

Vic's twitter feed

May

12

does anyone share my belief that the camp kindergard people at the Fed and Treasury will do everything in their power to help the november along? and that they have plenty? in the old days they asked all the dealers what they wished for.

a real behavioral bias, not the contrived ones that Kahneman and colleagues validate by giving college students self-validating questionnaires, is the envy phenomenon. much more than the endowment effect but related to it is unholy wish to see others who once were rich fall and fail.

Vic's twitter feed

May

9

nobody asked me but…many of the great composers - brahms, beethoven - say the way to write great music is to spend hours in the woods.

Nobody asked me but same true of trading on day like this. it was what i like to call a healthy day. all inflation things were down highlighted by 8% down in crude and 2% in all the grains. S&P tucked in slightly below the round one monday min - very bullish.

nobody asked me but at least there's one federal agency that's apparently very competent. the Federal Marshalls service always gets their quarry. crude goes from 20 day high to 8 day lo in one day. bonds up 2 1/2 from Monday low of 13500 to close 137 1/2.

Vic's twitter feed

May

7

it was most unusual of times on Friday. S&P closed basically unchanged for the week, while bonds were down 3 big pts on week, 7 big on 2-week basis. S&P is down a bit over 10% and the bonds down 25 big pts since the beginning of the year. calls out for systematic quantification of the regularities.

Here are regularities: S&P down a little on Friday but at 20-day low - bearish for Monday until 1 pm, but then bullish for next days. S&P down 10% in last 90 days and bonds down 20 pts - bearish for next 90 days. One cautions against selling short as that loses 10,000-fold a century.

Vic's twitter feed

May

4

Baron Coleman:

Served as a teacher to the illiterate. CEO of family business, Tennessee Building Products, Inc. with subsidiaries Tennessee Glass Co., Better-Bilt Aluminum and Kabinart Corp. One of the Founders and Chairman of Hospital Affiliates Int'l. One of the Founders of Health America. Involved in numerous organizations and charities: Board Member of The Temple for many years; Board Member of The Jewish Federation of Nashville & Boca Raton, Florida; Board Member of the Jewish Community Center; President of the Woodmont Country Club; Chairman of the Israel Bond Drive for many years; Life Director Emeritus of the Florida Philharmonic Orchestra; Honorary Benefactor of Lynn University Conservatory of Music.

one of great unsung heroes of america. started out as a peddler and became multi-billionaire. no mention of him on Wikipedia. He had a great sense of humor. when you asked him how he was, he'd say "everything's up except my widdler." i wish I had revered him more when i sold one of his businesses but didn't realized his greatness. It was a Barron Coleman day. My perfect wife is still sexy to me after 50 years. but my stroke makes it a Barron Coleman day all around.

Vic's twitter feed

May

3

all across the spectrum from Tudor Jones to art Laffer (as well as all the useful idiots and chronic bears, all bearish). I only lathered half of my face and didn't shave when I noted 4129. bullish.

Big Stock Bears Say S&P 500 Bottom Still Another 700 Points Away
It’s a fact of life in struggling markets: someone is always saying things will get worse. According to a number of prominent equity strategists, they’re about to get a lot worse.

The final plank:
El-Erian: Fed Has No Choice But to Raise by Half-Point
Mohamed El-Erian, a Bloomberg Opinion columnist, says the Federal Reserve's long-term policy decisions will get harder.

looks like camp kinderland meeting decided to help usual suspects along mainly by bonds.

Vic's twitter feed

May

3

Max Brand

May 3, 2022 | Leave a Comment

Max Brand was a giant who wrote 5 million words at 5 cents a word about mythic cowboy heroes who grow from ordinary people into Homeric heroes in the course of his 250 novels. Faust (one of his 15 pseudonyms) was in writing what Babe Ruth, Red Grange were in sport.

max brand wrote 75 novels, many of them westerns The Untamed and The Black Muldoon, Dr. Kildare. "a good tennis and squash player, he lived in a Olympian villa in Florence, could write a novel in a week, a short story in an hour, i rec." (The Life and Times of Fred Faust)

None of his novels have a locus of place or nature in them like Kelton or Schaefer (or even Lamour) but they are always pure adventure of a Greek-like hero.

Vic's twitter feed

May

3

i am an active trader but get live prices from my two brokers. this is a symptom of Bacon's rule that the public has no right to lose this much. somehow my prices are sticky and all sorts of firewalls exist to prevent live prices. No wonder the big social info company was bought into the Exchange. As mentioned all the rules that are designed to put the public at a disadvantage will ultimately backfire.

the way required margins are implemented is particularly reprehensible for the public.

Vic's twitter feed

May

3

The sage says crypto investing is stupid and evil— why? it doesn't give tangible wealth like a factory or railroad or ice cream slurry. some one is going to explain to the two old timers that liquidity and accessibility and hedging against disaster is valuable. the two centenarians are likely to join the big guy in a cry of "get off my grass". Didn't hear the almost centenarian bemoan that his secretary pays higher service rate than him — and promote an increase in service rates as a panacea. meeting at camp Kindergard right now to see how they can help big guy along.

"a gambling problem," that's the diagnosis of the two centenarians. but the real cause is not greed. It's a symptom of the market infrastructure, the strong being set up to take from the public.

Vic's twitter feed

May

1

Letters From A Self-Made Merchant To His Son (also online here): This is a wise book which every father should share with his children when they reach teen age. Many of the kids won't appreciate it until they are fathers and they have suffered the slings and arrows of business. It was written by George Lorimer who brought the Saturday Evening Post from a 1000 subscribers when he took over in 1902 to more than a million when he passed away in 1938. Lorimer must have been a friend of the Head of Armour or Swift and learned a lot from the road to success these meat packing and processing giants. As a side I note that many of the fortunes on the Chicago commodity exchanges started out in these packing plants. By following the advice of the self-made merchant, no wonder they were so successful.

Having been in business and visited many of the principles that Lorimer teaches, I can attest to their wisdom. The book consists of a series of 20 letters to his son which starts out with his son telling his dad about a business idea, his father warning him against pitfalls, then telling a story with metaphors that illustrates his point.

I will concentrate on his advice about Change, the commodity pits, and Wall Street.

What every man does need once a year is a change of work—that is, if he has been curved up over a desk for fifty weeks and subsisting on birds and burgundy, he ought to take to fishing for a living and try bacon and eggs, with a little spring water, for dinner.

He relates stories about gambling systems, gold brick speculation, and short squeezes engineered by his son and himself. His son asks for advice on a system his friend had figured out by logs and trigs and calculus that he learned at Harvard but he just didn't have enough money to carry it to its inevitable profitable conclusion. Graham tells the kids that the only thing the system provides is losses: "All the men who come to me with systems can only tell me about the losing end. The race horse, the faro tiger, and the poker kitty have bigger appetites than any critter has a right to have. Following these systems is apt to lead to the poor house or the Jail House." He gave hs son $1,000 to lose at 5% interest which he took out of his salary.

There is further advice about never selling short and never investing in a mining business you don't know about. Highly recommended.

Vic's twitter feed

Apr

28

Dear Victor: "i got stopped out of long position in S&P on Tues when the market dropped 67 points from 3pm to 4:15pm and another 15 pts from 4:15pm to 5pm. my margin was raised to $22,000 a contract at 4:15; by the start of night trading after 15 minutes market was back". an example of why the public always loses to the infrastructure. the strong take from the weak. but things like this eventually will decimate trading by the public. the most the S&P has ever fallen in a day is 150 big points or $7500 a contract.

Vic's twitter feed

Apr

27

as bacon would say "the public has no rite to lose this much". as I would say, the vig is key. the infrastructure must take money from the public. note the costs of 5 billion compared to 1 billion from timing. this in a bull market.

Retail Trading in Options and the Rise of the Big Three Wholesalers
Svetlana Bryzgalova, London Business School - Department of Finance
Anna Pavlova, London Business School; Centre for Economic Policy Research (CEPR)
Taisiya Sikorskaya, London Business School
Date Written: April 12, 2022

Abstract
This paper documents rapid increases in (i) retail investor trading in options and in (ii) payment for order flow (PFOF) for options transactions received by the U.S. retail brokerages. PFOF comes from so-called wholesalers/internalizers — market makers who execute order flow for a retail brokerage. Exploiting new reporting requirements and transaction-level data, we isolate wholesaler trades and propose a novel measure of retail investor trading in options. We find that retail traders prefer cheaper, weekly options, the average quoted bid-ask spread for which is a whopping 12.3%, and lose money on aggregate. The inflow of retail investors also coincides with an increase in call options left suboptimally unexercised. Market makers (and other arbitrageurs) exploit these mistakes via the so-called `dividend play' trades, producing (virtually) riskless arbitrage profits. Puzzlingly, they forgo 50% of these profits, leaving money on the table for option writers. Our findings suggest that the arbitrageurs behave non-competitively and that the Big Three wholesalers, whose share in PFOF for options surpassed 85%, seem to benefit disproportionately from the growth in retail trading.

Vic's twitter feed

Apr

25

Lucky call

April 25, 2022 | Leave a Comment

the compliments about my lucky call for a rally today reminds me of the good old days when i was a big operator and had a big staff and when I could visit somewhere and have a good chance of beating anyone in tennis without nowadays likelihood of having an ambulance sent.

in the good old days, I received 6 calls in one day from brokers. 3 told me that they were monitoring my trades so they could follow me. and 3 brokers called to warn me that they were monitoring all my trades on the floor so that they could copper me.

i receive a heads up from a most astute relative that says that if twitter now would stop censoring trades, i would be a miracle and great. i have to hand it to them the way they subtly censor me and presumably countless others. If the tweet is not 100% for the masters 100 and the business roundtable and the alphabet agencies et al, my tweet doesn't get circulated to any but my current followers.

isn't this the aim of the infrastructure also in the market — to scare the public out of positions though volatility that the public can't stand (and possible margin calls) and to create fear galore with the pantheon of bears previously lampooned.

a typical Mencken and Nock quote: "The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."

Mr Parisian: in your mentorship of the People did you learn from the People's boat building-skills and do you apply it to markets? I learn much from Jack Aubrey's tactics. he was always ready to change tactic when victory was in jeopardy. and he always had an escape route.

However in all deference to my sagacious relative, I refer him to Mencken and Nock and Jefferson. The powers that be aren't corrupt when they join the agrarian societies. they become corrupt when they become part of the buying of votes in exchange for providing alms.

"Like all predatory or parasitic institutions, the state's first instinct is that of self-preservation. All its enterprises are directed first toward preserving its own life, and, second, towards increasing its own power and enlarging the scope of its own activity." a typical Mencken and Nock quote. "The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."

isn't this the aim of the infrastructure also in the market — to scare the public out of positions though volatility that the public can't stand (and possible margin calls) and to create fear galore with the pantheon of bears previousoly lampooned?

Vic's twitter feed

Apr

25

nobody asked me but… (1) no better indication of ever changing-cycles is the performance of companies in the pandemic and after. the ones up the most in the pandemic are down the most in last 6 months. (2) Rumpelstiltskin and his followers have renewed their habit of very subtly creating canceling of info by not sending any info to new followers. my followers has been steady within 1 for last 2 weeks.

Vic's twitter feed

Apr

22

Tremendous decline in chance of the big guy's presidency from 15% to 10% in one day. No wonder the market was down big - regulatory capture less likely. 16 million bet so far from combined sources.

Vic's twitter feed

Apr

22

the problem with robots is they don't take into account ever-changing cycles. true in markets and why I've challenged any robot to a single combat with real money in markets.

in baseball, Yankees are robot-like in decision making: they didn't pitch to Cabrere and LA took Kershaw out in seventh while pitching a perfect game. have the robots no appreciation for fans cming back to the game and hating Yankees for denying them the oportunity to see the 3000th hit? no wonder baseball interest is declining 20% a year. same would be true if infrastructure lets hfq and infinite captalized banks have open sesame with public. all the big exchanges efforts to prevent public from getting timely prices (except with fee) a horse from same garage.

Vic's twitter feed

Apr

19

books read on a weekend trip to see grand child #13 and Professor, all are highly recommended for markets and life:

The Hidden Life of Trees

The Forest Unseen: A Year's Watch in Nature

The Tree: A Natural History of What Trees Are, How They Live, and Why They Matter

Discrete Mathematics

Infrastructure: A Guide to the Industrial Landscape

Professor's 31st book, Time And Beauty: Why Time Flies And Beauty Never Dies, explains why even ratios and round numbers are attractors.

Vic's twitter feed

Apr

14

is occurs to me that the growth of talent in the NBA is a manifestation of professor Bejan's constructal law.

Aubrey (my son) has been insistent that NBA players are better these day. and it brings up what Uncle Howie always told me "i agree with you that you don't know anything about basketball." i used to think that shooting 3 pt shots was a losing strategy. I didn't appreciate Curry at all because he seemed to shoot wristy shots which are very bad in racquets. At least I was right about saying that the two Knicks of 10 years ago who shot inordinate 3's were losers - Porzingis and Gallinari. the latter always high fived himself after a make. seed of destruction.

the one thing I said about basketball that Uncle Howie agreed with me on was that D'Antoni was the world's worst coach. I gave him a pass when he followed me like I am now giving the upside down man. after I played a conga in his honor I agreed not to ridicule his bear any further.

Vic's twitter feed

Apr

13

inflation numbers being leaked like a sinkhole before release these days. do insiders know that first reaction can be wrong? hypothetical conversation at house of rep: "the ppi was way above expectations why isn't everything cratering? i now have a low on my bond short. there ought to be a law."

"this isn't cricket" - hypothetical exclamation from those who had leaked ppi numbers at 8 am. only honest market that doesn't get leaks ahead of time is the crypto.

if instead of climate change and racial equality and universal education, the fed and Treasury would concentrate on keeping the monetary foundations in order, the world would be a better place.

why does every news source have bearish bias. the big financial one reads like racial equality and climate change are the keys to markets. "jumbo hikes" galore.

Nobody asked me but: (1) one of most dangerous things iv'e seen in making public lose more than they have any rite to lose is the "reverse" button on my broker's trading platform. (2) i gave up on the big option makers platform that gives you 10 seconds at 11 pm to meet their required margin of 10 times what competitors charge. but worse than that is their prices seem to be 10 minutes late. are things that bad that you are supposed to trade with lagged prices?

Vic's twitter feed

Apr

11

the least I can do is to share Tom Wiswell's favorite proverb which is relevant: "moves that disturb your position the least disturb your opponent the most." there's so much wisdom in that mainly because it minimizes vig and captures the Dimsonian drift of 10,000 fold a century.

For those that are new I find that the co-movements of bonds and stocks are predictive. i post a chart every day that memorializes the co-movements in the current month. also, i find checkers much more instructive than chess. it's like logic gates. Tom Wiswell was world champ of 3 move checkers for 25 years and provided 15,000 proverbs for me relevant to markets, life, and checkers.

Vic's twitter feed

Apr

10

In Dawkins work he frequently mentions the tendency of all trees in a stand to grow to the same size. they have to compete for light. and a symmetric arms race makes them the same height. I believe the vig and the range of markets show the same phenomenon. Your thoughts?

What Determines How Tall a Tree Can Grow?

Vic's twitter feed

Apr

9

it is interesting to look at conditional odds on the polls. Its 55% that the proud father will win if nominated. but only 75% that he'll be nominated. the person with the highest chance of winning if nominated is DeSantis with 66%, whereas 45 is only 50%.

chance that proud father will win has stayed steady at 15% for 6 months. watching these odds to me is a better predictor of the market than war news, although they both are weak. if chances of 46 winning go up from 15% that's bullish.

Vic's twitter feed

Apr

8

nobody asked me but it's strange to see bitcoin going down during midst of Flor. conference biggest ever of 25,000 bit supporters and sponsors.

the dissemination of news about the bona fides of the laptop is similar to the way certain truly big bear markets are designed. first there's an isolated big one day-rise (the Post story), then nothing for a year, then all of a sudden a flurry of rises (the Times, wapo, cbs). this must be quantified. it's more an impression than a regularity.

The flurry of news about the laptop these days along with all the bad news about the father leads one to think that there is a bombshell soon to come out that will not be favorable to Masters 100 or the regulatory capture boys.

following our guiding principle that the more it shows the terribleness of U.S the more bullish: if the 2022 senate and house races were to go against the 85% betting odds and the D'S should win, it will be bullish. similarly for the 2024 election.

Vic's twitter feed

Apr

5

Train traffic is suddenly up 300% in the past two months on the UP main line that runs one mile from my shipping container. Whenever there’s a quick shift in a single variable look for a parallel shift in cause or effect. That will be the investment.

I imagine the big flux is due to the skyrocketing diesel fuel price. It’s $7 per gallon here, and climbing. Trains are 4-9X more fuel efficient in ton-miles per gallon than semi-trucks. One train hauls hundreds of trailers in a two-mile string that requires only four diesel locomotives.

Apr

5

Joe has challenged me again to chess and handball. He's usually very precise but i won about 100 national tourneys in racquet sports not handball. and i'm very poor in chess but checkers is my game. in honor of Joe's shout out, i'm inspired to post some of Tom Wiswell's checker aphorisms.

(1) always eliminate the bad moves, what's left must be rite. (2) How to win: play loose, but not too loose, or you'll lose. (3) my mother told me, "Don't try to be brilliant. Just try to survive." I think i succeeded (Tom at 82).

i wish I had realized the greatness of Wiswell during the 20 years I took checker lessons from him. he wrote 10,000 proverbs for me relevant to board games, markets and life. He said it was going to be his best book of the 25 he wrote. A. Millhone and I are the only ones that have it.

that brings to mind my wife, old faithful. Tom would come into my office. My sign "board game in progress" (taken from Branch Rickey) memorialized the lesson. Tom would come in, look at Susan, my wife and invariably say, "The one thing I'm sorry about my life is that I didn't marry a girl like Sue." Then he'd shake his head, adjust his hat (which he always wore) and say, "But then again I wouldn't have written 25 books if I had."

Vic's twitter feed

Apr

4

books read this weekend include Robustness and Evolvability in Living Systems, by Andreas Wagner, has chapters on robustness in natural systems and robustness in man made systems - advantages of tradeoffs and variation. very relevant to force of destiny in S&P. first book i read from the Santa Fe Institute on complex systems that was not a puff piece.

Vic's twitter feed

Apr

4

everything aligned now for ATH. the academics, the media, the corporate board room, the pentagon, the school systems, the alphabet agencies, the Fed, the Treasury, all sing a harmonious tune that could be an opening chorus at Camp K.

Vic's twitter feed

Apr

4

the book Deceptions of World War II by William Breuer reveals 150 deceptions routinely used by both sides. it is useful for our markets and scary how much we were routinely subject to spies and snares.

[ A related story is The Ghost Army:

In the summer of 1944, a handpicked group of young GIs - including such future luminaries as Bill Blass, Ellsworth Kelly, Arthur Singer, Victor Dowd, Art Kane, and Jack Masey - landed in France to conduct a secret mission. Armed with truckloads of inflatable tanks, a massive collection of sound-effects records, and more than a few tricks up their sleeves, their job was to create a traveling road show of deception on the battlefields of Europe, with the German army as their audience.

This is the book from the documentary. - Ed. ]

Apr

1

no better example of the modified limited hangout (spy talk for a half truth designed to deflect and cut off the whole truth from coming out) is the prodigal son news about authenticity. "but it doesn't mean that anyone else in family did anything wrong."

do we see the modified limited hangout used often in markets to increase the vig we are subject to? Give examples? I will give a prize for the best ones in markets.

one was out of trading today seeing drs. like most people of age i could spend my whole life seeing drs. and none would help. because they are all so specialized they won't help you with anything outside of their specialty. I've been trying to get a prescription for a common problem. several drs. threw me out of their office because i questioned them. the days of private practice seem to be near an end as most drs. seem part of one big entity or another.

Vic's twitter feed

Mar

27

Larry Williams & Victor talk bonds, trading tips, cycles, market momentum, emotions & more:

Recession & bear market or bull & drift continues? 03/24/2022

Mar

27

after stocks up 11 of the last 12 days, 4 of 5 20-day highs in row, with bonds down 9 of 11 full pts in the last 2 weeks, one loses his confidence in the forces of nature ineluctably moving to new highs in S&P — at least temporarily. it all depends on how progressive the trophies and of course how effective and blatant the rapid response team is in augmenting their man.

one notes that the movie the Good Old Boys has credits for 50 actors and technicians for the movie but doesn't mention once that the author was Elmer Kelton. even in [1995], the studios were ashamed of someone who loved the west.

Vic's twitter feed

Mar

23

one of the worst and most loathsome audibles i've ever listened to - and I listen to one every nite - is Paul Ford's Lord Knows, At Least I Was There: Working with Stephen Sondheim. the one good thing in it, beside all the times he traded sex for a discount on a record or two, was that Sondheim gave him piano lessons and taught him how to play a rubato. it's a temporary quickening in the pace of a piece without changing the timing of the whole piece. How many time do you see a rubato in the market?

Sondheim liked to lean into his piano to create rubato, e.g., in Sweeney Todd when talking about his razor. strangely Sondheim planned to be a Mathematician and majored in it at Williams. Strangely I used rubato in all my racquet sports to gain an advantage.

I played Joe racquetball at the central park courts shortly before I had my stroke. To his credit he beat me which is very hard since I won the racquetball nationals in 1976 , but what Joe didn't know is that I played him with my opposite hand, Lefty.

That brings to mind all the great times and lessons learned with Marty Riesman. Marty loved hustling almost as much as he loved his microscopes. some of the players at Miles's ping pong emporium told me that they waited to play Riesman at the end of the nite and always walked away with all his money which he held loose from his Chinese restaurant. When I first played him i played with my left and took some cash from him. but I took him that evening to Le Bernadine with Herb London.

Gilbert Le Coz the cofoundner with his sister joined us that nite and was fascinated by Marty's stories and Herb London's take on reducing NY taxes. The next day Gilbert worked out in the gym and passed away from a heart attack.

as lagniappe, a little story: I can always get a reservation at Le Bernadin and they treat me as an important dignitary. Its not because they think I'm important - I lost my luster 48 years ago - but my brother fortuitously bought Bitcoin when it was $5 sine 29 years ago. Not having any loose bucks he reached into his pocket and gave a handful of bitcoins to Ben the maître d' for 29 years. "Keep it," my brother said, "someday it may be worth something." now that the coins have appreciated some 800,000%, i shine in reflected glory and am remembered, as I look like my brother.

One more thing: talking of Sondheim's rubato, i find deep poignancy and yes love in this song. For some 50 years through many a rubato and vicissitude, one woman has been my friend, lover and now caretaker. It's Susan, my wife. Here's the song that I still think of her as.

The best version how I feel. and I correct: It's only been 46 years.

Vic's twitter feed

Mar

22

it is useful and enlightening to contemplate the tangled bank of the markets with one going up, the other down, with oil reaching new highs and bonds hitting new lows, and to reflect that these elaborately related forms so different from each other but the various interactions are dependent upon each other in a complex fashion especially when Jay Powell, Janet Yellen or 46 speaks have all been designed to deceive us and create vig.

one general law that subsumes all the fluctuations in markets is the rejection of events injurious to the stock market and survival of the quest for new highs, and other related forms and markets. which we may call survival of the strongest.

Darwin put it best: "Keep steadily in mind that each being is striving to increase, that each at some period of its struggle for life, suffers great destruction. The war of nature is not incessant. The vigorous, the healthy, and the happy survive and multiply."

I heartily recommend Brian Cox, Wonders of Life: Exploring the Most Extraordinary Phenomenon in the Universe for all kids, market people and those who wish to learn of the connections of biology, chemistry and physics to all things. Reading this book gave me the idea that Darwin's tangled bank and struggle for existence explains the Dimsonian 10000 fold a century expansion, and much of the Professors work.

Vic's twitter feed

Mar

20

Nobody asked me but…Nock describes the situation at the Wigwam in 1890. a ballot harvester would come to you and say, "Look at the jobs i've got for you and your family through Tammany and such. Now while you're out of commission, would you mind if I place your vote for you?"

one has been thinking about 10 ways show that you are agrarian. 1) Whisper you advice like all, the whisperers. 2) wear a mask especially when outside biking or alone in the outdoors. 3) go to restaurants as your chosen form of entertainment.

4) mention Greta Thunberg with reverence. 5) Be sure to prevent your kids from reading Tom Sawyer or anything else from Mark Twain. 6) Make sure you put the pronouns his/her in your bio. 7) Wear a beard and smoke pot.

9) Have NPR and other public radio stations on at all times. 10) Listen to all the Sondheim interviews. come away from it thinking that Passion Play, Assassins and Hamilton are the greatest musicals of our time, that Hammerstein things like South Pacific, Oklahoma, King and I are dated.

most important of all to show you are truly a fellow traveler: applaud the Trophies that Power of Dog gets.

Be sure to say that value investing beats growth and say that your favorite investment books are written by the Sage or Charlie Munger. if you mention Ed Spec positively, emphasize that your favorite investment book by far is Reminiscences of a Stock Operator.

Vic's twitter feed

Mar

20

the best advice about markets comes from the New York Post sports section. In a bet-smart piece, the action network staff states, "bettors need to fight the urge." they give four tips on fighting the urge that are more helpful than anything in the financial markets.

True, these four guidelines are all in the Secrets of Professinal Turf Betting, by Robert Bacon, but they're timeless and easy to understand when put in the midst of sports betting.

(1) "We encourage bettors to embrace a flat betting style. Bet the same amount on every game." as Bacon puts it: "beware of the switches. the public bets 1 nickel on a 20-to-1 horse that wins then bets 100 on a favorite that loses."

(2) Don't overreact to recent trends, i.e if a tame has won bet against it, if it has lost, bet in favor of it.

(3) beware of gamblers fallacy. that's the belief that if something happens more often than normal in a period of time, it will happen less frequently in the future.

(4) don't bet on every game, betting 10 of 15 games a nite is dangerous One night can decimate you.

Other tips on playing the markets comes from an article about Coach K. He's going for the 1200th win. he's done it by changing his style with each team. most significant, he learned much from coaching the Olympics and seeing Kobe, Lebron play. he learned from them to embrace the one and done style.

of course there is one other significant thing in the news that is more important even than bacon's timeless advice: The prodigal son's laptop is now fair game. Its suppression in the past ie one of the 25 reasons that the whisperer squeaked a victory in 2020 and for sure the suppression of the prodigal son by big tech and big media including the wsj front page was one of them. just as important as ballot harvesting.

i could go on with 100 reasons that the grandeur of the markets is able to withstand the negativity that was and always is endemic at a bottom. it was only Monday that the marks was at lows. and now 10% higher. perhaps the posts 4 rules and rereading of bacon is in order.

Vic's twitter feed

Mar

18

As we close a week with fantastic negativity on all sides - war, interest rate increases, agrarian reformers galore - and every market is up and we have increased about 10% from the lows of 4100 on Monday, March 14, it is good to reflect like Darwin: "There is grandeur in the inevitable forces of destiny which invariably lead to new highs, that the markets while cycling on according to the fixed laws of physics and chemistry, from such simple beginnings, endless forces most beautiful and wonderful."

Vic's twitter feed

Mar

17

A beautiful story by L. Bershidsky. very bull I think:

My Grandmother Was in the Winter War. It Was as Ugly as This One
Ukraine and Finland have little in common and 21st-century warfighting is new and different. But the parallels are still hard to miss.

Ukrainian and Russian negotiators are reportedly getting closer to a deal that would end the Russian invasion. The deal, if and when it arrives, likely will resemble the Moscow Treaty of 1940, which crowned the Winter War between the Soviet Union and Finland. Ukraine will sign up to a version of Finland’s neutral status that resulted from that treaty, and some of its territorial losses will likely be sealed, if not recognized. Just as Finland did, however, Ukraine will keep its independence and its military, rather than become a Russian puppet state.

Vic's twitter feed

Mar

16

'The Power of the Dog' Wins Best Picture At UK's BAFTAs

and terrible reflection on all the western writers who write about the heroic individuals who settled the west and served as a model for us in the 20th century.

just read an Elmer Kelton novel or better yet listen to Elmer Kelton about the time and place of the West and why the critics hate the adventurous indivualistic spirt of the West and the code of the west.

Vic's twitter feed

Mar

15

i believe i have been asked to have an emergency youtube session-blog, but i would only say that tues is one of the most bullish days i've ever seen. including the fact that the fed doesn't like to do anything bear when it will add weakness to the S&P.

other things that are bull i've already mentioned, including payday and the mon-tues effect, and 500 pts and 70 days from an ATH, as well as the bonds down big. i sound like a broken record and I am as regretful of that because i have followed the multivariate time series — hasn't there been a dramatic decline in prices recently, eg crude down 25% from a week ago? will this have an impact on the fed decision or are they too concerned with the inequalities and injustices to notice?

Vic's twitter feed

Mar

9

nothing personal but my debacle with puts on S&P was aided and abetted by the frequent increases in margins by the members with opposite positions. just one more day would have saved me. this is the reason that I havent sold puts for 15 years not the black swans.

it sounds exculpatory but as I approach 100 years old, people like to touch me for good luck, and the market markers in S&P puts had all the forces with them. Now you can touch me without sharing my shame. Yes, it's an alibi. but I took my medicine like a man. and those who still respect me should know this.

JPMorgan Bails Out Chinese Nickel Giant Facing Billions In Losses From Record Margin Call

According to the WSJ, Tsingshan’s founder, Xiang Guangda, told a Chinese media outlet that "there have been some moves by foreigners," and that it is in active negotiations with relevant parties, without specifying who they were and what was being negotiated.

Xiang was also quoted saying that "relevant government departments and leaders are all very supportive of Tsingshan. Tsingshan is a solid Chinese enterprise and our positions and operations do not have problems," according to the report in Yicai, a financial-news outlet.

Needless to say, the fact that the LME is now owned by Hong Kong Exchanges and Clearing, whose biggest shareholder is the Hong Kong government which for the past two years has been a puppet of China, did not hurt Xiang, whose empire would have been bankrupted had the LME forced him to make payment on his margin call. None other than outgoing LME chief executive Matt Chamberlain admitted as much.

Vic's twitter feed

Mar

9

would someone who wishes a prize send me a good tweet about all the ways the admin has goosed up the price of crude — including the general meme that one should be ashamed of drilling because of climate change.

A reader responds:

The main conclusion is that through policy action as well as through promises of future regulation & threat of capricious punishment the admin has clearly signaled to producers that their days are numbered. The idea that the industry will surge production for an admin that can't wait to crush their margins & replace them is farcical. If they invest to grow production they will do it with extreme caution. Here is my case:

During the primary, Mr. Biden promised a policy of "no new fracking".

During the presidential debate he responded to a question about whether he would "shut down" the oil industry with: "I would transition from the oil industry".

During the campaign, he promised to reduce gov support for oil & gas, ban drilling on federal lands & waters, "hold oil execs accountable" (jail time?), and rejoin Paris Climate accords.

From day one the administration "moved to dismantle Trump's oil and gas legacy". This article while old summarizes the key points of early action.

Granting of federal permits have been paused & in court for the past year.

Keystone XL had a target start date of 2023, and with planned capacity of >800kbd and >500kbd of commitments already in hand, it would have helped anchor the back of the crude curve.

Day one the admin rejoined the Paris Climate agreement, committing to net-zero by 2050.

Big oil was then grilled by congress about why they haven't spent enough money lobbying for the Paris Agreement. (I'm serious!)

As this recent interview suggests, there's likely still no serious coordination with US producers.

Even now, Mr. Biden still can't talk about US producers without threatening them if they price gouge.

And finally, he has so seduced the KSA that Crown Price MBS has said he does not care what Biden thinks of him, and declines his phone calls (lol).

Vic's twitter feed

Mar

9

Aspects of the great man commissioned by me and painted by Susan Slyman

The publication in 1859 of the Origin of Species by Charles Darwin made a marked epoch in my own mental development, as it did in that of human thought generally. Its effect was to demolish a multitude of dogmatic barriers by a single stroke, and to arouse a spirit of rebellion against all ancient authorities whose positive and unauthenticated statements were contradicted by modern science.

I doubt, however, whether any instance has occurred in which the perversity of the educated classes in misunderstanding what they attempted to discuss was more painfully conspicuous. — Francis Galton, Memories of My Life

The Life, Letters and Labours of Francis Galton, by Karl Pearson:

Volume I

Volume II

Volume III

Also see: Karl Pearson

Vic's twitter feed

Mar

9

with all the socialist talk about not raising prices to allocate the limited supply to those who need it most and the dangers of not providing incentive to bring out more supply thru profit seeking, it is good to remember this:

The Speculator As Hero, by Victor Niederhoffer, February 1, 1993

I am a speculator. I own seats on the Chicago Board of Trade and Chicago Mercantile Exchange. When my daughters ask me if my job is as important as the butcher’s, the doctor’s or the scientist’s, I answer that the speculator is a hero, and has been throughout history.

Vic's twitter feed

Mar

4

an excellent book that covers all aspects of growth, including interacting species like in our markets:

Population Biology: Concepts and Models

Population biology has been investigated quantitatively for many decades, resulting in a rich body of scientific literature. Ecologists often avoid this literature, put off by its apparently formidable mathematics. This textbook provides an introduction to the biology and ecology of populations by emphasizing the roles of simple mathematical models in explaining the growth and behavior of populations. The author only assumes acquaintance with elementary calculus, and provides tutorial explanations where needed to develop mathematical concepts. Examples, problems, extensive marginal notes and numerous graphs enhance the book's value to students in classes ranging from population biology and population ecology to mathematical biology and mathematical ecology.

Vic's twitter feed

Feb

28

the only commodity i can find that is not near a high is sugar. what else am i missing? between the bonds forecast and the commodity forecast i'll go with the bonds.

it time to educate the ignoramus camp kinderland pronoun person chair of the fed concerning ever-changing cycles. there must be some 20-year old study at the fed which shows that commodity prices tend to reverse. but they haven't reversed for a long time. and to base an
inflation forecast on the out-of-date and non-statistically-significant tendency of commodities to reverse by looking at a core price index rather than an unadjusted one only an ignoramus who doesn't know ever-changing cycles and statistics would be prone to.

everything at the treasury and their sisters at the fed is based on politics. let us assume that the economic numbers will all be adjusted to political expediency by people like the press secretary and the systematic racism person at the Treasury.

apparently i am afflicted with a perfect wife who can fix everything, and does, around our dinosaur house, and i am immobile at 100 years old so I don't patronize Home Depot and Lowes enuf. but i don't share the hatred of the common man and the working man. the progressives despise the working man, the trucker, the plumber, the builder (who's not in a union), the deliveryman, the electrician, the boiler man. I admire them. it's just that my wife handles all of that so I don't get a good tell from Loews or Home Depot.

Vic's twitter feed

Feb

21

while I was out on thur and fri, feb 17 and 18, i had occasion to listen to Heroes by Stephen Fry. He occasionally makes summarizing statements on the Heroes so that one can gain order beyond the names and varieties of Heroes.

One point he emphasizes over and over again is that many great Kings see voluntarily or forcefully to abdicate in favor of their son. It occurred to me that this would be just what Doctor ordered in our country at this time. and it would be a boon for the market. i'm sure you are thinking along the lines of who would be the ideal vice pres. for the son. i would suggest at the ideal counterpart the cattle trader herself. that would definitely bring the market to an ath.

Vic's twitter feed

Ed: The other books in Stephen Fry's series:

Mythos

Troy

Feb

18

A scholarly query

February 18, 2022 | Leave a Comment

i am looking for a reference to a book on individual differences that showed pictures of the anatomy like stomachs of humans showing tremendous differences in all body parts. it would have been published about 1960-1970 and Arthur Jensen might have referenced it. i will give three signed copies of Education of a Speculator to the first one that finds it. i believe William may have written it.

Ed: Post any ideas on Vic's twitter feed.

The below are good references but not the target of this search:

Bergman's Comprehensive Encyclopedia of Human Anatomic Variation 1st Edition

Lippincott Williams & Wilkins Atlas of Anatomy

Feb

12

I don't listen to or follow any news during the trading day so I didn't learn that the reason that stocks went down on Fri afternoon was the admin warning that an invasion of Ukraine was imminent. Upon reflection i wonder what reason there was to make this announcement during trading day.

similarly why wasn't the cpi tweaked by 0,1% to show no monthly increase? also one wonders how the Bullard announcement was vetted and if so by whom. Certainly the pronoun people at the Fed and Treasury must have given their okay.

Out of the same garage is the press secs. her sudden familiarity with the intricacies of seasonal adjustments and recording periods. They certainly didn't teach this at Wake Forest English or in the Obama admin where she worked as asst. communications director. What is the reason for all this market affecting negativity?

Your guess is a good as mine. but I attribute it to desperate situations require desperate remedies. Things are so bad that everyone must suffer to deflect grievance against the sickness restrictions. what would your explanation be? or am I completely on the wrong track?

Vic's twitter feed

Feb

10

A challenge!

February 10, 2022 | Leave a Comment

the market makes me feel like an idiot every day but I still feel I could predict S&P better than any artificial intelligence on day to day basis despite collab between google and CME.

i issue this as a challenge. Rumpelstiltskin and his followers have beaten Go and Checkers and Chess often. Perhaps I could even find some backers to make it interesting for both parties.

Vic's twitter feed

Feb

7

i can't figure out what aspect of plant or spider behavior is closest to the propaganda generated before the employment number that it was going to be a very bad number likeley showing a decline in employment. i know in sports its common to talk about how good the opponent is and how likely the opponent is to trounce you. I used this downplaying for 10 years in my squash career where I spoke about all the young wolves snapping at my heels and I didnt have a chance. I didn't lose a match during that period. I used the same techniques in Gladwell's interview of me versus Nassim . Nassim was braggadocio and all I could say was how it was impssible for me to withstand his dynmaic buying of out-of-the-money puts. Gladwell fell for it hook, line, and sinker as I believe is his wont. here's a story of deception, downplaying, some techniques that the market uses:

Deception, Disinformation, and Strategic Communications: How One Interagency Group Made a Major Difference

Vic's twitter feed

Feb

7

From Downtown America: A History of the Place and the People Who Made It:

But variety store shoppers habitually brought out familiar often old fashioned merchandise that they could not find elsewhere" - thingamajigs such as 39 cent diamond engagement rings, pant stretchers and plain serviceable stationery. "The typical variety store customer - old and frugal, low-income, taking public transit or walking - participated in urban commercial life in ways that defied the pronouncements of market analysts. When Woolworth closed its remaining American variety stores in 1997, Kurt Barnard of Barnard's Retail Marketing Report observed that the company "died many years ago, but it just wasn't buried."

But Woolworth refused to give up their emphasis on variety stores until 1997. Walmart took another tack and their bathrooms and water fountains were integrated.

Vic's twitter feed

Feb

6

1. the markets were not happy with the employment numbers but the administration was. bonds had their worst reaction to a Jan employment number ever falling more than 2 points from wed close to fri close of 153 and 16/32 from 155 and 25/32. S&P fell both thur and friday by a total of 60 pts. the german dax fell by 3.5%. yet the admin was ebullient. it started a new idea of prosperity caused by the D's, that goes along with the daring strike against ISIS masterminded and ordered by the Pres.

2. the Jan employment numbers are notoriously meaningless because season adjustment swamp them. actually employment fell by a large amount but seasonal adjustments swamped them.

3. the admin presumably gets the numbers a few days in advance and the hands at the BLS work hard to receive 3 chairs from the next meeting of all the pronoun people and the systematic racism people at the Fed and Treasury at camp Kinderland.

4. you have to hand it to them as it was a grand deception to have everyone talking about how the numbers were going to be so dismal and terrible when they presumably knew what the announced seasonally adjusted number was. since when does press secretary psaki become an expert on the intricacies of the reporting periods and collection periods of employment data? amazingly crypto went up 10 % within 10 minutes of the Amazon announcement.

5. we live in a world where everything is politics and all media is geared to help the Prez along. No wonder we were able to disable the helicopter in a jiffy on the 2 1/2 hour raid but were unable to disable 70 billion worth of equipment in Afghanistan.

6. close was amazingly bullish for S&P and the prediction of a new ATH in 8 days is intact. we've gone 21 days since the last one.

7. haven't heard anything about bearishness of the Jan barometer lately. why? like all technical indicators, it's subject to multiple classification and ever-changing cycles.

Vic's twitter feed

Feb

2

in a long and not uneventful life, one meets great personages that one didn't appreciate and learn from enough. here is list of some greats I wish I had stopped and encapped their greatness:

Barron Coleman, Richard Bernard, Harvey Sellers, Arthur Niederhoffer, Robert Schrade, James Lorie, Al Danoff, Tom Wiswell, Alan Millhone, Don Siskind, James Wynne, Rorie Schrade.

Herb London, Lee Henkel, Fred Mosteller, Steve Stigler. If only I could do it over again, and get to know them better and pay tribute to them and thank them for everything they did for me. If only I could meet them in afterlife. One not living who belongs: Francis Galton.

two persons left out of the list of greats who i wish i could get to know better and learn from and express my appreciation to. MFM Osborne, Susan Niederhoffer. In looking through the list the first three were great owners of companies that were models of how to produce.

four more to add to the list from the libertarian field: Bill Bradford, Joan Kennedy Taylor, Tyler Cowen, Adrian Bejan. i believe my daughter Victoria will wish to memorialize these persons some day.

Vic's twitter feed

Jan

31

Big Dams

January 31, 2022 | Leave a Comment

Big Dams and Other Dreams: The Six Companies Story tells the story of the 6 companies that banded together to build the Hoover Dam, Golden Gate Bridge, Bay Bridge, Bonneville Dam and other icons of the west. the Hoover Dam was completed for $30 million in 1934. the six companies were Morrison Knudsen, Shea Company, Pacific Bridge, Kaiser, and Bechtel. compare this to the union costs today espoused by Psaki in describing why Tesla wasn't in press conference on electric cars.

estimated cost of Hoover Dam today is 10 billion. perks and carve outs add to costs. Frank Crowe was a hero.

Vic's twitter feed

Jan

31

Given the recent music discussions on the list, I thought I would share a few things. First, I spent much of last year (as a pianist) digging into Bach. Over the past few months, I've been playing a lot of Chopin, and reading contemporary accounts of his teaching and playing–always trying to understand this music more like the composer himself might have.

I recently recorded this famous Nocturne. It's not a difficult piece by any means, but is a gorgeous aria for piano. (There's a little bit of sparkle at the end that often captures amateur performances off guard!) My performance of this piece isn't flawless, but I hope you enjoy it!

This piece also has some famous tie-ins with yesterday's Holocaust Remembrance Day which you can read about in the wiki.

Also, I'll be doing 100 days of composition, and sharing some of the progress daily. This is primarily a tool for myself to create some accountability, as I've been inexcusably lazy on the creative front over the past year. I invite you to follow along here. I'll update that post and probably share some snippets of work as I produce them. I've never done a project like this publicly, so I don't quite know what to expect–it may be a complete flop, but let's see what happens.

Vic replies:

very good and relevant post thank you

James Lackey responds:

Yea man awesome. So what’s the musical that beats describes this week? We had more dipsy than doodle weak close big up open ground hog days. My deal if trading I’d be so exhausted I’d be flat by lunch and not look at those screens again til Sunday night. I can only imagine how costly that was to Mr Vic and my bank balances years ago.

Stefan Jovanovich offers:

Sviatoslav Richter - Chopin - Etudes

Adam Grimes responds:

I absolutely love Richter's playing. His Bach was one of the biggest reasons I became a musician…as a kid, I was transfixed by some of his Bach recordings.

Jan

30

tom was able to enjoy life while he could and that is how I would like to live my life, taking it as it comes and enjoying it while i can, not worrying about the bad outcomes which might follow. that is one of the more important themes in this book, to live and make life the best as possible while you can and it will sooner or later pay off. I think that throughout the book, when Mark Twain mad Tom's childhood sound like so much fun it inspired me to grow and have as much fun in my childhood as Tom did in his. so i guess when I say that I most admire Tom Sawyer, you could also say that I admire Mark Twain and most of all, my father. (tom's father read the book to him since he was five. his father had a special way of reading it to tom that made the book so much better. he would use different voices for every character, change all the hard words to easy words so that they would fit in to the flow of the book, and he would elaborate on each scene to tell him the time when each particular incident happened to him.)

the only timeless advice Bernard Baruch got rite — in talking to Wiswell in 1929 he said, "Even in times of great unemployment people will need inexpensive forms of recreation and entertainment." Baruch was called the central park philosopher because he sat on a bench in CP. Based in part on that advice Wiswell and Grover opened two chess and checker clubs on eighth avenue and sixth avenue. Wiswell quit his job as a clerk at Chemical Bank and opened the clubs. (From the unpublished book Maxims, Mysteries and Memories.)

These reminiscences of Tom were inspired by the brilliant article in the Atlantic on Marion Tinsley.

Vic's twitter feed

Jan

30

Penny Lane on Loving and Loathing Kenny G

Love it or hate it, but you've definitely heard it: the so-called "smooth jazz" of saxophonist Kenny G. Filmmaker Penny Lane talks about her documentary, Listening to Kenny G, with EconTalk host Russ Roberts. They discuss the pursuit of perfection, the power of vulnerability in art, and why Kenny G is loved by the people and reviled by the critics.

Here is the trailer for the documentary.

Jeff Watson comments:

If I was forced to listen to Kenny G, I would welcome an increase in the rate of my deafness, in fact deafness would be my safe space.

Zubin Al Genubi writes:

In contrast to Kenny G I've really been into John Coltrane. Took a number of years to truly appreciate his music.

Adam Grimes adds:

I absolutely loathe smooth jazz and New Age music (Einaudi, et. al.). I'm not completely sure why, but I've always had a very strong visceral reaction to music like this. And I DO embrace a lot of simplicity and minimalism… so it's not that… Perhaps it's music that is obviously intended to be trivial.

James Lackey writes:

Well joy! Who loves listening to the same key trillion not low tech music? Kenny G blah blah blah. Charlie Parker on a 50s Miles album. If the ever frustrates me is because I can’t play it. Branford Marcellus probably the best ripper sax ever but whatever. Some may think taking pop tunes re sketch them into EDM is silly or lazy. It’s not hard but it’s hard to do and who wants women to dance anyways.

The point was Kenny G hit a note and held it then. Did not hit a note a rest then hit a note on same scale coming from and angle and your eyebrows raised. Damn!

And guys the emotional response to music rests rhythmic beats to each his own. Like the markets please remember the scientific evidence. Down 20% is always going to be emotional. The first 10, I’m not sure if any of us should lift a brow.

Jeffrey Hirsch writes:

I get into some of that old jazz from time to time. But I am a rocker at heart. Recent highlights:

Grateful Dead in Honolulu Jan 23, 1970, with Pig Pen and an extended Turn On Your Lovelight. It's on Dicks Picks.

Little Feat - Electric Lycanthrope – recent release of a live studio performance in 1974

Laurel Kenner responds:

I'm with Adam — I hate the phony sentimentalism/exhibitionism.

Antonio Porres Miranda suggests:

I end up always defaulting to what ever has to do with Antonio Carlos Jobim.

Laurel Kenner approves:

Jobim is impeccable — good choice!

Vic offers:

i always and continuously listen to Verdi. every aria is a perfect blend of instrumental music and singing. each aria is designed to please. and he's very innovative in his orchestration, sometimes 7 basses, other times 4 clarinets. beautiful augmentation of life for me, heartily recommend it.

Maria Callas - Early Verdi arias

Jan

30

Chess is like looking out over a vast open ocean; checkers is like looking into a bottomless well.
- Marion Tinsley

Marion Franklin Tinsley (February 3, 1927 – April 3, 1995) was an American mathematician and checkers player. He is considered to be the greatest checkers player who ever lived. Tinsley was world champion 1955–1958 and 1975–1991 and never lost a world championship match, and lost only seven games (two of them to the Chinook computer program) from 1950 until his death in 1995. He withdrew from championship play during the years 1958–1975, relinquishing the title during that time. It was said that Tinsley was "to checkers what Leonardo da Vinci was to science, what Michelangelo was to art and what Beethoven was to music."

in honor of Marion Tinsley and the game of checkers, I pulled out yet another book of proverbs of Tom Wiswell, who is the Marion Tinsley of problems: the book is called Maxims, Mysteries, and Memories. It so far is unpublished but it will live on.

Here are some new Wiswell proverbs that are good for markets: "don't try to be brilliant, just try to survive." I think I succeeded. "there is never an end to the fine endings in checkers; like old man river, they just keep rolling along." and Tom's favorite: "Moves that disturb your position the least, disturb your opponent the most."

"Defeat is what happens to you while you are making other plans." Wiswell from Maxims with proposed associate editor and shout out to Susan Niederhoffer. have you tested that — from Wiswell: "Checkers seems to guarantee a long life - it is the board of health." Tom writing about Larry Evans and Sammy Reshevsky.

I repeat: checkers moves are very close to all the logic moves that go into the circuitry of computers for truth tables and arithmetic calculations. as such it is the best training for a youngster.

Vic's twitter feed

Laurence Glazier offers:

How Checkers Was Solved
The story of a duel between two men, one who dies, and the nature of the quest to build artificial intelligence

Zubin Al Genubi writes:

Sometimes when I trade I like to think I see signs of computer trading…such as multiple players running the same algo and doing something stupid. Probably just hubris on my part. In the old days I would like to think "now here is a bunch of retail guys calling their broker" and the broker sloppily entering orders, or some big fund in trouble and exiting a big holding like Worldcom. The tape talks. Why can't a computer figure it out. Its just a problem of size and bandwidth.

Big Al suggests:

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

Jan

19

From Marketwatch.

As it turns out, during so-called rate-hike cycles, which we seem set to enter into as early as March, the market tends to perform strongly, not poorly.

In fact, during a Fed rate-hike cycle the average return for the Dow Jones Industrial Average DJIA is nearly 55%, that of the S&P 500 SPX is a gain of 62.9% and the Nasdaq Composite COMP has averaged a positive return of 102.7%, according to Dow Jones, using data going back to 1989 (see attached table). Fed interest rate cuts, perhaps unsurprisingly, also yield strong gains, with the Dow up 23%, the S&P 500 gaining 21% and the Nasdaq rising 32%, on average during a Fed rate hike cycle.

Penny Brown wonders:

Very surprising. I am wondering why there is a mantra: "don't fight the fed." And "three hikes and a stumble."

Vic adds:

not mentioned is that the average fed rate increase cycle lasts 5 years. there have only been 13 of them since the fed was founded in 1910. usually these is a run of 15 increases once they turn from red to black.

i believe that the fed will not raise until the S&P is much stronger. a very nice close today (18 Jan.)

Nils Poertner comments:

the more talk about rising rates (and neg impact on stocks) the better it is for stocks. to a point of course.

everything is taking to the extreme these days. said to my cousin "eating apples is good for health" - and he replied "eating 10 apples isn't." of course not, but for now it seems so wrt rates.

Paolo Pezzutti writes:

Over the next few days option expiration this month can be an issue for stocks in terms of volatility. Not rising rates in my humble view.

Jeffrey Hirsch agrees:

Performance during January’s option expiration week

Big Al writes:

The Fed has never been sitting on a balance sheet like this, along with the other major CB's. Plus, the aggregate amount of debt is quite high after all these years of ZIRP. This will not be a "normal" rate-hiking cycle.

Jan

19

a fairly unbiased and accurate review of a great book I read or listened to in my quest to duplicate Tyler Cowen's 2000 books in a year. bartelby the scrivener.

The Remains of the Day

Some of Tyler Cowen's book links:

Best non-fiction books of 2021

What I’ve been reading, December 28, 2021

What I’ve been reading, January 10, 2022

Vic's twitter feed

Jan

19

on occasion my opponent from the main stream or main line would try to kill me by hitting their shot with all their mite into the back of my head. this situation is comparable to the voting now.

it's time for my posterity to look back on my career. true, i had a glaring weakness or two, i sliced my backhand and i didn't volley enuf. however, i won 5 national singles and didn't play in 5 others when i would have won because of my ill-timed protest against prejudice.

however i won 3 nationals in a row in straight games holding my opponents to less than 10 pts a game and i was virtually undefeatable for 10 years from age 25 to 34 winning about 60 various major tournaments in a row. i wish i could do it over again but my problem was that i was so good that i didn't have to change and only beat Sharif 3 times out of 14 without adjusting or improving my game. in short, with all my defects, i was good.

the game is much better now than it was in my day. i was stiff after every tournament because i didn't train. i wish i had trained like Aubrey does for running. its amazing he's shooting for a 4 min. and 30 second mile. no one in my family can do under 8 minutes . my best is 8:30. i know.

yet these days the only way to get into an elite school with athletics if you're not diversity is to be a national jr. champ. you definitely have to be close to a 4 minute miler before they'll notice you especially if there's Asian pedigree somewhere.

Vic's twitter feed

Jan

16

like the stock market, the worse the news is, the better the stock market's future, especially relevant is the November 2022 elections. you don't have to be a savant to guess that all the powers of the fed along with the usual suspects will be attempting to build a higher S&P.

i once said that the army of fed people including the thousands they support with grants (used by 50% of all monetary economists) only worry about stock markets and now they leaven this with correct pronouns for which they get positive feedback from the universities. my point is that with all the bad news for Blues during past week, certainly a nadir, the chief capitalist Biden increases his odds of winning the presidency by 1%. imagine what he'll do coming around November with all the suspects from the masters 100 to the schools and swamp lined up.

as my learned brother says: "no way that interest rates will be against him come November." In my naive way, i agree with him that this is very bullish for crypto especially around the election.

[Admin: Learned brother Roy Niederhoffer interviewed about crypto and other issues.]

Steve Ellison responds:

Very insightful comments by the Chair's brother about how one might identify Fundamentals underlying cryptocurrency valuations.

Vic's twitter feed

Jan

14

nobody asked me but supreme court chief John Roberts always seems to compromise in decisions to keep face with the popular man and always votes in a way that furthers the Court. (I don't know anything about the law except that it doesn't function well)

nobody asked me but the nite moves in markets are ideally suited to prevent a person who needs sleep 4 hours a day to extricate good profitable positions that should be held with impunity.

nobody asked me but the new appointees of the new administration make me think of a G&S or Moliere play . Stay close to your desk and never go to sea and you may wind up a head of the Queen's navy, especially the DA's who refuse to arrest anyone.

Vic's twitter feed

Jan

14

Received a nice intro note from new spec Mr Ani Sachdev, and it elicits important advice I have for all specs. its not advanced calculus or Bayesian stats or higher. the most important is Finite Mathematics and Differential Equations.

my differential equations book is Differential Equations by Shepley Ross and my discrete math book is Discrete Mathematics with Combinatorics. both are highly recommend but they're both 20 years old. amazing how they've both held up.

Vic's twitter feed

Jan

3

More books

January 3, 2022 | Leave a Comment

books i have been reading or listening to that i recommend highly:

1. The Princeton Guide to Ecology

2. The Princeton Guide to Evolution

3. The Life And Times of Giuseppe Verdi

4. The Life and Times of Gilbert and Sullivan

5. The Life and Times of Johannes Brahms

6. Branch Rickey

7. 100 Statistical Tests

8. An Illustrated Guide to Theoretical Ecology

9. Mathematics in Action

10. Master and Commander

11. The Life and Operas of Verdi

12. The Long Ships

13. Americana

14. The Hunt for Red October

15. How Innovation Works

16. Life and Works of Mozart

17. every nite i listen again to The Time It Never Rained and Good Old Boys by Elmer Kelton (these keep me from brooding on all the mistakes I've made and put me to sleep)

Vic's twitter feed

Dec

28

Sexual selection

December 28, 2021 | Leave a Comment


whenever you see the latest self-serving item (invariably bear) from such luminaries as the sage, the palindrome, or the upside-down man, I think we are seeing male-versus-male competition and the bighorn sheep.

Vic's twitter feed

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