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

Laurel Kenner on Substack: Nobody Asked Me, But…

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

21

Trading Strategy Rules: Bill Ackman Strong Risk Management skills triggers and he exits the stock from his portfolio. We buy the stock & hold for one year. Below are the prior 4 instances, when the trading system got a buy signal, and a comparison with SPY:

One notes Bill Ackman exited Netflix , with the following note on risk management practices of Pershing Square:

One of our learnings from past mistakes is to act promptly when we discover new information about an investment that is inconsistent with our original thesis. That is why we did so here.

[Note: We are not able to get the details on Borders Group.]

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

Carlsen has a great poker face:

World Number One Magnus Carlsen Stuns Everyone With His Poker Skills

Every time you watch the world chess champion, Magnus Carlsen, he never fails to amaze. It’s like he is the best in everything he touches. His brilliant skills are not just limited to the world of chess. But the Norwegian Grand Master can easily adapt to other games as well. While Carlsen’s stats in the Fantasy Premier League can give you chills, his poker skills are even better.

WATCH: Magnus Carlsen, Best Chess Player In History, Turns Pocket Aces Into A Bluff

A reader writes:

i have noticed that ambitious chess players, by and large, seem to be pretty straightforward type guys….not saying they never lie - they are humans but it made me think about certain disciplines in life requiring a sense of honesty to improve - also honesty for oneself - cuz the game itself is not about gaming others but by using memory, logic etc. and lying itself puts extra mental strain on the brain, and they need to concentrate for hours and hours. whereas say ppl who manage OPM…well, a lot are good in marketing etc. no prob with that, just saying.

Zubin Al Genubi adds:

The joke about lying in our family comes from when our kids were little.

We asked,"Who did this?"

Big sis says,"Kenny did it."

Little Kenny says,"Kitty did it!"

J.T. asks:

So poker is the antithesis of chess?

Big Al responds:

From what I've read, von Neumann didn't consider chess to really be a "game" because of complete information. On the other hand, he loved poker because of incomplete information and the possibility of bluffing. He felt poker was, therefore, a true "game".

Andy Aiken comments:

Sprague-Grundy Theorem states that all impartial games are equivalent to Nim. Since a chess game starts impartially, and there is a process of removing pieces (and therefore at each turn, a chess game has a nim-state equivalent), it is a game in the classic sense. But the randomness of play is due to human error, not chance.

The current chess programs can beat international grandmasters and eventually they'll be insurmountable by humans. The final stage of programs playing one another (if anyone cases to watch such games) will probably consist of elaborate opening traps and gambits, with volatile position scores until midgame, at which point the winner will be obvious.

Poker has a large element of chance that can be increased without any change to game rules (adding decks to the shuffle, table bet limits, etc). And there's the additional issue of money/bankroll management that adds further uncertainty. In contrast to poker, in which everyone plays for money, I only know one person who plays chess for money, and he's a 2600+ rated player.

J.T. writes:

Don’t forget the use of bluffing in poker whereas chess doesn’t have such.

Stefan Jovanovich disagrees:

"Bluffing" is the essence of chess - and warfare. Both players see the board - as opposing armies see each other's deployments. What each player cannot see is where their opponent intends to attack and where they plan to defend and how much those plans will change as the game continues.

The biggest part of the blitzkrieg lie is that the French and British did not see the Germans coming through the Ardennes. They did; they did not think it was going to be the main axis of attack. And, until the Germans had the good fortune to have their opponents recover a copy of their tasking orders from a general staff officer, the plans did not have the Ardennes being the center of focus.

I am, as in most things, barely mediocre at chess; but I am unembarrassed by my lifelong habit of asking dumb and then dumber questions. The one person I know who is capable and who studies the game like a real-life Philip Marlowe tells me that deception is the key and the great challenge is not to fall victim to your own certainties about what is going to happen next on the battlefield.

List of chess openings

Big Al responds:

You've using a very soft/fuzzy definition of information and bluffing. In game theory, chess is a game of *complete information*, i.e., all the information about the game is visible on the board to both players at any given time. Poker is a game of *incomplete information*, e.g., in Texas Holdem you don't know what your opponents hole cards are and you don't know what cards will be dealt on the flop, turn, and river. Also, in poker you can truly "bluff", i.e., pretend, through betting, that you have cards you don't have. In chess you can't pretend to have more pieces than you do or that they are in positions on the board other than the ones they actually occupy.

War is definitely a "game" of incomplete information.

Stefan Jovanovich contends:

No. Militaries know what each other side has - in terms of resources - and unlike poker the game is continuous. There are no hands, bets and then the winner takes all; and then new hands are dealt. I can understand how JHH and others see Ukraine as winning; judging each day's events as a single operation or poker hand shows a picture of success for Ukraine. Yet here we are in a war that continues with no end in sight even as Ukraine gets more advice based on the presumption that Russians cannot think more than one move ahead.

Apr

13

I've uploaded the Autobiography of Charles Darwin to my website of public-domain books, optimized for reading on phone or tablet. Enjoy!

Laurel Kenner applauds:

Thank you, Peter, and thanks for letting us know about the site. It's a treasure, full of interesting books.

Peter Saint-Andre responds:

Thanks, Laurel. I'm always adding more books and suggestions are welcome.

Bo Keely comments:

I'll read it again because it's worthwhile.

Peter Saint-Andre adds:

Oh, and I've discovered that Francis Galton wrote an autobiography, too. I'll add that to my publication roadmap.

J.T. approves:

Most definitely

Apr

13

I recall a study we did years ago on April 15 effect of everyone cashing in to pay the tax bill.

Jeffrey Hirsch responds:

No effect anymore from our studies.

"The first half of April used to outperform the second half, but since 1994 that has no longer been the case. The effect of April 15 Tax Deadline (April 18 for 2022) appears to be diminished with numerous bullish days present on either side of the day. Traders and investors are clearly focused on first quarter earnings and guidance during April. With conflict in eastern Europe and the Fed raising rates, companies may lean conservative with guidance during this upcoming earnings season."

From my blog and newsletter.

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

12

Good to have assets and debt. Assets go up, pay back deflated dollars. Advice from 1970's. Leverage real estate comes to mind. Malls did well back then. Maybe REITs now? Offices not so much. Residential already had quite a run.

J.T. writes:

Malls are going for pennies on the dollar. Lots of very interesting repurposing going on around Virginia with Malls. My local mall that’s been empty for years just turned the old JC Penny’s into a Children’s Hospital. The empty Applebees turned into a Chicken Salad Chicks. BTW, if you’ve never been to a CSC’s before then it is a must go! It’s also a great libertarian story of its foundation in Alabama.

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

one would like to see a good study of how the range of the day at various times of the day like at 1200 pm affects the future price move classified by how close the current price is to the high or low.

Reply to: 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

8

When roots of a tree hit an obstacle eg a rock, they embrace it and grow around it. That is how living organism work isn't it - they somehow adapt.

Speaking to younger ppl (below 30) there is a bit of despair I can pick up which wasn't there say 20yrs ago. And plenty of good reasons for it perhaps and I agree with them so often. It is amplified by media, professors, parents, celebrities , and then group think etc etc…they all set this emotional temperature of negativity and cult of fear. applications are everywhere - nominal rates can not rise in the US coz the econ would collapse etc etc etc…completely un-nuanced…whatever the topic…almost irrelevant.

maybe individually or collectively there is a lesson to be learnt from trees.

Henry Gifford writes:

Most everyone has seen sidewalks pushed up by tree roots, but the way the roots do it isn’t exactly what it looks like. The roots don’t actually push the sidewalk up.

What happens is that as the sidewalk expands and contracts with alternating sunlight and darkness, and maybe moves for other reasons, small spaces become available which the roots grow into. Then, each time the space opens up a little, the roots expand a little more, thus the sidewalk can’t move back to its original position, and gradually ends up far from its original position. The mechanism is called "ratcheting." Reminds me of overnight price movement.

Apr

7

Washington Inoculates an Army
The Continental Army Battles an Invisible Foe

Stefan Jovanovich comments:

Washington was always a better strategist than tactician. Even though he lost more battles than he won he had command of the larger picture. In this case he scored a seemingly impossible victory against an invisible enemy.

First sentence: meaningless. Washington was never Commander-in-Chief in the way Lincoln and Roosevelt were. Congress and the French (and later Spanish) allies determined the "strategy" based entirely on their territorial ambitions. You kick the British out of Boston so they and their soldiers have to go to Halifax and then you decide the best of all possible strategic choices is to try to capture Quebec City when the smallpox has already weakened your army?

Second sentence: equally meaningless. The "larger picture" was always the one in the Caribbean, Mediterranean, and the Indian Ocean, not the Atlantic colonies.

Third sentence: The only proof that they did are the Army's own records of the soldiers who reported being sick. The number of those infected with smallpox fall off dramatically in the last two years of the war (1778-1779), but the evidence that attributes this to successful inoculation rather than the accrual of natural immunity is a single case study. The Army surgeons conducted a clinical trial during the winter in Morristown (which was far worse than Valley Forge) when 6 out of 6 soldiers who were vaccinated did not die from the disease versus 5 out of 6 for those who were not vaccinated. See Smallpox in Washington's Army: Strategic Implications of the Disease During the American Revolutionary War.

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

3

When looking back at the term structure of interest rates, certain periods stand out: 1998, 2001, 2006-7, 2018, and now 2022.

That history is displayed here, constituting the 2yr, 5yr, 10yr and 30yr rates shown as month-end closes. Note that the 3-month bill rate has been omitted, and that the 2-year is emboldened. All of the periods show an increase in rates prior to the congestion, and all subsequently resulted in economic difficulty. From basic economic education we have learned the causative connection and indeed current political “Policy” seems to be in agreement.

Kim Zussman asks:

Do you think the long term downward slope could affect the forecast ability of yield curves?

Zubin Al Genubi comments:

Its along the lines of "don't fight the Fed".

Bill Rafter responds:

IMO, the downward slope is a function of the Fed essentially trying to remove the US economy from the free market. So (1) yes to Kim for the observation that it will lessen the effect, and (2) yes to Zubin for the always true observation not to fight the Fed.

Had I take the picture back farther, say to the early 70s you would have seen much higher rates (i.e. 21% for the 3-month), so that downward trend is a long one.

Apr

1

In November I started reading an interesting and beautiful book, Oak: The Frame of Civilization. Partly a book on the acorn and human history, part on Oak forests and the environment. I planned to write a post for Daily Speculations. Then, short of presents, I gave the book to my niece for Christmas. I’ve just ordered it again for Kindle, so hope to writing something on it soon.

I continue to run programs for speech and debate, and continue to research nutrition and health. My analysis for the Goodman Institute on the flawed energy balance theory of obesity was released recently, and I write about it here: Overweight? Blame Energy Balance Theory and Dietary Guidelines

Laurel Kenner writes:

I had the pleasure of taking the author's (William Bryant Logan) pruning class this winter at New York Botanical Garden. I enjoyed his previous work, Sprout Lands, and can't wait to read this one. A very nice man.

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

29

Always be there

March 29, 2022 | Leave a Comment

nobody asked me but I find it very heroic that Will Smith defended the honor and life force of his wife. My parents almost did the same things for me. My principal in high school, an Abraham Lass, had a grudge against me. he was in partnership with a math teacher in a tutoring service. his wife hated my family because my mother was very attractive and her husband the math teacher admired her. the principal kidnapped me after school and took me to his house.

next day Artie and Miltie, two tough cops written about in The Gang, came in uniform with their guns to the office of the principal. There was no violence. Indeed the principal tried his utmost to preclude my getting into Harvard. But my father was always there for me in every way.

a similar instance is described in Elmer Kelton's memories of his father. the father was a great cowboy and was somewhat disappointed with Elmer because he went to Univ Of Texas to be a writer. the father took Elmer to the bus stop and told him he would always be there for him.

Vic's twitter feed

Mar

28

Go sit in the bushes on the east side of the track along Beal Road. One train pauses daily here to let another pass or to change crew. The once-a-day is an average, is random, and the train rests for 10-15 minutes to allow boarding. Board toward the rear of the train to avoid the engineer’s glance, and choose a car with shade. In minutes, the train whistle sounds highball and you’re on the ride of your life.

These are the steps of each of my hundreds of freight rides, and of yours:

CATCH OUT: Where the hobo hops a freight.

FRISK THE DRAG: The drag is the string of cars behind the locomotives that you walk to pick a car.

BULLS: There are no RR bulls in Niland. As long as you’re not spotted by the engineer boarding it’s cool. Even then, he’ll likely look the other way.

THE RIDE: A freight train is a string of steel elephants that carry you across the country. It’s a notch above hitchhiking, faster than Greyhound, and you don’t need no ticket to ride.

AMERICAN DREAM: Congratulations, you’re living the American Dream!

ARRIVAL: Your arrival is the starting point of another ride. It doesn’t matter where you end up, because the journey is the destination.

A southbound freight out of Niland takes you three hours to Yuma which is an easy crew-change yard to catch out of. There’s a mission there. A northbound freight from Niland takes you to San Bernardino Colton Yard that is also an easy catchout for points east to Las Vegas or north to Portland.

Disclaimer: Freight hopping is illegal, this is not intended as an urge to freedom, and thousands are out there now on the iron road.

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

How does Jevon's paradox play into the current situation with commodities?

Oil demand holds up in Norway, despite record electric car sales
In September, electric cars reached a record 77.5% share of new car sales in Norway. Yet, surprisingly, oil demand is higher than ten years ago when the first zero-emission cars were sold in the country. (UBS Editorial Team, 08 Dec 2021)

Zubin Al Genubi laments:

It's like my garage storage and my budget, demand grows to meet supply. Also despite efficiency the same energy created is used.

Big Al adds:

The road-congestion version:

The Fundamental Law of Road Congestion: Evidence from US Cities
Gilles Duranton and Matthew A. Turner
AMERICAN ECONOMIC REVIEW
VOL. 101, NO. 6, OCTOBER 2011

Abstract
We investigate the effect of lane kilometers of roads on vehicle-kilometers traveled (VKT) in US cities. VKT increases proportionately to roadway lane kilometers for interstate highways and probably slightly less rapidly for other types of roads. The sources for this extra VKT are increases in driving by current residents, increases in commercial traffic, and migration. Increasing lane kilometers for one type of road diverts little traffic from other types of road. We find no evidence that the provision of public transportation affects VKT. We conclude that increased provision of roads or public transit is unlikely to relieve congestion.

See also induced demand.

Stefan Jovanovich comments:

There is no marginal cost of entry into the "system" of free roads. The only way that public transit can begin to compete with highways is for their cost of entry - i.e. the fares - to also be zero. I had one great professor at what was otherwise a mediocre school - what Harvard then called Architectural Sciences - who taught this. I can still remember his lectures and one in particular - when he explained how he had been unable to convince the Indonesian government that the solution to their particular traffic problem was to fix the phone system. It was so unreliable that even in what was still a poor country the streets in Jakarta would be jammed by merchants and others getting in their cars so they could talk to one another in person.

See also bid-rent theory.

Big Al adds:

You'd think that policy would be a natural, especially for "progressive" regimes, given that public transport fares must skew towards a tax on the bottom deciles.

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

11

One-Minute Piano Lessons
Inflation-fighting practical tips for a lifetime of playing

A friend of mine used to joke that teaching piano is easy because it required only four words: Faster. Slower. Louder. Softer.

He exaggerated. Teachers devote years to impart artistry, theory, and history to their students. Yet much lesson time is spent on the humble practicalities like fingering, tone production, and overcoming technical difficulties.

In this book I present a collection of practical tricks, tips, and secrets from a lifetime of lessons, practice, and performance. Most take just a minute to read but will bear fruit as they are put into practice.

Laurence Glazier comments:

Nice. Very Leschetizky.

Laurel Kenner responds:

Thanks, Lawrence. Like so many other pianists, I studied with teachers whose teachers studied with Leschetizky.

Adam Grimes writes:

I read your book. I think it's very good. A few random points (some reinforcing, some maybe slightly contradicting):

- I struggled with poor technique for a long time, and I got by, but the thing that made a difference for me was realizing that there is exactly, precisely ONE ideal alignment of hand, wrist, and forearm for each finger. You can find it by pretending you are going to exert maximum pressure through a single, extended finger. (Like you are going to push a refrigerator or something, but don't actually do it!) It's not always possible to have that alignment for every note played, but knowing what it is and seeking it is the key to technique.

-I don't think there's much value to exercises in general. I did Hanon, Czerny, Dohnanyi (dangerous, imo) for years. Complete waste of time, at least for me. All the technique we need is in the literature. Everything needed to play Classic and before period music is in the Beethoven c minor variations… extract exercises from Chopin (not saying just play the Etudes… make exercises from the Waltzes, the Berceuse, from difficult passages in any piece.)

-Absolutely agree on pain being a big STOP signal. And, as for relaxation, this is often confused, but the key is you don't want to have antagonistic muscles activated at the same time. our brains can't tel a muscle to do anything specific, so we have to work through body motion.

-100% agree about piano being a percussion instrument, though with great capabilities to sing. Play Schubert to make the piano sing… then Chopin. I used to tell my students that legato on the piano was a lie… but it can be told as an utterly convincing lie. Listen to great violinists and singers to understand real legato.

-I would prioritize ear training. It's very hard to create something from the instrument that cannot be vividly experienced internally first.

-I have a very long list of practice techniques. Some of my favorites are rhythms, articulations, practicing fast stuff slow and super-expressively, and practicing small sections up to tempo asap.

-With the metronome, suggest using it on "large" beats. For instance, it's obvious a Chopin waltz you'd set the metronome on the dotted half. But consider the first fugue from the WTC… a good way to practice is with a metronome click ONLY on the downbeat… or maybe on 2 and 4. Doing this requires the player to internalize the pulse more than the typical use of metronome on every beat.

-The technique of slowly speeding up with a metronome only works if the player knows how to play fast… it fails with students because there is a speed wall. (Essentially, there's pretty much only one (or a very limited) way you can play a fast passage at tempo, but slowly? If you're playing slowly you can do ANYTHING!) So, I find that doing big jumps close to target tempo is effective. For instance: let's say the target is q=144 and you find the passage easy at 75. Play it 3X perfectly at 65. Then turn metronome up to 130 and try it. (Absolute disaster, of course.) Try it a few times at tempo, then go back to 70… then back to 130… then 72, etc. This is a way to bring the coordination from fast speeds back to slow practice. Your body gradually will find the right way to make it work.

-Another key to doing the slow speeding up thing (which i do sometimes… it's valuable in some situations) is to also practice back to a slower tempo. For instance, play a passage 3X at 62 (I won't use actual mm here just close), 3X 68, 3X 72,… etc 3x 132… which is your target tempo… but don't stop there! Now do 2X 120, 2x 100, 2X 80. Why? Because tension will inevitably arise as you are ratcheting the tempo… tension can become a learned part of a passage… taking the tempo back down allows you to learn relaxation also.

-Divide practice into small sessions. It's ideal if you can nap after a session.

-Most things won't be fixed today. Your brain will consolidate the work while you sleep. If you aren't dreaming about the work, you're probably not working hard enough. (Personal observation, maybe not true for all.)

-Check the volume in your practice room. I discovered mine was spiking 110+ dB! Permanent hearing damage is certainly possible with the piano.

Bo Keely suggests:

the weights should go on top the fingers, to eventually lighten the touch.

Laurence Glazier adds:

My first Leschetizky teacher, along with all the shaking of hands and relaxation, advised playing each note as if with the whole arm. It may seem strange. But I liked it. At the time I was studying ki aikido and it struck me that several exercises were in both.

I didn't take piano playing very far. Loved learning to play from jazz chord symbols.

The magic of music always finds a way to flourish. The development of jazz. The great songs of the Beatles, who did not know the notation. We need knowledge, but must not let it get in the way.

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

6

A reader writes:

We have been having trouble with wild boars coming under the fences and over the walls from neighboring forests. They dig up the lawns and gardens and are very destructive. They reproduce at prodigious rates. They come in in the early dark hours of the morning under cover of darkness. They are smart. They are black, and travel in absolute darkness. Their main weakness is that they are creatures of habit and travel the same paths at similar times. They have poor vision but good hearing and smell. It takes modern technology and other primitive strategies to get them. I place traps in the paths they like to take. I have infrared motion sensors and night vision cams. Still, it took a couple days of all-nighters to get a persistent one. If startled, they bolt in a panic.

It is similar to trading. The spus tend to move late in the dark of night especially in my time zone. They tend to travel the same paths as they have previously. It takes persistence, late nights, and high modern technology to anticipate their moves and have orders in place to capture them along paths they have traveled before. It seems the spus like to return to places they have previously visited several times. Recently, the spus have been jumpy and panicky and tend to bolt, then return once their panic passes. The spus are smart, but have weaknesses. Stupid news stories spooks them.

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

28

Given the following parameters in macro (FX and rates primarily):
Portfolio return target 10%
Vol average 8%
Max drawdown 8% - portfolio cut and out
Drawdown 4% - capital cut in half

How best to consider various ways to trade within these parameters:
What do you do at -2% drawdown in terms of adjust position sizes, risk, etc.?
How adjust position sizes, risk etc. at +4%, etc.?
How consider position sizing at point 0 relative to percent of portfolio at risk, trade return goal, etc.?
How best overall utilize a strategy to reach those objectives?

Generic questions and these and others can be expanded of course. Any thoughts or reference materials I might read?

Zubin Al Genubi comments:

Parameters need to be dynamic and adjust with volatility.

John Floyd responds:

Yes, agreed. I am thinking more along the lines of specific quantitative measures and rules such as fractional Kelly criterion and assessing probabilities outside a fixed system and how to size in drawdowns and upturns both when trading tactically and on longer-term basis.

Kim Zussman offers:

The authority on this is Ralph Vince, who is here or elsewhere. Search optimal F.

Zubin Al Genubi agrees:

Ralph Vince's books are quite good and improve on Kelly's risk measures.

Theodosis Athanasiadis writes:

it depends on the type of approach and systems. those parameters are for a high sharpe approach (>=2) which is hard in rates and fx. they also make you become ostensibly a trend follower and short-term trader in your approach and pnl.

there are many methods for sizing that at the end of the day are similar; expected return divided by a measure of risk. Kelly is just a subset of the whole spectrum. Vince's work is a must read. The question is the inputs and as you know better they are very hard to estimate. fractional sizing, sizing inverse to vol etc will help but it is not going to change your return profile immensely. Most likely you want an approach similar to constant portfolio insurance. the best approach would be to use simulations along with extremes/penalties (eg haircut your returns by half etc) to create a distribution of pnl and then decide the optimal way. it is tedious but you avoid making more assumptions and you incorporate worse than historical scenarios.

from my experience, those don't work well in practice and you end up reducing allocation when expected returns are higher but if you have those restrictions you need to have something in place.

Feb

23

the round numbers are easy to grasp and calculate from. also there is concentration of energy there so that the flow is greatest when rounds are hit. (see limits in specialist's book et al.)

There is beauty in swings of a volatile market where it covers in swings in 1 day almost a full year's average change at the end. it brings to mind the old man and the sea. after reeling the fish in the old man says "We killed each other". how many specs feel that way at end day?

nobody asked me but:

there is hysteresis in the crypto relative to a force from S&P - what other markets show this?

the shark can teach us much about markets. particularly its shape and scales and height and width relative to rate of flow.

to what extent is the hatred and fear of Putin related to the professed help that the Russians gave to his election campaign and his professed closeness to 45?

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

18

The old canard, “You never go broke taking a profit” was not coined by a winner, that’s for sure.

Big Al adds:

Markets are an excellent venue for cultivating outcome bias and hindsight bias. It's too easy to look at a chart and think, "Why didn't I buy *here* and sell *there*???" Then you turn to face the future, and the future is blank.

Jeff Watson writes:

People who watch televised poker with the hole cards exposed and % to win, frequently make judgments of the players performances based on the complete information they see vs the incomplete information the player is working with. It’s easy to be an armchair quarterback.

Dendi Suhubdy comments:

True. You could however predict the bluff rate, and percentages from past play, which can be used to win a game. New outlier players are hard to predict because lack of data, you need some sort of one-shot learning there. Hard.

Zubin Al Genubi responds:

The best buys are at the point of maximum pain and uncertainty.

Feb

14

HUGE 2nd Reef Pipeline Set Mows Down Surfers In Lineup

Gyve Bones comments:

Ever-changing cycles.

Feb

12

I just thought I'd share with the list. Almost two weeks ago, I mentioned here that I had committed to doing regular music composition for 100 days in a row…after a year of producing essentially nothing!

Today, I have a small piano piece finished that I can share with you. This piece is interesting because it has quite a bit of obvious math embedded in it…and it's a little more process-oriented than most of my pieces.

I'm also learning (and re-learning) things I thought I knew about the creative process…so far, this project has been worthwhile and rewarding.

Peter Saint-Andre asks:

Excellent work, Adam! Do I hear a whiff of Debussy in the harmonies?

Adam Grimes answers:

Debussy? Not deliberately. (Though I'm far from an expert on his music…I'm sure I haven't played two dozen of his pieces over the years.) But the harmony is very ambiguous at times, which might be the tie-in you're hearing…so, yes, I can see that!

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

Woolworth

February 6, 2022 | Leave a Comment

Woolworth: it brought back many useful highlights of my life when I read Dr. Brett's story "I am Woolworth" [Ed: see page 45 in The Psychology of Trading]. here was a patient who thought he was Woolworth despite the modern world. He lives in a different reality just like we often find ourselves completely out of touch with market gyrations and can't understand why. The sage and Charlie Munger exemplify this best as they persist in saying Crypto is worth nothing and will eventually go to zero because it doesn't produce anything like a farm.

Woolworth was started in Scranton and Wilkes-Barre, PA, the home of great entrepreneurs like Carnegie and Frank Woolworth. I worked there for two years as Tennis Instructor at the Valley Club. I visited the site of the first Woolworth store there but was too immature to appreciate it. Even then, there was a tremendous entrepreneurial spirit in the city and I still marvel at all the great, creative, dynamic entrepreneurs I met there. strangely many of these entrepreneurs were in the shoe business and while Woolworth went for the 5-and-10 business after 10 years and kept its one successful business as Foot Locker, the shoe entrepreneurs in Wilkes-Barre tended to fail. My first contact with Woolworth was when I was 12 and after school each day i would ride a trolley.

retailing then and now was such that no customer liked to walk more than 500 feet. My Woolworth I used to buy a 19 cent banana split every day after school. The lunch counters at W. were the site of local daily meetings and one of their most popular features.

There was great nostalgia when W closed its 900 5-and-10 stores after 100 years in 1987. "Where else could you buy such nick-nacks as a 37 cent diamond engagement ring?" I got engaged to my wife of some 50 years there, when I bought her that diamond ring at W. She still wears that ring and if she's in a expansive mood, she will send a picture of it to this site.

after splurging on the 37 cent diamond ring, i had to economize with a root beer float for 10 cents along with the grilled cheese sandwich.

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

3

From Einstein On Creative Thinking: Music and the Intuitive Art of Scientific Imagination:

In other interviews, he (Albert Einstein) attributed his scientific insight and intuition mainly to music. "If I were not a physicist," he once said, "I would probably be a musician. I often think in music. I live my daydreams in music. I see my life in terms of music…. I get most joy in life out of music" (Calaprice, 2000, 155). His son, Hans, amplified what Einstein meant by recounting that "[w]henever he felt that he had come to the end of the road or into a difficult situation in his work, he would take refuge in music, and that would usually resolve all his difficulties."

btw, today [3 Feb] is the birthday of Felix Mendelssohn Bartholdy.

Stefan Jovanovich writes:

I don't really think; the few insights I have come from early training in copy editing and a certain skill for moving 3D objects around in space so they fit better (in the good old days this was called warehousing). For that kind of mind mulling, Haydn's Piano Trios have become the essential daily brain food for over a year now.

Nils Poertner replies:

perhaps there is a type of music, or composer, or melody, that resonates with a certain person for a while - almost like good medicine? a little goes a long way though.

Adam Grimes comments:

Speaking personally, I can't listen to complex music and do any other task. My attention is too easily diverted to the music and I spend too much time focusing on the music, which is an obvious reflection of how my brain has been trained. (I do think there are some fundamental differences in the way musicians perceive music compared to "everyone else", and different types of musicians also perceive differently, based on my experience.)

I do, however, like a wide range of musics, and I find bluegrass and old-school country are especially conducive to writing and programming. (Again, a very personal perspective.)

I do think musical training teaches people to hold and to manipulate patterns in a special way. There's also a lot to be said for the work ethic and focus of a musician. (When I was younger, I spent 6+ hours in front of my instrument, day after day. That requires a degree of focus and attention to detail that most people don't encounter very often.) But I'm still a little skeptical about wide-ranging benefits… maybe they are there, but expertise can be frustratingly domain-specific. I suspect there might be something in the pattern recognition and manipulation aspects that's meaningful, though.

Stefan Jovanovich responds:

For one thing, AG, you all actually hear the music. I can recognize the differences between the F-Minor (#26) and the E-Flat Minor (#31) because I have heard the pieces often enough to distinguish one combination of noises from the other; but that is all. I do not perceive the music.

Zubin Al Genubi adds:

After training and practice you can hear in your mind the perfect pitch of a note out of thin air and tell if a note is not in tune. Its another thing to train your voice to hit that perfect pitch.

Adam Grimes writes:

The skill of "perfect pitch" (absolute pitch), which is the ability to name notes out of thin air, is actually not trainable, despite a lot of work and effort. It appears to be a skill that probably all babies have, just as babies have the ability to hear all phonemes in all human languages. At some point, early on, the brain changes and unused (unheard) phonemes become relatively inaccessible (which is why, for instance, native French speakers struggle with the English "th" (and there are many other examples), and this appears to be the window that closes on developing perfect pitch. If musical training begins at a young age, this skill of absolute pitch may continue into adulthood.

It's also interesting that there's a range of pitches that will be accepted as "A", just as there are a range of mouth sounds that will be perceived as a specific phoneme. (in other words, not all speakers will produce the same sounds in a language exactly the same, and the same speaker might produce sounds slightly differently in different words, but the brain adjusts by categorizing.) I don't have absolute pitch myself (though I do have a few absolute "notes" that I can recognize or pull from memory), but in working with people who do, I've noticed they don't have quite the precision of a tuning fork. What they do have is a radically different perception of music than the rest of us, though the rest of us aren't as handicapped as we would be inclined to think.

There's a lot of very interesting work done and being done on perception. David Huron has written a few books that are both precise and accessible–always a nice combination of attributes!

Though perfect pitch can't be trained, what CAN be trained is the ability to judge relative pitches and to hear multiple notes played with precision. As you say, training the voice is another skill. I'm a very poor singer, but producing pitches with the voice is a critical part of internalizing pitch (and music, in general) for instrumentalists.

Big Al adds:

I think one of the most important lessons in music, especially for young people, is that you can begin studying something you know nothing about and, through practice, master it. Many people do not learn this and schools don't overtly teach it.

Feb

3

Non-farm payroll day open, minus previous day close, 1st Friday of the month:

as we can't log log dollars, i'd give give a pass. not a bad idea if TNA sounds like TINA, to have have her best song (feel free to disagree) while sending a a buy order into close or death on close order as it used to be called.

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

Feb

1

Here is a thought experiment. There is a market with 1 buyer and 1 seller. The seller has 1 testing sell stop in place at 0. If the buyer can see it, he will take the free offer. If he cannot see it, he will explore with low bids moving at some point to 0 as a buyer wants the best price. Seller takes a loss.

Another day, 1 buyer, 1 seller, 1 offer at 100. Buyer has to buy and so searches, finally taking high offer.

The seller's low stop results in a loss. Can this be generalized?

Ani Sachdev writes:

I don't trade options - I think it's a fool's game to pay/sell premiums. If I have to trade I prefer futures (but I much prefer just buying and holding). I have, however, read a lot about options, and Mr. Taleb's book Dynamic Hedging is excellent at highlighting the important concepts. This conversation reminds me of his description of liquidity holes, on page 71:

Since stop losses guarantee an order, it becomes understandable that some operators can have an incentive to trigger the large stops. The following example shows the execution of a stop-loss in a relatively less liquid market.

[See the book for the chart that follows the above quote.]

Larry Williams responds:

I kind of see stops like getting in a fight… And somebody beating the hell out of you. The best strategy is to run.

That's why I always use stops there, they protect me from getting beat up… And they protect me when I'm not watching the market; which is most of the time.

Kora Reddy writes:

don't worry neither taleb trades options, just my personal opinion, take it with a pinch of salt:

1) taleb recycles others knowledge in a complicated and nonsensical way and presents it in a non readable gibberish manner vs

2) Euan Sinclair explains the same complicated options stuff in a straight no nonsense way and easy to understand

3) think like speaker Nancy Pelosi: go farther out like 2024 Jan leap, spy around 450 levels, I need about 45k to buy one contract if I go via vanguard route [i.e., 100 shares of SPY], but if I go deep itm calls at 400 strikes, its midpoint is at 80, one contract costs me about 8k with benefits about. 65 move for spy one usd underlying move and we know that spy average expectation is about 8 to 10 percent rise per year, so we are looking at 550 levels then, your 400 call is worth about 150 or roughly 90 bucks or 100 percent gains post tax vs no tax on 10k by 45k about 20 percent gains. the trick is to execute it when vix goes back to teens at much cheaper costs.

Editor's note:

Possibly of interest to readers:

Liquidity Black Holes
Stephen Morris, Cowles Foundation, Yale University
Hyun Song Shin, London School of Economics
September 8, 2003

Abstract
Traders with short horizons and privately known trading limits interact in a market for a risky asset. Risk-averse, long horizon traders supply a downward sloping residual demand curve that face the short-horizon traders. When the price falls close to the trading limits of the short horizon traders, selling of the risky asset by any trader increases the incentives for others to sell. Sales become mutually reinforcing among the short term traders, and payoffs analogous to a bank run are generated. A “liquidity black hole” is the analogue of the run outcome in a bank run model. Short horizon traders sell because others sell. Using global game techniques, this paper solves for the unique trigger point at which the liquidity black hole comes into existence. Empirical implications include the sharp V-shaped pattern in prices around the time of the liquidity black hole.

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

24

1) Search results for "Grantham" on CNBC
2) of the 118 results , the below 7 more caught my attention
3) assuming a hypothetical 1k USD investment on those 7 occasions

Jeffrey Hirsch comments:

Nicely done Kora. Perhaps it’s just a marketing campaign. Fear sells you know.

Duncan Coker responds:

Consider the source. Grantham's contrarian flagship fund GBMFX total return since 2003 when it launched is 30.5% ( that's total not annual compounded) and that included 2 bear markets. SPY over the same period 488%.

Andy Aiken writes:

Back in the late 90s, I had a few $ in David Tice's Prudent Bear Fund, which was, essentially, short stocks and long PMs. Entered in 1999, got out in 2002 at a very small gain. Gold & silver dropped along with other risk assets during that time, killing returns. If I'm going to short, I'll do it myself now…

Jan

24

Stefan Jovanovich offers:

The mania for sudden fortunes made in cotton, raging in a vast population of Jews and Yankees scattered throughout this whole country, and in this town almost exceeding the numbers of the regular residents, has to an alarming extent corrupted and demoralized the army. Every colonel, captain, or quartermaster is in secret partnership with some operator in cotton; every soldier dreams of adding a bale of cotton to his monthly pay. I had no conception of the extent of this evil until I came and saw for myself. Besides, the resources of the rebels are inordinately increased from this source. Plenty of cotton is brought in from beyond our lines, especially by the agency of Jewish traders, who pay for it ostensibly in Treasury notes, but really in gold. What I would propose is that no private purchaser of cotton shall be allowed in any part of the occupied region. Let quartermasters buy the article at a fixed price, say twenty or twenty-five cents per pound, and forward it by army transportation to proper centers, say Helena, Memphis, or Cincinnati, to be sold at public auction on Government account. Let the sales take place on regular fixed days, so that all parties desirous of buying can be sure when to be present.

- Charles Dana's recommendation to the Secretary of War, 1863

Jeff Watson responds:

Sounds like sour grapes from Mr Dana, almost like he was having problems with his hidden cotton partner and since he didn’t find easy money, nobody else should either.

Stefan Jovanovich replies:

Score by WS. But, according to his memoir, Dana was no more secretive about his partnership with Conkling than anyone else in D.C. He asked Halleck for letters of introduction to the generals not named Grant. He omitted Grant because he already had the reputation of being incorruptible.

How the Story Ends:

On March 31, 1863, Mr. Lincoln issued a proclamation declaring unlawful all commercial intercourse with the States in insurrection, except when carried on according to the regulations prescribed by the Secretary of the Treasury. These regulations Mr. Chase prepared at once. At the same time that Mr. Lincoln issued his proclamation, Mr. Stanton issued an order forbidding officers and all members of the army to have anything to do with the trade.

Or does not end:

Diary of Gideon Welles: Saturday, May 21, 1864

Last night I was at a party at Mr. Chase's, or his daughter Mrs. Sprague’s, and late in the evening he spoke to me of the great abuses in cotton speculations. It was a new and singular theme for him, and I said it could not be otherwise than demoralizing. He said, “Yes, your whole fleet out West is infected; Porter devotes his attention to getting cotton and has a boat to himself, with a piano and his pipe, on these cotton raids.” I replied this could not be so. The naval men could capture and retain nothing, which the courts do not adjudge to be (a) good prize. We were interrupted at this point. I conclude the Committee on Commerce have notified Chase that they disapprove of his “Trade Regulations,” and this outburst on the Navy is to turn off attention from his officials. But we shall see.

Lieutenant-Commander S. L. Phelps has been with me this evening and given me many interesting details concerning the Red River expedition and the incompetency of General Banks. Among other matters he relates some facts in regard to cotton speculations by persons connected with General Banks — some of his staff — that are exceedingly discreditable. Among others whom he specially mentions is one Clark from Auburn, New York, who appears to be managing director of the cotton operations.

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