Jan

2

thank you to all my correspondents, happy new year. let us hope that the same regularities, drift greet us next year. there seems to be no negative correlation between the S&P moves in one year and the next. in other words the 27% gain this year is not abnormally bearish.

on the two occasions that the S&P dropped a little on dec 31 during the last 10 years, it was bullish for all the relevant subsequent periods. however, on the 6 occasions where the S&P was up big over the preceding 5 months, it was bullish for Jan but there was one big decline that occurred around May that brought the expectation down big.

Vic's twitter feed

Jan

1

For those who haven't read it, here’s a pdf of Robert L. Bacon’s book, Secrets of Professional Turf Betting. The book provides a banquet for a lifetime.

But first, it must be understood that while it is possible for ANY man or woman to get started with a lonely deuce or sawbuck and run it up to a handsome amount, it is at the same time impossible for EVERY man or woman to make a living at the races.

The careless, the inconsistent, the people who must be "in action" every minute, the stabbers at the moon, the followers of free public selectors, the people who go to the races "just for fun", the players who are ignorant of the principle of winning, the people who do not keep up to date with all the new ideas and trends — all such people must lose. That is true because every cent of the purse money, the jockey fees, the track upkeep and amortization, the trainer's living, the plater owner's living — and the profits of the consistent bet winners — all must come out of the money lost by the careless and uninformed public.

Jan

1

Many of the richest in the country have 2nd homes here in Hawaii. Each year I count how many private jets come in as a gauge of the economy. The place is packed to overflow full of big new G5's with custom paint jobs. All is good as might be expected at new ATH's. No DC8's with restrictions on Saudi's with Covid.

The place is crawling with tourists and not just the usual grossly obese. This year the crowd is younger and more stylin' with the nice braids and cool leisure suits and headphones and thong bikinis.

SP 5000 next year?

Allen Gillespie writes:

The most applicable economic question for private jets and politics right now are the "Green New Deal" policies. Wall Street loves a free money subsidy. Fundamentally, the Greens seek to raise the price of energy to encourage substitution and conservation while subsidizing their donors. If you disagree you get locked up so you are forced to conserve. Obviously, this creates the paradox of Progressives following regressive economic policies and fascist political policies with a little mix of Cultural Revolution.

It has been well established that oil price "shocks" as defined by a 10% move above 3-year average have preceded 11 of 12 US Recessions by an average of about 5 months. This Bernanke paper suggests if the Fed reacts to the shock, then their actions will account for 2/3 of the damage - Powell indicated in Nov the central bank will be reacting.

In 2018, we had such a breakout and the yield curve later inverted by May with a curve shape indicating that Nov 2019 would be the peak, and the curve straightened out late April 2020.

We had another such energy breakout this October. The yield curve has not inverted this time but it has flattened but I think people are now substituting MEGA cap stocks for bonds which is why the largest of the large outperformed despite the dismal long-term track record of buying the largest companies.

Mid and Small Cap stocks made 60 day lows in December, which would be the minimum objective necessary to discount a recession. If a recession is defined as two consecutive quarters of negative GDP, and stocks lead by 3-6 months, then a 60 day low would represent the potential mid-point. I think the trade in 2022 would be long small and mid-cap name and short MEGA caps if they have been used as bond proxies once the recession is discounted. That trade may have started on The Almanac's January effect by date of the Dec options expiration.

Nature of recession - I believe 2022 will bring a inflationary growth recession. We are at the low point on the demographic U (peak Baby Boom 1957/1958 - low Gen-X birth year 1972/1973) (life cycle spending peak Age 50) - and millennials well into workforce. The exist of the Boomers and China production unreliability are driving up labor costs and goods costs likely in a structural way.

The Fed is reacting to the inflation data, but the 10-year realized inflation rate is 1.82% and the short-term numbers are much higher, so while they will move in the direction of tightening, at the end, we will likely still be left in a negative real interest rate environment. Once they blink, probably in late 2022 because of politics, crypto might have the biggest move yet unless Americans are able to completely roll the fascists.

Jan

1

From Human Error, by James Reason:

People often have an overwhelming tendency to verify generalisations rather than falsify them: this is a fundamental attribution error.

Whatever governs general proneness to everyday slips and lapses also appears to contribute to stress because certain styles of cognitive management can lead to both absent-mindedness and to the inappropriate matching of coping strategies to stressful situations.

Predictable potential for error is the inappropriate acceptance of readily available but irrelevant patterns.

Humans, if given a choice, would prefer to act as context-specific pattern recognizers rather than attempting to calculate or optimize.

Nils Poertner agrees:

so true. chess for kids = excellent - they learn to falsify a "winning path" by looking at all possible defenses of opponents. so many good projects now everywhere -eg St Louis Chess club for kids etc - also see Ben Finegold.

Duncan Coker offers:

Read an interesting book called Scatterbrain by Henning Beck. Humans makes tons of mistakes especially in repetitive, mundane tasks or difficult calculations. Computers do that way better. What the brain is quite good at is forming ideas based on connections, patterns, correlations, and intuition. We are also very good at adaptation and learning from mistakes. AI will be much better and grinding through terabytes of data. But human brains better at separating the wheat from the chaff and making sense of it all.

Dec

28

Sexual selection

December 28, 2021 | Leave a Comment


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

Vic's twitter feed

Dec

27

Test, test, test…

December 27, 2021 | Leave a Comment

after 3 straight years of above 10% rise, what are chances of rise next year? big article in wsj says that banks are skeptical. is this bull or bear? how can this be tested? after a big rise in last 3 months the S&P is neutral to bear 30 days later from 1996 to present.

Vic's twitter feed

Dec

27

Beating the Stock Market, by R. W. McNeel (1926), could have been written by Graham in 1950 and contains the worst advice for customers that could have been given 1000 years ago and is still being given today: "Stocks are to be bought at low price - and only by so doing can one make money." the idea is that when stocks are low, people get frightened and at these times they would not think of taking money out of their banks and buying stocks. the idea is to sell when stocks are high, get out of the market, wait for the inevitable decline and then get back in. This is almost like it was written by Alan Abelson and his current day followers except that even after the 1987 fall where stocks fell 30% to Dow 400 the former was still bearish and called the decline a start.

What are the problems with this approach? (1) the market is more bullish at a new high than at a new low. (2) the stocks that go up the most have a higher expectation than the stocks that are down the most. (3) the market has a 10,000 fold a century drift upwards and thus you can never never be successful if you get out and wait for the "inevitable drop". (4) growth stocks perform much better than value stocks.

Other bad advice in the book which reads like it was written today is never buy new flotations as Rockefeller and Morgan lost money. Rock and Morgan lost money when they didn't stick to their list and invested in railroads. New Haven and Colorado Fuel and Iron were their downfall.

all these counter to the terrible and destructive advice in the book and other uttered today in the media must be tested. I will endeavor to provide such tests here in the near future.

here's a more current version of McNeel but the original book that Alan Millhone gave me as present was written in 1926.

Vic's twitter feed

James Lackey writes:

My immediate question is why are these books sellable? We realized they get published because as Pam might say that’s what book sellers do. She’s one of the many book published experts on this list.

Perhaps Vic's advice which is granite rock solid is that it seems too easy! To be honest I thought that as a young spec. Now I realize this:

It’s hard to be bullish all the time.
Everyone calls us fools.
Then they point out our faults.

If we dare share logic and my goodness statistical data to prove why we are bullish all the time they weaponize our insecurities. The bears are smart and have very good arguments. They can be spiteful mean men. I’d be an old mean SOB too if I was wrong on average about everything.

Alex Castaldo adds:

It has been more than 25 years since I read this book in the reading room of the New York Public Library and I don't have a full recollection of it. I went to read it because it was mentioned in another book (or article) by Dean LeBaron and the library seemed to be the only place to find it. At the time I was reading as much as I could about investing, both recent works and what others considered "classics".

The main point of the book I thought was the importance of independent thinking in investment. The author points out that most people are like sheep and follow what they hear from others. A good investor should guard against this and try to come up with his own judgements. If I recall correctly the author coined the term "contrarian investing" to describe this. He explained that "contrarian investing" does not mean believing or doing the opposite of what everyone else does or believes. Rather it means doubting what others believe and being willing at times (but not all the time) to take a different position.

I did not dislike the book. I did think it perhaps a bit too obvious. If you are going to "outperform the market" almost by definition you have to do something different than what everyone else is doing. Also, it may be easier said than done. Some people, such as the Chair, seem to be good at coming up with their own opinions, but most people are somewhat conventional and it is not clear what they could do to change. Would just being aware of the need to think independently be enough?

I also thought the term contrarian does not seem the best choice for what McNeel is trying to describe. (It sounds like mulish opposition to what everyone believes). "Independent thinking" or the term coined by Michael Steinhardt "variant perception" seem more appropriate to me. But still it was interesting to see what the originator of the term thought it should mean.

Dec

20

Nhlanhla Mhlanga is a bright man. He will soon graduate from Swaziland's only university, speaks fluent English, and has taken many advanced courses in math and statistics. Unfortunately , he still has to work for less than $1/hr.

My son and I are looking to find him work online, his only hope to earn a living wage. If you are interested in his extremely affordable services, part or full time, please contact him. See his skills and contact info.

He is currently reteaching me some concepts in statistics for $10/hr. It is incredible how much money he saves me compared to if I'd hired a similarly qualified tutor in the US. The free market is beautiful.

Vic's twitter feed

Dec

18

The Power of the Dog - typical of the denial of the adventurous spirit, the pathbreaking spirit that made the west a vibrant place. proves the point that any western that's made these days has to show the cowboys as weak and vile, drunk and taking advantage of the minorities. Any westerns these days have to be anti-westerns, showing cowboys and ranchers to be evil. perhaps transgender, mercenary, unfair wasting their life away. this one has the cowboy and dr. as the murderer. so woke. never waste your time.

power of dog– saw two good reviews in woke newspapers, was recommended to me. wasn't completely borrowed form 1902 trail drives like Larry McMurtry. Bronco Henry so contrived. to find out good Westerns of heroic nature, listen on Audible to Elmer Kelton - tells the truth.

NYT has acclaim for it because it dispels and shows the lie of america's foundational myths. that's a real review typical of our times.

Dec

18

Poker, Sex & Dying

December 18, 2021 | Leave a Comment

Kora Reddy recommends:

Poker, Sex & Dying: Inside the Mind of a Gambler

The classic guide for winning at poker is back in print - and better than ever! Praised by poker experts and aficionados for years, Poker, Sex & Dying trained scores of high-stakes champions to play poker better - by learning to 'play" people. The pros swear by Anderson's poker 'Bible." From page one, you'll recognize the character types Anderson identifies - because you've sat across the poker table from them before! Now - face them with confidence, as you use the tips, strategies and player profiles Anderson highlights to beat them in the mind game of poker - time after time.

Dec

14

the bonds were up as usual on the inflation number, -10 today but up 48 ticks yesterday. but stocks went down on the ppi number which presumably has wholesale prices of 1 month ago. as always the market goes where it wants regardless of the news.

James Lackey writes:

Mr Vic Wrote: "calumniate, traduce - wrongfully accuse." the 6.8% inflation rate announced on the cpi for friday was good enough to raise the S&P futures to an ATH on a 1% rise. as mentioned repeatedly the inflation is not a problem. bonds and mortgages predict a 5 year rate of 1.5%.

what's worse is that the current administration is being wrongfully accused of driving inflation up by miles to this rate. when it comes down as will be seen on all future cpi's and eci, one should not credit with the great miracle of driving it down. its was front page news about the horrible spike. its not the fault of bbb so much, what's wrong with all these programs is the opposite of capitalism (i dare not use the word for fear of total cancelation). in any case a great opportunity to go long sp on future releases like last friday.

There is something I need to say. This statement took 20 years to pass. Guys I have never agreed with Victor Neiderhoffer publicly because I had to or for any other reasons than this one: He’s correct.

If we need a reason inflation isn’t ever a problem outside of the printing press or the rigged short term rates set by the central’s for their 12 and only 12 clients, when businesses are left alone to do their thing it is this one which probably comes from Vics books but the gist is: Business men drive profit to Zero!

If you can’t wrap your head around that one think of Trucks in transportation services. There are times in history where Trucks have lost money. It’s not that truck drivers cost too much or fuel or repairs. It’s the business. A truck will take a lower load vs no load at all dead head.

That’s easy to understand. What is driving me more insane, more crazy or best stated by my bmx racing kids is your crazier than usual Mr Lack. Why do industries as a whole seemingly lose on purpose? An example is BBBY or cars in general like Autonation, Sonic et al? Why would any business not.

Text book "pure competition" was described as agriculture in my old books. Why? How why what in the world are they doing driving profit to zero? Please help with anecdotal evidence and stats if we get them.

Here is why: Covid rigged shortage some of these old line businesses like food service Carz and others are running 10% non levered margin profit or triple of what was stasis and as usual driven to zero.

My hypothesis is men never learn as a people. A person is smart but people can be toxic as hades and let’s not forget Every day is better than the years 1942 to 45 at least for Americans.

Duncan Coker observes:

5-year TIPS yield -1.6%, with 5-year Treasuries yield 1.2%, implies a 2.8% inflation rate over the period. Wake me up when it hits 5%.

Dec

14

some themes of the fray. where there is an absence of congealment, the situation is classified as an open game. where there is a binding element, the hudooing of certain pieces (chart patterns) in close proximity to the middle price, the situation is classified as an open position.

as a general rule the fundamental strategy in handling an open game is to make waiting moves taking care not to advance any piece to any square that mite be a liability. on the other hand in the closed game denoted by structural solidity of material, every move made by both withholding or waiting moves are not to be found. therefore it is much easier to lose a game of markets or checkers involving a solid formation through faulty structural developments than it is to lose an open game where it is so much easier to anticipate the results of moves. Champion players seldom lose an open game but they frequently err in the closed game.

if you want to stay out of trouble, keep away from complex arrangements of the market (your pieces with those of your opponent). when you have the choice, play the open and flexibly situated.

Willie Ryan, Championship Checkers Simplified (1951)

Read A Psychiatrist Looks at Checkers from The American Checkerist (1950). Scroll down about half way and click on the scanned pages from the magazine.

Vic's twitter feed

Dec

13

El-Erian Says Transitory Inflation Call Likely Fed’s Worst Ever

There seems to be much agreement on my post about the former partner of the Upside down man. Who are the other useful idiots and why are they predominantly wrong?

why is the big data provider and their major expert writers so wrong all the time? (1) they are always bearish. in line with their former hatred of 45 and now the institutions like the fed that are hold overs. (2) they don't realize that there is a drift in the stock market. (3) which ever market is down the most they come up with reasons to be woeful about it. (4) they have a political agenda that is very negative and very political for what's happening in the US. what other reasons can you think of? can the idea be generalized to the big options firm?

(5) most of their columnists like Mike Lewis and the useful ever wrong former partner of the upside man are highly progressive and tend to be distrustful and angry with what's happening. they fail to take into account regulatory capture and the return on capital investment.

the fed will do its thing and show its relevance. the hatred and shame for the US will be dissipated tomorrow perhaps.

at least the buttoned down pseudo academic former partner of upside down man gave a tell by telling us the low interest rates were much too low on a day when interest rates had one of the biggest declines.

Vic's twitter feed

Dec

12

calumniate, traduce - wrongfully accuse. the 6.8% inflation rate announced on the cpi for friday was good enough to raise the S&P futures to an ATH on a 1% rise. as mentioned repeatedly the inflation is not a problem. bonds and mortgages predict a 5 year rate of 1.5%.

what's worse is that the current administration is being wrongfully accused of driving inflation up by miles to this rate. when it comes down as will be seen on all future cpi's and eci, one should not credit with the great miracle of driving it down. its was front page news about the horrible spike. its not the fault of bbb so much, what's wrong with all these programs is the opposite of capitalism (i dare not use the word for fear of total cancelation). in any case a great opportunity to go long sp on future releases like last friday.

Vic's twitter feed

Dec

12

A music piece by Händel - the Arrival of the Queen of Sheba. One could tell that the organ player is enjoying himself.

So many of us finance do terribly well - financially speaking. But then we see it as toil. Some go to the theater or listen to concert in the eve- but perhaps we got it all backward then?

Laurence Glazier writes:

Let’s remember that Handel was enjoying himself too.

Nils Poertner replies:

Wasn't he a pretty good investor as well?

Most (good) musicians experience life in greater fullness than ordinary folks (like us) and express it via their music, eg, the late US singer Johnny Cash…same thing with him. also good lyric with toil and feeling depressed and the sun comforting him etc. some of my more narrow minded friends are like: "I am rich, I can buy happiness." No, you can't. It is an illusion.

Vic adds:

i listen to verdi whenever i need cheer. every one of his arias and chorus pieces is bite sized to enjoy. verdi was a genius in all things like mozart and brahms. a great investor also was about the richest man in Italy when he passed. maintained amazing secrecy about his mistresses also.

Jeff Watson offers:

Whenever I need cheering up, I listen to Steve Fromholz sing his epic Texas Trilogy, and his Man With a Big Hat. (If that one doesn’t bring a tear to your eye, have someone check you for a pulse.)Beautiful music that celebrates real men, freedom, and the open range.

Adam Grimes writes:

Thank you for the share, Nils. This is a fun piece… I've played arrangements of it literally hundreds of times in church services and weddings, etc.

By the way, if any of you play piano, Handel's keyboard music is vastly underrated. Almost all of it is super accessible and a real joy to play. Worth checking out!

I've been more successful in the past few years finding a balance between my artistic, creative life as a musician and the markets. It's a terribly hard balance to maintain and I haven't quite got it right yet.

James Lackey writes:

The Blues Travelers Run Around, the blues brothers and the prison movies Shawshank Redemption, Clint Eastwood Alcatraz always cheer me.

Verdi is fantastic for its simple yet full and rich chord structure and the similar movie sound tracks. Or how about that chord and crescendo on the TDX patented movie surround sound vrrrrmph there is nothing like the sounds of a properly tuned full blown racing engine at idle then a single thump of the throttle and shut it down to silence.

Simon and Garfunkel the sound of silence is wonderful with the remakes of recent rockers.

The sound of silence trading is one thing, like sunshine itself that is either one of the most beautiful things a day or annoying. The sounds of a single fan on in a room across the hall, a car door, mumbled sounds of laughter on the next block. In a panic as your fingers cut plastic keyboard buttons and you search for an honorable retreat. A big rally, the escape with a proper reduction, back to even you laugh as your holding what you’ve got for the duration as we mumble we should have had the balls to hold all to close.

Then like the sun rising over a few covered manicured field of dreams. You whisper, Put some music on brother…Why is it so quiet in here?

Life without music is death.

Laurence Glazier responds:

Nicely put, Lack, with a great rhythm and turn of phrase. Music is a force of nature we cannot tame, but we can be its instrument.

A quote from the painter David Hockney's latest book, Spring Cannot Be Cancelled:

I intend to carry on with my work, which I now see as very important. We have lost touch with nature, rather foolishly as are a part of it, not outside it. This will in time be over and then what? What have we learned? I am almost 83 years old, I will die. The cause of death is birth. The only real things in life are food and love, in that order, just like our little dog Ruby, I really believe this and the source of art is love. I love life.

Larry Williams suggests:

Food and love?? How about air? How about something to be passionate about—like trading or whatever turns you on.

James Lackey :

Larry as you know "trading for a living" opens up self - I we me - to the world in a very simple output PnL and you can not fake it for long. To complete on the worlds stage full time is to immerse yourself. If you give the market 80% effort perhaps you’ll end up with a 20% loss. Give it 98% maybe you’ll get a 2% profit after expenses and paying yourself a working wage. Go all in and it’s literally limitless. All the money fame fortune a many can ever want.

Take back 2% of your time? The mistress of the market is a very jealous person. If she doesn’t kill you your cohorts running at 100% will.

Trading is one of the best things that has ever consumed me and mine. Yet it consumes me.

Laurence Glazier comments:

Better the passion is in the art than the artist.

Nils Poertner writes:

well said. there is nothing wrong with some healthy ego. but the ego that modern man (modern woman) has formed is perhaps way too narcissistic. We are co-creators in fife and that spirit is encapsulated in many religious books- even by Ralph Walter Emerson. one has to feel it - it has nothing to do with IQ.

In The Gospel of Emerson, Ralph Waldo Emerson is quoted as saying:

"There is a principle which is the basis of things . . . a simple, quiet, undescribed, indescribable presence, dwelling very peacefully in us . . . we are not to do, but to let do; not to work, but to be worked upon."

James Lackey adds:

The gist of whatever m saying comes from my dad and army guys and y’all:
Give a smart man time he finds problems.
Give a real smart guy time he finds solutions.
Give a genius time they find the right questions.

With leadership all 3!work together and create the undiscovered unlimited human potential. Alone without leadership and a dose of pain you get what my dad called "lost souls". Time is the 21st century issue most have too much time to think of problems. Those with solutions have no voice as they live in fear. The genius sit alone talking to the connections.

The genius around the globe never before without a middle man or government wishing some one would take charge and get it done. What is it? That list is now so long it’s an infinity symbol. No begging. No end.

Alston Mabry suggest:

Speaking of music, the Fresh Air podcast has a 3-part Sondheim
retrospective. It's really interesting to hear somebody at that level
talk about his work.

Part 1

Part 2

Part 3

Dec

10

Zeitgeist

December 10, 2021 | Leave a Comment

Nils Poertner offers:

“There is nothing that man fears more than the touch of the unknown. He wants to see what is reaching towards him, and to be able to recognize or at least classify it. Man always tends to avoid physical contact with anything strange. In the dark, the fear of an unexpected touch can mount to panic. Even clothes give insufficient security: it is easy to tear them and pierce through to the naked, smooth, defenseless flesh of the victim.”

- Elias Canetti, Crowds and Power

Larry Williams admits:

I fear margin calls a lot more than the unknown.

Zubin Al Genubi writes:

I don't fear margin calls due to careful use of risk management techniques as outlined in books by former list member Ralph Vince and Phil McDonnell. Together with diversification its one of the free cards in finance.

Larry Williams concurs:

Me too! My fear of margin calls is what forces RV’s money management rule upon me.

Give Bones asks:

You size your trades using optimal F?

Larry Williams answers:

Yes, a form of it I have adapted it to my trading style.

Dec

9

Bond gyrations

December 9, 2021 | Leave a Comment

bonds gyrating madly to maximize vig and stop out - up 5 full pts last week, down 4 full pts this week. using friday closes. hats off

what is difference between an open position and a closed position in markets and board games and how should you adjust your play accordingly? how to define?

and with all the gyrations bonds have moved from (say) a 1.4% a year inflation forecast to a 1.5 % a year forecast. if these forecasts are too low, which probably they are quite accurate, then purchasers of bonds would be going into probable losses in real money terms.

Vic's twitter feed

Dec

3

three cheers for Lubabalo Kondlo from a shanty town in South Africa who just won (tied) for the world championships of checkers. he is a programmer but is very poor and is suppressed by the South Africa sports authority which is the old English in form. Alan Millhone is the pres of USA Checkers.

World champion checkers player visits Belpre

Lubabalo Kondlo came all the way from South Africa to meet with Alan Millhone, Belpre resident and president of the American Checkers Federation

just some facts: (1) checkers is at least as difficult as chess. it requires precise thinking often 50 moves ahead. with its binary aspect it is the closest game to computer logic. (2) Luba lives in a shanty town and often can't afford a computer or its connection.

(3) While Nelson Mandela was in Robben Island Prison his favorite game which he played often was checkers. there are an amazing number of top checker players living in shanty towns like Luba. (4) Luba is a fine gentleman with exemplary character who is a credit to humanity.

(5) Luba always carried a Wiswell book with him for study. (6) Luba can play 15 checker games blind folded. if i've made any errors in this Alan Millhone will gently correct me.

Arthur Niederhoffer (father of Victor and Roy and Diane) loved checkers. when we visited the first thing we did was to play a game. I never beat him until the day before he passed away. He purposely let me win by a block. he said it was like his body. the incident led to my book Edspec. He said to me at the time (you have a good move) and then i could give him 2 for none and he couldn't move (in checkers when you can't move you lose) the incident I wrote up, sent to my friends. they all said I should expand it. and thus, Education of a Speculator.

Dec

1

with bonds near a 6 month high, forecasting a very low future inflation rate, and oil in the 60s down 25% from recent levels — with gas soon going at $3.00 a gallon compared to $5.00 recently and grains down 25% from highs

the problem with bbb and the others is not inflation, it's pork and socialism, and ruining the capacity of the economy to create jobs

the idea that inflation is a killer falls into the hands of the adversary. r's and libertarians and those on the rite have been sounding the alarm bells about the deficit for 5 years. when will they stop the false alarms?

Vic's twitter feed

Nov

29

anomalous move fri with crude down second most ever down 800 and sp down 130, sixth worst ever. shows danger of politicians tampering with prices ( "baker did it"), a smiling capitalist move that will be blip on momentum of rising constructals.

idea that we will have inflation should be dead with bonds 1 big pt away from 6 month high. danger of tampering with new scare from virus before nov 2022 is rampant.

if only politicians would stop declaring that we have to stop handout and entitlements and pork because of inflation, and would concentrate on incentives and private property and takings and what causes prosperity - everything would be much better.

Vic's twitter feed

Nov

29

Elmer Kelton at 75 retired from writing and 50 years of newspaper work said he often wished to go back to newspaper work because he'd have some time to rest compared to current. His time was filled up with lectures to librarians and elder hostels.

at a school lecture one 12 yr boy was very shy, kept trying to wave his hand and then put it down. finally Elmer called on him: "Mr. Kelton, when you were my age, were you good with the girls?" — he had to think and then said, "No. Why I became a writer I guess."

Branch Rickey, like Stephen Sondheim, insisted on a strenuous journey to give a lecture honoring George Sisler. he said "I'd rather die two years early and have a good life then retire." he died at that speech and 100 tall men came to his funeral in Ohio. The Harlem Globetrotters.

Vic's twitter feed

Nov

28

after a day that went awry from my thinking and some of my followers, perhaps some retrospection. black friday is generally a bullish day with 8 of the last 10 up. bonds were up 200 at 1am with stocks up [Ed: actually down - see below]. that's happened 3 times in last 20 years. 1 of 3 up in stocks.

the european markets were at a low relative to us as of thur close. that's very bearish. the sp went from a 20 day on thur to 20day low on friday. that's never happened before. the big decline on friday the third biggest in last 20 years is very bull for mon. the decline in crude as of 1 am with a big rise of 2 pts in bonds has only happened once every 8 years so not predictive. in general were there any signals? the break of 2700 was the third constructal number in a row without a break. that's very rare and slitely bear.

in retro, there were signs but very rare similar so not overly predictive. the fact that it happened after holiday and it was apparently coordinated sticks out. gold was up before with bonds up 2 pts rite away, with crypto down about 10%. in retro signs but not predictive.

correction - stocks were way down at 1 am with bonds way up, that's bear for stocks but too rare for prediction. the central banks may have wanted to make the camp kindergard progressive and the pres look good — why? nothing stands out as predictive. sp broke a round.

sp broke constructal from above - that's bullish. in short there were too few similarities with enuf bull as bear to make a quant prediction. perhaps the progressive wanted to make the smiling capitalist look good. and the european markets had the thing in advance. that key another correction. the sp on friday went from a 20-day high on thur to a 20-day low on friday. that's never happened before. The robberies of home depot was somewhat telling if not predictive.

that the bird man's favorite store was robbed of hammers telling but not predictive. perhaps that's why p wasn't on duty. telling of thinking of bad country, taking from bad, undeserving people, had red friday instead of black. thanksgiving as day to disparage abundance.

the palindrome must have been happy. he likes a bear raid on vulnerable fridays and he's always bearish, yes for the record i'll answer many readers' query as to why palindrome severed relations with me 20 years ago. i wrote him and asked him and he said he couldnt answer.

4 reasons. i was insufficiently appreciative of his 70th birthday party which was very thoughtful and lavish with ship from cal brought in for after dinner cruise. 2. he knew in advance about vulnerability of the fab nobel trio who were short otm puts, and i was also.

he told me at his house "you're going to go bust but turn over position to me." 3. we disagreed on everything in politics especially government control of capital versus private. and the freedom philosophy. 4 i was poor dancer and was sat next to his Susan at dinner. 5. I am bad chess player and bad tennis player so he found much better than me to recreate wtih him. i gave bak money to his friends but not enuf to keep them happy. we were always opposite on market. he always bear, i always bull. he liked to go for big swings, i had to go for slite swings, since i handled part of his holdings and i had to be fast. i can't think of any more reasons. the aftermath. i met him at tennis tourn shortly thereafter and he wouldnt shake my hand. my family was invited to his home for 12th consec year, and his sec called 1 day before to cancel.

Vic's twitter feed

Nov

26

Markets, markets

November 26, 2021 | Leave a Comment

query: do turning pts in crypto lead and create an inordinate tendency for turning pts in gold? crypto had a turning point with etherium up 7%. gold straight down 60 bucks in 4 days before Thanksgiving.

there is a positive monthly correlation between consecutive months. when prev month is up, the next month is up 70 % of time versus 50% up when the previous month is down. the magnitudes are about 1/2% in the positive case and about 0 for next month when prev month down.

the force of destiny and the 12 inevitable forces. the 13th force is a rising stock market, say 10,000 sp in 2 years and 30000 nikkei very soon. the reasons are regulatory capture, power of compound interest, a 15% hurdle rate for invested capital versus a 2% bond rate, et al.

the triumphal trio - the greatest scholars providing periodic table of markets. i was first person to lionize their work - and hopefully they will abrogate their English Disease in future and will not be predicting a Galtonian regression as in past. [See also: GFD Guide to Global Stock Markets]

Vic's twitter feed

Nov

22

RR track robberies are a sign of the times. The Michigan Supreme Court judge Mike Cavanagh, whom i played softball with, once told my hobo sociology class that RR property is a prime investment for hoboes because the police have no jurisdiction. The bridges, tunnels, and rights-of-way along the tracks belong to the companies, so It takes a long time for the RR bull to arrive as tramps thumb their noses at the sheriffs.

Now the homeless are encamped along the track stretch from Los Angeles to the Long Beach international yard. This was one of my first rides, in the caboose days, where I walked out the Long Beach container yard and caught a local bus to the downtown Midnight Mission. With a hundred other men, I was subject to a pelvic UV light examination for gray soldiers (body lice) before they let us eat supper. Hobos carry urinal soap in their pockets to thwart the lice so they may sit and eat in peace.

That's the sort of people who are robbing the containers including oriental shipments and FedEx with their doors ripped and hanging open. I predict more of this in the future as homelessness and general national disgruntlement rise. It's a reason to sell short on containers, and with the price driven down you may live cheaply in one like me.

There is no such thing as a secure container. An outlaw who calls himself the Google thief drove up yesterday sunrise on a 350cc Yamaha dirt bike. He rides with a diamond blade saw to remote containers throughout the Sonora, in an expanding radius, and cuts open a door. He had just led a posse of sheriffs and Border Patrol on a merry chase through the desert before laying down the stolen bike under the skirt of a Palo Verde, covering it with branches, and walking on hardpack to a nearby Ironwood. There he watched the authorities drive 10 yards past him. He told me, "I plunder for fame."

Here’s the link to the shipping container heists by homeless at the Long Beach Port of Los Angeles where Louis L’mour worked in this wild, wild west.

Nov

21

The technical book Robustness and Evolvability in Living Systems summarizes research on how living things have managed to thrive and grow, especially by warding off harmful influences of mutation and genetic change.

Central to the solution is that most living things live in a vast neutral space where there are many separate solutions to ward off problems. Central to the solution is the concept of robustness. robustness comes from two mechanisms — redundancy and distributed ways of solving survivability.

the organisms have multiple parts, each with a different role in compensating for mutations and invasions of genetic material. the book is about dna and proteins and how they evolve to create sustainability and preclude fragility.

how does something like the stock market maintain its growth while being buffeted by mutations of economic and political systems and problems such as wars and inflations. how does it cope? the book contains many technical examples at the bio level.

I would opine that the key is the competition between interest rates and regulatory capture of the dominant players. no matter what happens when you can get a return of 15% on invested capital versus 2% on interest rates, the neutral space has a million ways of warding off mutations, invasions and threats. What other mechanism do you see?

Vic's twitter feed

Nov

20

The Speculator: 3 lessons from ace investor George Soros

Kim Zussman comments:

I don't think there is such a thing as an unconditional friend. Everyone wants something - what is friendship if you get nothing out of it?

The same with 'unconditional love'. I had a conditional friend who was a feminist, and she said that her cat loved her unconditionally. I told her to do this experiment: Every day when you come home, find the cat and kick it (obviously just a thought experiment because never be cruel to any animal). After a month tell me about your cat's unconditional love for you.

Stefan Jovanovich adds:

Friendship and love are exchanges, contracts of shared interest and sentiment. Those of us who have endured bad partnerships and been sustained by good ones know that the people who sink the ship are those who are incapable of sharing good sense because they want people to promise to sacrifice "everything" in the name of the perfect union.

Nov

20

Alston Mabry notes:

Some TLDR:
- The US will lead the post-covid recovery, not EM.
- Goods-producing jobs are back which will have a multiplier effect.
- Capex will lead in the US, and total capex is 4x stock buybacks.
- China unlikely ever to exceed US economy. China much more like
Japan since the 90s.
- She likes innovation and recommends ARKK.

Wealthtrack: U.S. MANUFACTURING RESURGENCE
November 12, 2021

Be prepared to question many of the negative assumptions you have been hearing and listen to some other data that shines a different light on the outlook. Our guest is a highly respected economist who is no pollyanna. She is just a top economist who looks at data many others miss.

Nancy Lazar is Partner and Chief Economist of Cornerstone Macro. Lazar and her team are challenging the assumptions that higher inflation is here to stay, that interest rates have to go higher and that emerging markets will be the driver of global growth post-pandemic.

K. K. Law comments:

China could be much worse than Japan in the '90s.

Sarah comments:

Is she assuming all manufacturers/categories operate the same way? As much as I would love for this to be the case, there appears to be an oversimplified view of manufacturing that stems from the en vogue ecommerce B2C who typically have less operational personnel, strategic planning, etc. Sales and marketing teams are out in full force to convince manufacturers to buy their products, but many B2B who are currently better positioned and quieter could be the slowest to change.

Nov

20

The Fed talks of the transitory nature of inflation and not raising rates, meanwhile Treasury is offering I bonds at 7% yield to small investors. Seems
to be a disconnect.

Peter Penha responds:

I Bonds Purchases are limited to US$10k a person, the extra coupon is indexed to the Urban CPI (why higher - nothing funny or contradictory it is formulaic)…this was all seen in advance by I series holders who track the urban CPI (which if you believe the rent increase stories - should remain high).

The FAQ is here: Series I Savings Bonds FAQs

Separately I do believe everyone should have a treasury direct account (was made a little more difficult to open one during the GFC) but no fees of any kind and you can leave your money as a certificate of indebtedness (C of I) of the US treasury with 24 hour withdrawal/ credit to any banking institution & you jump the queue among indirect/direct bidders on any US treasury auctions and I believe I read years ago that the original legislation (Ron Paul was part of it) guarantees you cannot be issued at a negative interest rate even if rates are negative for financial repression purposes.

Was about putting the little guy/gal first.

Nov

20

Kora Reddy writes:

triumphal trio's year book copy cat

GFD Guide to Global Stock Markets
197 Pages Posted: 18 Nov 2021
Bryan Taylor
Global Financial Data
Date Written: October 18, 2021

Abstract
The paper provides comprehensive coverage of the performance of financial markets in 25 countries and 3 global markets. Topics include nominal and real returns to stocks, bonds and bills, the equity risk premium, bull and bear markets, stock and bond yields, stock market capitalization, government debt as a share of GDP, the exchange rate and an overall analysis of returns to financial markets in each country with information on the sources used.

Nov

20

Regularities

November 20, 2021 | Leave a Comment

With crude down 10% in a week, at the lowest level at $75.00 a barrel and bonds within one or two points of all time high, the idea that inflation is the big problem, and thanksgiving prices and black monday are going to cause great distress and inflation related things

inflation is going to be very mild and this should be good for the recent diagnosed president and his agenda

all around enterprises ane front running black friday by starting their bargains a week or two in advance. it should provide a lesson to traders as to how regularities get telescoped and dissipated well in advance of expected date

Vic's twitter feed

Nov

16

New card game by an entrepreneur who is a former web-mistress's fiancé. Any assistance you give him would be appreciated and I believe helpful to you and any kids you know.

Kickstarter: Call of the Wild

Nov

16

Stein’s Law

November 16, 2021 | Leave a Comment

p taking cold bath and doing stretching exercises

Rocky Humbert writes:

countless macro parallels - fiscal, monetary and social - to the 1960's. few of us remember that period, fewer of us were market participants during that period, and none of us kept our punched cards. rocky says good time to review Stein's Law.

Vic replies:

very nice to hear from rocky. a man of wisdom and poignancy and profits. p's law may augment.

i still have my punch cards and cassettes from the 60's. now i will look up steins law. from 25 years ago, whenever i heard from rocky who was named by a white shoe flexion many years ago, it was to point out how trend following was about to or had recently buried me.

stein's law appears to be that a big trend will stop because it can't go on forever. however, there is a law of consilience and beauty i will quote from p shortly and until the nikkei hits 30,000 there is no beauty.

thus i think that rocky's message to me form 25 years ago is resonant but different. i believe he warns me and my meager followers not to be overly bullish.

a quote from P's forthcoming book Time and Beauty. "the connection between beautiful images and ease of grasping and understanding serves as basis for the brain design known as cognition. this is why art occurred in cavemen."

It was robert rubin who gave rocky his name because he was part of the rocket scientists at that white shoe firm and even then the treasury secretary was flexionically in the clouds.

the boys on investicon have a system. buy to sell higher and sell to buy lower. one could wait a long time like 50 years for the latter to work. reminds me of the only time Lorie sold futures some time in 1986. he had a 200 point loss and bailed out on oct 19 1987. never sold short again.

the amazing thing was that the palindrome during the 12 years of our association was bearish on stocks 90% of the time. yet he made money. perhaps the two tennis cans and the back ache were the key.

Vic's twitter feed

Nov

15

Trading lessons

November 15, 2021 | Leave a Comment

thanks for the comment about being one of best traders of all time. many people including my wife and black swan acolytes think i am one of the worst. the idea is fanned by the new yorker article calling me the blow up artist. upon reflection, i couldn't defend myself during the new yorker article because i couldn't give my position away. as to why i lost so much from selling out-of-the-money puts, i now conclude that because of the small number of market makers who had positions against me, and who made the rules and margins, that left me vulnerable to "concerted" action from those with opposite positions to me. i did not have the wherewithal to withstand the moves that were dissipated as soon as margin forced me out, and prices started rising again. i should be tarred because i put myself into this position where i could be broken so easily by my adversaries. other than my forays into selling puts, i have done fine mainly because i have always been bullish following lorie and dimson and now p.

gave all the gross proceeds to my customers. one other thing i learned from the debacle was never to bring a legal action as the cost of pursuing it is always greater than the expected recovery. i wish i had followed this in my merger business where i stupidly insisted on full payment of my fees and brought action to recover the last 10% or so that my customers wished to chisel me on. as I am 80 yrs old, i am tired of being tarred and feathered for my lapses in 60 years of trading. thank goodness, i was able to recoup for my 7 kids and 13 grand children and they are free to pursue whatever career and education they wish because of the good trading i made to offset my lapses in selling otm puts. btw i've learned my lesson, and haven't sold any puts for 15 years and don't advise others to do so even though with point and click trading there are more than 2 market makers on other side these days.

Vic's twitter feed

Nov

14

why would someone buy a bond paying 2% interest for 30 years if the expected inflation was 5% or more a year? There is a growing fallacy among R's that inflation is going to ruin us. but the bond rate shows that expected and actual inflation is going way down.

This should provide a big boost to d's before the nov 2022 election. and a tremendous disconnect in the way the public is contemplating one of the hypothetical but transitory and ephemeral problems that they attribute to bbb and other boondoggles.

much more salient is the diversity, equity, inclusion tests that are explicit or implicit in all government and masters 100 regulatory capture firms.

it is distressing to see someone like victor hanson and so many other clear thinkers so wrong-headed about the problem of inflation. long term bonds are up in price about 4 pts since sep month end.

the problem with bbb is not increased inflation or deficits but replacement of private control of capital with government, socialism and pork.

Vic's twitter feed

Theodosis Athanasiadis comments:

I believe it is prudent to separate expected inflation and expected real rates when one looks at nominal rates. You can look at the tips and get those numbers. Right now expected inflation that the bond market is pricing is the highest it has been which means that rates have stayed low because of zeroish expected real rates. In other words the bond market is pricing a sort of stagflationary environment for the next 10-30yrs. How likely that is is an open question.

Some other things to keep in mind:
- 30 year rates are weighted averages of future expected inflation. At some point the fed will tighten and this will stabilize inflation creating a mean reversion. This is what drives the yield curve flattening
- bonds historically have offered a crisis protection which in theory means one can hold them even if he expects negative return as a cheaper alternative ie to buying puts

Nov

12

There's a great deal of money to be made being bearish…as an investment advisor or publisher.

There is a great deal of money to be made being bullish as a real investor.

Nils Poertner comments:

generally true agree. easier to sound scepitcal in life - no academic person normally wants to sound like a constant cheerleader

that said, maybe next 2 yrs different than last 2 yrs - and lots of refinement, creativity, imagination needed as in right hemisphere type of job

James Lackey writes:

Of course there is a lot of money made by doing nothing as well. Sell premium but the argument is not how to make money the argument was: What’s the cost? Time and price are currently market marked and what’s the mystery? The future time and prices. What’s the cost of carry the opportunity cost how many calories are being expended by being long short flat

Thermodynamics of the entire system comes to mind:
The market eco system
The firms eco system
Family
Your inner voice peace or
In my case: Brain damage from Cognitive Dissonance

Nils Poertner expands:

Health (incl mental health) is already a huge topic not just for ppl on this list. coz our lifestyle is often normal these days but still unnatural. And we have lost touch with what is natural a bit..

Eg. light. we need light - daylight eg. the amount of time we spend indoor is like 3pc on average in the US (compared to 10 many decades ago)- am speaking about kids - it is probably the same for adults or worse.. Also ppl chroincally jetlagged without ever having taken a flight as they use too much artificial light /don't get enough darkness /sleep at nite. (eg I used to trade Asian fx during European hours …. - you can imagine how my body clock got out of whack etc etc etc)

see Jacob Libermangood intro on light, vision and health

James Lackey responds:

This is fantastic! The Huberman Lab agrees a… The brain is the eyes and the eyes literally pop out of the skull during development. Light is s key to good mental health!

Andrew advises to watch the sunrise and sunset daily. My Lack Hack to reset or to maintain the body clock meme is Planet Fitness. My hypothesis is if we watch the fireball in the sky dip from horizon it’s about 2 minutes from bottom to top if your on a British Navy ship a few hundred years ago it was a simple task and all hands on deck. If we are on the equator this is 12 hour days.

Shakelton in his arctic voyages had a big problem. In Alaska Army guys have a point in the year of incredibly low sunlight or 24 hours of dark like an eclipse day and 24 hours of blue skies at night. The Army and the British navy always find life hacks to be fit for duty

Ok so you want to fall asleep by let’s say 9 pm tonight? Get up 3 am and blast yourself in stand up tan room at planet fitness! It’s close then a few minutes before dawn get outside and literally stare at the color change of the shy at nautical sunrise which is before the fireball

The Huberman lab falsified my hypothesis that’s it’s the 2 minutes it take for fireball to go from top to bottom. That doesn’t work. What does work is the change and range of colors of the sky the light refraction. Then why the lack hack do planet fitness 18 hours before exact bed night go to sleep in a cool dark silence room?

Because like trader it’s the duration and the magnitude of the sunlight daily! Ya see in S Florida a very light skinned person has to be careful due to the magnitude of the sun on skin cancer spectrum. Therefore the duration and Magnitude is imperative for physical and mental health. When I realize that I shut all lights off in my house when my daily sun limit was maxed out IR too much sun at beach and bmx track I said omg!

So the falsified hypothesis led to another it’s not only the eyes signal the brain chemistry the sun rise plus 16/18 hours you see sunset and boom you can sleep. You need f(X) amount of physical sunlight and duration and magnitude must be maximum for your body skin etc/brain chemistry and dna what ever the hades all that must mean.

I’m genetic white Nordic and I’m tricking my eyes to signal it’s brain to think it’s Summer Solatice in Fall or best Winter

PS trade the Dax vs SPU for a bit and live dad bmx dad life it was too hard until we used science!

Larry Williams adds:

Increase telomere length

[For example: Lifestyle Changes May Lengthen Telomeres, A Measure of Cell Aging]

Nov

12

H.L. Mencken Quotes for the Cynical Soul

Nov

11

A Chinese company that read this post contributes their writeup on wind power:

Interesting Facts You Should Know About Wind Energy

Nov

9

several inquiries have asked me about the University of Austin. if you've ever tried to advise a very sick person to travel away from home and other who takes care of them, you know that they won't go from home. same is true for profs. they like it if their univ provided freedom but they have too much invested in tiaa and home and faculty club to and accoutrements to and stasis to move.

one notes that the pres of st. johns annapolis is heading the new univ of austin. i've seen many colleges that my family and numerous grandchildren have gone to. st. johns provided the best education of all. that a pres of this quality is willing to start over is amazing.

Vic's twitter feed

Nov

9

Bonds and stocks

November 9, 2021 | Leave a Comment

after being away from markets with my duke medical school daughter and husband for a few days, I come back and note for sure that bonds are at 163.10 and this has to be very good for inflation down the road or else all the trillions of sagacious bonds investors will lose.

what is impact of this rise in bonds on stocks? out of 17 most similar since 2017, one notes that 16 of 17 are up big 10 days later. i don't calcualte in percentages but the algebraic changes are up 60 big points starting with todays 2pm.

Vic's twitter feed

Nov

9

I discovered a unique feather in my cap today. I have become the first consultant to three garage industries that have become #1 in the world of sports. In Racquetball, I helped Leach Industries design their first fiberglass racquet in the 1970s. In Paddleball, I did the same with wood paddles for Marcraft tin the 1980s. And, in Pickleball, today Randy Stafford credited me with his move to China to become the top seller. Each manufacturer started piecemeal in a garage. I was living in a garage at the time, and have moved to a shipping container and invent hiking boots.

Nov

9

back from a trip seeing P. he believes that one of the reasons for consructal numbers is the ease of remembering and the beauty of the least effort in achieving a goal. 4700 very soon and then 5000.

p is the tony hawks of thermodynamics - not by chance the champion of predicting markets. while he is the most cited of all the professors in the engineering department of duke, he is treated like a pariah. not one of his 25 proposals for funding has been approved in last 5 yrs. is it sad to see him suppressed by the climate change boys at his school and the fed science institutes that provide all the funding for the school at the height of his powers, while 99% of universities are virtue signaling in order to regulatory capture. his univ is one of worst. one presumes that he would be anticipating a 100 on crude and a 100k on bitcoin.

a quote from P's forthcoming book "time and beauty" physics of why we are attracted to images that we grasp and understand easily and fast, we tend to remember these as beautiful. a beautiful body is said to be well-proportioned. proportioned are all the preferred objects presumably the round numbers fit in as beauty and fast

Vic's twitter feed

Nov

8

JS Bach was once asked why he wrote so much music.

His answer:
1. "To the glory of God" (not sure whether he meant it, nevermind)
2. To amuse himself.

Maybe some like this piece here as well:

Bach - Concerto in D minor BWV 596 - Van Doeselaar | Netherlands Bach Society

In the first notes of the Concerto in D minor, performed by Leo van Doeselaar for All of Bach, it is immediately clear that this is not the usual Bach. This piece is an organ version of a concerto for two violins and orchestra from Antonio Vivaldi’s L’Estro Armonico. Vivaldi’s music was popular throughout Europe and Germany was no exception. During his years at the court in Weimar, Bach made a series of arrangements of Italian concerto music for organ and harpsichord, including six concertos by Vivaldi.

Gyve Bones adds:

From 20 arguments for the existence of God, from Prof. Peter Kreeft, Department of Philosophy, Boston College:

17. The Argument from Aesthetic Experience

There is the music of Johann Sebastian Bach.
Therefore there must be a God.

You either see this one or you don't.

Alston Mabry writes:

There is a scene in Professor T (Antwerp version) where T is talking to his cellmate and says very sadly something like, "Is there a God?". And his cellmate says something like, "There is Bach. Bach is God." And T smiles and says "Yes, Bach is God."

Peter Saint-Andre offers:

A quote from Pablo Casals:

For the past eighty years I have started each day in the same manner. It is not a mechanical routine but something essential to my daily life. I go to the piano, and I play two preludes and fugues of Bach. I cannot think of doing otherwise. It is a sort of benediction on the house. But that is not its only meaning for me. It is a rediscovery of the world of which I have the joy of being a part. It fills me with awareness of the wonder of life, with a feeling of the incredible marvel of being a human being. The music is never the same for me, never. Each day it is something new, fantastic and unbelievable. That is Bach, like nature, a miracle!

Nils Poertner responds:

that's great. I always try to listen in the moment - whatever works for ppl - life works a bit by invitation anyway. one can't force stuff. a basic sense of joy and harmony is certainly missing in our era (the media, the drama etc outside).

Jeffrey Hirsch recalls:

An English professor whose class I was in asked the question why people write poetry. Answer: Because they have to. Similar reason why Bach wrote so much music. Because he had to.

Richard Owen wonders:

Does Bach have an Onlyfans? I can't see it in the search.

Laurence Glazier suggests:

There are free versions of Sibelius. May I recommend the pleasures of composing now available to all?

Richard Owen admits:

Thank you Laurence, an answer from a real musician of note I think? I should therefore disclose, because you are a decent and proper individual of good character and standing… my question was touched with satire. Google Onlyfans via google news, and you might learn something about the debasement of our culture.

Nils Poertner makes a connection:

btw…I always wondered whether one could re-train a musician becoming good trader? Why? Coz good musicians (of any style) tend to enjoy the process of learning - and are the complete opposite of end-gainers. perhaps they are not interested in financial markets enough- otherwise it would be an interesting project. any idea?

Duncan Coker writes:

I am not in the class or universe of LG in terms of composing, but I do write country songs as a hobby. One thing I have found useful is, often I have to throw something away that I thought was good, a melody, a lyric and start from scratch. The more easily and quickly I scrap an idea, the easier it is to start over. You can't force it. This is true for trading.

James Lackey expands:

Dunc is not gonna get mad at me because we never argue. However sure we can force it and to add to the comment of "those people". As if a career makes a man!?)@“”

Anyways path dependence omg I sound like the geek I am. Ok in a sport or music the pleasure has to be the process of practicing or doing it every damn day. As parents we teach this as in brush your hair teeth good girl boy kiddo! The pleasure of rewriting written words must be higher than start from scratch or least effort kicks in no?

I do not care if she likes my poems. I love them. I’m not sure if it’s a coin toss but I can’t fathom whether I like the poems I wrote in one blast or over 6 hours weeks days or? Good is good and great is better than 6 years ago and awesome is when she says so.

I wrote an awful poem once. Many bad but awful because you can hear the blood hit the floor. I gave it to a song writer buddy and he said damn that’s awesome. I said write a song. He said no man you never write over another mans blood sweat or tears.

In trading the get the joke one liners or 5 lots are cute and won’t hurt anyone much can’t kill you but will never inspire romance. The all in big line can and will get you the one, the forever girl or death one way or the other every 7 years death to the marriage of business and of the romantic life.

They say you’ll get what you need out of trading the market. I think perhaps that’s what separates us from the other guys. We need we want we just can’t help ourselves, we need everything. We want it all!

Adams Grimes writes:

I do think there are some fairly intense connections between music and successful trading/investing. There are the obvious issues of "sticktuitiveness" and grit… I'm currently working my way through one of the Bach Partitas and spent about 4 hours yesterday on 2 measures of music. (For reference that's probably 4-6 seconds, when performed). That degree of focus on detail is absolutely normal for musicians, but is not normal for most peoples' experience, at least in the modern world.

In markets, we get kicked in the head (if we're lucky) or the balls (or, more likely, both) on a regular basis. Some degree of stubbornness and a willingness to just not give up.

I think there are also some profound tie-ins in terms of pattern recognition. For me, I think this worked both ways… after taking a decade away from music I discovered my "musical brain" and compositional skills were probably better than they were, in some ways, when I was focusing my life around music. (My keyboard technique emphatically DID NOT improve, as that's something that does take a fair amount of maintenance.)

Serious, important, and maybe even interesting epistemological questions lurk here.

It's hard to have a favorite Bach piece… his works are surprisingly even in quality across his output, but let me share one that is at the top of my list. This has always been one of my favorites:

Bach: Trio Sonata in G major BWV 530 - I. Vivace - Koopman
(And, for sounding so simple and transparent, it's a nasty little nightmare to perform!)

Gyve Bones harmonizes:

I first heard this performed in the 1970s by Walter/Wendy Carlos on the “Switched-On Bach” on Moog synthesizer, and it has remained a favorite piece of music since then. There are various settings of the piece for guitar and piano as well. Here is a full symphony rendition… It is a song of gratitude to God for his many blessings.

Bach - Sinfonia from Cantata BWV 29 | Netherlands Bach Society

Peter Saint-Andre responds:

I had a similar experience with one of the Bach Cello Suites last night. There is much effort (both time and concentration) involved in learning these pieces. And he probably just dashed them off!

BTW, many years ago there was a software company that specifically recruited music majors because they were highly trainable for programming. And music majors also scored quite high on the even older IBM Programmer's Aptitude Test.

Adam Grimes comments:

And he probably just dashed them off!

This, for me, is one of the biggest and probably eternally unanswerable questions in music history. I suspect our performance standards today are probably far higher than they were historically. It's possible we have an army of at least highly technically competent instrumentalists who've devoted more time to, say, the Chopin scherzi than he ever did himself. We know that Beethoven's playing of his own pieces was, according to contemporary accounts, thrilling but filled with mistakes. When Czerny (a student of Beethoven) proposed playing Beethoven's pieces from memory, Beethoven replied that it was impossible to get all the details without looking at the score… and then admitted he was incorrect on that assumption.

Reading between the lines of what CPE Bach wrote (the Essay on the True Art… is a must-read) I suspect contemporary performance practice was much more improvisatory and perhaps less detail-oriented than we'd expect. We know many of these Bach cantatas were written, rehearsed, and performed in a week. These performers were not super human… the only thing that makes sense to me is that our performance standards and expectations (which approach technical perfection, due to the advent and growth of recording) might be much higher than in past ages.

But perhaps I'm wrong on that.

Interesting on the programming front. I would think those are two quite different modes of thinking (and knowing the expertise is domain-specific in many cases), but I'm a far better programmer than I should be given my level of actual training in the discipline. Maybe there's something to that.

Peter Saint-Andre writes:

In his book "Baroque Music Today", Nikolaus Harnoncourt notes that before music was recorded, people most likely heard any given piece of music only once and didn't want to keep listening to the same music over and over as we do but instead continually sought out whatever was new. Perhaps there was a sense of discovery as composers explored the potentials of the tonal system; once those potentials were exhausted and composers started to produce extremely chromatic or even atonal music in the 20th century, listeners were turned off by the new and sought refuge in the old (thus Western art music ceased to be a living tradition for most listeners). Thankfully composers like Adam Grimes and Laurence Glazier are bucking that trend!

Laurence Glazier writes:

One would expect coding and music skills to be correlated. A symphony is partly an encoded instruction set, whether performed by a computer or an orchestra. The conductor is the "crystal", the timer that pumps the flow. But oh, so much more, than that.

It would be very hard to combine the music and trading fields. To be attentive to the Muse and the S&P at the same time? Surely both are all-consuming. But trading, with its psychological dimension, of self-awareness and development, is a fine path. Alexander Borodin managed to combine composing with a distinguished career in science, as did Charles Ives in insurance.

Nov

5

Jeff Watson writes:

Proposition bets have been around since the beginning of time. They capture the greed of the victim and put money in the pocket of the prop hustler. Proposition bets rely on the greed of the victim combined with the ignorance of the real probability of what they are betting on. Most good proposition bets are of the sort that will give the victim at least a small chance of winning, the bets that allow the victim no chance to win aren't really bets, but swindles. Although I'm not a fan of swindles, there are some very elegant swindles out there. The book only mentions a couple of them.

Owen O'Shea has presented 50 different proposition bets, mostly in the card, dice, or numbers categories. The real beauty of his short book is that the author kindly explains the math behind each of the prop bets in easy to follow detail. The math is very friendly to those math challenged individuals who might read the book.. The description of each wager and the subsequent true odds of the outcomes allows the reader to "see" what's under the hood for each bet.

The bets described in the book could be easily modified for different situations. For example, he describes the birthday problem wager, but also describes a wager that is a kissing cousin to the birthday problem. I could think of 15 different scenarios that one could apply the same principles of the birthday problem.. All of the other wagers mentioned the book could be expanded upon in this manner.

O'Shea's book is brand new, July 2021, and I highly recommend it. It is an easy read, which is surprising, considering the level of explanation for each bet. This book should be included on the shelf of every library of those interested in gambling, probabilities, math, cards, dice….and for those with a touch of larceny in their hearts. For the beginning proposition hustler, this book could be a bible.

When I was a young man about to go out into the world, my father says to me a very valuable thing. He says to me like this… "Son," the old guy says, "I am sorry that I am not able to bank roll you to a very large start, but not having any potatoes which to give you, I am now going to stake you to some very valuable advice. One of these days in your travels, a guy is going to come to you and show you a nice, brand new deck of cards on which (Sky snaps fingers) the seal has not yet been broken. This man is going to offer to bet you that he can make the jack of spades jump out of that deck and squirt cider in your ear. Now son, you do not take this bet, for as sure as you stand there, you are going to wind up with an earful of cider."

- Sky Masterson "Guys and Dolls"

Stefan Jovanovich adds:

The prop bet was whether Mindy's (actually, Lindy's) sold more strudel or cheesecake.

Vic comments:

all prop bets on S&P from short side are losers. in sports betting you can win if 52% against the line. is that better or worse than markets? how can you beat the 52%?

Henry Gifford writes:

After hearing about the book on the list, I bought a copy. Thanks for the tip. I particularly looked forward to having the examples explained.

I started reading the introduction, which starts with an explanation of the Monty Hall paradox.

Now let’s get something straight – the problem described in the book is described as being a description of the game that was played on TV. All such explanations I have ever heard also say they describe the game that was played on TV.

A hustler offers a mark the option of choosing which one of three doors (cards in the book) is a winner, with the mark betting $10 for a chance to win $10 for choosing the winning door. The three choices are designated A, B, and C.

In the example given, the mark chooses A, then the hustler reveals that C is a losing option, then the hustler gives the mark the option of switching to choice B. The book then explains the mark’s situation as follows:

Here’s the thing. If you do not switch, your choice of picking the [winner] is 1/3, so think of the other unturned card as the “winning card” with probability of 2/3. Therefore, if you switch 2/3 of the time, you switch to the [closed winning door]. Consequently, by switching you double your chances from 1/3 to 2/3 of picking the [winner].

Suppose a con artist is offering this bet to various marks at various locations. At a bet of say, $10 a round, where the mark wins, they win $10. About 1/3 of the time the mark will choose the wrong card. If the mark decides not to switch from their original choice, they lose. This will occur about 1/3 of the time. But the hustler wins about 2/3 of the time and therefore for every $10 the mark wins, the hustler wins $20. Therefore, the con artist is winning this bet 2/3 of the time and in so doing, is making a tidy profit.

Then the book names a famous mathematician who was fooled by this bet, then changes the subject.

I don’t see any explanation of the paradox, and a lot of other things are not explained in any way I can understand.

For example, if switching improves the odds from 1/3 to 2/3, why would switching 2/3 of the time improve the odds to only 2/3? And what is the assumption of the mark switching 2/3 of the time based on?

And “If the mark decides not to switch from their original choice, they lose.” Huh? They lose all the time by not switching? But the previous sentence says the mark wins 1/3 of the time if not switching.

Another gem is “About 1/3 of the time the mark will choose the wrong card.” Really? I thought that with one choice out of three cards the mark will choose the wrong card 2/3 of the time.

And, at the core of the issue, the claim that switching improves the odds to 2/3 is not explained.

Of course the greatest paradox is that the book is about proposition bets that appear to be better bets than they really are, meanwhile the bet described says the mark is betting $10 to win $10 on a choice of one out of three options – a bet which does not appear to me to be a winning bet, as the hustler has a 2/3 chance of winning. Then, after the “paradox” is allegedly explained, the book explains that the hustler enjoys odds of winning of 2/3 because of the paradox. So, the hustler’s odds of winning improve from 2/3 to 2/3. Just how much did the hustler gain by improving his odds of winning from 2/3 to 2/3? This is another thing I don’t understand, and don’t see any explanation of.

This leaves me with zero faith in the accuracy of anything else in the book, and zero faith that anything else in the book will be adequately described. Or, at least, explained in a way I can understand it. My copy is in my garbage can, but I can retrieve it and mail it to any list member who asks for it.

Nov

3

this, versus never

Vic's twitter feed

Nov

1

an excellent read showing that motivations especially jealousies have not changed in 10,000 years

Troy: The Greek Myths Reimagined

[The first two in the series are also excellent. -Ed.]

Mythos

Heroes: The Greek Myths Reimagined

Vic's twitter feed

Nov

1

…in the U.S. stock market

WSJ: U.S. Stock Market Faces Risk of Bumpy Autumn, Wall Street Analysts Warn
Investors have pushed the S&P 500 to 54 record closes in 2021, making some observers wary

After a record-breaking bull run for the U.S. stock market this year, many Wall Street analysts are starting to warn that investors could be in for a bumpy ride in the coming weeks and months.

Analysts at firms including Morgan Stanley, Citigroup Inc., Deutsche Bank AG and Bank of America Corp. published notes this month cautioning about current risks in the U.S. equity market. With the S&P 500 already hitting 54 records this year through Thursday—the most during that period since 1995—several analysts said that they believe there is a growing possibility of a pullback or, at the least, flatter returns.

Vic's twitter feed

Oct

29

those ETF's (about 240 that i track) which at least have 15 or more years of trading history, with 1/p-value > 20, sorted by Sharpe, returns details since Y2K:

November statistically significant seasonal bets

Nils Poertner suggests:

seasonality = some relevance - but perhaps other mkts than equity deserve some attention?

Oct

28

Ground Zero of Woke

Unless the university itself is rebooted, its rejection of meritocracy, its partisan venom, its tribalism, its war with free speech and due process, and its inability to provide indebted students with competitive educations will all ensure that that it is not just disliked and disreputable but ultimately irrelevant and replaceable.

Oct

28

how much of masters 1000 and airline regulation and coke and walmart and sports leagues and the stock market in general can be explained by this:

George J. Stigler, "The Theory of Economic Regulation"

In the field of regulatory policy, few articles have achieved the impact of George Stigler’s "The Theory of Economic Regulation," published in 1971. Stigler punctured the idea that regulation arises solely to advance the overall public interest by correcting market failures. He forcefully argued that instead “regulation is acquired by the industry and is designed and operated primarily for its benefit” (p. 3). Although Stigler never used the phrase “regulatory capture” in “The Theory of Economic Regulation,” his article has nevertheless come to be so identified with the idea that regulation serves private interests that it is hard to find any serious discussion of regulatory capture in the last 40 years that does not at least cite Stigler’s work.

From WSJ, 2014:
Regulatory Capture 101
Impressionable journalists finally meet George Stigler.

The financial scandal du jour involves leaked audio recordings that purport to show that regulators at the Federal Reserve Bank of New York were soft on Goldman Sachs. Say it ain’t so.

The news is being treated as shocking by journalists who claim to be hard-headed students of financial markets. One especially impressionable columnist calls it “a jaw-dropping story about Wall Street regulation.” The real scandal here is the excessive faith that liberal journalists and politicians continue to put in financial regulation. The media pack is discovering regulatory capture—a mere 43 years after George Stigler published his landmark paper on the concept.

Willem H. Buiter and cognitive regulatory capture:
Lessons from the North Atlantic financial crisis

lets take the big Pharma that held back its announcement that it had a vaccine and it was effective for covid—-held back announcement for day after election. then received 100s of millions of orders and reg approval after election - as well as airlines receiving millions if they ageed to body tape all those that mite vote against who didnt maintain the semblance that masks worked. what other examples can you give besides big P and airlines?

For more examples:
Regulatory capture

Vic's twitter feed

Oct

28

Yes, it is a different mind set and self fulfilling. I am thinking about replacing some wood flooring and got a quote and now makes me think better do it now before the wood becomes less available and/or more expensive. Meanwhile cash is losing 5% this year. Multiply this mindset x 100m people and you get some inflation. Fed won't raise rates, wages won't keep up, but assets should do well until the yield curve is so steep that rates have to go up, which is the big unknown. Who will be our Volcker of 2020s? Does this not make the case for all the supply-siders. You can demand all you want, but someone has to make the stuff.

Steve Ellison adds:

I worked in technology supply chain management in a previous career and have been thinking about a scenario called the "dreaded diamond".

Technology part shortages occurred with some frequency as the transition from designing a next-generation product to ramping up production did not always go smoothly. And even before covid, accidents happened; some years ago, a factory in Japan caught fire. Many specialized components have only one supplier.

What typically happened in shortage situations was that the supplier would allocate the limited supply among the buyers. The buyers would try to game the system by placing 3x to 5x their normal orders, hoping that would increase their share of the allocation. Meanwhile, executives would want daily updates on the situation: how many units were delivered, and what the likely delivery schedule was.

This situation might continue for some months, with buyers continuing to place inflated orders, and the apparent shortage stretching out longer into the future with the higher orders.

As actual deliveries increased, one day, all of a sudden, the buyer would cancel all the excess orders. As other buyers did the same, the demand on the supplier would crash to near zero. This phenomenon of illusory orders that would vanish later was called the "dreaded diamond". A few quarters later, there would be big inventory write-downs because technology products lose value fast as they age.

Maybe some variation of this scenario could occur in the general economy as some of the shortages are alleviated in the course of time. We might find out the shortages have been exaggerated by purchasers trying to maximize their own supply.

Alston Mabry offers:

The Odd Lots podcast (BBG) had a recent episode about the chip shortage, and the guest described this exact scenario, where a customer orders 10x chips and is told by the supplier, "We can deliver 1x chips now, and the rest within 50 weeks." So the customer then orders 100x chips, hoping to get a 10x allotment, after which they cancel the rest of the order. But suppliers must be catching on.

A reader comments:

Sounds like how the Street allocates hot deals. The “pad-my-order-by-a-factor-of-10” move can’t help but to attract attention on the syndicate desk… and the result rarely benefits the customer.

A reader adds:

This has been my base case for some time. Interestingly, I get the sense that complacency is increasing lately, which us odd.

I expect a deflationary shock from overproduction within 24 months, globally synchronized. The delay us from supply chain snafu’s continuing for about another 18 months.

The difference between this and the diamond is deliveries being made and a simultaneous demand drop (ie they get their increased orders).

Hybrid system in time models are rolling out still.

Pamela Van Giessen writes:

This is not rocket science or even dismal science.

Quit testing healthy people for covid so companies that engage in non-Zoom activities can work at capacity and people aren’t "scared" to be around other people. We are still testing well over 1M and sometimes 2M people daily. ~2.5M people were unable to work between June-Sept because of covid. Since there weren’t that many sick people the bulk of them were out of work due to covid related quarantines. And I can promise you they weren’t the zoom class. Supply issues and inflation last as long as covid is a 24/7 threat that "must be conquered."

Our World in Data: Daily COVID-19 tests: USA

Yes, hoarding makes the problem worse but that will evaporate in 2 seconds once we have reliable supply.

Last week I saw a man on a bike wearing a mask in Park County MT where we have nearly 3000 sq mi and a population of ~16k. No helmet but he had a mask on. I should have snapped a pic as it was a perfect illustration of the brainwashing insanity that plagues our economy and health right now. The vaccines may prevent serious illness/death from covid but they don’t seem to be good for much else be it the supply of canola oil, engines, or other health conditions/injuries, etc.

Duncan Coker writes:

The reformers always make the assumption that supply will just naturally bubble forth like a spring constant and unaffected by the world around, be it for labor, capital, services, products. It is assumed no incentives apply and the curve is a vertical line stretching to the the outer limits of the universe. However, this assumption is always wrong and being tested right now.

Oct

25

A pullback before the rally into the year end for S&P 500 and crypto? 2021/10/22

Yelena Sennett and Andy Aiken: Bitcoin and Ethereum sell off after the ETFs launch, is the top in? Can S&P 500 trade 1000 points lower next year? Tesla is on the way to a trillion dollar company…

Oct

24

Ideas That Changed the World, by Felipe Fernandez-Armesto, contains the idea of universal force. is there a universal force in the stock market? how does it relate to constructal force?

the idea of the Mana, the universal force - is there a Mana in the stock market that causes it to go up 100,000 fold a century?

the book's idea that there is a purposeful universal force should be augmented to apply to the stock market. the studies of Jim Lorie, and Elroy Dimson et al, show the inevitable rise of the stock markets. how does it apply now?

i see about 30% of all days since the end of 2020 have been all-time highs. rite now we are 14 away from another all-time high and 29 days away from the last one of sep 06. how does it happen? one way now is for all the companies to submerse themselves in the current political system (ie, rumpelstiltskin) and realize the favoritism and emoluments of being with the force. how can the stock market go up 10% a year when profits don't grow that much? being with the force. what do you think?

Vic's twitter feed

Oct

20

It’s never easy

October 20, 2021 | Leave a Comment

it's never easy, clear sailing in markets. and with bonds at or near the 9-month low at 157 60 versus 157 50 month low on mon oct 11. it doesnt seem like very good for sp. however, the numbers say that it doesnt get bearish until thur oct 21 or at the close on oct 20. histeresis.

Vic's twitter feed

Oct

20

The energy crunch in China and Europe may grow into a bigger trend worldwide. Its one of those small line notes you notice and go hmmm. Like the pandemic was in early 2020. Hmmm, shortage of masks. Hmmm, Shortage of gas, coal. Things that make you go hmmm.

Water shortages also coming up. See how this winter is. Reservoirs are quite low. Look at weekly chart of FIW water etf.

Jeff Watson adds:

I’m noticing many holes where product should be on shelving at every retail establishment we patronize. I’ve been waiting on a part for my Jeep that’s been on back order for 6months. Still see little to no ammo in stores. The system is full of hiccups.

Tim Melvin notes:

I saw a lot of empty shelf space at Costco last week. Very unusual.

Pamela Van Giessen writes:

No joke. We have a huge problem. This is what happens when the world gets shut down and everything is all covid fear all the time. No workers. Test school kids constantly and they will end up being sent home and parents won’t be able to work. Then stuff won’t get made or shipped to where it needs to be. Freight train, fully loaded, sat parked in Livingston MT for nearly 2 weeks. Just left the other day.

As someone running a business that relies on actual commodities (flour, sugar, etc) I find myself overbuying out of concern that I will not be able to get basic ingredients. I had a hard time getting boxes about 2 weeks ago. It’s ridiculous.

Laurence Glazier writes:

It’s getting reminiscent or the Atlas Shrugged movie.

Nils Poertner suggests:

UK is worth to watch as most things we are going to see here in Eurozone or you guys in the US are happening a touch earlier over there (UK being such a tiny, little, open, exposed, econ).

Laurence Glazier adds:

Yes, over here in London it's harder to get petrol (i.e. gas) for the car, less things available in online stores.

James Lackey writes:

I can get everything to build a car a bike or a motorcycle and mysteriously no spikes no single bearing or one simple chip - I call BS. This is almost as big as a Vatican scam.

Jeff Rollert adds:

The most common boat engine, the Merc Cruiser, is quoting deliveries of full engines for next summer.

Duncan Coker notes:

Motors being taken out of production. Sounds a lot like a book I know.

Oct

20

How do traders deal with sleep patterns or disruption? Especially with markets in different time zones, etc.

Circadian Rhythm and Sleep Disruption: Causes, Metabolic Consequences, and Countermeasures

Abstract
Circadian (~24-hour) timing systems pervade all kingdoms of life and temporally optimize behavior and physiology in humans. Relatively recent changes to our environments, such as the introduction of artificial lighting, can disorganize the circadian system, from the level of the molecular clocks that regulate the timing of cellular activities to the level of synchronization between our daily cycles of behavior and the solar day. Sleep/wake cycles are intertwined with the circadian system, and global trends indicate that these, too, are increasingly subject to disruption. A large proportion of the world's population is at increased risk of environmentally driven circadian rhythm and sleep disruption, and a minority of individuals are also genetically predisposed to circadian misalignment and sleep disorders. The consequences of disruption to the circadian system and sleep are profound and include myriad metabolic ramifications, some of which may be compounded by adverse effects on dietary choices. If not addressed, the deleterious effects of such disruption will continue to cause widespread health problems; therefore, implementation of the numerous behavioral and pharmaceutical interventions that can help restore circadian system alignment and enhance sleep will be important.

Larry Williams comments:

That’s one of the hardest parts of this business 'secially when you live in 2 places.

Zubin Al Genubi writes:

Haha. I sleep when I trade. Wake up . Sell too soon.

Jeff Watson responds:

Sell too soon? My life story is that I always pay too much and sell too cheaply. It's a bad habit.

James Lackey adds:

In Ecuador your perfect 12 hours of sunlight all year 365 sure beats fall back to dark at 5pm here. The fall back time change and the further/ farther your from the equator is
More difficult than staying up 100 hours a few times a year.

Oct

19

Here's a good download site for all 51 books of the Harvard Classics Anthology. Since they are all in the public domain, there is no charge. They can be easily put on your Kindle or other reader.

Oct

17

The Big Ratchett by Ruth DeFries is an excellent book describing the human insecurity in more productive ways of producing food such as hybrid seeds irrigation, capture of nitrogen and phosphorous for fertilizers, insecticides versus the ratchet that comes from diets. it leads to a cob web test of food prices versus stock market and other useful relations.

Oct

17

After a bull week, S&P500 & crypto ready for the new highs? Coinbase and Galaxy 2021/10/15

Yelena Sennett and Andy Aiken: A pause, small pullback and range trading for S&P 500 next week is likely. Bitcoin ETF, Coinbase NFT trading, lots of other headline news contribute to bitcoin rally, is it too much too fast?

Oct

14

Heard a great quote today while driving and listening to SiriusXM. No clue who said it but enjoying this nugget of deliciousness from the meal for a lifetime:

Music is mathematics for the ears.

[Ed. note: attributed to Stockhausen]

Art Cooper writes:

Here's another, in a similar vein:

Geometry is frozen music.

Peter Saint-Andre chimes in:

Music is the hidden arithmetical exercise of a mind unconscious that it
is calculating. - Leibniz

Music is mathematics - and architecture is music in stone. - Ayn Rand

Andy Aiken builds on the theme:

Goethe said, "Architecture is frozen music".

There aren’t physical geometric forms, but many physical representations of geometry, such as in architecture.

Nils Poertner suggests:

Christopher Wolfgang Alexander

(born 4 October 1936 in Vienna, Austria)is a widely influential British-American architect and design theorist, and currently emeritus professor at the University of California, Berkeley. His theories about the nature of human-centered design have affected fields beyond architecture, including urban design, software, sociology and others.

Oct

12

One of my contrarian disciplines is to read the quotes from money managers and analysts in the Wall Street Journal’s daily market roundup. I don’t care about the opinions themselves—on any given day there are 100 plausible reasons the market might go up, and another 100 reasons it might go down. It’s the editorial selection that is interesting and might occasionally give a clue the market is leaning too far in one direction. But today’s first quote is a head-scratcher.

WSJ: U.S. Stocks Waver Amid Energy, Inflation Concerns

Investors are running around like chickens with their heads cut off,” said John Buckingham, portfolio manager at Kovitz. "They focus on one thing at a time and buy and then change their mind and sell."

What is he talking about? The S&P 500 is down 0.2% today, maybe 1% over 3 days.

Oct

12

Mr. Terminal Value

October 12, 2021 | Leave a Comment

mr. terminal value: i always used terminal value rather than discounted value on problems including my final exams for big things like phd. it's so much better than discounted value. but the professors never understood it. and I got graded down. so i had go to the dean for rectification of terminal value. the dean was George Stigler who was in the old days too good an economist to be canceled by the "committee". fortunately he was still able and sharp and understood it. he was able to hit 3 holes in 1 at 60 in his club in canada.

Vic's twitter feed

Oct

12

Biden's nominee for Comptroller of the currency has a plan, a big plan. It's such a big plan, it's best done in places that used to have 5 year plans…don't worry, we're getting there soon enough.

Oct

12

No it is not the Onion.

3 economists awarded Nobel for work on real-world experiments

"The Royal Swedish Academy of Sciences said that Card's studies from the early 1990s "challenged conventional wisdom." By comparing what happened when New Jersey hiked its minimum wage to labor market conditions in neighboring Pennsylvania, he was able to upend the accepted theory that increasing the minimum wage would lead to fewer jobs."

Peter Saint-Andre adds:

Why don't we raise the minimum wage to $200/hr so everyone can be rich?

James Lackey relates:

True story: What is the probability old lack would sell a unit to University PhDs in Econ in a year? They both asked why I sell Carz. That I blew up again peaked their interest. What they didn’t realize is the Econ profession told me the exact same thing the Law clerks told me: Go trade lack.

Anyhoo they always bring up the big short movie book or some other mumbo story then they quote their book. I exhale and call bs.

I get very upset at men calling me a not ummm honorable man or imply that whether it’s Carz or trading for a living.

I blast them with a 11 minute data dump and why the street works and how and Mr Vics ecology the story of the elephants and like Gresham law they know they never read Albert K Nock and they do implicitly understand the law of least effort. I end my discussion with the same to all business men: It’s the pay plan man!

I’ve been asked to speak at MBA classes and seminars and for sure interviews for their next book. After blow up artist and hour interviews and a one line quote that was actually the get the joke true real deal about Mr Vic "he always found a way for all of us to make money". Which in bmx or drag racing terms means to win! I say no thanks have a nice day.

A year later I see the profs new book at the library. I flip through it and I’ll be damned. Ya can’t make a jackass drink the koolaid.

Henry Gifford comments:

The thing frequently referred to as the Nobel Prize in Economics is misleading, at best.

The original Nobel Prizes were established in 1895, and financed (the word "funded" implies "free" government money in some circles) by Alfred Nobel's will.

The prize in economics was established in 1968 by a donation from Sweden's central bank. Perhaps the central bank has some economic agenda to pursue, but if so, they didn't state that as their goal.

In 1995 the prize in economics was redefined as a prize in social sciences for the stated purpose of widening the field of possible recipients to include people who are not economists.

While the prize in economics is often called "The Nobel Prize in Economics" in the US, that has never been the official translation to English agreed on by the people giving the award. The official English translation of the name has changed eleven times since 1971 - perhaps they are striving for the most confusing and politically correct name possible. The official names in English usually include the words "Memorial" and "Alfred Nobel."

At a minimum, the prize should be referred to with the word "Memorial" in the name, to distinguish it from a genuine "Phone call from Sweden."

Oct

10

Uncle Howie

October 10, 2021 | Leave a Comment

My uncle Howie: (1) is notable for winning and losing 55 national handball Nationals, and (2) is the world's most apreciative person of father Artie (he lived across the steps from him)and (3) he always looks like he's going to punch you in the face if you disagree with him.

(4) he gave me that mix of 2 to 4 and insisted i take a whole body scan. its similar in its efficacy to the illumina story. I finally yielded in view of 2-4 and it saved my life when it found a 10-fold elevation in cea. David Brooks said I had about 6 months to live had he not operated on me. how many have passed away because of regulatory delays?

Vic's twitter feed

Oct

9

Is the market ready to rally to new highs as bonds sell off? Part 1 2021/10/08

Yelena Sennett and Andy Aiken: Everything being woke is good for the markets as well as the sell off in bonds. Lower volatility is likely for next week as we close above the vol trigger level.

Part 2

Best DeFi project to buy now. Shibu? Ethereum & Bitcoin update. Part 2 2011/10/08

Yelena Sennett and Andy Aiken: Will the Ethereum killers succeed this time or will history repeat itself? Curve CRV has one of the best valuations in DeFi now.

Oct

8

arthur niederhoffer my father was a police officer for 20 years and routinely did acts of kindness for others. everyone who knew him said they thought of him as their fondest elder brother.

banana ice cream: Artie encouraged many kids and police officers to go on from high school to college. At 12 midnite when his shift ended he led a regular group of 12 in going over the entrance exams using the Delehanty study guides.

At that time NY City creameries included the Breyers Ice Cream Factory. Artie treated all his students and me to banana ice cream from Breyers at 1 or 2 am after the study sessions ended. After 70 years i can never eat banana ice cream without crying as i'm doing now.

the slice backhand: as part of his acts of kindness, artie graded the Delehanty guides. indeed on the last day of his life he graded all his students at John Jay and gave them all an A. i studied these Delehanty guides and it helped me get into Harvard. it was there i learned the terrible slice backhand as i had never played squash before.

The life and career of Arthur Niederhoffer

At his memorial service, John Jay College President Gerald W. Lynch said:

"Arthur is the prototype of what John Jay College is; the practitioner who stood on the front line of police work; the thinker and explainer to us all of the reasons for social deviance and the proper responsibilities and limits of social control; the man of strong compassion for his fellow human beings who strove to help us understand police work and its stress, as well as the criminals the police must deal with.

"In loving tribute, his colleagues, friends, and relatives established the Arthur Niederhoffer Memorial Fellowship, awarded annually to students in the doctoral program in criminal justice at John Jay College who ”best epitomize in academic achievement and in the promise of future fulfillment the professional accomplishments of Arthur Niederhoffer.”

Vic's twitter feed

Oct

7

still 53% for d's to win. and with 25 million gov employees who vote 90% dem, and 50 million on foodstamps etc, its amazing its only 53%.

electionbettingodds.com: Chance of…Presidency 2024 (by party)

Oct

7

Last moonless midnight I bumped my CSC-259 along the railroad right of way looking for the old RR stations. I was 20 miles south of Niland when I passed a railroad signal and the arm went down. But there was no train, and the arm went up again. A minute down the track, I turned back and this time the signal faced me. The arm went down, and I stopped.

The Salvadoran carried nothing but a jug of water, new blanket in a package he had found in the track, and an extra pair of tennis shoes strung over his shoulder.

Three nights ago, he stood at the Trumps new, unclimbable border fence and climbed it. As he got his first foot off the ground a gun pressed his temple, with the order, ‘Not yet!’ The Mexican Mafia robbed his cell phone and wallet. He had $2.75 in his pocket when he dropped to the other side in USA.

The railroad track here begins in El Salvador and passes through Mexico to Calexico, and north through Slab City to the promised land. It is the notorious La Bestia line that is the rolling pipeline of Central American immigrants into America and jobs. He had taken one month to pass through Mexico, worked a week in Mexicali to buy the phone and stake the border hop. Now he had turned himself into a RR signal to try to stop the only passerby he had seen in three days of walking the hot track.

‘Is this California?’ he asked in fair English. I laughed in Spanish. He had lived for fifteen years in Virginia, owned a house, car, and then his wife took everything and reported him to immigration. They had flown him back to his native country, where he turned around and rode La Bestia the second time. His goal was to recover the American Dream.

I have ridden La Bestia myself and, knowing the travails, picked up the walker. He had not eaten for three days.

He ate the same as I did that night, canned spaghetti, and the following morning I outfitted him to hobo the freight out of Niland. There is a patch of bushes on the west side of the track to twiddle the thumbs until, daily, a Union Pacific pauses to change crew. There would be orchard work at the next stop in Indio, CA. He carried a copy of my ‘Executive Hobo: Riding the American Dream’.

He ducked into the portal of a cement car. There you are in a steel rolling hotel room looking out. I waved goodbye like a RR signal, and he mechanically waved back.

Oct

6

%$#@ Yankees

October 6, 2021 | Leave a Comment

to me the yankees play a pathetic game with no small ball and terrible defense, and the great majority of their batters with averages below 220. typical is their clean up batter gallo with a 190 average. compounding the misery for me is the terrible managing and the way the yankees use quant strategies unvarying and fixed. even worse than technical analysts in our field. no matter what, the yanks will take a pitcher out after 100 pitches even he's if pitching a no hitter.

worst of all are the promotional ads like kars and dear priscilla and the cancer and lotteries ads on the radio that destroy ones equanimity. in short the yankees don't deserve to win and good bye susan and john for 6 months.

stockholm syndrome at bronx baseball. the players, when asked about the good job that boone is doing, come up with "he shows up every day."

Vic's twitter feed

Oct

6

in proper sell-off in equity, one eventually gets a massive backwardation - and we haven't seen this - almost the opposite- it slightly steepened yesterday - that is odd - and could mean a lot more stress but who knows, am not an equity guy just noticing it on the side and it needs to be tested more…

Zubin Al Genubi comments:

Decay of hi vol over time is a regular tendency. This leads to pennant like structures. The most dangerous time is at the expansion phase where the rate of expansion rapidly increases.

James Lackey responds:

This is a fabulous lesson for new specs that fall for the bear memes then get whacked post dip rally buying.

Look there are times for all things. We can make money short but it's so crazy risk dangerous and the vigorish is insane. I love Mr Vic's "never short" advice!

However if you must sell them without owning them I'd test when the vix is increasing in the short term ie today's vix is higher than 5 days ago then keep it to something like no more than a few trading days hod short et al.

My gist is paying huge vig and buying strength and selling weaknesses is the stupidest system ever! However I'm a man that made it happen and allot over many years even prior to my spec list school.

In closing don't lol but if you must: It makes sense to move all the contracts you can, all day every day when the vix is over let's say 25 and my hypothesis is when it's expanded rather than contracted.

With love honor and respect for those that trade for a living.

Nils Poertner adds:

whenever this graph (from Peter Garnry at Saxo Bank) is -20 or -30, it is possibly a contrarian buy.- that is how I read it. in other wards, in strong backwardation in the vix curve…eventually one needs to switch and be bullish - in context perhaps with other indicators? treat with caution - have not done study myself. always test for yourself

Oct

6

1. Human Error, James Reason. A rather disappointing academic treatise on cognitive analysis of how humans make errors which is really dragged down by obtuse academia speak. Two major sources of error are lapses and slips, and secondly errors of reason and rules. Slips are when you forget steps, lose your place, get distracted, fall into a habitual practice inappropriate for the situation. Errors of reason are using the wrong rule for the situation, where the plan does not go as expected, or the plan was wrong. When the rule doesn't fit, the expert acts like a novice.

There are the raft of heuristics. One is how humans utilize familiar patterns rather than calculate or optimize a current new situation. It is cognitively difficult to consciously think through a new situation.

An interesting section was about how the brain uses "autodrive" to do many familiar things to make room for conscious thought. I was driving down somewhere thinking, and look up and arriving at my destination, realize that I basically had no recollection of the drive there - just on autopilot. A lot of daily life is on auto pilot thus ripe for error.

It's a difficult read. Better to rent, than buy.

2. The Genetic Lottery: Why DNA Matters for Social Equality, by Kathryn Paige Harden

A flawed book addressing a difficult subject. Galton's biggest failing was his theory on eugenics. One of Harden's main points is to debunk the misconception that the genetics of race has any meaning. Race is close to meaningless in genetics. For example, people with genes from people from Africa have a much larger variation in genes than in all the other races, and the categorization of Black and White becomes meaningless.

Genetics does have an effect on personal traits. It predicts certain diseases. The attempt at connecting genetics with achievement in education, life satisfaction, and wealth, suffers from too many variables to have any use.

Their statistical studies, not disclosed, I think will not be robust.

3. John Steinbeck, Sea of Cortez, recommended by Andrew Moe. A beautifully written book and a joy to read.

4. Yottam Ottolenghi, Plenty More. Highly recommended cook book with smashing recipes for vegetarian dishes with a mideastern influence. He has other cookbooks such as Jerusalem with recipes that are real home runs. I've made a number with great success.

5. Michael Lewis, The Premonition. Excellent book about the sad state of the lack of preparedness for a pandemic in the US. Outlines some of the goings on in California to deal with pandemics and disease. Lewis is a fine writer and easy to read.

Pamela Van Giessen comments:

Lewis is a facile writer who performs a parlor trick by bringing forward, in Vanity Fair like story telling, that which will convince you that his view is the correct view. He will not be remembered 100 yrs from now.

A reader writes:

There are three sentences in the short review of The Genetic Lottery that are utter nonsense:

"Galton's biggest failing was his theory [sic] on eugenics."
"Race is close to meaningless in genetics."
"The attempt at connecting genetics with achievement in education, life satisfaction, and wealth, suffers from too many variables to have any use."

These sentences could probably be accepted in, say, the NY Times given that and other leading publications' denial of much of genetic science, but not on this Spec List.

James Lackey appreciates:

Fantastic report! I dig Lewis because moneyball was a great movie lol but really love him because his Wife is so amazing that he must be a good dude to keep her.

Duncan Coker

Thanks for the list. Has anyone read the latest from Steven Pinker, Rationality? It seems like a more scientific analysis of what Kahneman failed to do. We humans have trouble with advanced probability in every day life, so appear to be irrational, but there is more to the story. Do the shortcuts we use help or hurt. Try doing Bayesian Analysis at the grocery story. I think Pinker is one of the best writers we have at present.

An excerpt from Pinker's latest:

Why You Should Always Switch: The Monty Hall Problem (Finally) Explained
By Steven Pinker

Oct

5

Vic notes:

an observer who seems as acute as andy:

SUBSCRIBER 6 minutes ago: We had a hot tip, in about 2010, about stock in a company that could do many different lab tests from a "drop" of finger stick blood! Knowing nothing about the company structure–just the excited promises–but being 30+ years into a Laboratory Medicine career, we realized that this was nothing new. We'd been doing a variety of chemistries & blood counts on finger stick and heel stick blood sample since at least the early 80's–actually 2 or 3 drops of blood in a thin glass capillary tube. The variety of tests, and the number of analytical systems doing these tests, expanded every year. It was routine–a standard of medical lab operations…nothing at all new except the excitement of a 20-something girl who had the market, a score of hyper-successful board members, and an uninformed public fascinated by her predictions. She was masterful at marketing–initially.

A reader adds:

I have heard several interviews with John Carreyou about his book, Bad Blood, but haven't read it yet.

Oct

5

Decoded neurofeedback

"Decoded Neurofeedback (DecNef) is the process of inducing knowledge in a subject by increasing neural activation in predetermined regions in the brain, such as the visual cortex. This is achieved by measuring neural activity in these regions via functional magnetic resonance imaging (FMRI), comparing this to the ideal pattern of neural activation in these regions (for the intended purpose), and giving subjects feedback on how close their current pattern of neural activity is to the ideal pattern. Without explicit knowledge of what they are supposed to be doing or thinking about, over time participants learn to induce this ideal pattern of neural activation. Corresponding to this, their 'knowledge' or way of thinking has been found to change accordingly."

Nils Poertner comments:

interesting. personally, I found cross-training v helpful - so honing skills in non-work areas, too. eg, professional trader in equity who has singing as hobby might benefit a lot from taking professional singing classes to open up new pathways (also re creativity in trading. also) - am happy to be the subordinate then whereas in trading there can be some unconscious resistance in learning from others.

Jeff Watson adds:

Ben K Green wrote a book called Horse Tradin'. The entire book is cross-training and might even be on Chair's list of recommended books. If it isn't on a list, then it should be.

James Lackey writes:

I've been working on this for a while now 3 years. Path duration outcome based on neuroscience. Dr Andrew Huberman my skate park guy is one of the best - Prof from Stanford University and Army special forces fan. It's fantastic to study.

Nils Poertner responds:

yes excellent. the thing is it can't be an endgaining experience, one needs to have an intrinsic interest in something /also the learning part. if ppl love skateboarding for the sake of skateboarding and hire a teacher to get better, this enthusiasm may carry over for trading (learning /improve process here as well) too.

(our whole culture is way too much based on endgaining - maybe not in all areas - but in a lot of them which is part of the problem why are in this situation altogether)

Oct

5

An Armor Conspired: the Global Shipping Freeze

First, the foundations. While bottlenecks are occurring everywhere, at present US ports are disproportionately affected. Docking locations along US coasts are among the slowest in the world: not because of size or technological capacity but collective bargaining hindrances. As Dominic Pino recently wrote,

Why are our ports so far behind? Not because we don’t spend enough on infrastructure, as the Biden administration would have you believe. The federal government could spend a quadrillion dollars on ports, and it wouldn’t change the contracts with the longshoreman unions that prevent ports from operating 24/7 (as they do in Asia) and send labor costs through the roof. (Lincicome finds that union dockworkers on the West Coast make an average of $171,000 a year plus free healthcare.) The unions also fight automation at American ports today, “just as they fought containerized shipping and computers decades before that.”

James Lackey adds:

Pete there is another one you can add to your list: The conspiracy to collude. The ftc is looking the other way whilst all car manufacturers minus Toyota Subaru and Mazda are limit up on next years ie 2022 sticker prices and it's not collusion - if you're not cheating, you're not winning in racing.

Oh, and the help wanted signs are bullshiza as they do not want to hire anyone as their wage offers are limit down. They can't pay back the ppp - they are all broke.

Bud Conrad comments:

The article is long on the sequence of events that colluded to a Perfect Storm of shipping delays. But he doesn't pick the specific culprit (Labor Unions? Government Port Investment? COVID Rebound? Trucking and intermodal capacity inadequacies? and I'll throw in another: Some kind of government or business sector conspiracy to get prices higher.

Regardless of the cause, the impacts on our economy are likely to be most felt in surprisingly high price inflation, for a broad range of products, that the US no longer knows how to make.

We will also see prices rising from the expanded money supply. Wage price inflation is already visible.

Pete Earle responds:

I don’t pick a specific culprit as the current state is not the product of a singular influence. Very simple, and the entire point of my article.

"Some kind of government or business sector conspiracy to get prices higher." [Not a reasonable theory.]

Bud Conrad clarifies:

I learned a lot in reading your article, and the problems you so well identify, including presenting the many charts. Yes: the world and its movements do work with multiple influences.

My challenge was rooted in my hope for identifying an overriding cause that could be addressed, and thus be the course of action to get things back into balance. Of course solutions will require many many efforts. And that was your point. What do you expect to happen?

I also threw out what I expected to be the consequence, that we would have very high price inflation, which will have obvious implications for all of us.

Oct

3

Is the market correction over? S&P 500 new highs coming up or 200 day MA? 2021/10/01

Yelena Sennett and Andy Aiken: Crypto breaks out as Fed loses the hawks and Powell goes woke. Crypto rally was not confirming the risk-off selloff.

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