Oct

30

Steve Stigler's new book Casanova's Library is a fascinating trip down the history of lotteries, history mathematics, of combinations, and utility theory. It also explains many of the hopes and failings of gamblers in our markets. well worth reading.

how can stocks go up at a much larger rate than corporate profits over time? the reason i think is that companies have developed the art of taking more emoluments from the government each year thru sneaking into more regulatory extracts.

Vic's twitter feed

Oct

29

much talk about the 1900s custom of touting a stock at its high, and selling out. but the contrition this time is as if it was a first time. What i disagree with is the expression "go woke, go broke" quite the opposite it true as all the big companies that prospered typically by adamantly going against Georgia on their election reform. in general they love regulatory capture which is always greater with more regs. watch out if the house and senate are reversed on Nov 8. it's very bearish. I guess 90% of CEOs now are agrarian.

i guess its only fair to relate that I worked for the repentant Meta Bull for one day before I was fired. my lapse was I said that Galton was the founder of correlation and regression and contingency tables (among other things like weather maps, finger prints, psychometrics, biometrics - i could go on). Fortunately John Markman hired Laurel shortly thereafter and I have infinite respect for him.

if only the golfer celeb were to concentrate on the 30 things that unfairly worked against him before the election, we'd all be so much better off. i'll list them daily: (1) The big pharma that withheld the announcement that they had an effective vaccine until the day after the election.

it is good to have a man in power who is young at heart and hit a 368 baseball single in a congressional game as well as a football star who lettered on the varsity team that beat Ohio state. to say nothing about his prowess in martial arts. He would beat the Hades out of his past opponent if he were still in high school.

two of the most entertaining and boisterous and knowledgeable people in their respective fields are Mad Dog Chris Russo and the always certain but not chastened Jim Cramer (who fired me after one day). It is instructive but not by chance that despite all their erudition, both "madmen" are no better than 50-50 in their frequent predictions. It is not chance that they both approach 50% but part of an inevitable tendency for forecasters to approach and breach the 52% accuracy level needed for profits in sports betting. I believe frequent forecasters in markets don't approach the 52% needed in sports and this is guaranteed to happen by evolution.

Vic's twitter feed

Oct

27

Checkers and logic

October 27, 2022 | Leave a Comment

nand from computer circuitry, checkers, or move from 4:00 ET to 4:15. this was my most important post of the week. the circuitry for computers, based on Boolean algebra, has paths for and, not, or, and nand ("not and", false only when all inputs are true). in checkers there are usually two moves that are likely. the checker moves are much closer to real binary decision making than chess.

how is this related to the moves in the last 15 minutes? why is this be a key reason that checkers is more difficult and relevant than chess? perhaps Mr. Millhone will ask some of the computer literate checker players to expand on this theme so that we will never hear again "he plays checkers while the real smarty plays chess."

let us hope in the new regime that the platform will not cancel by suppression any views that are not woke as they do with so many posters like me. I can reach a wide swath only by paying which I'd be much more willing to do if fair play all around.

it is interesting that my post on nand was noticed by 300 people on the platform. perhaps it was mistakenly considered a not (the unifier or his counterpart). what would the platform's earnings be if they had to deduct from earnings like all other companies their salary expense?

the three major problems with get-rich or trading schemes is: (1) multiple comparisons, (2) ever-changing cycles, (3) lack of testing, (4) self interest, or (5) front running. i have to laugh when half of the reviewers of Ed Spec complain and rate it the worst because "he doesn't give you any trading systems that work."

Vic's twitter feed

Oct

27

really a sign for things to go other direction sometimes. eg, the moment Tchernobyl engineering team got awarded prize - 1 year before the disaster. your typical trader eventually buying his dream house or so and bragging about it to friends etc etc. maybe USD bulls brag now? or 30yr bond bears?

bragging is far more subtle than one imagines. most academics brag (via the number of articles they write), even in social groups they do (look how clever I am since I can do this or that or have this insight.)

sly traders don't brag as they prob have been alone in the trenches so many times, WW1 like trenches…its is cold there and dark and lonely :) so they kind of know.

Steve Ellison suggests:

There was a whole chapter about hubris, including statistics on underperformance of shares in companies that bought stadium naming rights, in Practical Speculation.

Stefan Jovanovich corrects the history:

The comparison of sly traders' adventures with WW 1 trenches has its own touch of hubris; it is also bad military history. The trenches were not "dark"; by 1915 both sides on the Western front had them electrified. They were not "lonely". That was the cause of the greatest slaughter.

Based on their experience in colonial wars, the general staffs assumed that packing men into dense line formations was the solution to holding ground. (Holding and retaking ground were the primary tactical objective for the Allies because they had already surrenders to much territory in Belgium and France. As much as the movies, then and now, want to picture the slaughter as a matter of men running upright across open ground and being mowed down by machine guns, that was the smaller part of the killing. 3 out of every 4 deaths and wounds on Western front were caused by artillery barrages against trench lines and rear assembly areas where troops were massed to rotate up to and back from the forward trenches.

Oct

27

how can weekend be over without canceling Yankees for: (1) keeping players in lineup with 100 averages, (2) reliance on ridiculous analytics, (3) not resting Judge, (4) the Boston Redsox tape, (5) futility of listening to an old man on the radio saying ridiculous things like "you can't predict baseball".

do you agree or not "the public got a better deal and a higher chance of making a profit in the days of bucket shops and commissions 100 times higher than today" (i.e., circa 1900)?

a fantasy - i see in my mind's eye the boy wonder saying goodbye to his coven of models and disboarding his yacht thankful that one of them had not killed him yet and rushing to Delmonico's.

it is good to view once again Kagemusha to see how a dead or dying warlord can be hidden from the adversary with respect to the Penn race and debate.

Vic's twitter feed

Oct

25

professor and I meet as S&P crosses 3800 amid Bloomberg warning on Friday oct 21 that an armageddon in the market seems likely.

at the turn of the century, it was common practice of Gould and Drew to spread rumors of a catastrophe on the market before buying with abandon to cover their shorts. thus the advice when the papers and brokers were most negative to buy . As I was out visiting children on Oct 21 and Oct 24 and the only contact I had with market was the bearish news and data source, i thought back to the days of the manipulators memorialized so well by Lefevre.

Bejan's latest book will be on evolutionary design (e.d.). we discussed the e.d. in the market over the last hundred years. commissions have gone from 10% a trade to zero, but the rake and vig and the chances of making a profit with short term trading has remained near zero.

it is instructive to realize that Livermore went bankrupt 5 times by not realizing the inevitability of the rake and the vig (bid-asked and commissions) to lead to bankruptcy and in his case suicide. The thing I loathe the most is when some well meaning personage says that two favorite books are Reminiscences and Education of a Spec.

guaranteed to happen: the powers that be make sure that, before an election, good news is rampant and reduction of service revenues is off the table forever.

Vic's twitter feed

Steve Ellison adds:

Remembering that the upside down man and his successor are often quoted as being bearish about the stock market, and remembering that they were bond salesmen whose best interest might not be served by clients buying stocks, I recall the fear, uncertainty, and doubt (FUD) technique that the 1980s IBM sales force was known for.

My first job out of college was assembly language programming on IBM mainframe computers that were the standard for large corporations. IBM essentially had a monopoly in this market from the 1960s on, but by the time I started in the 1980s, competitors such as Amdahl were nibbling around the edges of the market by offering "clones" of IBM systems for lower prices.

The IBM sales force's primary technique if they were worried a customer might buy from a different vendor was FUD. The IBM sales guys would come in and cast as much fear, uncertainty, and doubt on competitor products as possible. Other technology sales forces adopted the technique, too. In one example I was involved with while working at a technology company, a competitor's sales person told a customer that our product could not be programmed in Kanji. Kanji is not a programming language at all; it's a writing system for Japanese.

One ought to keep this history in mind when evaluating bearish statements about the stock market by bond fund managers.

Jeffrey Hirsch replies:

Appreciate the reminder, Steve and Vic. Been observing Goldman and other firms doing this in recent years.

Oct

19

Benjamin Franklin

October 19, 2022 | Leave a Comment

nobody asked me but…the greatest writer, diplomat and scientist and a man completely indispensable to the birth of America was Benjamin Franklin. I am reading Walter Isaacson's excellent bio of Franklin and it is mind-blowing in so many ways, such as how Franklin dealt with spies at Passy by being honest and good. How long will it be until he is painted and toppled?

From: Spies, Patriots, and Traitors, Review by Amb. (ret.) Edward Marks

More questionable is the characterization of Benjamin Franklin’s activities in France as “intelligence” operations rather than diplomacy. Just because Franklin’s work was often “secret” and just because he was the target of British intelligence does not mean that Franklin himself was a “spy” or intelligence operator. He was an accredited diplomat pursing bilateral negotiations with his official host.

The chapter on Franklin, in fact, is one of the best as it re-interprets a story we all thought we knew. The British were all over the American mission to Paris, surrounding it with spies and observers, but more important inserting an agent, American-born Dr. Edward Bancroft, on to Franklin’s staff. In fact, the British were fully informed of everything the Americans were doing, to the point of receiving full and complete copies of the most secret communications. As the author quotes from another historian, "Franklin’s embassy at Passy, it now appears, was almost a branch office of the British Secret Service."

But this is where the story becomes even more educational. Despite this fully successful intelligence operation against Franklin, he was completely successful in his diplomatic mission.

The book: Spies, Patriots, and Traitors: American Intelligence in the Revolutionary War

Vic's twitter feed

Oct

18

barnacles aparently will not be increased on open tomorrow. two big big opens have only happened four times since 2011. and it's not bearish.

a symptom of malaise. the Yankees radio are forced to air commercials that are total promotions, twisted. they have one about diverse groups that get gypped on water, another about wearing a helmet that breaks if not patented, to say nothing about buying a Kar without cred.

a bicycle celebration for a player who has a 100 average but kneels during the anthem.

Vic's twitter feed

Oct

13

The Dark Trader

October 13, 2022 | Leave a Comment

market below the round temporarily.

i join the bicyclist.

the more he unifies the better the market.

today his unification falls to 17%.

after 6 down days in a row, it had a lot of ground to cover on the upside and it exceeds the level 4 days ago by a google.

interesting gain in senate now 50-50. the unifier falls correspondingly.

Vic's twitter feed

Oct

11

Learning From the Most Ruthless Robber Baron (Jay Gould) | Greg Steinmetz

American Rascal: How Jay Gould Built Wall Street's Biggest Fortune

Kim Zussman comments:

Likely worthwhile but I was stopped out at 2:59 "Buffett was a model of integrity"

Stefan Jovanovich replies:

Agreed. One of the many things the List has done is teach me the limits of my own understanding. I find the Oregano offensive because he has an outright pimp for a partner; in a decade of active practice in LA during the GO-GO years of the 70s and 80s, Munger's firm was - by far - the worst combination of self-righteousness and chickenshit deviousness that we and every lawyer we knew encountered. But, Buffett's artful dodging as a taxpayer has never bothered me. Thx to KZ for reminding me that all cheating really is equal in the eyes of God.

Jeff Watson writes:

I liked this biography better.

Oct

11

Americans Are Fake and the Dutch Are Rude!

Do all human beings have emotions, just like we all have noses or hands? Our noses have different shapes and sizes but when all is said and done they help us breathe, and let us sniff and smell the world around us. Our hands can be big or small, strong or weak, but regardless they help us touch, grasp, hold, and carry.

Does the same hold for emotions? Is it true that emotions can look different but, in the end, we all have the same emotions—that deep inside, everybody is like yourself? It would mean that once you take the time to get to know somebody, you will recognize and comprehend the feelings of people who have different backgrounds, speak different languages, come from other communities or cultures. But are other people angry, happy, and scared, just like you? And are your feelings just like theirs? I do not think so.

Andrew Aiken asks:

Why do Belgians have windshield wipers on the inside of the windshield?

Peter Saint-Andre doubts:

As someone who is half American and half Dutch, I am skeptical. The fact that there is a difference between Americans and Dutch in the style of public emotional expression doesn't mean that Americans experience, say, gratitude and Netherlanders don't. Also, if this person had come to New York (New Netherland!) instead of the midwest (midwesterners are fake, New Yorkers are rude!), she might have come to different conclusions.

And let's not forget that one of the world's famously untranslatable words is "gezellig", which in Dutch means the warm, cozy, comfortable feeling you experience when in the company of family or close friends.

Pamela Van Giessen agrees:

Over 50% of social science research, of which psychology comprises a significant proportion, fails on bad data, poor data management, and is unreproducible. Seems like this author is a poster child for that.

Oct

11

phenotype selection: Darwin's theory of evolution explains why living things change over time: the mechanism is adaptation - the tendency for living things to become well designed for reproduction and survival. many factors in the environment cause this including competition.

selection causes: predation, weather. in summarizing the subject, Pfenning and colleagues say selection is common in nature and is often sufficiently strong to cause substantial evolutionary change.

there has been a substantial change in market activity and structure in the last year. From 2019 to year end 2021, the S&P was up 54% of the time for an average of 0.3 a day. During 2022, the S&P was up 46% of days and down -4.8 a day. What are the reasons? Lets start with bonds: at year end 2021 they stood at 159, today at 125.5; nasdaq at 16 500, today at 11 100; crude at 76.5 now at 91.2; eurodollar 1.13 now at 98. yen down 40% , gold down 100.

what are the reasons for this change: the answer from ecology is usually increased competition — in this case it would be from fixed income like bonds. but the answer is somewhat deeper I think: there has been a massive increase in regulatory capture, in agrarian reform.

when will it reverse? the statistic shows that after every bad year, the next year is very bullish. perhaps the November election now at 80% for the non-unifiers is a telescopic date.

Vic's twitter feed

Oct

5

Larry Johnson writes:

What Do You Make of Russia’s Strategy in Ukraine?

Russia is now sacrificing pawns in the form of strategically useless territory, while Ukraine is rushing forward to seize symbolic territory without having the necessary reserves in terms of trained soldiers and equipment to sustain the attack and defeat Russia. Russia, meanwhile, is moving its Knights, Rooks and Bishops into position for checkmate. The question remains – what is Putin’s gambit?

One likely answer: Putin follows the path Metternich would have taken if the British had not had their Navy.

Mahan missed the part about how Napoleon lost. In a world of anti-ship missiles, the Americans cannot hope to do what Britain did after 1815 and use sea power alone to rule world trade. The Continental system failed because Russian would not go along. Now, to succeed, a Russian continental energy system only needs to have Poland and Ukraine neutered by having Americans remove all military assistance. Those countries will continue to hate and despise Russians the way John McCain did; but they will have no more ability to do anything to change the pieces on the board in central Europe than American Cold Warriors had between the Korean War and the fall of the Berlin Wall.

Putin can, in the name of peace, build new improved pipelines to follow the route that Russia took against the Ottomans. Russian oil and gas - and Iranian as well - can go around the Black Sea coast and through Moldavia to Hungary and Austria where Germany and Italy can accept deliveries.

Oct

5

Chess.com: 'Niemann Has Likely Cheated In More Than 100 Online Chess Games'

We based this decision on several factors. First, as detailed in this report, Hans admitted to cheating in chess games on our site as recently as 2020 after our cheating-detection software and team uncovered suspicious play.

The interesting thing to me is the cheating detection system.

Big Al imagines:

Trying to imagine what it might be, the first thing that comes to mind is feeding each situation, move by move, into AlphaZero and seeing what AlphaZero would do. If the player's moves match too closely to a program rated 3800, when the player's rating is maybe 1200 points lower, then one must assume the play is computer-assisted.

Antonio Porres Miranda offers:

Statement by Magnus Carlsen

Steve Ellison writes:

I am not sure if the grandmaster is still among us on the list, but I have seen him on social media expressing concerns about what level of due process there is in the event of a public accusation of cheating. He thinks the possibility of being accused might be enough to motivate top players to skip events. For example, here.

Oct

5

In What Computers Still Can't Do: A Critique of Artificial Reason Hubert Dreyfus argued that an important part of human knowledge is tacit. Therefore, it cannot be articulated and implemented in a computer program.

first book was written in 1972. true back then and true today despite what others want to tell us. don't need a nano-second to know this by heart.

Zubin Al Genubi adds:

My theory is computer algos leave trails.

William Huggins agrees:

they always do. a friend who was at MIT for a few years had an interesting talk on algos and the firms tracking/hunting them.

Oct

1

Numb3rz

October 1, 2022 | Leave a Comment

good article:
Raging Markets Selloff in Five Charts: $36 Trillion and Counting
• S&P 500 posts rare third straight quarterly loss as Fed Hikes
• Stocks and bond fall in tandem as investors rush to cash

dark bicyclist now behind baseball player at 17.1% versus 18.1% [as of 1 Oct]. what is expectation going forward? for oct, for 4th quarter, and next year.

Laurel and I once visited Cooperstown and met an idiot savant who knew and told us about the batting average of every player going back to 1894. attending the advanced study classes that a certain offspring of me is taking reminds me of that savant. all formulas to prepare for test.

Vic's twitter feed

Oct

1

Sentiments of individual investors about the stock market improve with consumer confidence about the economy, as if individuals were unaware that stock prices are a leading indicator of the economy.

Consumer Confidence and Stock Returns

Consumer confidence index (CCI)

Larry Williams comments:

Consumer confidence—MOST BEARISH EVER

Bud Conrad replies:

Thank you Larry. This 37-minute video presents about 50 charts showing everything already in collapse.

Stanley Druckenmiller said in his 25 year career investing he has never seen anything as negative as he sees now (Interview with head of Palantir)

Zubin Al Genubi writes:

The counter rallies sure can be violent in a bear market and it is easy getting buy orders filled. Interesting night [27 Sept]. Definitely foreign influence.

Stefan Jovanovich suggests:

Knickerbocker Trust Company

Zubin Al Genubi adds:

Someone did a quick study a while ago where most gains were in night session. Seems like that lately that bears sleep at night. No scary overnight crashes and trading halts.

Larry Williams is optimistic:

Perma bears! We are in a bull market.

Stefan Jovanovich agrees:

++++++

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