Feb

21

Weekend reading

February 21, 2023 |

while snoring at the market over the weekend, and remembering that I had to be awakened by my assistant at 915 on Friday feb 17 as I had "watched" the market for 24 hours straight and I can no longer do that without sleep, I read some good books over the weekend.

i was younger then: Someone in a Tree

the best book was Beethoven Unleashed. here is a year by year chronology of Beethoven's development, family life, music, and love life. I know a hundred anecdotes about Beethoven (collab and I were once going to do a play about the great man) and this book thrilled me by teaching 100 more also about his hard study under Hayden, the progress to write string quartets, and the Austrian war's influence on his fortunes. highly recommended. I recommend the audio version which brings forth music to illuminate each part of his life (although their constant playing of the fifth and ninth symphonies is boring and over the top).

the most disappointing book for me was Models of Adaptive Behaviour: An Approach Based on State by Houston and McNamara. It takes a state approach to predicting molecular behavior. all the states could just as well be market states with the change of a few words. an organisms behavior strategy is a rule that specifies how the organism deals with every possible circumstance. a strategy is a rule specifying the dependence of behavior on a state and time.

"the costs and benefit of an action must depend on state." "fitness is a measure that can be used to measure the performance of strategies." "that an action cannot be considered in isolation is an important reason for considering sequences of actions and hence for using dynamic programming." regrettably there is one empirical finding that illuminates the state-based topology into concrete life. Although I can get the gist of most mathematical treatises, the dynamic programming examples and other techniques were beyond me.

I turn to a book that's much more useful to financial readers and mure more up my alley: This is the Road to Stock Market Success by George Seamans.

the Seamans book was first published in 1944, and the dow was about 150 at the end of that year, and Seamans recommended the base method in use of Heads and Shoulders to sell high and buy low. There are so many bad recommendations in the book that it's even worse as a guide book than Reminiscences of a Stock Operator.

From George Seamans (1945):

What is a business barometer? Whether it be Barron's Weekly, the Federal Reserve Bank, the Cleveland Trust Co, the National City Bank, or any other– it is the published facts of supply and demand as expressed in the volume of steel production, number of freight cars loaded, orders for locomotives, amount of payrolls, amount of checks cleared, bank savings, money in circulation, electricity consumed, quantity of lumber cut.

Supply and demand (the time element theory–a time to buy when low, a time to sell when high) is the basis for all forecasting of market movements.

"But who has time to read books?" he replied. Whereupon I told him frankly he wasn't fit to hunt squirrels.

[One notes that SBF prides himself on never reading books. and if he were one of the big shots that constituted the thousands of clients that Seamans had, Seamans mite call him a baboon.]

In the market session of October 19, 1937. Stocks crashed that morning by ten points or more. However by two or three o'clock of that same day many of these identical stocks were up to their previous prices. Was this the play of genuine and natural forces of "supply and demand"?

The safest time to buy is when the market is dull and trading is going on only in small volume with prices on the easy side. If you buy then, exercise patience (comparable to that of the Insiders) and hold on until activity develops at times taking as long as six months or more for the market to generate. Months later you will get 'the' signal that it is time to sell.

In 1914, at the outbreak of hostilities, stock market prices dropped. In September, 1939, prices soared upward the moment a European conflict became a certainty. Developments in industry since the last war in sociology, economics, electronics, machinery, politics and finance were of sufficient importance to warrant entirely different conclusions. In 1918 for instance we sent troops to Siberia to fight Communism. In 1944-45 our presidents drank vodka with Stalin and toasted his great country.

Seamans is adamant that the big-guy subscribers to his service which number thousands should never hesitate to sell short. Thus he joins the boy speculator in sowing the seeds of destruction.

i am very fortunate to have a very sharp wife who has seen many a mistake in my trading over 60 years i have been trading. (she has only seen 45 years.) she sees me reading all these old books and throws up her hands and like Don Quixote's wife she burns them while I rest.

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