Mar

3

1. "Electrocybertronics," an article in Smithsonian, March 2008 issue, points out some sexy company names, especially suffixes, from the last century starting with electric, going to "ex," then "ola" then "tronics" then "cyber" then "nano." I made a preliminary study of returns the 35 US public companies with "nano" in their names and found that most of them are near zero and have not risen in price. I can't pass this subject without noting that like most new things, those who wish us to remain primitive are fighting against this development, and much life-saving will be prevented. Apparently there are nano pants that stay clean, and perhaps this will play the same role that hybrid seeds played in opening up biotech in opening up life extension and reduction of human drudgery in nanotech.

2. We've now had the greatest number of down S&P opens in a row in history at six. And that's surprising since it's only a 1 in 64 shot.

3. How often can people take one city, one month, and send the market down a few percent, as they did with Chicago Purchasing Managers, only to reverse it the next day when the next random number, such as NAPM, comes up.

4. In "The Mauritius Command" by Patrick O'Brian there's a beautiful passage about how Mauritius bonds are trading at only 10% on the dollar recently from 80% as they follow the probabilities of success of Aubrey's imminent invasion and his recent results against the French. Very much similar to the movements in the market as Democratic prospects for victory wax and wane.

Easan Katir writes:

Vic's post stirs memories. To properly observe a mid-life crisis at age 43, I sold my book and moved to a beach house in Mauritius, about 100 yards from Point aux Cannonieres, the fort from which the French defended their island against the British in 1810. One could easily imagine those frigates in full battle. O'Brian mentions the monsoon. A few months after we moved in, a category 5 hurricane's eye passed directly over our house I can't imagine how ships of that day withstood these monsters.

So the nanos have gone the way of the Mauritian dodos. Two more words to add to the 100-year historical list might be 'railroad' and 'mining' as most of those went to zero, and more recently 'bio.' The takeaway message is be on the lookout for the next fad name. We are right in the middle of the crash of any name containing the word 'finance.' Perhaps any name with 'solar' is on deck next, unthinkable as that may now seem.

John De Palma adds:

You wrote today: "In "The Mauritius Command" by Patrick O'Brian there's a beautiful passage about how Mauritius bonds are trading at only 10% on the dollar recently from 80% as they follow the probabilities of success of Aubrey's imminent invasion and his recent results against the French. Very much similar to the movements in the market as Democratic prospects for victory wax and wane."

I'm reminded of how historian Niall Ferguson studied whether bond markets anticipated World War I, discovering that they did not: "…Ferguson is intrigued by the behavior of the financial markets on the eve of World War I because stock and bond prices at the time registered scant concern about the impending cataclysm. This contrasts with the conventional view among historians that the war was all but preordained because of a decade of escalating great-power rivalries that erupted into violence after the assassination of an Austrian archduke by a Serbian terrorist in June 1914… Ferguson was most surprised that the people who had more to lose from a war "bond investors" didn't see it coming…" 

Similarly, before the Iraq war, Penn economist Justin Wolfers ran regressions of changes in various financial assets against changes in the TradeSports Saddam contracts. He inferred the extent to which an anticipated war was built into financial market pricing and objectively determined what the impact of the war was on markets. Also, MIT economist Michael Greenstone analyzed the Iraqi bond market to gauge whether the country would survive.


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