The Education of A Speculator

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The Book of the Week is “The Education of A Speculator” by Victor Niederhoffer, published in 1997.

Born in 1943 in Brooklyn in New York City, the author sorted “market advisers and investment newsletter writers” into eight different categories, providing a brief description of their behaviors or personality traits. He classified himself as “The Other World Person” because he ignored the overpaid noisemakers and distractions of conventional media outlets that purported to convey information on which securities to buy, sell, or avoid.

The author’s two data sources for his commodities, currency trading and investing ideas consisted of the National Enquirer and his research results from testing all kinds of variables in statistics-calculations of past securities-market data using software. No other sources.

The mid-1990’s saw great advances in statistics software modeling that could process scads and scads of data; hence, market players could erroneously use past performance of investment vehicles faster than ever before for predictive purposes to help themselves and others lose their money faster than ever before. And those advances might have played a part in the scandals and financial crashes that have occurred with alarmingly increasing frequency in the last thirty years. Big Tech’s and Big Media’s incestuous oligopolies (fraught with political donations) just keep getting more hegemonic, so that power and money keep feeding on themselves ad infinitum. Globalization is yet another wrench in the works.

At the book’s writing, global trade had been maturing for decades, but capitalism was still in its infancy in many territories of the world; particularly in ones that were becoming politically democratic again, or for the first time in their histories. Many European countries were in the process of adopting cooperation rather than competition in their financial and economic dealings. A large proportion of them even voted to use one currency among them. The United States kept to itself, but more and more people around the world were starting to trade or invest in foreign securities, currencies and governmental financial entities, so chain reactions occurred more and more.

The Federal Reserve (aka Fed) has always been a major influence on America’s financial markets. The author contended that the Fed was just as clueless as the rest of the country about what effects its making of rate-adjustments would have on the nation’s economy. It is currently just as clueless. But its announcements are made with such confidence and arrogance, that a large number of their listeners are brainwashed into believing they are receiving valuable information.

The incumbents– known names pre-Internet–became the most influential voices in the financial sphere. The wiliest ones use propaganda techniques to paper over their wrong predictions. They never apologize for the losses stemming from their pronouncements. The walls of the author’s business office were lined with portraits of ones who had disastrous losses.

To be fair, the author himself told various anecdotes of his own failures. In 1992, he bought IBM stock for his own kids. That was an embarrassing mistake. He learned to cut his losses at a certain level of the total money he reinvested. And, he didn’t let his greed get out of control when he was winning.

The author was a champion squash player. One similarity between squash and speculating is externalities–opponents’ actions determine players’ actions in the game. So, for instance, in ten-pin bowling, there are no externalities. In squash, there are. In one college finals-match, the author moved his body in a way that tricked his opponent into thinking the ball was going to go in a certain direction, but it went the opposite way. Traders and investors play similar tricks in their communications in the financial markets. Conditions change rapidly so even the market propagandists’ winning streaks don’t last long.

The reason is:

First, independent thinkers make observations or find obscure data that works in making them money. Then software detects their trading tricks. So word gets around, and everyone else jumps on the bandwagon so that the advantage is lost.

Human beings want so badly— to believe they can predict the future, and love to fantasize about getting rich quick– that they tend to look for patterns and order where none exist. The author did provide one vast generalization that might be valuable, though. His statistical analysis between the years 1870 and 1995 inclusive showed that years ending in the digit 5 were good years, and those ending in 7 were bad, for the American stock markets. He didn’t speculate as to why.

However, politics is one major mover of markets, and the collective mood of the United States specifically, might be a bit more upbeat in years when political uncertainty is at a minimum. Presidents and other politicians begin or continue their terms during years ending in 5. The public might be unclear about their future policy directions, or weary of them by the years that end in 7.

Anyway, read the book to learn a boatload more about the author’s philosophy, his trials, tribulations and triumphs in the markets, his research results and comparisons between financial markets and: ecology, games and sports.

Burn Rate

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The Book of the Week is “Burn Rate, Launching A Startup and Losing My Mind” by Andy Dunn, published in 2022. Born in February 1979 in the United States, the author won the lottery in that he had family and friends who knew him well enough to recognize that, given his personality, his behavior was anomalous. He was doubly lucky that not only did he get mental-health treatment before he ended up in jail (well, at least on one occasion) or in the cemetery, but also, he could (with assistance from others) afford it.

“… for many, even a ‘chill’ drug like marijuana can stimulate a manic episode.” The author got to college still unaware that bipolar disorder (aka manic-depressive illness) ran in his family; his grandmother had had it. People who actually have the condition suffer under a Damocles sword their whole lives, as their mental state goes through unpredictable cycles, even with medication. Of course, stress exacerbates the highs and lows. The medication has side effects that are meant to dull the emotions, so bipolar patients don’t experience and enjoy life as much as people whose brain chemicals are more stable than theirs.

According to the book (which appeared to be credible although it lacked Notes, Sources, References, or Bibliography and an index), while in college, the author was ingesting alcohol and controlled substances such as ecstasy, magic mushrooms and marijuana on a daily basis, and taking the (radical) acne medication Accutane. Somehow, he graduated anyway, and got his MBA at Stanford. He explained that the professors there educated students in entrepreneurship, if they wanted to go that route. The author did.

After years of interesting ups and downs, in 2016, the author– a lifelong fan of the Chicago Cubs (who had last been World Series winners in 1908)– was afforded the opportunity to see game 7 of the World Series in Cleveland. But first, he had to rush to JFK airport from the streets in the East 50’s in Manhattan, beginning an hour before his plane took off, to get there. His cab driver did 90 MPH. Sympathetic people at the airport made way for him when they heard about his situation.

Read the book to learn of the author’s other trials and tribulations, triumphs and defeats. Speaking of defeats…

This is the song Hillary Clinton is singing now.

IN POST-CLINTON TIME

sung to the tune of “Sunny Afternoon” (Official Audio) with apologies to the Kinks.

My opponents BEAT me the last two times.
Deplorables and BERnie were unkind.
I SOREly miss the Situation Room.
And though I CAN-not be in charge,
I’m not locked up, I’m still at-large.
All I WANT’S in-the Situation Room.

Save me, save me, save me
from bad publicity.
I’ve got lots of enemies.
It’s a VAST right-wing conspiracy.

And I love to hobnob with elites,
brag about my political feats.
I SOREly miss the Situation Room,
in post-Clinton time,
in post-Clinton time,
in post-Clinton time.

Donald Trump’s ruined my rep.
He’s in his safehouse doing ’24 prep,
spewing the usUAL blather and cruelty.
Now I’m here online,
doing the grass-roots, make-work grind.
I SOREly miss the Situation Room.

Help me, help me, help me
revive my ca-reer.
Well, give my Party money
to get me out of here.

‘Cause I love to hobnob with elites,
brag about my political feats.
I sorely miss the Situation Room,
in post-Clinton time,
in post-Clinton time,
in post-Clinton time.

Ah, save me, save me, save me
from bad publicity.
I’ve got lots of enemies.
It’s a VAST right-wing conspiracy.

And I love to hobnob with elites,
brag about my political feats.
I SOREly miss the Situation Room,
in post-Clinton time,
in post-Clinton time,
in post-Clinton time,
in post-Clinton time,
in post-Clinton time.

Extreme – BONUS POST

The Bonus Book of the Week is “Extreme, My Autobiography” by Sharon Osbourne with Penelope Dening, published in 2005.

Born in October 1952 in the United Kingdom, Osbourne grew up in a dysfunctional family. In this volume, she revealed how her father– Don Arden– a music-industry executive got away with committing an excessive number of financial crimes. Basically, he never signed legally-binding contracts, but had his daughter and other members of his entourage sign them, so when it hit the fan, they were on the hook, not him. His contacts in high places did his bidding until his bullying and contentiousness wore thin and they abandoned him.

Arden bribed a U.S. senator to help Osbourne acquire a green card. She thus became a permanent resident of America and got a Social Security number so that he could commit tax evasion. Of course, he also hid his assets in offshore bank accounts, which the United States cannot outlaw. Her formal education ended when she quit high school in her sophomore year. So her limitations led her to join the family business. In her early twenties, she was so flattered that her father trusted her with important documents that she happily signed everything put in front of her.

Osbourne met her future husband Ozzy in the late 1970’s. He was the lead singer of the rock band, Black Sabbath. “The music business in those days was a boys’ club, fueled by cocaine and sexual favors. These were the days of payola and Mafia involvement…” But Osbourne would sooner get violent with the boys than give in to their advances or threats.

Read the book to learn many more details about the lives of Osbourne and her family, trials, tribulations and triumphs.

Open Skies – BONUS POST

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The Bonus Book of the Week is “Open Skies, My Life as Afghanistan’s First Female Pilot” by Niloofar Rahmani with Adam Sikes, published in 2021.

Born in December 1991 in Afghanistan, the author deserves major bragging rights. For, she possessed the courage to serve as a liberated female role model (given her culture) by risking her own life and her family members’ lives in serving her beloved homeland. She joined the air force in December 2010. According to the book (which appeared to be credible although it lacked Notes, Sources, References, or Bibliography and an index) this was at a time when the Americans and NATO were running the show.

The Taliban and other devout Muslims were less than thrilled that she was the first Afghan female ever to learn to fly a fixed-wing aircraft. Pursuant to the Koran, a female’s priorities were: submissive girlhood, wifehood, motherhood, and womanhood (and usually, the first three were forced on females simultaneously), and taking care of a household; only then, might she work outside the home if her oldest living male relative allowed her to.

The author spent her early childhood in a refugee camp in Pakistan. Anomalously, but fortunately for her, both of her parents believed in educating her and her siblings (mostly sisters), and encouraging them to pursue the career of their choice. The family eventually moved to Kabul. Unsurprisingly, the author’s career choice provoked angry reactions from the male-dominated air force and males in her country. The most fanatical ones began to smear, spy on, and threaten her and her family.

Nevertheless, the author’s parents martyred themselves in so many ways for their children’s futures. Her father continued to encourage the author to keep flying, even when her family was under siege and suffering many hardships due to her focusing on her dream job.

A barbaric incident that occurred in March 2015 was just one indicator that in Afghanistan, the tide was turning toward the dark side yet again: a huge flash-mob of outraged, radical Muslim men tortured and killed a devout Muslim woman wrongly accused of burning the Koran.

The victim was set upon because a mullah (a credible, influential religious leader) was her accuser. Just a few of the vicious untruths spread about her were that she was a prostitute, a blasphemer of Islam, and was an agitator sent by the Americans (perceived as the evil occupiers). The author herself was subjected to roughly equivalent, ugly utterances.

Read the book to learn how the author cheated death in this wordy, redundant yet suspenseful volume.

Maverick

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The Book of the Week is “Maverick, The Personal War of A Vietnam Cobra Pilot” by Dennis J. Marvicsin and Jerold A. Greenfield, published in 1990. Marvicsin nicknamed himself “Maverick.”

Born in 1940 in Mansfield in Ohio, Maverick had a burning desire to become a helicopter pilot. He joined the Navy right out of high school, but after a year and a half, switched to the Army in order to fulfill his dream. In September 1964, he began boot camp in Fort Wolters in Texas, and finished advanced training in Fort Rucker in Alabama.

According to the book (which appeared to be credible although it lacked Notes, Sources, References, or Bibliography and an index), in 1965, Maverick began his first Vietnam-War tour in Vinh Long. The American military base there had comfortable living conditions, and creature comforts such as alcohol and cigarettes. At his periodic reassignments to other locations, he encountered primitive accommodations. He began by flying re-supply missions to ARVN troops and American advisers in the Cam Ranh Bay area before a full military installation was built there.

The American military killed not only the enemy, but also dangerous animals such as tigers, and elephants because they were useful beasts of burden to the enemy. In autumn 1965, when he began flying a Huey helicopter that had the ability to return fire– for the purpose of rescuing the war-wounded– he took to the work like a fish to water. When they answered a typical call for help, he and the three other adrenaline-junkies in his crew rushed to “… the middle of the jungle, miles from the base, but someone had set off a red smoke grenade which meant enemy fire.” A crashed or shot-down chopper might be stuck in the trees with fire all around, and the pilot pinned in the wreckage’s cockpit.

On more than one mission, Maverick got to host a highly-decorated military bigwig. This, in an allegedly aerodynamically improved aircraft (but it had yet to be perfected and was shot down), such as the “…brand new Charlie-Model Huey with the fancy 540 rotor system, and now it’s fancy garbage and it’s on fire…”

Maverick began his second tour in Vietnam in Tay Ninh, a mountainous region where the Viet Cong had made tunnels underground. The Huey helicopter had been replaced by the Cobra, which was easier to maneuver but had its own flaws. Regardless, the traumas of war had caused Maverick to become twice shy about getting emotionally close to his fellow soldiers. He said, “First tour, you make friends and they get blown up or shot down or simply never come back. Second tour, you make no friends.” One of numerous other emotionally troubling aspects of Maverick’s participation in the war was not knowing how long it would be, if ever, before he was released when he was taken as a Prisoner of War.

Read the book to learn of many more episodes of Maverick’s personal experiences in combat, in captivity, and in collecting medals and glory.