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QOTD

Insisting on perfect safety is for people who don’t have the balls to live in the real world.
Mary Shafer -NASA Dryden Flight Research Center, Edwards, CA SR-71 Flying Qualities Lead Engineer

I stumbled across this quote and thought it was the most perfect description of what is required for trading. If you dont have the nerve to accept that trading is an imperfect, dirty and chaotic endevour then it is not for you. If you want the full context of this quote you can find it here. It sounds as if Shafer had a fascinating career as an aerospace engineer during NASA’s heyday.

PS: If you dont know what an extraordinary piece of engineering an SR-71 is go here

The secret to happiness? Stop trying to be happy.

A few minutes after Neil Pasricha learned his wife Leslie was expecting their first child, he got an idea for a book. They were sitting on a plane returning to Canada from a trip to Asia when a flight attendant handed them a plastic-wrapped muffin with a scrap of paper that read, “Congratulations!” Leslie had been sick toward the end of their vacation, and on a hunch she had picked up a pregnancy test during a layover—and taken it mid-flight. Pasricha’s first thought upon hearing the news: Tell someone! Hence the muffin.

His second thought would require more time and effort to materialize. Pasricha decided to write down everything he knew and was learning about how to be happy: “I couldn’t think of anything I wanted more for my child.” Almost two years later, Pasricha has finished a 275-page book called The Happiness Equation: Want Nothing + Do Anything = Have Everything. Whatever edits the copy has been through, the dedication has remained the same: “To my baby, I wanted you to have this in case I didn’t get a chance to tell you, love Dad.”

Just about every parent can relate to Pasricha’s wish for his child. His mother and father no doubt wanted the same for him. But Pasricha’s struggle to articulate what happiness is and how to achieve it has a particular resonance. This is, after all, coming from the guy who during the past decade, while working as a corporate leadership executive at Wal-Mart, started a blog, 1000AwesomeThings.com, which turned into the bestselling The Book of Awesome, an ode to everyday pleasures, which was spun off into three more Awesome books (plus a journal and five calendars), a popular TED talk and hundreds of other speaking engagements around the world.

Stratospheric professional success aside, Pasricha, 36, has much to be happy about: he owns a home in Toronto, has a loving wife, a young son and now a second baby on the way. Despite all of these accomplishments, and even the wisdom Pasricha imparts in his books, finding happiness has turned out to be as much a maze as a marathon for him. “I don’t feel like I’ve achieved any next-level enlightenment or nirvana,” he says. “I have intense daily, weekly and monthly net struggles.” Especially around how to juggle work and family time. “Dropping my son off [at daycare] and picking him up is really important to me,” says Pasricha, as an example of one thing that’s come under threat. “Seventy-hour weeks in an office [mean] no more breakfasts with my son.” So he recently did what many people who are similarly stretched often fantasize about. Pasricha quit his job at Wal-Mart with one plan in mind: “I’m actually right now in the throes of dedicating myself more fully to happiness.”

More here – Macleans

Ok…..Im Confused

This popped up on my feed this morning. Long story made short. All analysts say Spotless is a bust, one analyst says no you are all dickheads – its actually worth $1.15. Spotless halves and then through a fluke gets a takeover bid lifting prices to $1.05. Analyst who said it was worth $1.15 is hailed a hero  for recommending a stock that halved in value post the recommendation and then was made a little bit better than a total disaster by an out of the blue below recommended price take over offer.

WTF ?

Spotless

 

The Astonishing Vision and Focus of Namibia’s Nomads

Nestled in a grassy valley of north-western Namibia, Opuwo may seem like a crumbling relic of colonial history. With a population of just 12,000, the town is so small that it would take less than a minute to drive from the road sign on one side of town to the shanty villages on other. Along the way, you would see a hotchpotch collection of administrative offices, a couple of schools, a hospital and a handful of supermarkets and petrol stations.

For many of the people living in the surrounding valley, however, this small town is also the first taste of modern life. The capital of the Kunene region, Opuwo lies in the heartland of the Himba people, a semi-nomadic people who spend their days herding cattle. Long after many of the world’s other indigenous populations had begun to migrate to cities, the Himba had mostly avoided contact with modern culture, quietly continuing their traditional life. But that is slowly changing, with younger generations feeling the draw of Opuwo, where they will encounter cars, brick buildings, and writing for the first time.

More here – BBC – Future

Playing Versus Doing

A mate of mine sent me the clip below. I am an unabashed fan of combat sports. I accept that they are violent in tone and to the outsider appear brutal with potentially devastating long term consequences for the participants. Anyone who has ever been hit in the head can attest to how awful it is.

The reason I like such sports is that you do not play them – you may practice them but you can never play at them. The consequences for doing so are serious. Unfortunately, too many people take the attitude that you can play at trading and in fact this is the motivation of most. The lives of the majority of traders are spent playing at the fringes of trading, they become experts in various bits of software and spend countless hours on various forums talking up their game without actually doing anything.  I accept that perceived as being in the action is important to most and the research around this topic confirms this. Being seen as a player is more important than actually making money.

I understand that people approach various endevours with differing motivations and desires. However, some arenas dont really allow for these differences simply on the basis of the consequences that follow. To my way of thinking the market assumes that everyone is serious in what they are doing because it takes money equally from everybody – it just takes more than money from those who are not serious.

Does News Move Markets….Sort Of…Maybe…Well No Actually

I was chatting the other day with someone who was having trouble with their trading system. Their approach was based on trading news events. Such a plan is predicated on the notion that news events move markets in certain ways and whilst this movement might not be wholly predictable it will at least generate some form of activity. Such a trading system has a single giant assumption – that news and news related events move price. If this maxim does not hold up then the system is a bust.

It has been sometime since I looked at this question and I had a vague recollection of research done in the 1980’s that looked at this question and found that news as a source of trading ideas was a bust. So armed with the dimmest of memories I went looking through my archive and found what I was looking for. David Cutler, James Poterba and Lawrence Summers produced a working paper titled What Moves Stock Prices for the Department of Economics at MIT in 1988. This paper looked at the 50 largest single day moves in the US market since World War Two – I have included the events from the original monograph below.

Event 3

If you take a cursory look at the events above you could argue that news events do move markets. However, there is a glitch in that some movements defy explanation – there is simply no event that can be seen as a casual trigger for a market move. Cutler et al stated that news events could really only be useful as an agent for movement in about half of all cases of the variance in stock price movement and in my world half is a fluke.

The interesting side issue with the work of Cutler et al is that it puts another hole in the Efficient Market Hypothesis because stock price movements according to the EMH reflect the assessment of investors to new information. If markets move without the the addition of new information to the system then something else is happening that is not explained by the EMH. And it seems in the case of broad brush analysis as performed by Cutler that prices move without any significant input.

This initial work has been expanded upon by Ray Fair at Yale University who looked at outsized movements in the S&P500 futures contract. This new work had much greater granularity to it in that it looked at five minute data, something that would have been difficult in the original work by Cutler and crew simply because the available technology would not have allowed it. Fair compared what he defined as big movements with news items emanating from the Dow Jones News Service, Associated Press and New York Times. The upshot of this investigation seemed to be that the majority of large events have no news based driver. They were only able to attribute a news item to 69 of the 1159 big moves that were examined. Recent  flash crashes seem to support this notion of significant market moves  occurring without a notional driver.

So we come back to the original assumption that news events drive markets and that these moves offer opportunities that can be traded. It would seem on the evidence available that this notion is false.

I Like The Finns

Apparently they line up in such a manner that the distance between them minimises the chances of interacting with a stranger…..my kind of people.

Finns

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