Archives of “new york times” tag

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Taleb's aphorisms

  
  Education
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Just in time for holiday sales Nassim Taleb is back with what The New York Times dubs a “happily provocative new book of aphorisms,” The Bed of Procrustes. If you are among the unwashed who don’t understand the reference, “the Procrustes of Greek mythology was the cruel and ill-advised fool who stretched or shortened people to make them fit his inflexible bed.” It’s easy to understand why Taleb invoked this fool: “we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas, reductive categories, specific vocabularies, and prepackaged narratives, which, on the occasion, has explosive consequences.”

The book is short and inexpensive. I will undoubtedly succumb and buy it even though it evokes mixed memories of exchanged aphoristic barbs with a titan in his (very different) field. Academic cleverness can easily turn ugly. But then why should the battles for intellectual capital be any different from those for other forms of capital?

The Power of Habit: Why We Do The Things We Do

  
  Education
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The notion that success is a simple matter of following routine and sticking to good habits isn’t exactly new. But in his just-released book, The Power of Habit: Why We Do What We Do in Life and Business, Charles Duhigg explains why. An investigative reporter at the New York Times who also has an MBA, Duhigg taps into insights from biology, sports, consumer products marketing and manufacturing.

How do people kick smoking? How did Procter & Gamble turn Febreze into an also-ran into a big seller? How did Tony Dungy turn his National Football League defenses into champions? How did Paul O’Neill (the executive, not the baseball player) succeed at Alcoa? It all comes down to understanding the power of habits, Duhigg argues. “In the last ten years, our understanding of how habits work has been totally transformed, and companies take advantage of that,” he said.

People, like animals studied by scientists in laboratories, tend to see a feedback loop in their behavior. They are cued or prompted to act in a certain way, respond with a routine behavior, and then receive a reward for the behavior. “If you identify the cues and rewards, you can change the routine,” Duhigg writes. (more…)

The agony of waiting

  
Economy, Education
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Alex Stone in the New York Times recently had an interesting article up on the psychology of waiting in line. He notes how Americans spend 37 billion hours a year waiting in line and how it exacts a psychological toll on all of us. Traders are in a very real sense waiting in line for trades that meet their criteria for valid setups. It should not be surprising then that traders have a tendency to jump the gun looking for things to do to relieve the stress of waiting for viable trades. Stone writes why it is we as consumers are vulnerable to distractions from our waits:

The drudgery of unoccupied time also accounts in large measure for the popularity of impulse-buy items, which earn supermarkets about $5.5 billion annually. The tabloids and packs of gum offer relief from the agony of waiting.
Our expectations further affect how we feel about lines. Uncertainty magnifies the stress of waiting, while feedback in the form of expected wait times and explanations for delays improves the tenor of the experience.

Unfortunately traders don’t know what the “expected wait times” will be for their next trade. The ongoing challenge for traders is to avoid impulsive actions that don’t fit with established trading checklists. Brett Steenbarger in a vintage post from TraderFeed walks through an example of how he was jumping ahead of certain trades and paying the price for them. He was able to turn things around but he notes how even experienced traders are still a work in progress.

It is a bit of cliche to say that traders need have patience and discipline. A better understanding of the psychology of waiting can help keep traders a bit more grounded while they wait for better opportunities down the road. As for your wait at the DMV that is a whole other issue entirely.

The Probabilities Win Every Time

  
  Education
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Columnist David Brooks wrote an interesting article in the New York Times on how to effectively use probabilities:

In 2006, Philip E. Tetlock published a landmark book called “Expert Political Judgment.” While his findings obviously don’t apply to me, Tetlock demonstrated that pundits and experts are terrible at making predictions.

But Tetlock is also interested in how people can get better at making forecasts. His subsequent work helped prompt people at one of the government’s most creative agencies, the Intelligence Advanced Research Projects Agency, to hold a forecasting tournament to see if competition could spur better predictions.

In the fall of 2011, the agency asked a series of short-term questions about foreign affairs, such as whether certain countries will leave the euro, whether North Korea will re-enter arms talks, or whether Vladimir Putin and Dmitri Medvedev would switch jobs. They hired a consulting firm to run an experimental control group against which the competitors could be benchmarked. (more…)

Japanese Public Debt 2X GDP With Deflation Threat

  
Analysis, Economy, Education
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In summary, Japan has “$9.5 Trillion in public debt”, 2x GDP (192% 2009 estimate, #2 behind Zimbabwe at 3x from CIA.gov) with threats of deflation and falling wages. This is after 2 lost deflationary decades and a loss of 75% on the NIKKEI index since 1990 (39,000 to 9,700 today, 1st chart below). The good news is, most of Japan’s public debt is held domestically in Japanese Yen. Some analysts believe US Treasuries could end up like Japanese Government Bonds (JGBs) and catch a bid even with hardcore reflationary policies (see David Rosenberg’s debate on March, 2010). What about the S&P, would it follow the NIKKEI’s footsteps in a deflationary environment?  Or is the US economic machine too strong for that to happen.A 75% drop in the S&P from the October 2007 peak would be around 400, which is David Tice’s S&P target. What are the odds. Paul Krugman had an op-ed in the New York Times today titled The Third Depression. Hopefully Gold and the S&P move in tandem from here if more $ printing is coming. The 10-Year US Treasury Note is trading at $122 resistance in an ascending triangle (Chart 2) and I’m going to see what happens with the $USD at its 50 day moving average tomorrow.


If Trading is War, Is All Fair?

  
  Education
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An article in today’s New York Times focuses on high-frequency traders and the efforts that they are making to avoid regulations that may limit their growing power in the markets.

According to the article, “Critics say traders with access to the fastest machines win at the expense of ordinary investors by seizing on the best deals and turning fast profits before other traders.”

Many attribute last May’s “Flash Crash” to high-frequency trading, although according the article, “Regulators did not blame high-frequency traders for causing the sell-off.”

High-frequency trading firms defend that the technology they utilize to build their business is part of “stock-exchange modernization” and helping to create “a level playing field.”

How do you feel about high-frequency trading? Has its rise affected your own trading? How have you had to change the way you trade to remain competitive?

As one of the comments on the article suggested, would it be foolish to think an average trader can beat an automatic trading professional?

Lifestyle & Improvement

  
Education, LINKS
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  • How to add an hour to your day (Harvard Business Review)

  • The Bucket List lie (Jonathan Fields)

  • Why all happiness and success fades away (Peter Shallard)

  • Why what you believe gets you nowhere (Peter Shallard)

  • How to really shake things up (James Altucher)

  • There are real-life advantages to being a strategic deceiver (New York Times)

  • Don’t let email run your life (CNN)

  • Great idea – change your smoke alarm batteries with daylight savings time (Lifehacker)

  • Yet another reason to get off your duff and exercise (BBC)

  • We make risk/reward decisions every day, all day long (Tech Crunch)

  • Tips from Thomas Edison (Open)

  • It’s looks like it is a really good thing I feel happy while trading (Forbes)

  • Natural approaches to combating the winter blues (Dr. John Briffa)

Links for you

  
Education, LINKS
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linksforu

  • Goodbye, yellow brick road! (Doug Kass)

  • Could we have less talk about gloom and about doom in 2010? (Money)

     Most people stink at market timing. Investors pull money out of stock funds (MarketWatch)

  • The Housing Crisis and Wall Street Shame (Robert Reich)

  • Are we coming out of recession? (Market Talk)

  • Get ready for half a recovery (New York Times)


  • One in six companies on the Standard & Poor’s 500 index may raise its next dividend payment (Bloomberg)

    • I’m always suspicious about the market [but that doesn’t mean I don’t find opportunities] (Jutia)

  • Dangers of an overheated China (New York Times)

  • Brazil GDP to Grow 6.1% in 2010 (Bloomberg)

  • 15 european banks now have assets larger than their domestic economies (Fund My Mutual Fund)

  • Correlation between the world’s tallest buildings and economic downturns (AlphaDinar)

  • Need a reminder? (Memorari)

  • RIP Mark Pittman (Bloomberg)

  • Life of a blogger (Slope Of Hope)

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