Update on the Financial Crisis

Ok so the Clemson game was too compelling to write about sticks. Then of course I had to watch Alabama and Georgia. So I guess with all the 'trouble' in the market I just haven't had time to write. For the record:

In the month of September I have had:

a realized gain of over 18%.

Friday we sold short expecting a down market on Monday. Of course all of our shorts went. Monday we played it long at the end of the day and well.... made a boohootale (technical term LOL) of money today. I should mention for the next segment -

today at one point we were down 2.5% on our investement. We ended the day 6.5% up.

So about a year ago my partner and I were sitting in our data center looking at our data. I think at the time we were down 2% during the day. I guy who we have loosely worked with for several years came to visit us. He asked what we were doing and we showed him our positions in the market. His reponse to us was something to the following - If you guys were trained financial analyst you would probably be better off. We politely shook our heads and shrugged our shoulders. In ten years of historical data and nine months of live trading, we have never shown a month for a loss. In the last 2 months we have only shown 5 days for a loss and two of those were lapses in execution not the application. But what do we know.

Here is what we know and this is why burning stumps in the backyard has to do with stocks.

Stocks when selected one at a time in a one day engagement are a 50/50 proposition. However, when viewed as a collective group there are times in the market that stocks will reach a coherence level. Remember the example listed below about a sphere rolling down a hill. That actually occurs in the market. Our research indicates we could play those days alone and make over 60% on our investment.

We track every stock every day. We have made the assumption that the news which is listed after the stocks react is actually an excuse that explains the action and is actually not associated with the action. Look through my writings about Race and you will see a section on non-sequentor science. Specifically it has long been thought that more babies are born on a full moon. The fact is according to a physicist from App State more babies are born during the 3rd waning gibous LOL. So news and track records of stocks are out as analysis tools. So how do we keep making money no matter the market?

We watch pigeons. We watch insects on the windows of the data center. We look at sticks scattered around stumps and cigarette smoke. No we don't throw runes and conjecture from these behaviors. We look at these behaviors and apply them to the stocks.

What we realized best about pigeons is that there is a critical number of pigeons for a micro population that will cause the entire group to move. Interestingly enough we suspect the movement has no basis other than random independence of pigeons based on a time frame. What I mean by this is 10 pigeons within 2 seconds decide to reposition themself for whatever reason. This action stimulates every pigeon in the group to fly. The flight of all the birds actually disrupts the orginal 10 and once all the pigeons set back down there is now a group that is no longer satisified with the position and thus the pigeons fly again.

As to the sticks, try to light a stump with a match. You cannot do it. Stumps are very difficult to burn. I grew up without heat in my house. As a consequence I learned at an early age how to build a fire. I am quite good at it, and I pride myself on never using more than one match to get myself warm (if you ever live on fire heat alone you will understand the importance of embers). I take great care to select the proper piece of 'fat lighter' I split it carefully with my knife ensuring there is a paper thin point at the end. I gather small sticks and build a pire before I light the fat lighter. The fat lighter lights immeadiately and within the pire I insert a larger piece of fat lighter. As the fire builds I begin to add larger sticks until I am burning logs and then in this case stumps. There is a lot of preperation to setup but once the fire is going it is stable. What I found in my preperation for the stumps is my collection of larger sticks created a mosaic of small sticks all around the stumps. It seemed no matter how much I walked around the stumps adjusting the logs and fire, I could never collect up all the little sticks.

Here is my point. 1 little stick by itself does nothing. Since you cannot select any stock with better than a 50 / 50 one day chance of winning you cannot win looking at one, two or even 10 stocks. (Much research went into studying market sectors - it don't work people) However, if LOTS of little sticks are aligned in a pire and a small volitile stick is ignited, the whole pire will catch rapidly. Once the pire is going larger sticks will begin to burn (are you getting the analogy). But once the sticks are all burnt what you have is a random collection of little sticks that surround a large smoldering mass. If the smoldering mass goes out, those little sticks will not burn. If those little sticks are aligned against the smoldering mass the fire will start again.

Tony - this is giberish and nonsense. Ok, you don't have to believe what I am saying.
You, like the guy I mentioned before can continue to think understanding P/E and Earnings and financial reports is critical to short term performance of stocks. If you do, don't bitch about the markets. You had ever right to research your investments and make a decision. If on the otherhand you agree with what I am saying then you realize this is a game of chance and little different from gambling.

Approximately 4 times a quarter (the number varies) there is a coherence of stick alignment. This month has been extremely active for that alignment. Calculating the alignment is what we do. To do it we use several factors

One factor we call Tic Tac Toe. Another factor we call Mae West. Another Factor we call 20/20 energy and finally based on individual buy counts. When all the factors come together there is no question in the direction of the market. We have yet another method for handling days when there is not convergence.

The market is a gamble nothing more nothing less. But just like gambling there is a way to count to the cards.

Tueday holds 2 of the four factors for convergence. BTW Friday held 4/4 and Monday held 4/4.