Sandbox (3)

Sometimes very active discussions about peripheral issues overwhelm a thread, so this is a permanent home for those conversations.

This is also a continuation of previous Sandbox threads (1) and (2) that have fallen victim to the dreaded page bug.

1,013 thoughts on “Sandbox (3)”

  1. Milton Friedman on inflation:

    This video has some significance for investors that is not obvious. If one can borrow money at a substantially lower (interest) rate than the inflation rate, this leads to compelling statistical arbitrage opportunities.

    My training in the financial markets stems from two people who will not be named but who I met through my blackjack circles. One of them was prominent executive in Wall Street. Blackjack players often move on to work the financial markets because the principles of statistical arbitrage that make it possible to “beat the dealer” makes it possible to “beat the market.” I mentioned the billions of dollars Ed Thorpe and his pupil Bill Gross made in the statistical arbitrage market here:

    Thorp, Shannon: Inspiration for Alternative Perspectives on the ID vs. Naturalism Debate

    To restate what I said there, Thorp, before going on to actually make huge profits in the arbitrage market actually gave details of one his plays involving warrants:

    https://www.researchgate.net/publication/275756748_Beat_the_Market_A_Scientific_Stock_Market_System

    That particular play is long obsolete, but it showcases Thorpe’s brilliance!

    Thorp was the only person to my knowledge to have his theory of blackjack publishished in the PNAS!

    Now back to Milton Friedman. One of the people who taught me investment was one of the infamous Turtles. The turtles were formed by Richard Dennis who turned $400 into hundreds of milliions.

    https://en.wikipedia.org/wiki/Richard_Dennis

    Dennis earned a bachelor’s degree in philosophy from DePaul University, then accepted a scholarship for graduate study in philosophy at Tulane University, but then changed his mind, and returned to trading. He borrowed 1,600 dollars from his family, which after spending 1,200 dollars on a seat at the MidAmerica Commodity Exchange left him 400 dollars in trading capital. In 1970, his trading increased this to 3,000 dollars, which he described as “compared to 400 … a real grubstake”, and in 1973 his capital was over 100,000. He made a profit of 500,000 trading soybeans in 1974, and by the end of that year was a millionaire, just short of twenty-six years of age.

    Dennis profited, as he bought successively new weekly and monthly highs in the trending inflationary markets of the 1970s, an era of repeated crop failures and the “Great Russian Grain Robbery” of 1972, when agents of the Soviet Union secretly purchased 30% of the U.S. wheat crop in the space of a few weeks. This set the stage for solid, sustained price trends in both directions for the next several years, a period in which “anyone with a simple trend-following method and a dart board could make a million dollars”.[1][4]

    In contrast to the vast majority of floor traders, who quickly scalped trades throughout a trading day, Dennis held positions for longer periods—riding out short-term fluctuations and holding over the intermediate term. Dennis often pyramided his positions. In the late 1970s, he bought a full membership at the more expensive Chicago Board of Trade and opened an office upstairs in order to trade more markets.

    Dennis believed that successful trading could be taught. To settle a debate on that point with William Eckhardt, a friend and fellow trader, Dennis recruited and trained 21 men and two women,[5] in two groups, one from December 1983, and the other from December 1984. Dennis trained this group, known as Turtles, for only two weeks about a simple trend-following system, trading a range of commodities, currencies, and bond markets, buying when prices increased above their recent range, and selling when they fell below their recent range. They were taught to cut position size during losing periods and to pyramid aggressively—up to a third or a half of total exposure, although only 24% of total capital would be exposed at any one time. This type of trading system will generate losses in periods when the market is rangebound, often for months at a time, and profits during large market moves.

    In January 1984, after the two-week training period was ended, Dennis gave each of the Turtles a trading account and had them trade the systems they had been taught . During this one-month trading period, they were allowed to trade a maximum of 12 contracts per market. After the trial-period ended, he gave the few of them who had successfully traded the system during the one-month trial, accounts ranging from 250,000 to 2 million of his own money to manage.

    When his experiment ended five years later, his Turtles reportedly had earned an aggregate profit of 175 million dollars.[6] The exact system taught to the Turtles by Dennis has been published in at least two books and can be back-tested to check its performance in recent years. The result of such back-test shows a drastic drop in performance after 1986, and even a flat performance from 1996 to 2009.[7] However, a number of turtles (e.g., Jerry Parker of Chesapeake Capital, Liz Cheval of EMC, Paul Rabar of Rabar Market Research, Tom Shanks of Hawksbill Capital Management, Howard Seidler of Saxon Investment Corporation, Jim DiMaria of JPD Enterprises, Inc.) began and continued careers as successful commodity trading managers, using techniques similar, but not identical, to the Turtle System.

    Dennis managed pools of capital for others in the markets for a while, but withdrew from such management in the spring of 1988 after his clients suffered heavy losses. In the Black Monday stock market crash of 1987, he reportedly lost 10 million,[8] with a total of 50 million reportedly lost in 1987–1988.[2] In 1990 his firm settled investor complaints of his failure to follow his own rules, for over 2.5 million, without admitting or denying any wrongdoing.[9] He also managed funds for some time in the mid and late 1990s, closing these operations after losses in the summer of 2000.

    Dennis has published op-ed articles in The New York Times, The Wall Street Journal, and the Chicago Tribune. He is the president of the Dennis Trading Group Inc. and the vice-chairman of C&D Commodities, a former chairman of the advisory board of the Drug Policy Alliance, a member of the Board of Directors of the Cato Institute, and on the Board of Trustees of the Reason Foundation.

    What is not told in the story is that Dennis was supported by a first rate mathematician by the name of Eckhart. The guy is brilliant!

    https://en.wikipedia.org/wiki/William_Eckhardt_(trader)

    So how does this relate to Friedman. I have a pet theory that at the root of this is basically the arbitrage of zero-interest loans on the futures exchanges that leverage the natural growth of inflation. In the futures market, one can place bets that are 20 to 100 times larger than collateral pledged at basically zero interst if you know what you’re doing!

    Richard Dennis trading system was merely a sensible risk-management strategy that took advantage of the natural market arbitrage. I’ve not actually taken the time to go back into the financial records and analyze the commodities markets to apply his trading strategy but I’m relatively sure I’m right that all he was doing was risk management of natural arbitrage opportunities provided his derivative trades didn’t explode!

    My understanding is that Dennis system doesn’t work in the currency market. Why should it unless one is privy to which currency to bet on. Neither does it seem to work quite as well as it did in Dennis’ heyday. There are other arbitrage opportunities which I will not comment on here, but Friedman gives a lot of insight helpful for financial planning and investment.

  2. https://arstechnica.com/science/2017/09/the-mysterious-voynich-manuscript-has-finally-been-decoded/

    Since its discovery in 1912, the 15th century Voynich Manuscript has been a mystery and a cult phenomenon. Full of handwriting in an unknown language or code, the book is heavily illustrated with weird pictures of alien plants, naked women, strange objects, and zodiac symbols. Now, history researcher and television writer Nicholas Gibbs appears to have cracked the code, discovering that the book is actually a guide to women’s health that’s mostly plagiarized from other guides of the era.

    Gibbs writes in the Times Literary Supplement that he was commissioned by a television network to analyze the Voynich Manuscript three years ago. Because the manuscript has been entirely digitized by Yale’s Beinecke Library, he could see tiny details in each page and pore over them at his leisure. His experience with medieval Latin and familiarity with ancient medical guides allowed him to uncover the first clues.

    After looking at the so-called code for a while, Gibbs realized he was seeing a common form of medieval Latin abbreviations, often used in medical treatises about herbs. “From the herbarium incorporated into the Voynich manuscript, a standard pattern of abbreviations and ligatures emerged from each plant entry,” he wrote. “The abbreviations correspond to the standard pattern of words used in the Herbarium Apuleius Platonicus – aq = aqua (water), dq = decoque / decoctio (decoction), con = confundo (mix), ris = radacis / radix (root), s aiij = seminis ana iij (3 grains each), etc.” So this wasn’t a code at all; it was just shorthand. The text would have been very familiar to anyone at the time who was interested in medicine.

    The mysterious medieval Voynich Manuscript is probably a women’s health manual, according to history researcher Nicholas Gibbs.
    There are countless images of bathing women in the book because medieval and ancient physicians believed baths were the cure for many ills.
    A lot of the book focuses on how to make medicines from herbs, and there are a number of pictures illustrating medicinal plants.
    Astrological images appear throughout the book too, mostly because medieval doctors thought the positions of the stars and planets could affect health.

    Thus endeth an opportunity for IDist to detect design from analysis, without a Rosetta Stone.

  3. petrushka: Thus endeth an opportunity for IDist to detect design from analysis, without a Rosetta Stone.

    I wonder how one detects an appearance of design …?

  5. I’ve asked a dozen time if any IDist could say for certain whether the manuscript is meaningful or gibberish.

    Too late now. Lots of people tried, but they couldn’t decipher it, or even be certain it wasn’t gibberish, until someone found something of known meaning to compare it to.

  6. petrushka: Too late now. Lots of people tried, but they couldn’t decipher it, or even be certain it wasn’t gibberish, until someone found something of known meaning to compare it to.

    Exactly! Straight out of Dembski.

  9. I thought people might be variously amused or outraged (I’ll settle for either!) over this piece of Trump-bashing by acerbic Scottish comedian Frankie Boyle:

    It’s impossible to imagine what it’s like to be killed in a nuclear explosion, but that doesn’t mean we shouldn’t try. I think it will probably involve being blasted over quite a large distance, and at a surprising height, while simultaneously having all your skin burnt off. I know we think of it as being an instant death, but there’s every chance that there will be a few seconds where you’ll be sailing out of your local school catchment area, at a height of about a hundred feet or so, as some sort of screaming skeleton. Maybe you will get to see your family melt before the blast picks you up, and your final memory will be of their faces devolving into cubism. Or maybe it’s more like being smashed to pieces by a wave of rubble. After all those years of driving into town to go to work, or go shopping, your city centre will finally be coming to you, moving at several thousand miles an hour, and hotter than Venus in July.

    Donald Trump got himself into yet another war of words with North Korea after they test fired a missile that went over Japan. In a war of words you do not want to be on Trump’s side: a man who speaks like he’s on shuffle and has a smaller vocabulary than an upturned calculator. It’s incredible to see the US take the moral high ground about, of all things, nuking Japan. Bear in mind that Japan is a country that specialises in wooden buildings with paper walls. It’s odd to think that as millions of people hunkered down in their paper houses during a potential nuclear attack, they were still safer than the many thousands of people in the UK living in high rise social housing.

    Trump is like a fat bee bashing around inside a greenhouse repeatedly failing to understand why the world doesn’t work as he thought it did. The chances of this unrepentant lunatic starting World War III are surely very high. Often, when I hear Trump talk even the most egregious garbage about wanting to strip people of their healthcare, or exile children, I’m actually just glad that he’s talking about the future, weighing his words like I would those of a possible suicide.

    This is a man who obsesses over winning, and uses success as his single metric for evaluating humanity, who has become the key player in a game which it is impossible to win. Who would win in an all out conflict with North Korea? My best guess is a guy in Tokyo who knows how to catch and roast rats, who owns a shopping trolley and has the entrepreneurial flair to get out into the smoking rubble of his city and begin trading his rodents on sticks for essential items. A UN expert at the European Council on Foreign Relations told the media that Trumps latest intervention on sanctions was, ‘an exceedingly silly thing to say’. We can only assume he’s had that statement prepared for the last two years and since writing it has thought about pressing the send button a couple of hundred times a day.

    Trump isn’t a military man, and salutes troops in a way that makes Benny Hill look like Stalin. I hate the way that “draft dodger’ is thrown at Trump as an insult. I mean, if you want to insult a guy who looks like God twisted some haemorrhoids into a balloon animal, why pick one of the few moments that he behaved rationally? Some take comfort in the fact that a triumvirate of US generals have essentially annexed military policy. In many ways, the concentration of power into the hands of Generals Mattis, Kelly and McMaster is the only thing worse than Trump.

    It’s impossible to have been in an institution like the US army your whole life without having internalised a worldview that believes complex international relationships are best handled through the medium of high explosives. In their own way, their worldview will be as limited as those priests who live in the catacombs under the Vatican who can see in the dark and have five hundred words for a child’s bottom. The US military view is one that sees existence as a permanent war for resources. A huge reason for elite climate change denial is that it collapses the American worldview. If you allow that climate change is real, the war for resources is two dying men in a locked room fighting over a live hand-grenade. It’s also a worldview of permanent escalation. In the aftermath of a college shooting, we always laugh at the wing-nut who calls for more guns on campus. Yet that’s actually a pretty tight metaphor for US foreign policy, one where the US is both the wing-nut, and the shooter.

    If I might make one suggestion to the North Koreans, please don’t drop bombs indiscriminately upon the USA. There are specific targets you should hit that would upset the President the most and, luckily for your bombing crews, they’ve all got his name written on them in fifty foot high letters.

  11. Boyle:

    Trump is like a fat bee bashing around inside a greenhouse repeatedly failing to understand why the world doesn’t work as he thought it did.

    That’s our president.

  12. Trump is rich and married to a beautiful woman. And is President of the United States of America. Would could possibly be jealous?

  13. Mung:

    Trump is rich and married to a beautiful woman. And is President of the United States of America. Would [sic] could possibly be jealous?

    Trump is an obviously insecure and unhappy man, Mung. Just read his tweets.

  14. Mung,

    Trump is rich and married to a beautiful woman. And is President of the United States of America. Would could [???] possibly be jealous?

    Yep, that’s it. That’s why so many people think he’s a fuckwit.

  15. Mung:
    Trump is rich and married to a beautiful woman. And is President of the United States of America.

    So was the guy before him.

  16. I thought he was an asshole on The Apprentice. The fact that he’s now President is more a reflection on the American people than on him.

  17. Egged on by Trump’s protectionist nonsense, Boeing has filed a lawsuit against Canada over Canada’s bailout of Bombardier. The argument being that this provides Bombardier with an unfair advantage.

    Finally, our Prime Minister has grown a pair and simply responded that Canada does not do business with companies that are suing it and that we will likely cancel plans to buy an interim fleet of F18 Hornets from Boeing, and exclude them from bidding on the future replacement fleet of fighter jets.

  19. Allan Miller: The fact that he’s now President is more a reflection on the American people than on him.

    Oh good. He was duly elected. Conspiracy mongers can go home now.

  22. walto,

    Mildly interesting, yes, but the guy has apparently no appreciation of the zombie argument (which operates on the distinction of apparent emotions from real emotions, and the same distinction with intellect or wisdom). He also has forgotten the history of AI. He says it’s developing faster than predicted. Maybe so in this century, finally, after a full century of failed hyperoptimism. As far as I can see, AI is still incapable of learning in the relevant sense. It’s been only the scientists working with AI who have learned somewhat along the way.

  23. Mung,

    Oh good. He was duly elected. Conspiracy mongers can go home now.

    His popular support is utterly mystifying, however the vote apportionment stacks up. But then this is a country that gets all apoplectic about a frigging flag, so, y’know.

    But funny that he was saying all along the election was rigged! He’s #1 conspiracy nut. In which context it’s also strange, now that he has access to the files, that he’s not lifting the lid on any actual conspiracies. It should be a conspiracy nut’s wet dream, to be able to tweet that what he knew all along was True Goddammit.

  24. Allan Miller: But then this is a country that gets all apoplectic about a frigging flag, so, y’know.

    Someone who didn’t know better might think it’s just about a flag.

    I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.”

  25. Mung,

    Yeah, still weird. We just don’t have that forced-patriotism over here (though a few right-wingers would love it to be otherwise). Not having grown up having to mouth some oath, I don’t understand it.

    But, if someone wishes to protest about something America does (such as the background to the NFL protests) it doesn’t mean they are pissing on soldiers’ graves. There’s a massive Thou Shalt about patriotism as applied to others.

  26. To me, the amazing thing about “the pledge” and the constant repetition of anthems at every high school girls’ volleyball game, is that it seems to require replenishing on a daily basis. If you pledge once–haven’t you pledged? If renewal is necessary, why only once per day? Wouldn’t every five minutes be safer?

    And if quietly kneeling in front of a flag during one of these zillion anthem performances is considered inappropriate (FWIW, I’m generally at the fridge during those), how much more disgusting must be waving a Confederate (i.e., treason) flag during one (with a beer in the other hand)? That’s what happens at Trump’s beloved Nascar races.

    Please don’t defend this bullshit, mung. It’s beneath you.

  27. Erik:
    walto,

    Mildly interesting, yes, but the guy has apparently no appreciation of the zombie argument (which operates on the distinction of apparent emotions from real emotions, and the same distinction with intellect or wisdom). He also has forgotten the history of AI. He says it’s developing faster than predicted. Maybe so in this century, finally, after a full century of failed hyperoptimism. As far as I can see, AI is still incapable of learning in the relevant sense. It’s been only the scientists working with AI who have learned somewhat along the way.

    Please explain the difference between apparent and real wisdom.

    (I mean when the “apparent” type makes the same or better predictions than that thought to be “real.”)

  28. We have quite an uneasy relationship with the flag here in the UK. It has been hijacked by right-wing organisations, to the extent that many find it no longer a symbol of the nation, but of a certain flavour of politics.

  30. [T]he rapid losses of nucleobases to pond seepage during wet periods, and to UV photodissociation during dry periods, mean that the synthesis of nucleotides and their polymerization into RNA occurred in just one to a few wet–dry cycles.

    Poof!

  31. As to the sources of nucleobases, early Earth’s atmosphere was likely dominated by CO2, N2, SO2, and H2O. In such a weakly reducing atmosphere, Miller–Urey-type reactions are not very efficient at producing organics. One solution is that the nucleobases were delivered by interplanetary dust particles (IDPs) and meteorites.

    Poof!

  32. Mung: Poof!

    It’s not a “poof” Mung…It’s not even remotely close to a “poof”… It’s nonsense…My kids have a lot of fun reading all the bright ideas about OOL… I don’t read them…

    Fairy-tales and Greek Mythology look more real next to them…Whoever believes in any of OOL theories should have his head checked…. lol

  33. Mung: Someone who didn’t know better might think it’s just about a flag.

    Then we should tear down all the statues of the treasonous south.

  34. J-Mac: It’s not a “poof” Mung…It’s not even remotely close to a “poof”… It’s nonsense…My kids have a lot of fun reading all the bright ideas about OOL… I don’t read them…

    Fairy-tales and Greek Mythology look more real next to them…Whoever believes in any of OOL theories should have his head checked…. lol

    Excellent point. Everyone knows that an adequate scientific explanation must be one that makes sense to children.

  37. Kantian Naturalist: J-Mac: It’s not a “poof” Mung…It’s not even remotely close to a “poof”… It’s nonsense…My kids have a lot of fun reading all the bright ideas about OOL… I don’t read them…

    Fairy-tales and Greek Mythology look more real next to them…Whoever believes in any of OOL theories should have his head checked…. lol

    [Kantian Naturalist]: Excellent point. Everyone knows that an adequate scientific explanation must be one that makes sense to children.

    That could be true…I’m more interested in the evidence though, such one piece of scientific, experimental evidence that convinced you the most that life “created” itself, for a lack of better word reg. OOL…
    You can convey the proof (s) in a simple language…I don’t think my kids are going to be offended…

    We are all ears… 😉

  38. J-Mac,

    My kids have a lot of fun reading all the bright ideas about OOL… I don’t read them…

    If your kids aren’t already laughing at you behind your back, I suspect they soon will be.

  39. keiths:
    J-Mac,

    If your kids aren’t already laughing at you behind your back, I suspect they soon will be.

    Well…They are definitely laughing at you…

  40. Mung: You and who else?

    All TrueAmericans, if kneeling football players is too much disrespect to bear those who actually waged war against the Flag should not be commemorated.

  41. For some reason, when people get all wobbly-lipped about disrespect to national symbols, the term ‘snowflake’ forms unbidden in my mind.

  43. newton: All TrueAmericans

    True Americans doesn’t go around destroying public property and committing crimes. True Americans bring about change through lawful means.

    Imported gangs of foreigners who are nothing more than thugs and rabble-rousers should be repelled by the state militia.

  44. Mung: True Americans doesn’t go around destroying public property and committing crimes. True Americans bring about change through lawful means.

    Then you agree, statues honoring such individuals, seditious confederates, in the public sphere are inappropriate and unpatriotic.

    Imported gangs of foreigners who are nothing more than thugs and rabble-rousers should be repelled by the state militia.

    Personally don’t really care if it is a foreigner or American that shoots me or if it is the federal or state that defend my rights.

  45. Mung,

    True Americans doesn’t go around destroying public property and committing crimes. True Americans bring about change through lawful means.

    OK, I’m no expert on American history, but …

  46. Mung,

    The snowflake is the national symbol of Hell. Be careful about disrespecting it.

    I have a similar attitude to symbols of made-up places as to real ones.

  47. newton: Then you agree, statues honoring such individuals, seditious confederates, in the public sphere are inappropriate and unpatriotic.

    Terrorist or freedom fighter eh? I don’t think it’s up to outsiders. What ever happened to using the political process?

  48. Mung:What ever happened to using the political process?

    I think it’s become unaffordable except for the likes of Trump, Mercer and the Koch brothers.

  49. Obama and the democrats should have concentrated on the affordable political process plan. lol.

  50. J-Mac: My kids have a lot of fun reading all the bright ideas about OOL… I don’t read them…

    Yet you feel qualified to comment on it. Knowledge through ignorance, thy name is J-Mac.

Comments are closed.