Parisian Family Office, CEO. Began Wall Street, 1982. Founded investment firm, CHIPPEWA PARTNERS, Native American Advisors. Active Trader. White Earth Chippewa Tribal member. Was NYSE/FINRA arb. Conservative, raised on Great Plains reservations. Pureblood, clot-shot free. In a world elevated on a dopamine binge, this is his take! Written from MT Ghost Ranch on the Yellowstone River, TN farm Pamelot or San Jose del Cabo, Mexico, CASA TULE'. Always been, will always be, an optimist.
Friday, July 29, 2005
Wednesday, July 27, 2005
7/26/05 What We Can Learn from Shells, by Victor Niederhoffer:
Shells and mollusks have been around for 500 million years, and they are the second most numerous family of all in nature. The shell provides the protection and stability for relatively slow moving species and how it evolved and its function would seem to provide some guidelines for survival and success stories in markets and life.
The book Shells by Cheryl Claasen is very helpful in understanding the uses and abuses of shell research. Her passage on predation as a contest between prey and predator among shells makes you particularly skittish about the direct approach to investments. Shells change their colors, their size, their opening thickness and space, their curvature, their carried baggage, their depth, their shape and their speed, all to avoid being swallowed, enveloped, suffocated, trapped, drilled, thrown to the ground (the otter is a master at this), cut open, hammered, crushed, speared, poisoned, parasitized, nibbled or "killed by forced entry from non-human predators." They use all their senses to preclude dying as a meal for a day by escape, and over evolutionary time by developing the ideal mechanisms for such defense, a defense that Claussen emphasizes again and again is mainly against their natural predators such as birds and fish rather than humans.
The shell is mainly for protection, but also to prevent dehydration and the mollusks manipulate the shells by "strength, resistance to dissolution, thickness, projections, colorations, narrow apertures, hinge teeth and crenulations on margins and repair, often affixing stones, shells and other detritus to provide camouflage". Particularly clever are the many mollusks that arrange when ingested to close up tightly, thereafter emerging healthy and unscathed through the digestive tract of their predator weeks later.
I am always amazed, after reading something about how a slow moving species like the mollusk or a moth is able to use all types of deception, that anyone could believe that markets and the human actors within it don't make it equally hard to survive with a simple strategy of eating them "raw, squawking and fully feathered" as the great MFM Osborne liked to say.
The two main kinds of structures for animals are the skeleton and the shell. The skeleton hangs the organs around an internal framework, and the shell puts them in a box. The skeleton is much more adaptable, but the shell provides rigidity and protection, a nice alternative. The most intelligent mollusks, the cephalopods, like the octopus and the squid, have given up their shells so that they can be more mobile and flexible. The companies that try to protect themselves with a rigid structure through regulations that preclude competition, or heavy non-reproducible fixed costs, like the mining companies, are like the shells. They can maintain it for so long, and certainly everything they do to create a fixed structure for protection is to be applauded. But I wonder if the companies that are more skeletal, such as eBay and Google, can maintain flexibility as well as providing a fixed barrier to entry and dehydration? May I mention MERC in this context, as having the best of both worlds
As an additional note, the boys in the office are generally averse to a wager because we don't like to gamble, but when we read that you can drop an abalone shell from a second floor window and it won't break, the gloves came off and many nickels changed hands. We dropped it and the oak floor chipped but not the abalone. The abalone has amazing strength, 3000 times stronger than the minerals it's made of. The secret is that it has a crystal formation called aragonite that lays down calcium carbonate between sheets of protein in a regular pattern. Another amazing example of how nature has a million designs that can teach us about engineering. They can also teach us about how to make a stock strong, and I hypothesize that the layering of ups and down in a path, with for example a five point move consisting of 25 points up and 20 points down, is much more resilient than a straight up 5 points.
Tuesday, July 26, 2005
Friday, July 22, 2005
Tuesday, July 19, 2005
Friday, July 15, 2005
I stopped by to see Angela Lam, an importer of fine Chinese antiques. She shows me a pair of 100,000-year-old mammoth tusks carved with a flourish of fierce dogs. We chat about our lives. I ask if she has children. Yes, she says. Her 17-year-old daughter has already been accepted at Columbia Medical School. "You must be so proud," I said, gazing at the passion in the mother's eyes. "She must be really smart." "Yes, very smart. She studies all the time. The only time she watches TV is after an exam. Sometimes I get up at night and her light is still on." "I'm sure you had everything to do with it." "No, she wants to study. She told me, 'I want to give you money, Mom.'"
Thursday, July 14, 2005
This weeks news read like a Bill Clinton/Jesse Jackson book on morality. This pathetic Morgan Stanley debacle in giving some untested "superstar" 32 million bucks for 100 days of work sounded like the kind of job i just may be interested in. Or Bear Stearns ponying up a couple HUNDRED million without admitting or denying any wrongdoing. Geez, i thought shareholders were finished getting banged.
Just ask Bernie Ebbers about banging shareholders. If he had been innocent he would have taken the stand and cried to the heavens when the verdict was announced. Bernie of WorldComm conned the world.
The Wall Street Journal Editorial Board had it right on Karl Rove.
And you think your financial consultant/stockbroker/salesman is more interested in your outcome than in his/her income?
The beat goes on.
Wednesday, July 13, 2005
Tuesday, July 12, 2005
The S&P 500 has posted a similar move - a steep, sustained rally - without yet notching that decisive breakout. At Monday's close, it held just 10 points shy of four-year highs.
And ironically, these recent stirrings have occurred exactly when you wouldn't expect them: immediately after the most significant adverse catalyst this year, the London subway explosion." I arrived back in Atlanta last night after a day of flight delays in trying to get out of Sioux Falls, SD back to Atlanta via Minneapolis. The "Dennis the Menace" hurricane stub had upset flight operations and Monday flying the worst so I was behind the curve when I got on the desk early this morning and tried to get a handle on the big up-move in the market the past few sessions.
Thursday, July 07, 2005
Wednesday, July 06, 2005
Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death.
It doesnt' matter whether you are a lion or a gazelle.
When the sun comes up, running may be the best course of action.
There is a sense of hopelessness in Europe that one sees manifested by the sense of febrile unrest in such things as declining populations, rising unemployment, costs far and above the value of their currencies in dollars or hours worked for goods, rising crime, incredible congestion on roads even with the congestion charges, a move for national identity cards to preclude people emigrating freely or making too much noise about paying taxes above 100 per cent, and growth rates well below inflation. How could a person choose to live there or start a business there unless there were draconian restrictions enforced by the kind of world state apparatus that the sage and the palindrome would prefer?
Walter had his ways, a peculiar sort who was hustled out of Austria in the middle of the night by the family nanny to beat the Germans from taking his family to the gas chamber.
Walter hired me in 1984. He was a stubborn man. A man who for years and years never spoke a word to his brother. He was a good father, loved the opera, admired good horseflesh, a good manager in the securities business, a good businessman for being so tight and probably a great husband when he wanted to be. He would have loved to be a Cheyenne or Crow or Sioux warrior.
I am honored to have served my clients and Drexel Burnham Lambert under his tutelage. We were still together when the doors were slammed shut and we headed off to another bankrupt firm, Thomson McKinnon. Little did we know. All in all it was a great ride.
It was great to be in business with you Walter. I shall never forget the symbol, BMED.
May the Creator bless the soul of Walter J. Shaw.
Asset rebalancing, layers of fees on top of fees, modern portfolio theory, blah, blah, blah.
As an arbitrator for both the New York Stock Exchange and the NASD my fear of the brokerage community continues to grow. It is still a wonder why investors hire non-fiduciary salesman for a successful retirement.
Wall Street cares only about their income, not the clients outcome. Do you really think the big houses pass out titles because some salesman made a client big money or took care of a widow? Not a chance. They award titles because massive amounts of fees and commissions are generated. That is what allows the brokers to keep their seats.
Call it "twirling" or "position velocity" or "making the book sing"........it all comes out of the little guys pocket. Brokers call it "GROSS" as in gross commissions generated.
The weekend was spent without great health. A nasty ear ache engulfed my senses and I did not run the worlds largest 10-k road race, The Peachtree. Next year. Also enjoyed a family reunion on my wife's side. This weekend will find me in a remote part of the United States at my high school class reunion. Wish it was my 10th!!!
Summer trading may slow considerably and I look for stocks to bore trading desks. Things may get slow although deal activity may heat up. It looks much cheaper to buy assets/companies on the floor of the NYSE than build them youself. Just ask the Chinese. And no shortage of private equity boys to join the fray.
We await the roll-out of the first high yield bond exchange traded fund. Interesting and timely.
I hope the first half of 2005 has treated you well. The main thing is to have the right priorities in life so that life is in balance. That is the key. Health and family first. At the end of the day, nothing else really matters. We are ready for the 2nd half of 2005. May it be the best ever.
To the great growth industries of America such as health care and home building add one more: influence peddling.
The number of registered lobbyists in Washington has more than doubled since 2000 to more than 34,750 while the amount that lobbyists charge their new clients has increased by as much as 100 percent. Only a few other businesses have enjoyed greater prosperity in an otherwise fitful economy.