Briefly Speaking, by Victor Niederhoffer

1. Bonds during the last four months have moved gradually back and forth from a low of 114.00 to 118.00 in a gentle ascent, descent, ascent and now descent, that covers the same ground in 5 months that it liked to cover in 1 good volatile day in the 1980's when the bond vigilantes were masters of the universe. Such a reduction in volatility has many unforeseen consequences including such things as the heightened volatility in energy, thru the law of conservation of volatility.
2. Stocks have had 5 up days in a row, since Sept. 21, covering in total less than 1/2 a %. This has to be the smallest such positive run of 5 in history. It gives one the feeling that one had when he had the pleasure of escorting a most elegant and attractive other to five refined and noble cultural events, without being invited in for a night cap after the festivities. But such must be tested as to its impact on the market, not on romance, and similarities for expected moves after long runs of consecutive paint drying on a Arizona wall are surprisingly unrewarding to the chronics.
3. The concept of diminishing marginal utility in economics explains the bulk of the conundrum that affected the subject for so many years, including why diamonds sell for so much more than water. It also explains why risky stocks sell for less than stable ones. The marginal utility of buying a product is affected always by the availability of substitutes. Bonds are the main substitute for stocks, and their relative lack of attractiveness increases the marginal utility and derived demand that the public has for stocks. Such changes in the attractiveness of substitutes and their affects must be tested in a predictive fashion so as not to descend into the labyrinth of promiscuity that surrounds all of behavioral finance.
4. Convection currents explain most of the weather patterns we observe in our day to day forays with the wind and water. The essence of the phenomenon is how a source of energy like the sun causes the replacement and lifting of hot liquids by the more buoyant cold liquids that fall to the bottom. The movement of hot stocks to the top of the best performer list in a period, only to be replaced by the laggards in the ensemble of companies in the presence of constantly increasing income, wealth and changes in tastes has always reminded me of the changing winds and temperature from day to night in the Brighton Beach, upon the Atlantic Ocean that I grew up in. Such regularities mite well be applied to market phenomena ranging from sector rotation, to the changing composition of the most active, best performers, and new highs and lows in a year. One predicts it won't be long before the esteemable Mr. Soji reveals to us how similar phenemona explain the prowess of the surfing champions and can be used to day trade stocks with great aplomb.
The European stocks continue to outperform their US counterparts by a wide margin with the normal indexes there such as Eurotop 300 up by 18% year to date against a measly 0.5% for the US. Part of the differential is explained by the universal law of one return for all assets that the master investor, perhaps best typified by Prince Alweed of Saudi Arabia ( the subject of a hagiographic interview previously reserved only for the sage of Nebraska, and their biggest advertisers, in Fortune's pages), who sits on a portfolio that must directly or indirectly thru his intimates approach the trillion mark. And part of the differential must be explained by the Vic 1997 affect, ( "Thanks for asking. Things are much better than they were in 1997 but then again they couldn't have fallen any lower than the nadir") Yes, things were so bad there that they couldn't have got any worse, as exemplified by the great desire of the Sage and other old lions to hold European assets rather than US assets since the European trade balances were so much more green than ours. But ultimately one would predict a greater harmony and equalization of the returns of Europe versus the US, possibly caused by the equal conduction of return theorem

Obviously..........

With so many of the top tier hedge funds opening up to new investors the writing is on the wall. The guys I talk to every day, day in and day out, all are in agreement. Equity returns are poised to slow down. The massive performance fees (20% to 50% of profits in some cases) on billions and billions of dollars are not in the cards so a 2% management fee is better than a stick in the mud. That is not to say the derivatives traders, the futures players, the arb guys, the bond daddy's all will have their day. Just not this year.

Last week it happened............

Equinox means equal night. The first official day of autumn, the autumnal equinox, occurs on Sept. 22 or 23 in the Northern Hemisphere. This year it was Thursday at 5:23 when the sun reached the celestial equator, an imaginary line through the sky above the Earth's equator. As the sun's center crossed the line, the season officially changed to autumn. So for the next three months, nights in the Northern Hemisphere will continue to grow longer than 12 hours and days to grow shorter.

The stench of bloated pork is found here................

http://www.truthlaidbear.com/porkbusters.php

NASA's "MOON"DOGGLE = TEXAS PORK

If Hurricane Rita was in danger of killing off jobs in Texas, President Bush and NASA stepped up and tried to game more tax dollars to put a man on the moon. We went to the moon 40 years ago. There was nothing there. I doubt much has changed.

NASD Arbitrations..............

The process is broken. As the Secretary of State of the Commonwealth of Massachusetts said, "it is industry-sponsored damage containment and control masquerading as a judicial proceeding." As an arbitrator for a decade for both the New York Stock Exchange and the NASD the system is so poorly run it could destroy investor confidence. The beat goes on...........

Yesterday.............live and let live..............

My wife wanted to see Paul McCartney perform last night. Phillips Arena was sold out. More grey hair than i expected and lots of "no hair" types. His act is old but apparently not out of style. How those songs "imprinted" on the baby boomers is a story in itself. Why he had a teleprompter going was beyond me.

football...................

It was wonderful to be on the winning end of the 8 year-old Alpharetta Red Eagles football team this weekend. My son, Jordan, plays fullback and cornerback and was awarded the Offensive Player of the Game award. Seeing these young guys get stronger physically, build mentally, focus, concentrate and learn what "firing out" is all about is a treat. It is great to see the support of the parents as well. We will win again.