Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Minersí Q3í17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
The 10th Man: Play Ball


 -- Published: Friday, 17 April 2015 | Print  | Disqus 

By Jared Dillian 

As I write this, the Yankees are down 2-0 to the Orioles, on their way to a sub-75 win season. Anyone want to take the other side of that?

ďHow can you not be romantic about baseball?Ē asks Jonah Hill in the movie Moneyball, based on Michael Lewisís 2003 book of the same name. How can you not? I have always liked that thinkers tend to be fond of this game, like the late David Halberstam and George Will and even Keith Olbermann. I loved to play ball, but I was only average. I spent more time in my room playing with statistics, with a pencil and notebook, before the existence of computers and spreadsheets.

Itís not news that the geek squad has taken over the game, probably for good. I donít even recognize the new statisticsóstuff like WAR, BABIP, VORP, and something called PECOTA, Player Empirical Comparison and Optimization Test Algorithm. What? I was a math major, and even I canít figure this out.

To some extent, itís diminishing my enjoyment of the game. Seems like they have the infield shift on every other play. Iím sick of watching left-handed power hitters bounce into groundouts into short right field. I miss bunts. I miss stolen bases.

But there is a lot of money at stake here. Not just for the teams, which have finally found a way to quantify talent, but for the sports bettors, like my friend and former Lehman colleague Joe Peta, who found a way to use sabermetrics to great advantage in Vegas, and wrote a book about it.

Igor the Traderbot

There was a point in my career at Lehman, when I was trading index arbitrage, where I pretty much knew that unless I figured out a way to trade algorithmically, I was going to be out of a job.

One, I wasnít a programmer. Two, I didnít even know where to start. And three, I doubted Lehman would have put the resources behind it. So I was out of a job.

I was also a floor trader. Those guys lost their jobs too.

There is a huge existential crisis on Wall Street now, especially in equities. Thousands have been laid off. Some guys are still hanging around for a couple of six-figure orders every month so they can make their mortgage payment, but the picture is exceedingly bleak. Usually a bull market means happy sales traders, but not anymore.

The credit guys are still doing well, but they will get whatís coming, someday.

What do you do if youíre a trader and you lose your job to a computer? You are not uniquely qualified to do anything in particular. Some people become insurance agents. Some people open restaurants. Some people work at restaurants.

The beneficiaries are the young kids, the computer science majors who program computers to trade ticker symbols about which they know nothing at all.

Itís a weird situation. The game of baseball has gotten more efficient, and the game of trading has gotten more efficient. It can be tempting to go up against the computers, head-to-head, like day traders do. Donít do that. You will get your clock cleaned, like Brian Cashman, who admitted at a conference I attended to using sabermetrics only sparingly.

How to Beat the Bots

The one thing computers have yet to figure out in baseball is chemistry. Sometimes players get along, sometimes they donít, but no computer will be able to quantify its contribution to the number of wins each season. The corrupt, lovable í86 Mets got along famously. For the last few years, the Yankees have looked like they have as much chemistry as a university history department.

When it comes to stocks, you canít beat the computers by trading faster (duh), but people try. In fact, having a holding period of anything less than a few days is just madness.

But computers are not clairvoyant. They canít see the future, but in some cases, people can.

Iím not talking about what the Fed does, stuffing data naively into economy.xls. By 2006, it was obvious to much of the investing community that there was a housing bubble, yet it didnít become apparent to the Fed (which is basically a computer) until the very end. Sometimes itís just obvious. The coming Canada bust seems obvious to me. The BOC still sees a soft landing. Go figure. (I explain how to short Canada and how to invest in the US housing market in the last two issues of my investment letter, Bull's Eye Investor óyou should check it out.)

Whenever I talk to investors, I always tell them to stretch out their holding period, by months or years. Computers have made things efficient in the short term but have actually contributed to greater inefficiencies in the long term. Before computers, I used to worry about entry and exit points. Now I couldnít care less. The value is in the idea and the risk management. The execution is worth diddly.

You should be thinking more, and doing less, which goes for just about everything nowadays.

Jared Dillian
Jared Dillian

The article The 10th Man: Play Ball was originally published at mauldineconomics.com.

| Digg This Article
 -- Published: Friday, 17 April 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.