Pseudo Random News and Comment

Starting a family does not encourage parents to eat healthier  Because a) life as they knew it is over so what’s the point, and b) they therefore need a lot of comfort food.

Research challenges idea raising aspirations is key to education success There are so many elements which are vital to achievement that focusing on a single one is hopeless. Delaying gratification and self-control would be a better place to start.

Breastfeeding is associated with a healthy infant gut I wondered where the little buggers picked up those little bugs. The symbiotic relationship with bacteria is getting more and more interesting.

I think this qualifies as good news. Yellowstone ‘super-eruption’ less super, more frequent than thought

Air France Flight 447: ‘Damn It, We’re Going to Crash’  A good point about design generally. One of my pet peeves is programmers/analysts who expect users to do what they’re supposed to do.

Research suggests breast-fed infants metabolize perchlorate  Can adults get the same protective effect?

Newer, more expensive psoriasis drugs only slightly more effective than older therapies under real world conditions  I hope they are more effective in transplantation, but this isn’t too promising.

Highly religious people are less motivated by compassion than are non-believers. They must delegate compassion to god.

Cost study shows timing crucial in appendectomies Regardless what science decides on the wisdom of appendectomies, being paid a flat amount per diagnosis means there won’t be any wait and see being done because it costs more.

Multitasking may hurt your performance, but it makes you feel better  That’s why I listen to music when doing everything. I feel better about my mediocrity.

Italian merchants funded England’s discovery of North America  The next time someone mentions decoupling, and you know they will sooner or later, remember this.

A new glimpse into ancient human history  Given the first farmers were shorter, sicker, died sooner and had less free time it’s no surprise it wasn’t an easy sale.

Diamond implants are forever Sounds promising, in a decade or two.

Leonardo da Vinci’s real body of work was anatomy, claims new exhibition For a dead guy it’s amazing how much smarter he’s getting.

When I see things like this I keep wondering how rents or house prices are supposed to keep rising. Credit cards?  ”Real” Disposable Income Per Capita: Still Flatlining

Dogs, But Not Wolves, Use Humans As Tools  Like the one I saw yesterday that was making his owner carry him while her similarly sized child was forced to walk next to her.

If you are looking to profit from the demise of the human race, here’s a list of potential makers of our robot overlords. The Robot Stock List

Pair of graphene papers retracted  Just been too hot a topic for this to be avoided.

Investor Sentiment: It’s All Good, but…  Latest on the dumb and smart investor indices.

Helpful reminder on the inevitability of stagflation if printing money is continued for long enough. What Is The Consequence Of Printing Money That Nobody Wants?

Since much of the funny money has been flowing into emerging markets I think China is going to be losing ground in the fraud competition. ‘Irregularities’ found by Adidas

But they are going to have to work to beat this – ‘It still has real value’

Google staff knew of Street View data breach, says FCC  No freaking sh!t. The necessary software and hardware for WiFi snooping doesn’t just spontaneously assemble itself (at least not yet).

Effect of steroid-free low concentration calcineurin inhibitor maintenance immunosuppression regimen on renal allograft histopathology and function Surprisingly good, at least in this study.

House NA / Sou Fujimoto Architects I wouldn’t want to live there but it would be great if a hot neighbor did. Maybe work out a streaming video deal.

Skype Reveals Remote and Local IP Address Of All Online Users

Don’t be this “trader” For some reason I think this trader’s initials are ZH.

Microsoft Makes $300M Investment In New Barnes & Noble Subsidiary To Battle With Amazon And Apple In E-books  Cool, a WinNook is definitely going to be easy to root.

Small spec becomes the big long in S&P futures — Oct. 2007 revisited  Ouch

Not all altruism is alike, says new study

Machine Politics -cool piece on Geohot, Sony and Anonymous.

Antimicrobial resistance for common urinary tract infections drug increases five fold since 2000  Oops.

Darwinian selection continues to influence human evolution  The agricultural revolution caused widespread changes in the genome, so this is quite interesting. Doesn’t take a revolution to impose selection pressures.

Some Books That Influenced Me

I’ve read a lot of books over the years and unfortunately have forgotten far more than I will ever know. These are a few of the ones that managed to stick and changed how I view the world.

The Selfish Gene
Like many great ideas it seems so obvious after reading it, but with further thought it changes everything. The implications are still stirring things up decades later – and the group selectionistas still don’t get it.

Evolution and the Theory of Games
Classic work on mathematical biology, but without an over-reliance on math to present the ideas. It changed the way I think about interactions of all kinds. Parasites and hosts and their corollaries in human society were a theme for me long before public choice theory got much attention.

In a similar vein, Cows, Pigs, Wars, and Witches: The Riddles of Culture illuminated the underlying forces behind some unusual cultural phenomena. The section on witch trials and their eventual end was particularly memorable.

Human Action, The Scholar’s Edition
Economics, beginning with “man acts” and proceeding from there, demolishing nearly every fallacy of modern economics along the way. Great discussion of means, ends, and the meaning of rationality, plus far more.

Neuroscience and consciousness have long been a big theme for me, all have been important in turning me into a strict materialist when it comes to explanations of consciousness. These are some of the best:

Descartes’ Error: Emotion, Reason, and the Human Brain
A wonderful explanation of the indispensable nature of emotion; that without it, knowing what you should do isn’t enough to alter behavior. I guess that explains a lot of people’s retirement planning too.

The Feeling of What Happens: Body and Emotion in the Making of Consciousness
Self Comes to Mind: Constructing the Conscious Brain (Vintage)
The second of Damasio’s books specifically about consciousness is probably the better explanation of the physical basis of consciousness but The Feeling of What Happens is still the more emotionally satisfying to me. Both changed how I view what goes on between my ears (though as he points out, the elements of consciousness are not confined to the brain).

Looking for Spinoza: Joy, Sorrow, and the Feeling Brain
Significant for promoting the view that emotions are another way of restoring homeostasis. From that point of view emotions aren’t something to be struggled with, but listened to and acted upon.

The Society of Mind
More artificial intelligence than neuroscience but to me it’s directly related. When written it was almost entirely speculative but science has since in many ways confirmed the fragmentary and often uncommunicative nature of the mind.

The Man Who Mistook His Wife For A Hat: And Other Clinical Tales
Deservedly popular, the clinical anecdotes alone are priceless and it’s a wonderfully written book as well.

The Baron In The Trees
Though I no longer remember any of the details I still get an odd feeling when I think of this book. It might be the earliest influence on what would become temporal spatial arbitrage. A man who goes his own way…at least for a time.

I Am a Strange Loop
The discussion of how his wife lives on as patterns in his mind and in the minds of those who knew her may ultimately be the reason I started this blog.

Religion Explained
Easily the best book on the subject of why religion persists and is so pervasive in human society. Though I never used it to start my own religion, for the more entrepreneurial it also features a wonderful framework for devising “good” religious beliefs.

The Trial
Crime and Punishment
The Diary of a Madman, The Government Inspector, and Selected Stories
Discovering the absurdists in college made me realize I wasn’t the only one who thought human affairs often made no sense at all. All had a keen eye for the arbitrary and capricious details of bureaucracy so familiar to anyone waiting in line at some office.

Nineteen Eighty-Four
I couldn’t understand how people could say in 1984 that Orwell had missed the mark when New speak was everywhere and the USSR and USA were enemies of convenience to incite support for further power grabs at home. Now that the surveillance state has caught up with what Orwell imagined it’s even more familiar territory.

Friendly Fascism: The New Face of Power in America
Outlined the elements that were already in place several decades ago. It made complete sense to me when I read it in 1984 (oddly enough) and unfortunately has turned out to be quite prescient.

Why I Am Not a Christian and Other Essays on Religion and Related Subjects
My first introduction to the reasoned approach to atheism and to a great mind as well.

Man and Microbes: Disease and Plagues in History and Modern Times
Simply a fascinating book on the mixed blessings of progress from domesticating animals to agriculture adn urbanization. After reading the list of diseases that came with each common domesticated animal you will never look at Fido the same.

Sperm Wars: Infidelity, Sexual Conflict, and Other Bedroom Battles
In many ways brings Evolution and the Theory of Games to the world of sex. Chock full of interesting vignettes and the science behind them.

Though I am limiting this to books that influenced the current version of me, for the sake of accuracy I have to say the first book I remember is How and Why Wonder Books – Dinosaurs. I made my mother read it to me countless times when I was three. It’s probably what got me interested in science (though not as a career, which likely would’ve ruined it for me, as often happens when an avocation becomes a vocation).

Pseudo Random News and Comment

Did the Division of Labor Create Consciousness? I think only indirectly. The increased complexity and necessity of social interactions put a great deal of pressure on what we now think of as consciousness to detect all the lying, cheating and stealing that was made possible. A Trivers-flavored interpretation.

Hugh Hendry Is Back – Full Eclectica Letter I agree with him on many things but reach the conclusions by a different route in a number of cases. Always an interesting read.

A good day for more thoughtful pieces – The Net vs. The Power of Narratives

Parents’ poor math skills may lead to medication errors Is it really that bad? No matter how many reminders I get I still seem to give people too much credit.

Big Data’s Big Problem: Little Talent  Wait, if the promise is to use the entire population of data there’s no need for statistics. In any case using statistics to predict human behavior is a fool’s errand.

Disruptions: With No Revenue, an Illusion of Value A great reminder to always consider why the other guy is willing to sell to you.

Keeping Secrets Weighs You Down, Literally No wonder gossip spreads so fast. It really is a weight off your mind.

How Overpriced is US Health Insurance? Doesn’t really address what is covered by the insurance.

Chinese Web giant Sina admits slow application of microblog rules, fears new government crackdown

Chen escape sparks China round-up. The inevitable is underway.

For all would-be entrepreneurs, whether or not you ever need funding you still need to be able to answer these questions. Be Concise! – The Top Questions Asked At A Y Combinator Interview

Great roundup on one of the coolest areas of neuroscience – Who’s in charge – you or your brain?  Hint: It’s rarely you.

Wealth Inequality – Spitznagel Gets It, Krugman Doesn’t  The latter  is hardly surprising since even on a good day his thinking is still roughly as deep as a Texas mud puddle in July.

A Gold Standard? Jim Grant addressing the Fed, with a plethora of historical examples. Hard to imagine a more hostile audience.

MPAA Boss ‘Forgets’ Hollywood’s Pirate History  Loss of memory can be very convenient. Just ask all the government officials who have used “I have no recollection of that.”

Pseudo Random News and Comment

Where Did All the Accomplished People Go? Calling the current crop of celebrities “cupcakes” is overly generous.

My Faith-Based Retirement A whole lot of people are banking that their faith will be rewarded. As usual those with no faith will end up paying for it.

Real GDP Per Capita and the Year-over-Year Change. Some disheartening charts illustrating the effect of a declining pool of real savings.

US secret service tightens rules for agents in wake of scandal. No more heavy drinking, but still no guidance on crack or IV drugs.

David and Société Générale. Kerviel is fighting back. He should because there are no rogue traders when they make money, only when they lose, and it’s not only sanctioned but rewarded.

Robert Wenzel’s ‘David’ Speech Crushes Federal Reserve’s ‘Goliath’ Dream  A nice pimp slap of BB brain and co.

The Neuroscience of Habits: How They Form and How to Change Them [Excerpt]

 


Masters of Real Estate

Some MLS listings have to be admired for their creative turd polishing. A case in point:

“Excellent condition, clean and move in ready! This amazing 3 bed, 2 bath Single Family Home is conveniently located within the metro area. Yes, it’s tucked away so well in a Cul-De-Sac that you’d never guess it’s there! In fact, I’m sure you’ve passed by many times without knowing it! Well landscaped yard surrounding the home, split A/C’s and dual pane windows throughout the entire home! Must See!”

Wow! Let’s search for a satellite view and see what we find… Continue reading

Pseudo Random News and Comment

Sunscreen use may lead to vitamin D deficiency. Essentially a demonstration that sunscreens are effective.

Researchers discover links between Facebook profiles, personality and job success.  It’s definitely time to falsify improve your resume Facebook profile.

New form of intellectual disability discovered. I thought Keynesianism was previously described. BB brain and PK have been dramatically illustrating it recently.

Work starts on new therapy to prevent Type 1 diabetes. Pretty cool, and only 50 years too late for me.

Critical Java Patch Plugs 88 Security Holes. I wonder what the record is.

Goldman Knows Banking. Pathetic is how I feel about it too. Political competition is a refuge for whiners, cheaters, incompetents and other despicable characters.

Cispa approved by House but critics urge Senate to block ‘horrible’ bill. Like I said on the last round. Sooner or later they will get something awful pushed through. I’m surprised they are still trying it as a stand alone bill rather than stuffing something into a Medicare appropriations bill or something.

How CISPA would affect you (faq). The assumption that “safeguards” on privacy would be worth anything at all is pretty laughable too considering the performance of current safeguards.

Attack Mitigation. Change in tactics in computer security.

Assay come, assay go: Corporate takeover leads to retraction of device analysis. Interesting example of research used as ad copy.

The Irrationality of Irrationality: The Paradox of Popular Psychology. I think it’s really about memes propagating despite our brains.

The Consolation of Philosophy

Most of the Internet’s Top 200,000 HTTPS Websites Are Insecure, Trustworthy Internet Movement Says. That’s an attractive feature for many governments.

Gareth Williams inquest: MI6 spy could have shut himself in bag, says expert. This reminds me so much of a case years ago in Indiana. Victim died of a dozen or more blows to the head from a hammer, any one of which could have been fatal. Hammer was found across the room with no prints and the victim wasn’t wearing gloves. It was ruled a suicide. Later reopened due to public ridicule.

Why Pygmies Are Short: New Evidence Surprises. Short parents were my guess, but apparently it’s increased disease resistance.

Certainty Principle: People Who Hold False Convictions Are Better at Retaining Corrected Information. The trick is in getting people to see what they don’t believe.

Finally some good news – Experimental Biology Blogging: Every once in a while, a double cheeseburger might not be so bad for the heart.

Man, 103, dies – after 95 years with bullet in head. Maybe a hole in the head is a good thing.

Debunking Bailout Myths. I hope nobody is surprised by this.

WSJ on Housing: “Bidding wars are back”. I’ve long had a theory about market behavior based on Tommy Boy: “That’s Gonna Leave A Mark.” When something big and bad enough happens it will reverberate for a long time. I think the housing market qualifies, which means this new burst of excitement is nothing but a punch drunk boxer getting up off the mat. We all know what happens after that.

FDA Approves Vivus Drug for Erectile Dysfunction. Secret Service applies for group discount program.

Obama’s Plan is a Stealth Middle Class Tax Hike. So Is Romney’s  Duh, that’s where the money is (and the campaign contributions aren’t).

Chen Guangcheng ‘safe’ in US embassy. If true, this is likely to cause a stink.

A Quantitative Approach To Intuitive Trading – Part 3/5

Identifying and validating an intuition

Assuming you have enough experience with the markets and your mind is reasonably clear, the next phase of turning your intuitions into a trading system can begin.

While some sense of anticipation is probably common to most intuitive trade signals, everyone is different so there’s no way to predict what you will feel. Fortunately the mind evolved to make successful unconscious inferences so at some point in the preparatory steps feelings corresponding to potential trades should arise regardless. With a reasonable amount of experience you probably already have some idea which feelings are the most promising as trade signals. However, before any intuitive feeling can be used reliably it must be fully characterized and tested through systematic observation and recording of both your feelings and their results in the market.

People often categorize feelings as simply feelings without making distinctions regarding their varying qualities. As a result, intuition is generally seen to be unreliable and inconsistent. But with careful observation feelings can be differentiated by location, size, intensity, internal vs external, texture, pressure, vibration, warmth/coldness, color, sound, pattern, and sensations for which words don’t exist; as well as whether they are associated with a common emotion like agitation, excitement or calm.

When examined closely every intuitive sense is a complex combination of a number of these qualities; sometimes extremely complex. Learning to discriminate between these composites, which can differ in very subtle ways, is vital to using intuition in trading. Practice characterizing feelings you have, whatever the context. When someone cuts you off in traffic make note of the characteristics of all the feelings it produces. Your body is incurring significant metabolic costs in producing all these feelings and emotions. Show some appreciation and take some time to get acquainted.

As you observe the markets and get feelings about future price movements, use a journal or spreadsheet to track everything about their qualities and context, also making note of market conditions, your general mood, and any notable events in your life. You’ll likely need a significant number of observations before clear patterns will emerge. Don’t dismiss a sensation just because you think it can’t possibly be relevant (as an example, George Soros reportedly gets backaches). Analyze a number of your intuitive signals and subsequent market action before deciding which sensations and feelings are relevant. While emotional engagement is good during training it’s important to be a detached observer at this point to avoid confusing things with feelings about your feelings (meta levels of feeling can be many layers deep), since too many intermediaries can make anything seem like unreliable hearsay.

With enough instances it should become clear which feelings are the best trade signals. When you feel you are at that point go back and do more observation, ignoring all other sensations and waiting for the one you’ve identified to occur. Does it exactly match what you had written down? Are the results as expected? If not, go back and see if you missed some other elements or were mistaken in how you characterized it. In my experience even very strong feelings can often be simply an alert, which won’t become a trade signal until some other element (whether internal or external) is present.

It’s common for the entry and exit feelings to be different. Intensity or other elements can also change with the urgency or quality of a trade. So you may not only need to identify which composite of sensations to use but also its range of qualities and their meaning. It’s important to keep going back to refine the exact composition of your intuitive trading signals and learn to recognize them like an old friend, because like an old friend you need to be able to pick it out in a crowd. Once you are confident you are at that point do more paper trading with unknown data to make sure the results hold up and ensure you feel comfortable recognizing and relying on your intuitive guidance. If you aren’t comfortable self-sabotage is nearly inevitable.

No matter how silly it sounds, if you’ve had a habit of ignoring your inner voices and feelings you may have to sincerely apologize and ask for their advice before you can make progress. Like any person they may stop talking if you never listen. If, despite several years of market experience or observation, you are still having problems with a lack of feel or are unable to find one with any predictive value one solution is to get more experience observing the market without worrying about making trades. The pressures and feelings generated by trading may place too much focus on yourself rather than on the market and prevent the needed internalization of market behavior. Unresolved internal conflicts also frequently interfere with intuition and should be investigated where an intuitive feel is lacking. If a large part of your mind doesn’t feel you should be trading at some point in time it’s likely your whole feel for the market will be thrown off.

The process is admittedly quite simple but it does require considerable time and effort to carry out, as well as having reached a point where it seems like a good idea (something I admit isn’t too likely for most people). The next step in quantifying intuitive trading is to create a framework for maintaining consistency and calibration. Things change in life, including personality, and since this all deals with feelings and emotions some method of guarding against drift and outside interference is needed.

________________

As an example of the complex sensations and level of discrimination required I’ll describe my trading signal. It starts with a slight tightness and warmth, with a very mild physical feeling like the squirming worm feeling in a muscle before a serious cramp. It’s at the bottom of my sternum, near the surface, and initially about the size of a quarter. This is accompanied by a mild sense of anticipation and feeling that there are things I need to do (research mostly, my intuition is extremely data dependent). Depending on the market and context it can start as much as 5 years in advance [1] with intermittent mild sensations, and increases in constancy, intensity, size, warmth and urgency as the time approaches. It becomes a denser feeling, the worms change to more of a buzz, and the warmth expands when the time is close. The intensity ramps up and the size increases to an area roughly 6″ in diameter and I find myself leaning forward when it’s time to pull the trigger. The intensity also varies with the quality of the trade so I use the intensity to guide position sizing (within the limits I consciously set). Entry signals are very time sensitive and decline rapidly after the optimal entry point. This is probably because I started as a swing trader and remained so through the time I evolved into using intuition for trade selection [2]

Exit signals, on the other hand, are similar feelings but the timing is less definite and occasionally may never come. I used trailing stops long before I started doing intuitive trading so it’s never been an issue. Probably for that reason, and the fact that short [long] entries are frequently the long  [short] exits, I’ve never tried to improve my intuitive sense for exits.

___________

The complete series: Part 1, 2, 3, 4, 5

[1] At this early stage it’s often starts with a flash of insight about how things are going to develop. It’s not as great as it sounds. It took me a long time to learn to be patient and the long wait makes it easy to lose interest and forget to come back to it later. If I’m not paying attention and continuing to monitor the market the feeling also tends to dissipate. Though I’ve learned the scale of intensity pretty well by now, I’d still rather the lead time was only a week or two.

[2] I’m entirely long-term now and it’s become a problem because when I miss doing a trade by a day the feeling is almost gone and I can’t pull the trigger. Obviously I need to follow my own advice and retrain myself.