Questions

(Quotes from Ed in Red)

Saturday, March 14, 2009

Bumper Sticker Process Report
 

Ed,

Ed hands out 11"x4" pieces of paper and color markers and asks everyone to write a short message that describes where they want to be - something they could stick on their car's bumper.

We get up and walk around holding up our bumper stickers. We send and receive feedback on each other's stickers. The feedback I hear is: "are you running a fun business or are you always in the process of creating them?" After we hear feedback, we have an opportunity to revise our stickers based on the feedback.

People struggle with how long my new sticker is. They seem to lose the train of thought by the time they reach the end of my text.

"I was just sittin' here, drinkin' my coffee, eatin' my muffin ... when I had what alcoholics refer to as a 'moment of clarity.'"

A lifetime's worth of events and feelings flash before my eyes. I discover that much of what I do, I do so that I can tell a story. My work, my hobbies, my trading - the part that I enjoy most about them is talking to people and sharing my perspective with them.

I notice that this trait is something I know about all my life. A page on my website opens with "Part of <doing what I do> is the fun of explaining how you do it." I also notice that I have a strong judgment on this trait. I worry that I talk too much, that I bore people, that people only listen out of politeness.

Without tribe, I spend a lifetime running away from something that makes me, me. In tribe, I come to enjoy it. Thank you IVTT!
 

Evolution of a Bumper Sticker

Thank you for sharing your process.

The Bumper Sticker Process can facilitate locating Right Livelihood - and doing so doing in a few hours or a few weeks - that might  otherwise take years.

Saturday, March 14, 2009

Mad magazine Spoofs Madoff

Hello Mr. Ed

Greetings from India. This is my first communication with you.

Being a regular reader of FAQ (which is full of your wit & wisdom) your thought process is having a profound positive impact on me in life. Thanks for sharing.

Mad Magazine parodied the title 'Slumdog Millionaire' quite creatively for Madoff spoof...see attached file.

Weblink: http://www.dccomics.com/mad/media/

Even MAD magazine, the fearless paragon of parody, hesitates to put Barney Frank and his team on the cover.

MAD and other publications are they round up the usual suspects - of which Madoff is likely an appetizer.

Friday, March 13, 2009

Treasuries

Medicating the economy by printing up money is like giving cocaine to a user or like putting out a fire by pouring gasoline on it.

We have a national War on Drugs - as long as the drug of choice is not the flat green stuff.

Drug of Choice

Production

Marketing

Distribution

Intention = Result

Clips:

http://justgetthere.us/blog/uploads/

money-printing-press.jpg

http://www.swamppolitics.com/news/

politics/blog/greenspan540.jpeg

http://www.urbandigs.com/g-helicopter-big.jpg

http://newt.org/Portals/0/

UltraPhotoGallery/706/BarneyFrank.gif

Friday, March 13, 2009

Thursday, March 12, 2009

The Crash of 09 - Result for Future Generations.
 

Ed,

One picture (Chart) really is worth 1,000s of words... Scary stuff !
 

Thursday, March 12, 2009

Video of Our Economic Crisis
 

Thank you for the link.

You ain't seen nothing yet.

Thursday, March 12, 2009

Wants to Sign Up

Dear Mr. Seykota,

I came across your website recently after reading your interview in Market Wizards, and figured I would send you an email. I know you gave that interview long time ago, but many of the things you said were timeless and resonate deeply with me.

I was hired as a summer investment analyst by a large institutional investor a couple of years ago and also found the environment stifling and grotesque.

I hated the idea that every security must be a “buy”, a “sell”, or some nonsensical combination of these artificial concepts. Needless to say, I did not return the following summer.

I write to you today humbly seeking some advice. My family immigrated to [City] from [Country] when I was young, and today we live in [Other City]. Currently, I am in my third year at [University] majoring in Computer Science with a minor in Math.

I got started in the stock market during the bull market in 2004, so unfortunately I have held a long bias until the events of recent months woke me up from that limited state of mind. From 2005 through 2007 I was able to pull off 27% annualized returns with a max drawdown of 15% on a low six-figure account, which from my perspective was a sizable amount considering most of it was funded by rolling 0% credit card offers.

Thank you for sharing your process.

Thursday, March 12, 2009

Thursday, March 12, 2009

Weight Loss

Thank you for your offer.

Thursday, March 12, 2009

IVTT FAQ Note
 

Ed,

I met a fellow tribe member for coffee the other day. We talked trading among other things. In my apprx 8 years as a professional, I was always suspicious of traders from other firms. This may have been justified in those markets where we competed for size and market share. But two individual traders have nothing to lose by sharing ideas and experiences.

Tuesday, March 10, 2009

IVTT Tribe Meeting Report -

Trust and Fear -

Intentions and Reports

Ed,

Thank you for sharing your process.

You Can Work on Your Issues in Tribe

or in Public

"Today, I want to briefly address a private matter. I have acted in a way that violates my obligations to my family, and that violates my or any sense of right and wrong.

But I have disappointed and failed to live up to the standard I expected of myself. I must now dedicate some time to regain the trust of my family."

Clip: http://images.businessweek.com

/story/08/600/0312_spitzer.jpg

Tuesday, March 10, 2009

Heat Question
 

Ed,

I have determined many aspects of my trading system but there is still one point which perturbs me.

I have decided to risk 2% of my equity on any single position. For simplicity let's assume I start my account with 100,000.

This would indicate that my risk on any position would be 2,000.

I am unsure of how to determine two things:

1. the optimal number of instruments I should trade and

 

2. what percentage of my overall equity should be at risk.

Monday, March 9, 2009

Sets Stops

see previous

Dear Ed,

I did it. This morning I entered stops on all ten stock positions.

I knew from the premarket futures that a couple of the positions were "insta-toast". My Ego began to sell me this idea, (among others pitched since deciding to set stops), "hold off and sell / scale out after the opening."

I fought a powerful urge to mastermind and entered the last stop order at 6:28am. Three of the ten stops triggered.

Guess what? Two of the three were my largest positions. All three were good sales. I added to a position, bought the only stock that made a new high last Friday, and bought another stock.

OK.

Dow Jones - March 2009 Futures

White Circle Indicates

Contributor Sell Area

Monday, March 9, 2009

Rock Process - Sexual Issues

Ed, (inter-tribe memo)

Thank you (all) for sharing your experience with rock process on FAQ.

Though I missed the last rock process I feel very up to date. I feel like I was actually there. I feel so much better now knowing that most family parents have tough times discussing sexual issues.

Thank you for sharing your process.

You might consider taking your feelings about <talking about the birds and the bees> to the Hot Seat.

Mis-conception

In general,

kids, as well as adults

want clear, accurate information

about all matters,

including sex.

Clip: http://images.elfwood.com/art/n/o/

Monday, March 9, 2009

Attracts a Client
 

Ed,

Monday, March 9, 2009

OCS

See previous
 

Thank you for the follow-up.

Your Experience with OCS

may re-appear

in your trading.

Clip: http://www.memphis.edu/nrotc/

Monday, March 9, 2009

S&R project
 

Hi Ed,

Thanks for your colorful response!

I have a few questions about the S&R Project. Why does your 140/20 backtest take a trade prior to 140 days having passed? It seems to do so would violate the rules of the system, since prior to 140 days the system cannot determine what the direction of the long-term trend is.

Also, I may be incorrect about this, but it seems to me that the prices you use for stops are exactly the Trade Resistance and Trade Support levels and not a tick above and below these levels.

Should not the buy stop prices be Trade Resistance + Minimum Tick and sell stop Trade Support - Minimum Tick? As I said, since your stop prices are not explicitly stated in the output online, I may be wrong about this.

The results flow from the rules.

Numerous people report duplicating the simulations to the penny.

Monday, March 9, 2009

Tears of Shame

Your describe external manifestations of emotions.

You might consider taking your internal feelings about <shame>, <embarrassment> and <betrayal> to Tribe.

This might provide a cost-effective alternative to working them out in the markets.

One Positive Intention of Shame

is to motivate you

toward Right-Livelihood

Monday, March 9, 2009

Dynamic Feedback System Models
 

Ed,

Ed Says: We are currently examining Dynamic Feedback System Models as possible predicates for trend-following systems.

Thanks. It looks like a very ambitious project. Good luck.


The steps involved in a simulation are:

* Define the problem boundary
* Identify the most important stocks and flows that change these stock levels
* Identify sources of information that impact the flows
* Identify the main feedback loops
* Draw a causal loop diagram that links the stocks, flows and sources of information
* Write the equations that determine the flows
* Estimate the parameters and initial conditions. These can be estimated using statistical methods, expert opinion, market research data or other relevant sources of information.
* Simulate the model and analyse results

Source: http://en.wikipedia.org/wiki/

Monday, March 9, 2009

TSP Project

Ed,

Monday, March 9, 2009

Searching in Seattle

Monday, March 9, 2009

Goals, Labor Relations and the Slave Rock
 

Ed,

On Wednesday I talk with Ed about goals. On of the things that come up in the conversation is the terror I feel at the thought of hiring someone to help with the more mundane aspects of my goal. Ed suggests that I meditate on that terror. I do.

Slave Rock

What I find is a slave rock. It isn't like one of those little IVTT rocks that fit in your pocket. This one is a cobblestone. It contains a whole civilization gone with the wind, a set of norms and a social order. In this social order there are two types of people -- slaves and slave masters. This fit together and depend on each other like cobblestones in a pavement and the mortar that holds them together.

A slave must work hard for his master. If a slave is idle, he's a net liability. The slave must always be busy or at least look busy -- otherwise his master will come up with more work for him. The slave has no free time. If a slave does something he enjoys, chances are he isn't doing what his master orders him. The slave must always do what he dislikes. He can do something he likes only if he convinces the master that this activity benefits the master. A slave does not own the fruit of his labor. If he produces above his quota, the master keeps the surplus. The slave has an additional disincentive to produce in excess of the bare minimum his master requires--if he does, the master may raise his quota.

A slave master walks a fine line. He must run a profitable business and use his resources fully, but without exhausting them. A dead slave is a useless slave. Also, he lives in constant fear that his slaves may raise against him. He knows that slave rebellions achieve nothing in the long run and that rebels receive heavy punishment. He also knows that rebels can well ruin his business or even kill him before they receive their punishment. He must balance the promise of incentives and the threat of punishment to keep his slaves in check.

I realize that I view almost all my relationships -- with my parents, with past employers, with significant others -- as a variation on one of these two themes. I dislike the slave role, but I find the slave driver role unbearable. At 20, I flunk out of [Name] school. At 29, I walk away from a stint running engineering for a company. At 32, I can't imagine hiring an assistant.

I imagine hurling my slave rock into the lake next time I'm at Tahoe. I realize that I don't know what to replace it with. I simply do know know any other resource for managing associations.

I need much help from my tribe.

Cobblestone, the Weapon of Proletariat

Emperor Alexander II legally abolishes serfdom in Russia between 1861 and 1866. Thirteenth Amendment legally abolishes slavery in the United States in 1865. Slavery and its legacy continue to have profound effects on citizens of both countries.

The statue, "Cobblestone, the Weapon of Proletariat," in downtown Moscow commemorates 1905 anti-government riots. The proletarian dislodges a cobblestone from a city street and attempts to send it to some unwilling receivers--without replacing it with another resource.

Clip: http://ru.wikipedia.org/wiki/%D0%A4%D0%

B0%D0%B9%D0%BB:Shadr-stone-proletariat.jpeg

-----

Thank you for sharing your process.

You might consider that the tag line on your emails links freedom with losing.

If You Think You are Carrying

an oppressive rock

You Might Like To Throw it Away

However, wanting to throw it away,

is likely just another aspect

of the pattern of the rock.

When You Come To Realize

that the rock is formerly

medication for your problem

You May Also realize

the notion of returning it

with love

to its original donor.

Clips:

http://farm3.static.flickr.com/

2406/2062546822_b5304be1db.jpg

http://www.dcresource.com/forums/

attachment.php?attachmentid=

26775&stc=1&d=1185170723

https://www.musicxray.net/song_images/

0000/0115/Hand_Holding_Rock.jpg

http://farm4.static.flickr.com/

Sunday, March 8, 2009

Placing Protective Stops

Dear Ed,

 

Ed Says:

Your Relationship with Stops

may have a lot to do
with how you hold them.

Thank you for your reply. I do not have a Tribe and appreciate your support. I found your response to my Feb. 9th issue with stop orders today, March 8th, thank you.

I am leaning on your FAQ section as my temporary tribe. Regarding stops - AHA! Thank you. I get it. I hold losers, (fail to place stops), average down, (don't ask how that's working) and make excuses not to place stops, (small cap liquidity / market dynamics), because of of my ego's need to be RIGHT!

I need market prices to confirm my brilliant research I hold ten stock positions and all are in the red. All have great stories, (funny-mentals), but no more excuses!

I am placing market stop orders on all ten positions before the open tomorrow. March 9th 2009. These stops will be five ticks below the Friday March 6th lows. I have not STOPPED OUT an unanswered "stomach call" for a week. 

This call feels like I am plunging down in a perpetual roller coaster. In spite of my ego, or because of it, I am setting stop loss orders on each and every position.

Thank you for sharing your process.

Trading From The Gut

typically works better

when you don't have

a knot in it.

Sunday, March 8, 2009

Getting to the Roots of Loneliness
 

Ed,

I report an interesting meeting. Hotseat has been feeling "lonely and sad" for some days; he is a very intelligent young man and can identify his feelings very well. He reports that in the morning he looks for intimacy with his girlfriend to medicate the feeling of loneliness and sadness. He is not certain about his relationship to her, because he sometimes feels lonely and sad. He has been writing to another girl for some months and did not receive an answer to his last letter. This makes him feel lonely and sad. I ask him about other situations when he feels lonely and sad. He remembers feeling that way years ago with a girlfriend who was cold and inaccessible.

We use the feeling "I do not receive the letter with the answer" as an entry point. I prompt him to feel that the girl will never answer his letter and to see how the days go by without an answer. He finds the form quickly and we help him to reach the summit and to surf the feeling. The form turns joyful and he laughs. He jokes "Well, maybe she does not write to me, but I hope she will not forget how to write!" He seems to be ready, and I prompt him to remember the cold and inaccessible girlfriend. He repeats the same form, and it is again very stressful. We stop and think.

I encourage him to repeat the form and to increase the motion to a maximum. Then, I prompt him to freeze the form and to remember the first time he felt this way. He remembers playing alone, as a very little child, maybe 1.5 years old, and not having his mum around for the first time. The child is very confused and does not know how to react. He remembers her mother being sad very frequently and adopts sadness as a strategy. We stop again.

I decide to carry out a very simple Rocks Process. He finds his reaction when people do not pay attention to him (getting very sad) not helpful. He suggest "getting very angry", but discards it. We suggest the most obvious reaction: "just go to the person and tell her / him about your needs, and ask about hers / his feelings". We think about other reactions (buying things, having sex with other girls and so on), but feel they are just medication and reject them.

Hotseat brings the new resource to Young Hotseat. He re-plays the scene in his head and tells his mother that he needs her. We then ask him to look for the feeling "my mum is not around". He finds the form and increases it until he enjoys it. After he is ready, he spends several minutes to rest and to explore the feeling.

Thank you for sharing your work and insights.

In the TTP Rocks process, we typically track forms to locate a "critical event" and bring the awareness of that event as a template for a lifetime of similar response patterns.

In practice, any event can serve as the template; we generally prefer working with very early ones as these typically involve intense emotions and survival-threatening situations.

The "original" Rock likely issues from a Rock Donor (say, the father) during a situation in which the Stressor (say, the mother) places the child under survival stress (say, by ignoring him).

We typically "open up" Hotseat emotionally by role-playing the critical incident; we effect rejection of the Medicinal Rock, implementation of the Pro-Active Rock and practice using the Pro-Active Rock - all while Hotseat is emotionally florid.

We implement the resources by practicing behaviors; the Tribe assists in this process by role playing; during the post-implementation Proactive Rock practice phase the role players notice the new resources in Hotseat are powerful in evoking new response patterns in the role players.

We make sure to discuss all resource suggestions with Hotseat to gain his concurrence during the Pro-Active Rock creation process.

We also make sure to incorporate the Medicinal Rock as the "five percent solution" into the Pro-Active Rock - since the original  pattern is typically the optimal response in survival situations in which a pathological agent is the stressor.

In TTP Any Root Can Work

when we bring it

to emotional activity.

Clip: http://homepage.smc.edu/hodson_kent/

plant_growth/Angiosperms/ID/3%20root%20

Sunday, March 8, 2009

EMA System

Hi Ed,

Please see attached the system finalized in Excel and also matched with my back-testing software. I run various tests on individual instruments and notice that the system performs well with European instruments such as the Euro, Swiss Franc, Bund and Bobl however draw downs are large, results are similar on a portfolio of instruments. I am happy to extend the research, arrange this work to be posted on the site or discuss further ideas for improvement.

Working on this project teaches me a number of things with regards to systems development and also helps identify gaps where I need to work on.

Thank you for sharing your process.

I am accepting an occasional visitor to the current IVTT series if they have Workshop experience and / or substantial Tribe experience and if they have some mastery of system dynamics.

Saturday, March 7, 2009

TSP Completion

Ed,

Friday, March 6, 2009

Sign of Despair

Ed,

I notice this cartoon.

At market bottoms, you may notice the evolution of hope into despair.  This is currently evident in cartoons and in the facial expressions of our national leaders, including the financial talking heads on TV.

Currently, we have rapid governmental expansion of the money supply - balancing a credit contraction associating with the real-estate bubble.

In effect, we have some rather substantial margin-call liquidation in a secular bull market in currency inflation.

The CRB Index is Near 20-Year Lows.

Legislation is currently pending to relieve banks from having to mark their portfolios to the market; this is likely to remove the margin call situation.

Once the banks thaw out and money starts moving again, we have, from David Hume and later from John Stewart Mill and Irwin Fisher:

MV = PQ

 

M = Money Supply

V = Money Velocity

P = Price Level

Q = Quantity of Goods and Services

So with M high and Q constant to declining, we have:

P ~ V.

Friday, March 6, 2009

The removal is complete.

You might consider taking your feelings about <embarrassment> to Tribe.

The Positive Intention of Embarrassment

is to bring behavior

in line with community standards.

Friday, March 6, 2009

Inflation
 

Ed,

Inflation originally refers to Monetary Inflation, the process of increasing or inflating the money supply.

The Austrian School of Economics, Milton Friedman and others claim that Monetary Inflation inexorably leads to Price Inflation, and increase in the level  of prices.

Currently we have substantial Monetary Inflation and also a recent general price level decrease associating with the "bust" phase of a real-estate bubble.

Weimar Republic Price Inflation

US Monetary Inflation

Note straight-up behavior at the right.

Clips: http://richvermillion.wordpress.com/

2009/02/08/monetary-hyper-inflation-is-already-

Friday, March 6, 2009

Shel Silverstein

Ed,

This was a cartoon Shel did in 1960 while commenting on the "scene" in Greenwich Village. Still very applicable today!

Enjoy!

Friday, March 6, 2009

Gives Up Alcohol

Takes Up System Research

Hi Ed,

Hope you are doing well.

Thanks for publishing information about dynamics feedback models. I am studying the site you post in your website. After reading the first chapters, I see more clearly how parts interact within a system.

After several months coding and back testing, I finally have a simple long term support and resistance system for commodity markets (basically an extension of the system from the TSP project).

I am currently paper trading this system with 37 markets to learn more about markets (e.g. contract rollovers). I want to continue researching other topics to improve the system (e.g. market diversification, system diversification).

I am now at a point where I feel stuck with my research process. I think that some of the positive intentions of feeling stuck are to move on or to try something else. I also think that another positive intention is about giving / receiving feedback so we can move on. (Somehow, I get this thought while reading about dynamics feedback models).

I want to participate and to contribute to this site. I am thinking on research ideas to apply to the associate program. For example, I test a pyramiding algorithm in my system ( I can email you my results). I am also open to suggestions.

I also want to share my commitment to attract at least 7 committed members to my tribe by the end of the year. I have the opportunity to join the Manhattan tribe for six months last year. I am not longer living in the US. I now see the importance of a tribe. I have a flyer that I plan to place in strategic locations to attract members in my city.

I also want to share my experience about not drinking alcohol since last November. I have a history of drinking alcohol as a “social” drinker of more than 20 years.

Lately, I just do not feel like drinking alcohol. I do not know if this is something permanent or not, but this is how I feel now. When I drink, I feel numb and unable to feel my feelings. I link my previous “social” drinking habit to a medication of feelings (shyness, boredom, loneliness).

Friday, March 6, 2009
 

A History Lesson - How Government Evolves


Ed,

Thursday, March 5, 2009

Gymnastics Perfection
 

Ed,

Thursday, March 5, 2009

Thursday, March 5, 2009

Fitting an Elephant

Hi Ed !

This demo shows you can fit anything with an equation.

http://demonstrations.wolfram.com/

Wednesday, March 4, 2009

Latest Research on Diets

see previous - February 25, 2009

Ed,

... It does not matter WHAT you eat, but HOW MUCH you eat ..."
 

http://content.nejm.org/cgi/content/

full/360/9/859?query=TOC
 

Looking at the paper, I noticed that the people on the high protein diet actually lost over 20% more weight than those on the high carbohydrate diet.

The difference was not quite statistically significant, so the researchers concluded that there was no difference.

Given the relatively small number of people on the study, the difference would have to be very large (over 50%) to be statistically significant. So the lack of statistical significance is not actually very significant.

For more on traps in statistics, see "Warning Sign I5: Taking p too seriously" in

http://norvig.com/experiment-design.html

Wednesday, March 4, 2009

Essentials Card

Ed,

thank you, I just receive my Essentials card.

In the mail, there is also 1bill of 2 dollars USD whereas I sent only one buck. Have you put it in the mail by error? If so, let me know to send it back to you.

Thanks 1000times again for all you do with your "encyclopedia" site, the best way to manufacture Wisdom.

I tried to manufacture wisdom by religion, the holy scriptures(...), I tried as well to listen and follow what my parents and grandparents both told me like "lead your life with your mind not with your heart", but I haven't succeeded.

Finally I find out most of my aha's on your book and site. I feel more free, more what I am without constraint. I really did not realize for 30 years that I have to use together the positive intention of my heart (feelings) and the logic of my conscious mind.

Yes Wisdom is the greatest wealth a man could have, even before health, and thank you to show your way to manufacture it.

Tuesday, March 3, 2009

Hi Ed -

In May 2005 I attend your Reno Workshop. There I learn about the Snapshot Process, which [my] Tribe embraces shortly thereafter and attempts to use as a tool in personal Goal Setting and Achievement.

In July 2006 all 4 members of [my] Tribe attend your Cambridge Workshop. All of us experience the Snapshot Process at the hands of our guru.

We continue to use the Snapshot Process regularly for personal Goal Setting. Tribe members report mixed results in regard to realization of their Snapshots.

I have 2 intriguing personal experiences with regard to my Snapshot(s), which I wish to share with you:

Experience 1
==========

Sometime in May 2007 I create a snapshot with the help of my Tribe. My snapshot is to have INR 100 million of AUM by December 2007. At the time of creating the snapshot, my AUM is a little less then INR 50 million. My Tribe buys into my snapshot.

Over the months that follow I take various issues that stand between me and my snapshot to the Hot Seat. I report progress regularly to my Tribe. They support me in my endeavor. And I work towards realizing my snapshot. I end December 2007 with an AUM of INR 160 million. My snapshot has been realized!

In January 2008, I create a new snapshot - to have INR 250 million of AUM by December 2008. Once again, I regularly report progress to my Tribe, they do a fabulous job of cheering me on and supporting me, and I continue to work hard to achieve my snapshot. By the end of September 2008 AUM has topped 750 million!! Way beyond what I target for the year. And the year is not over yet.

However in the very next month - October 2008 - I jump a stop-loss signal my system gives me, and by month-end my client accounts are in a 20% drawdown. My worst drawdown in many years. Besides losing a lot of money and the confidence of some of my clients, I lose my nerve and spend the rest of 2008 struggling to follow my system.


Experience 2
==========

In September 1996 I first start managing money for clients. I raise a small sum from 2 clients, and get off to an excellent start. The client list grows rapidly, and so does AUM. I report steady progress to clients quarter after quarter.

My confidence grows, but I have a nagging fear about my ability to sustain this good performance. When clients and friends praise my performance, I respond that "I will feel I have achieved something of significance if I can sustain this performance for 3 years" (don't know what hat I pulled that number out of !!?!). I consistently maintain that line to others and to myself.

Well, what do you know? By the end of September 1999 - 3 years and 1 month after I begin - my initial accounts are up over 5,000% (50 times). Snapshot (even though I didn't call it that at the time) achieved !!

However, starting the very next month, my performance begins to slip. Over the next 7 months my accounts draw down 75%. (I report this to you in my post to FAQ in April 2004.)


What strikes me about these experiences is:
(a) In both I have a goal and a timeline to achieve that goal.
(b) In both I am highly committed to achieving my goal, and manage to do so within the timeframe I have set myself.
(c) In both I suffer huge "drawdowns" shortly after achieving my goal.

 

-----

Thank you for sharing your process.

If you hold a goal, without integrating it into an ongoing process, you are likely to realize your goal and then enter a volatile period.

In the current IVTT series and in the Workshop, we explore the synthesis of Goal Orientation with Process Orientation.

A Bullet, Upon Reaching its Goal

may become unstable,

even self-destructive.

Clip: www.uberreview.com/wpcontent/

Tuesday, March 3, 2009

Wants to Attend Workshop

Hi Ed,

I follow the FAQ, whatever you say so diligently, reading it over and over, making notes. I have read RoSO (Jesse Livermore) and I think, its the bible or the Geeta for us (Hindus). It's the holy grail. I can't however design the system to take advantage of all that is said in there.

I am working on it all through the day and night. I can think about only that and my wife knows it more than anyone else. I averaged 50% last year and 40% before that and am down 3% since January. Before that, in the 5 years of my trading I averaged roughly zero percent.

But since I "met" you, I have changed. I come from an electrical background from the best universities in my country had a nice job, had my own part time business and no money problems as such. But, I love the markets. Its something I cannot beat with my intelligence.

I wanted to have a career in finance in trading. I'd love it and I would make lots of money. I totally wanted to. To me the markets are a total emotional manifestation of the human mind. Fear, Greed being just the two obvious ones. To fulfill this working in finance (dream!) I travelled to the US to learn Quantitative Finance.

I am completely disappointed and totally surprised by how little "tuned into" the professors are to the financial markets. They are far from it. They have no idea. I think neither does / did Markowitz, Fama, Black, Scholes, Merton. 

They are all just good mathematicians. And not really that either, because what they have done is quite simple, even for their time. Theory of relativity existed before 1905. More so, Bohr's Quantum Mechanics is mathematically strenuous too and at least works in practice.

They come up with the Mean-Variance frontier after 25 years. God ... please! Many professionals in the industry are the same. I am having a tough time persuading some of my interviewers that what I have done is not just by chance. I behave very differently to them then what you might make of me reading this.

The interviewers also are statisticians. I don't know what to make of them. One of them told what you have worked on is technical trading and I think it does not work. I said OK. I am also not sure whether or not to share my system with them. I have back tested, with no optimization - which means change any parameter by up to 15% and I am ok with the results - gives a CAGR of 70% with "minimal" leverage, no down years, 35% drawdown.

Any holding period of more than 400 days gives a 95% chance of a profit. This is tested over last 25 years. I also follow the system. But I have enough money only to trade one instrument, index future and as soon I trade a different system giving 30% returns per year on average. Whenever there is a drawdown I do not track my money at all. I leave it and do something else in life. And enjoy every moment and track it everyday when it increases.

This helps me keep up to commitment of "following the system". I am just writing in to say thank you. I want to really really really meet you. I am living hand to mouth right now. That's the problem.

1. Can I attend your TTP workshop? When I have some money I can attend one of your sessions.

Any hints on how I can meet you, before having the money?

2. Do you think a conclusive research on high magnitude of serial correlation in stocks will end the era of trend following success?

Since it will be mathematically proved that 'yes' you can do it. You can follow the trend and make some money. Thank you very much.

Sincerely,

1. We can meet here for free.

Tuesday, March 3, 2009

Heat

Ed,

I read more on the subject of portfolio heat from FAQ along with a whitepaper that was written by you and colleague a few years back. From what I've read, I suspect that one person's gut can handle trading at 35% heat while another person's gut may only allow him to trade at 10, 20, or 25%. Is this the correct understanding - that heat is basically gut feel quantified?

Yes. One meaning for heat describes the emotional reaction to drawdown, as in: "If you want to ride the trend to the end, you might have to take some heat during the corrections."

Heat

can be unmistakable

and difficult to quantify.

Clip: http://forums.biorust.com/attachments/

adobe-photoshop/1499d1200771785-

how-would-i-do-fire-effect-fire_woman.jpg

Tuesday, March 3, 2009

What if Emotions Malfunction

Hi Ed,

My understanding is that feelings can be our allies like an emotional gauge. For example, when we feel angry, it can be a signal to us that some of our important values is violated. When we feel anxious, it can be a signal for us to double-check. When we feel fear, it can be a signal for risk control. When we feel frustrated, it can be a signal that what we are doing is not working. So we celebrate every feeling, "good" or "bad", "positive" or "negative", because every of them contains important feedback signals that help us in living.

Now, what about the cases when our gauge "malfunctions"? For example, some children are fearful of the dark. Every time it is dark they feel fearful that there are ghosts behind them, however unjustified. Or in worst case, if someone has their frontal cortex damaged, and cannot feel feelings properly?

It seems that some of our emotions (fight / flight response) has traces to our ancestors' survival mechanism in the wild that may have been passed to us in our genes, and that they create some heuristic biases.

Tuesday, March 3, 2009

Now Now.

Ed,

Tuesday, March 3, 2009

Candy as Medication

Ed!

I notice that after I had written that I would never pay the amount for a workshop weekend, I actually became more interested in joining. Though I rest my case for yet some time. I wont risk more than 1% on any bet.

I also recognize our tribe is as effective with two persons as with five. At least for me. It's like playing football with 6 persons instead of 22. You get more time with the ball.

I am still weak with my candy habits. One of my most trying moment is to resist the feeling of eating a lot of candy in front of a good action movie.

The feeling is always strongest after a period of eating too much candy. I wonder if the feeling is most physical or psychological. Maybe it doesn't matter.

Candy is still my 5% resource so it's not a huge problem anymore. But that 5% should be dedicated to when I'm at a party and need the energy, not when I feel bored / sad / angry / uninspired.

Thank you for sharing your process.

Candy

Still available

without a prescription.

Clip: http://www.blog4parents.com/wp-content/

uploads/2008/10/2555732890_017b828465.jpg

Monday, March 2, 2009

Wants to Attend IVTT

Hello Mr Seykota,

Monday, March 2, 2009

IV Tribe Report

A Receiver's Experience of Assisting

the Sender Deal With Sisyphus

Ed,

At our last Tribe meeting a member, A, reports a recurring behavior pattern.

Every time he makes a new equity high, he increases position size beyond what he considers prudent and loses a big part of his equity.

He then works hard to make it back, makes a new high slightly above the previous high, increases position size and repeats the pattern.

Ed asks A about feelings that come up. A reports that he wants a target to work towards. That he feels tough when he works hard to recapture a previous high from a drawdown. Ed asks if A remembers feeling the same way as a child.

A recounts an experience when he is four years old. His friends invite him to go behind a hill to see something exciting. He doesn't know what it is, and later finds out that that a girl takes her pants off for the boys to observe.

A doesn't get to see any of it though because his mother shows up to tell him off in front of his friends, take him home and punish him. She spanks him with a wooden spoon. A recalls the wooden spoon as a recurring punishment. He recalls his mother breaking a spoon on his buttocks once.

He recalls feeling tough, like nothing can hurt him. He can take any punishment. Bring it on! He is tough.

As A recounts this very emotional experience, Ed starts drumming, and other members join in. The drumming seems to encourage A to get into his feelings.

Ed suggests that A has a resource, a "rock," that he learned from his father. This resource helps him deal with challenging situations. The rock lets him be tough, withdrawn and beyond hurt. Ed suggests that we role-play the situation. A agrees.

Ed distributes roles to tribe members -- the mother, the father, the friends. Ed asks me to play the mother. I agree, but note that I feel terror about this role. My wife and I expect our first child soon, and I feel terrified of failing her as a father. I realize that I have this fear throughout my life. I feel that the parenting patterns I learn from my own role models are inadequate, and I don't know how to develop better ones myself. I am particularly afraid of discussing sexuality with my children. My parents never discussed it with me.

We role-play the situation. When we get to spanking, A protests. He says he is innocent, but I tell him that he must obey his mother, and I will punish him if he doesn't. The more A protests, the more I feel I want to punish him. Ed drums and cheers us on. As the spanking continues, A's father appears to offer him advice. He says he has a resource, a rock, that will help him.

The father produces an actual rock about an inch in size and explains that this rock contains family wisdom. This rock is tough, and A can be as tough. Every time his mother punishes him, he can go to this rock for strength. The rock can help him feel no pain. The rock can help him feel nothing.

A accepts this rock from his father. As I continue to berate and punish A, Ed asks him if he feels any of the pain or the humiliation he felt before. A says he doesn't. I notice that I fee no emotional response from A. I continue the punishment for a little longer, then notice that I no longer feel a response from A, and lose interest in punishing him further.

We check out. We go around the circle and report our experiences in our various roles. Ed asks A if he likes his rock. A says he doesn't. He says it makes him numb. Ed notes that the rock has served him well and says that if A doesn't want to change anything, we can finish the process now, and A can go back to doing things as he always has. A says he wants a different resource.

Ed solicits A and tribe members for other resources we can think of to build a new rock for A. These must be resources that A can understand and assimilate as a 4 year-old boy. We make a list:

1. A can tell his mother about his feelings. He is a sovereign person and wants respect for his freedom. He wants to make and learn from his own mistakes.

2. A can ask his mother about her feelings.

3. A can avoid the situation altogether if he is discreet and his mother doesn't get involved at all. It's no one's business what A does behind some bushes with a girl friend of his.

4. Ed notes that sometimes, A's old resource is a good resource to use. Ed calls it the "5% solution." In a small number of cases, playing dead is the best strategy -- if gunmen bursts into a restaurant and starts shooting people up, asking them about their feelings may be a losing proposition.

5. Ed notes that in some cases, A may want to give himself time to invent a new solution. The take-a-deep-breath and wait-5-minutes resources allow A time to think about other solution for a situation.

A symbolically pushes these resources into a new rock.

We role-play the situation again. A is 4 years old. He disobeys his mother and receives punishment. When A's father appears to offer him the old rock, A rejects it. His father insists that it is his way, the family way to deal with things. A says that it's worked for his father, but it won't work for him. His father takes the rock and walks away.

A messenger appears. He says, "I bring a message from an older you and some friends of yours." He recounts the resources in the new rock and asks A if he wants to accept it. A says that he does. The messenger departs.

As I continue to punish A, he says, "I want to tell you how I feel." He says he loves me, and it tears him in two that he has to endure punishment from me.

I feel guilt for punishing a little boy who is so full of love and innocence. A tells me that he wants to have his own friends, that he is a separate human being who wants to make his own choices and learn from his own mistakes. I try to protest that a mother knows best, and that the children he hangs out with are bad, but I feel that my argument is coming out weak.

I know that the truth is that I can't let him go. I want to hold on to a little boy, but I know in my heart that he is growing up. I think to myself, "If he is mature enough to want to make his own choices, he probably is mature enough to make them. I guess that's how I know he is."

We repeat the process again, and A asks me, "how do you feel?" I protest, and say that what matters is what he did, not how I feel. A persists in his question. I say that I feel terrible that he behaves the way he does. Then I realize why I feel terrible is because I think it's my fault for not teaching my son right from wrong. If my child behaves badly, I must be a bad mother. I cannot have that. So I must punish him until he is a good boy and I am a good mother.

Something happens in me. I start crying.

I say, "look what you did, you made your mother cry." I tell A why I'm crying though, that it isn't his fault. I tell him about my fears, that I want to teach him to be good, but the only way I know is to punish him for anything he does. I see how useless that strategy is.

Ed suggests that A ask his mother about girls, and about his pant-less friend in particular. I find myself in uncharted territory, but I quickly find footing. I tell A that boys and girls are different in very exciting ways, start talking about our (his parents') marriage, and realize that I don't know how much of my explanation he is ready to absorb at 4.

I decide that it's better to let him talk. I ask him about his girlfriend. His eyes light up and he starts telling me how they held hands on the way to school. I ask him how it felt, and he says it felt like sparks passed from her hand to his. He asks if this is normal. I roll my eyes dreamily and tell him that this is the best there is. I say my my, our little boy is growing up. He will be a man soon. I find it hard to accept, but then I feel joy about it. I feel love and pride. Ed notes how different this interaction is from the original one.

We check out. We go around the circle, and each of us checks out in character, reflecting on the experience as the mother, the father, the friend, etc.

Then A acknowledges each of us in turn. He says, "Thank you for playing <your role>. I release you from it." He releases each of us in turn. We then go around the circle again and check out as our normal selves.

I reflect, in bewilderment, that I now know how to talk to my children about sex.

I set out to play a supporting role in helping A acquire new resources. What I find is that in that process,

Thank you for sharing your receiver's-eye-view of the process.

Kids are Naturally Curious

Especially about Sex

And as We Grow Older ...

We Might Still Enjoy an Occasional Peek.

Meanwhile, Parents With Controller Rocks

Stay Busy, Passing Them Down The Line

Clips:

http://snapshot.parade.com/main.php?g2_

view=core.DownloadItem&g2_itemId=959991&g2_

serialNumber=6

http://www.linearcollider.org/newsline/

images/2007/20070920_iotw.jpg

http://www.demotivateus.com/tag/fun-for-adults/

http://www.linearcollider.org/newsline

/images/2007/20070920_iotw.jpg

http://babble.com/CS/blogs/strollerderby/

2008/09/spanking.jpg

http://www.philosophyblog.com.au/

Monday, March 2, 2009

Under Water

Ed,

Monday, March 2, 2009

Makes a Million Dollars - Has A Draw-Up
 

Ed,

Monday, March 2, 2009

Beginner

Monday, March 2, 2009

Trading Tribe Workshop Application Essay

Dear Ed,

I want to make sure that I am fully in touch with my inner self. This inner being has no vocabulary, and cannot communicate with me like my intellectual self – but it nevertheless exerts a huge influence over my happiness. I believe this is very much like the “Fred” you have described in TTP. Over the past two years I have re-arranged my life to acknowledge this inner presence and I’ve made much progress in being in touch with this person, however, I sometimes feel unsure of my path.

Travelling to Reno and attending your seminar may allow me to learn new ways to communicate with my “Fred” and hopefully experience life ever more deeply. I want to be certain that I am doing all I can to stay connected with my inner, true self. I want to live my destiny.

Fear played a central role in my life in the past. Two years ago I decided to face up to my nightmares. And in so doing I brought about huge changes in myself and the way I lived and the relationships I had.

My life now throbs with a new sense of potential – but there is too pain and sadness that ties me to my past.

I’m not sure why the pain hasn’t gone away yet.

Perhaps I am not fully in touch with my Fred? Perhaps I am not interpreting some signals correctly? Or maybe healing takes some finite amount of time and the pain will be gone one day…I am hoping that your seminar would help me understand and resolve this.

One other thing that I want to address is my trading performance. In August 2008 I started trading a total-return portfolio which has only made 60bp since inception.

I have this lingering feeling that somehow I keep self-sabotaging my trading performance;

Thank you for your essay.

Monday, March 2, 2009

TTP and Getting Pregnant

Thank you for sharing your process.

I recall a similar event, working with a couple who are previously unable to get pregnant.

Appreciation

Clip: http://www.alaska-in-pictures.com/

Sunday, March 1, 2009

IVTT Meeting Report

Ed,

Experience at the airport. I get extremely early at the airport. I am ready and excited to go. I saw [Name] and feeling even better. I am expecting to get on the plane. Hour before the departure we get an announcement that batteries down and plane is no good so we need to figure out a way to get to Reno an other way.

Agents helps us to get to the other flight that would get us to Reno and be at TTP meeting 2-hour late. We got no choice so we decided to take that one then right at the time we are boarding the other flight, original flight say we can board.

At this time we are already late 1-hr, once we get on the original plane there is another problem and I am at the prime of frustration. Pilot announce us "sorry we are having unlucky morning and we have to wait for some other parts."

So we waste another 30 minutes. At this point our options are limited because other flight is long gone. Finally we start moving and still had to wait another 30 minutes at the departure line.

At this point I am ready to explode. I notice I feel similar feeling when I enter the position when signals are generated. Though improving Usually I experience set backs for 2 to 5 days before anticipated move occur. I am on a plane right now and we are very tight to make the connecting flight. Stewardesses refuse to answer, I feel OK because. At least we are on the way to Denver. I know we have more options to get to Reno on time once we get to Denver.

Feeling I am experiencing here is similar to when I am at the beach and tied is strong and I am taking the wave. I feel powerful because I am beating the nature. Though I like riding the wave also I enjoy taking the wave even more because I feel like I am invincible and powerful. Reminds me of when I was playing rugby I would tackle guys who are trying to score a try. I would knock them out instead. Awesome feeling.

However lately I am getting tired and prefer to just go with the flow.

We got to Denver and we have 40 to 30 minutes to catch a flight. we are optimistic. Then pilot says we got to wait for other planes to leave the gate. So long story short, we had to wait 30 min to park the plane and when we finally got out then we ran to the connecting gate and there is no plane to be found. At this point I am beyond frustration. Even sense of calm. I found a plane to Sacramento and

Thank you for sharing your process.

Fighting the Wave

may provide drama

that medicates deeper issues.

Clip: http://lh3.ggpht.com/_nIQcFQxOCfs/

RpyZl5d_SuI/AAAAAAAAACk/1sv4f31pVMk/

Sunday, March 1, 2009

Working on Goals

Dear Chief Ed and IV tribe Members,

I thank you for helping me with my goals this Thursday.

On the way back and few hours past, I now feel committed enough to send my revised goals. Though my goals might be simple task for others, it is tough task for me yet I feel I must and want to do.

Again, hope you feel my desire as sincere and truthful and I would like to get and ask all the help I can get to accomplish my goals by the end of June.

Thank you for sharing your process.

Sunday, March 1, 2009

Likes Associate Program

Hi Ed,

How are you?

It's a great pleasure to find the first Associate Report on line!

I plan to study it during the next weekend and also to give my contribution to the growth of this shared knowledge.

Thanks so much for the opportunity.

Sunday, March 1, 2009

Thanks

Dear Friend / Teacher,

Sunday, March 1, 2009

Lake Ratio

Hi, Mr. Seykota,

I’m a [Country] student for a PhD in Finance.

My thesis is about performance measures of portfolio; I just ended a paper with all measures proposed, paper which is downloadable here:

The Lake Ratio is a graphic that accompanies a discussion of risk management on my website.

The Lake Ratio = Blue / Yellow

Getting a feel for volatility by inspection

and experiencing your thirst for profit.

If you wish to make a metric from it, you might consider calculating it by summing all the water and dividing it by all the land.

The observation, in your taxonomy, of over 100 performance indicators and variations might itself be an indicator that we have no lack of indicators.

Exotic indicators, and other forms of "math-turbation" can be largely medicinal, serving to numb investment management from dealing effectively with the core gut issues of cutting losses.