Let’s start with a reader’s write from Tom in Illinois:

“….Your digital madness novel is a great idea, do it if you have the time. However, may have a mildly rhyming plotline, in an old sci fi book, written back in -58 by a guy named Miller, can’t remember the first name. Anyway, without revealing ANY of the plot line, may I recommend “ A Canticle for Liebowitz”, superbly written, and touches on many of the idiocies of mankind, including the absurdity of religion, the insanity of nuclear weaponry, and the propensity of man to keep sticking his weenie in the meat grinder. If you can find it, and have not read it yet, I guarantee you will love it. “

I actually (in a vague sense) remember reading it!  Perhaps the plotline was somehow embedded, since when I wasn’t memorizing everything I could get my hands on about electronics as a kid, I was sucking up everything I could in the way of science fiction.

The two reasons it jogs something? The name Liebowitz and it was the first time I had run into the world “canticle.”  A Canticle for Leibowitz is still available in paperback from Amazon, by the way.

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Speaking of writings and readings:  I keep thinking that if I ever get to the point of retiring, it would sure be fun to go back and reread a lot of the books I read as a kid.  A kind of reboot of data files before the Big Sleep.

I remember long ago when I interviewed Louis L’Amour and he told me about how he’d worked as a merchant seaman, reading pocket collections of great literature to other merchant mariners in the focsle at night.

Well, that got me to looking into such mini pocketbooks and you can still find the Everyman’s Library on Amazon with a fairly wide assortment of readings.  One, for example is The Stories of Ray Bradbury (Everyman’s Library (Cloth)) while another is Three Novels: Journey to the Center of the Earth, Twenty Thousand Leagues Under the Sea, Round the World in Eighty Days (Everyman’s Library (Cloth)).

Mind you, there’s a great many of the older classic books available on Project Gutenberg website; simple enough to download classics and then .PDF them and forward them to a Kindle, or toss them onto a ‘droid and read ’em as text files there.

As a Man Thinks

Most people don’t realize the extent to which their thinking is “bounded” by their inputs.  In other words, the number of new thoughts and ideas you’ll have is directly related to how much raw material you pack into your brain.

Creativity, seems, may be something of a matrix; which is one of my favorite topics to discuss.  Thus, the more fresh raw material you put in to your head, the more new ideas come out.  Which is why I try to devote an hour or two every day to reading something.

Readers have generously sent me a wide selection of readings, which I take up as time allow:  I’m presently parsing in “Astro-Economics: A study of astrology and the Business Cycle” by LCDR David Williams, which fits in many ways with one I’ve been working through from my personal stack (which you can get from Amazon): The Unified Cycle Theory: How Cycles Dominate the Structure of the Universe and Influence Life on Earth . 

That book by Peutz ain’t cheap, by the way:  A shade under $50-bucks.  But the rare booklet by Williams (1958) can still be found occasionally for $20-something from Amazon’s bevvy of used book sellers.

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One footnote about those mini pocket books:  The fonts are small, so they’d be something to read before your eyes get too old.

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Which get’s me to a very interesting thought about reading.  Seems to me there are two ways a person could look at the topic and structure your life which distills down to two paths:

1.  One path would be to “read like hell” until age 30 or so (whenever an advanced degree of some kind is nailed) and then quit reading everything except readings in your field of expertise for the rest of your life.

This is easy on the eyes, inexpensive, and minimizes time consumption for inputs.  Toss in the fact that 90% of news is useless in terms of personal action (what are you going to do in your life about last night’s latest Trayvon demonstration, for example?) and you can save all kinds of time to devote to either staying absolutely current in your area of expertise.

2.  The OTHER path would be to progress as above, until you have enough knowledge about  something to make a good wage, but then portion off some part of each day to your continued general education beyond what’s in your specialty. 

To this kind of approach, last night’s latest demonstrations (Zimmerman) do mean something, and reflecting upon news of such events might lead to insights which, although not specifically useful in a specialty/income area (outside of HR, perhaps) do reveal the current state of affairs in the “hearts of men.”

Eventually, one comes to the ponder about whether there’s some kind of existence of a human “essence” after Life as we know it ends.  Since most professional specialties only work in the physical here & now, if there is some kind of after-life, then going there, which is presumably another dimension or way of existing as spirit/essence/whatever, with specialized knowledge about how things “used to work on that plane” would be pointless.

What seems more likely to transcend the boundary of death would be the “affairs in the hearts of men” and in this regard, the more general information about the operating habits of other spirit/essences/whatevers would become the entire point.

Arguably, no one knows what happens beyond the grave, but there’s been enough information coming back, as documented originally in Dr. Raymond Moody’s Life After Life: The Investigation of a Phenomenon–Survival of Bodily Death wherein a lot of heart attack victims and others who’ve been dead, but just for a while, come back with amazing tales to tell.

One of these days, my friend Capt. Midnight has promised to write up a very personal experience with this phenomena of “touching other side” which is quite amazing, revealing, and I think important.  I’ll pass it along when it arrives (which I anxiously await).

Whatever IT is, seems to me that the more one reads, and the more one works on the “inner work” the better equipped one will be for whatever is next. 

Is television a help of hindrance?  We simply don’t know yet.  However, my personal choice has been to be very careful about that which goes into brain (from where it seeps into heart) which is why I don’t watch much horror or any gratuitous violence on television.

Not that the Way of the Peaceful Warrior precludes right action, it’s just that present society places lots of emphasis – too much – on the what can you do for me right now kind of life.  While the large problem is what do we take through the exit safely stowed in heart and consciousness.

If, perchance, the after-life is a restitching of all that’s in your head and heart right now, what would you put into it next as important raw materials?

I’m always shocked how few people grasp the question.

But with the weekend here, come five minutes past Miller-time this afternoon, might I suggest one hour this weekend for a well-chosen book?  One that won’t come back and bite you in the soul down the road? GIGO.  And maybe for eternity.

Sci-Fi Note

One other “perchance to dream” note in favor of sci-fi?  Mars Rover discovers more evidence that Mars was once habitable.

War on Planned Obsolescence

Reader Shelly has been following our discussion as we seek appliances that can “outlive us” and relates this:

“Hi, George: When my dishwasher died the cause was the electronic control board, which was toasted.  It would have been a very expensive repair, almost $300 just for the part.  Shocked, I asked the salesman what a new dishwasher would cost and was told that I could get a low end model for about $500.  Plus shipping and installation.

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As every morning, I begin on an economic note since our roots around here are sustainable living, long wave economics, and couple of nickels from from confiscation by government (inflation and taxes) and charlatans in finance (the Bernies et al) who seem to appear at every turn.

But this morning’s insight from my daughter Allison tells more about the condition of America that years of schooling and whole reams of economic data.  Best of all, it’s simple for anyone to comprehend.

Allison works, as I think I’ve mentioned, in the communications industry in sales in the Seattle area.  She works long hours, trains hard, has encyclopedic product knowledge, and (as is the standard in our family)  is honest as the day is long so consequently she’s doing very well.  Here lately, she’s been working a lot of overtime and I asked her about that.

“Well, dad,” she began “We had an ad out here last week to hire some new sales reps.  We had a total of 75 resumes come in.   But then, when we called and basically invited all of these people to come in for interviews only six expressed any interest!  I was talking to a friend of mine in our HR department and she said if we’re lucky three will actually show up and then we will find one…maybe two…that are worth hiring.  And we could hire five….”

I trust you see the dynamic at work here?  It’s summertime.  People who are on unemployment in many states need only to demonstrate that they have applied to three or four places per week, not that they actually went somewhere when a potential job called back, did an interview, or actually followed up in a meaningful way.

Now, this is just a wild-ass guess on my part, but seems to me that if 75 people were invited in for interviews at least 25% ought to be interested enough to show up.  Historically, in really hard times, the number showing up would be more like 50% or more…

No, I’m not arguing that welfare, food stamps, and unemployment comp should change.  But just presenting the data from a trusted observer.

Attn. HR Folks: Research Requested

If you know anyone in an HR position, ask them what their current “call-to-interview rate”  and the “interview-to-offer” rate is running.  Then, if they keep good records, ask them what their ratio was, say, five years ago…or better: 10-years ago.

My bet is that we have seen a large decrease in the call-to-interview ratio as people have become much, much more selective about the kinds of work they are willing to do, and how much effort they will put in to getting a job.  They can get a subsistence easy enough, so why put forth real effort?

Meantime, California is likely to cut extended unemployment comp.  The dynamic there is that if California rolling three month unemployment dips under 9% then 10-weeks of benefits dry up.

One other note about unemployment:  Fresh figures are out from the Labor Department this morning:

“In the week ending July 13, the advance figure for seasonally adjusted initial claims was 334,000, a decrease of 24,000 from the previous week’s revised figure of 358,000. The 4-week moving average was 346,000, a decrease of 5,250 from the previous week’s revised average of 351,250….”

With this latest bit of data integrated and with options expiration today, we look for the market to have a reasonably steady day (barring left field events) with volatility to increase next week and a possible down-side bias.

Student Loan Deal:

Inflation Forecasting School

There’s some excellent leg-work on what’s ahead buried in the report from the DesMoines Register which reports on a new deal being cut which may resolve student loan rates at least for a while into the future.

How so?  How does one infer the direction and magnitude of coming interest rate increases, the return of inflation, and such? 

It’s a two-part process.  First you get a sense of where Big Ticket interest rates are presently.  For this, flip over to the Federal Reserve’s Consumer Credit (which is really debt from where you and I sit) and notice the present new car loan rates.  For new cars it is about 4.13%.

You might want to make up a basket of rates:  Refi’s of home loans are in the 3.5% rate presently (basis a 15-year loan) and the 10-year US bond yield is running about 2½ percent.

Now, flip over to the present student loan rates:  They used to run a modest 3.4% for direct subsidized loans which had a first disbursement date between July 1, 2011 and June 30th of this year.

Now, however, a new student loan is running 6.8% (ibid).

The synthesis of this morning’s Des Moines Register report and a little common sense gives us two interesting thoughts to mull over.

First, the DR reports that democorps won a lifetime of loan cap of 8.25% while the cap for grad students would be 9.5% and for parent loans (PLUS loans) would be capped at 10.5%.

Which means – reading between the lines – that econometric modeling by lenders and government off in the back rooms is looking at interest rates going up another roughly 2-3% from current levels in the immediate future.  At least for now.

But there’s one other observation that comes into view which causes me a bit of consternation:  The marketplace presently provides more of an incentive to buy a new car than to get additional education.

Which, near as I can figure, is not the way to build a competitive country.

A number of groups are calling out the Fools on the Hill on this, but they have a track record of being “hard of thinking” when it comes to sacred cash flow cows of campaign-buying banksters.  The global chieslor cartel gets to borrow money from the Fed cheap, mark-up as loans to students, take spreads…

The future, seems, still has to be a profit center for the banker-class.  EBM* at work, again.

Is there hope?  Maybe: as Jesse Eisinger (NYT Dealbook/ProPublica) notes: “Finally, Bank regulators have had enough.”  It’s a little early to be celebrating…years early.

*Everything’s a Business Model

That Signpost Up Ahead?

India’s outlook on the economy has turned down in the latest Business Today-C fore Business outlook.  Snip from their press release:

“The turmoil in the foreign exchange market undid the gains of the last three quarters and the confidence level of businesses has dipped for the first time in four quarters.

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I don’t know if you’re old enough to remember the early days of advertising, and this maybe goes back to the days when man was not yet fully immersed in online media, but in the early days of rock ‘n roll advertisers often used the “mystery promotion” which involved doing advertising related to a particular date or place.

“Stay tuned to the super – 610 because this weekend we’ll…” And there would be somebody interrupting preventing the message from being complete.  Those kinds of promotions on radio increased average quarter hours and TSLs; time spent listening.

It’s a classic advertising ploy and one that can often be used in order to develop buzz around an upcoming event, especially if the event is a brand-new one and has no track record to otherwise attract interest.

If I told you “Be at the corner of Main Street and Willard Avenue at 10 o’clock Saturday because I’ll be giving away money…” You might be in being there.

A more complete disclosure about what my intent was, on the other hand, might keep you away. “Be at the corner of Main Street and Willard Avenue at 10 AM Saturday because I’ll be giving away three cents.” You see how some of the excitement, some of the mystery went away?  Classic American hype.

So now what we’ll do, to kick off an otherwise boring Thursday summer workday, is we’re going to combine some good old-fashioned advertising hype with the shortwave radio mystery stations that broadcast nothing more than numbers.

What has come to our attention (courtesy of reader Ryan), is a most curious set of YouTube videos which begin with the phrase “how to pronounce…”

The first one I found was “How to pronounce 77.” all it says is that “something is going to happen and 77 days.” I have no doubt that it will, since the sun has a high statistical probability of coming up on that day.

In the exciting “how to pronounce 76” the assertion is made “I’ve been trying to tell you something for 11783 days. Something is going to happen in 76 days.“

“I’m awake now, things are clearing up I’m not saying the words now. something is going to happen and 75 days.“

“I’ve got a minute, let me tell you what I think is going on. Something is going to happen and 74 days.”

“Tensions between the districts has spiked in the last few months. Something is going to happen and 73 days.”

“You can see it in the markets. Everyone is ready for a storm. Something is going to happen and 72 days.“

“They’re singing a new song in the streets of the zone. Something is going to happen and 71 days.”

“I have plenty of information to keep me company.

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Normally, I’d start up a report with something economic – like this morning’s consumer price report which we’ll get to in a second – but the first thing out of the hopper this morning is to note the report from the American Radio Relay League (the ham radio society I’ve told you about umpteen times) that the “HAARP Facility Shuts Down.“

According to the ARRL report, the Gakona Alaska facility has been shut down since early May and while a new contractor may come along for some finishing up research this fall and winter, the diesel generators on site no longer meet Clean Air Act requirements….

All of which leads to an intriguing question:  What about all the reports on the net about supposed “HAARP signals” impacting the mainland of the USA which seem to still be out there being reported this morning?  I’m not hearing HAARP on my ham rig…

It leads to some uncomfortable conjecture about the alternative reality called the Internet.

I guess we’ll need to find some other means of constructing a portal for alien reptiles to enter this dimension.  Hey!  Wait!  Isn’t that was CERN is for?  And what about using HAARP for mind control programs?  Does that mean we’ve been running out of control for two months now?

Time to double up on the meds….

Consumer Prices

OK, they came out this morning and as one might expect the continue to show modest inflation at the retail/consumer level:

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in June on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.

The gasoline index rose sharply in June and accounted for about two thirds of the seasonally adjusted all items change. Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining.

The food index increased in June as the index for food at home turned up after declining in May. The index for all items less food and energy increased 0.2 percent in June, the same increase as in May. Advances in the indexes for shelter, medical care, and apparel accounted for most of the rise, with increases in the indexes for new vehicles and household furnishings and operations also contributing.

The indexes for airline fares, used cars and trucks, and recreation all declined in June. The all items index increased 1.8 percent over the last 12 months, an increase from last month’s 1.4 percent figure.

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I’ve been doing research since returning from our conference up in the Northeast about the details underlying Big Data.  This is scarier stuff than I ever imagined and it has already led to a world where people can be targeted for either failure to report income or spending that is unusual – or both.

Yes, picture a world when a government near you can inspect literally every aspect of you income and spending to see if things are within “acceptable norms” and if not?  Something serious to begin considering.

The prospect of living in a society where everyone is constantly under a real-time audit may seem absurd, but I can tell you how it’s being done and how to write the code to do it.

So that’s coming up for Peoplenomics subscribers and as a kind of lead-in to that we’ll do an update tomorrow on Digital Tulips – those upstart digital currencies.

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A number of my acquaintances have in the past chided me (even called me a fool) for reporting every single dime of income I have and paying tax on it.  Not even trying to use available tools to “structure” a low tax situation because those can become contentious and any tax money saved in the short-term can come around and bite in the long-term both in terms of tax counsel and then, if not successfully defended, back taxes and penalties.

All of which was proven more or less right yesterday when a source told me they data files exist on every American and now, as data is being linked in (even if in meta data form) that can begin to sketch out you personal cash flow statement.

Example:  If the sum of your checking account checks plus your credit card charges equals more than the reported income on your most recent tax filing, you might become “interesting” in the world of Big Data since such arithmetic is trivial and instant.

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I’m sure one of our readers down in Ecuador (yes, you, Bruce) will send me a “Ha! Told you so, Ure!” but I’m not yet prepared to abandon America yet, although living in a country where cash flow outlier people can be targeted is, admittedly, a whole other kind of “police state.”

And maybe even that label isn’t quite right.  After all, tax laws are on the books, incomes are easily tracked, expenses are easily tallied…but what becomes interesting is how government approaches the problem of squeezing money out of us turnips.

To be sure, such a system could just automatically, once per month deduct taxes due, but that wouldn’t be any fun, would it?

In a world where there are no jobs (negative job growth in actual goods production/manufacturing) we need jobs, even if they are government jobs. 

Consequently, as the new data tools arise, rather than automate the taking of a government cut of our labors directly, a system of bureaucracy and – for extreme cases, jurisprudence and prison, can be maintained as well – ensuring almost unlimited employment opportunities in government.

Well, like I said….digital tulips tomorrow and deeper discussion of the mechanics of how this works on Saturday but even if you don’t like paying taxes (*and I don’t particularly enjoy giving away 30% either) the systems are being cobbled up now that will facilitate real-time financial monitoring of all Americans.

You know all those “FEMA camps” being supposedly built in America?  What IF such camps were where people who lied about their incomes (as outed by their spending records) were going to be put which the big switch is turned on and enforcement using the computers begins on a massive level?

I’m starting to idly think about converting myself into a corporation and offshoring myself.  Maybe have a corporate development center in East Texas, but move all banking and hard assets out.  But, of course, even that doesn’t work.

Remember Cyprus?  Offshore banks seem to be worse than our own.  And besides, the US authorities claim 10-years of  authority to collect taxes from expats even if you make it out the exits.  Not to mention there goes Medicare and Social Security income, too.

So how to play it?  I’ve thought about moving back onto a serious offshore sailboat, but DHS marine patrols have gone nuts…and in states like Washington which have decriminalized marijuana use, the feds are still enforcing draconian weed laws which (Whoa!  is that a roach?) allows for confiscation of boats or whatever.

Government confiscations of cash almost never work out for the little guy, either.  It’s a very asymmetric relationship.

In the end, we may all be forced into a kind of governmental “honesty” by the evolution of Big Data.  But what’s scary is the logic which says it’s all “legal” because tax laws and such are on the books already.

As my source pointed out: ” ‘Bout the only thing you can do is move further back in the woods.”  We only have a block to go before services end already…not even cell phone coverage…

The haunting question from all this? 

Can a government-run surveillance society – where “honesty” is computer-monitored  really be considered a “free” society?

Proponents of Big Data answer “Of course!”  They wrap it up in a flag and with a side order of anti-terrorism. 

Proponents of a Constitutionally protected right to privacy, unreasonable search and seizure, and other antiquated notions (including me) disagree.

Social maps, cross references to all major purchases, and a real-time view of everything you spend:  The fact is you’ve already been digitized.  Right down to keying in what food you eat in those grocery store discount card programs.

All that remains to be seen is how “Honesty enforcement” is rolled out.  Just a little more CAT-6 cable and a terrorism event is all that’s needed and almost sure to come.

Related Read

See the Frontline page about “Two American Families” if you missed it.

Says tipster Charles: read a bit.

I second that and scroll down to the comments section and read the first entry from Mikeguru completely.  Very good perspective on things.

And speaking of which, tipster Anthony says Paul Craig Roberts discussion of how the corpsncrooks have seized power is worth a read, too.

Something in the Air?

Maybe this is related to HAARP being off the air, or maybe it’s just how the stars have lined up this week… But whatever the cause a number of readers have been reporting trolls, outbursts among former sane people, and all kinds of odd behaviors of late.  Like since Saturday. 

Seems like something may have slipped but not sure what.  If you notice an uptick in people acting crazy, though, please let me know.

(Spouses don’t count…looking more at the general weirdness levels.)

Eight Second Ride, Dept.

A sure sign of my aging is that I have no interest in jumping out of an airplane in what skydivers call the “Horny Gorilla Exit” and then trying to ride the back of a partner in free-fall like a cowboy on a bull in the arena.

Which is why my son’s latest videoed adventure on YouTube is so odd.

I will admit, I was impresses to see the clenched fist/open hands being used for fine vertical speed adjustments…and his break-away and landing (at the end) was good.

He’s coming up on 50-jumps now, packs his own gear, and is quite accomplished for how long he’s been at this. 

I just wish he’d taken up something just a bit more sane:  Tightrope-walking the Grand Canyon or catching bullets in his teeth…

The Inventive Cat & Product Engineering Course

Our friend Bill (who sends in lots of cool observations about Life) noticed the reaction of Zeus the chicken/cat to the Roomba yesterday:

“FYI I snipped your little piece about the Robot Vacuum, with flowery credit added too I may say, and sent it around to some of my friends who have cats.  All agreed, the idea of a Robot Cat Stalking Toy is a big winner.  A million dollar idea.  Now if I only had some financial backing and the know how to start a business I would be rich, and so would you…. “

Well, holder, Newt:  Let’s run the numbers on this:  Traditionally the inventor’s piece of the action is 2% of sales price.  The rest goes into manufacturing.

Elaine’s figured that there are about 80-million cats in the USA, but as a marker, unless it’s as good as a pet rock, you’re only talking about 5% of the market buying…so that would be 4-million units.

Since both Bill and I want to make $2-million each on this, that means we need $4-million in royalties at 2%…which means a top line of $200-million.

Which means our price point needs to be (200-mil/4-mil units) or $50.

Now, if you haven’t done business with Big Box stories, you need to know that the BOM (bill of materials) for a product needs to be less than 33% or the retail price and 30% is even better.  That way, the retailer can mark up 40% (or more) and make money to cover their costs (shelf space and inventory and portion of SG&A on their side).

Which means our price out of China (delivered here) needs to be $16.66 and then we only have a 1-2 year window.  Set aside $50K for plastic mold costs…yikes!

Seems like too much work to me.  How about instead I reveal that when Elaine’s not roboting, I use one of these to keep Zeus entertained:

Syma S109G Apache AH-64 3.5-Channels Mini Indoor Helicopter  $21 bucks and no lead time.   A bit of thread and a 1″ round styro ball optional. 

Make sure you have the external load endorsement for rotorcraft in your logbook.

Deer Us!

Yes, I may be an idiot when it comes to deer control, figures reader Dave:

“George,  on the height of your deer fence – be aware that a standing deer can jump 6′ and a running one can clear a 10′ fence.  Hope that 18” addition is enough!

Hmmm…another reader (Roberta) offers this:

“I built my new deer fence last year and it seems to be working- thanks to a guy on YouTube.  He stated that deer can jump upwards, but can’t jump outward at the same time. So what he built would probably be only 5 feet tall if it were vertical, but since it is angled outwards it freaks the deer out. It has worked great for me so far. But I’ll still be replacing the dwarf orchard it protects, due to Japanese beetles. Back to the drawing board…”

Bill in California has an electrifying idea:

“Deer fences need to be at least 8’ tall to keep out the deer and other 4 legged critters or just to keep out the deer, electric fence with strips of aluminum foil with peanut butter on the alu foil.  Deer lick the peanut butter, get shocked leave fence alone and the garden.  This was told to me by an ag agent in TN as being the best way to deer proof a garden after the deer thanked my for their garden smorgasbord of over 100 x100 in size and all were 6” plus in height peas, corn and the list goes on….”

Someone else mentioned “blood packets” which some county ag offices have. They leave a smell of blood which the deer think is a predator kill, and so they won’t come near.

And says another Bill, t’ain’t just deer you will have problems with.  Raccoons are a nightmare, too:

“George,   In view of Weatherford’s “Parker County Peach Festival” last weekend, here’s my collision with Mother Nature..  

Score: 8 to 1

In view of Weatherford’s “Parker County Peach Festival” this weekend, the late frost caught most peach trees in bloom….

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Time for a thought problem:  I’ve been ponder the nature of predictive systems a good bit lately because it occurs to me that if indeed, as some have claimed, only a very few (and maybe only one) can use a predictive system at a time, then much of modern economics should have fallen by now.

I’ll give you an example:  Suppose I were to present you this morning with a system of predicting market performance based on predicting future events…and further suppose that I had run some tests and it seemed to work.

Being an enterprising fellow,  one might package up this way of looking at how a particular stock price could/should evolve and take it to market.

The question is:  Is there a point where the very act of prediction lessens the value of a predictive system?  (Hint: the answer is yes.)

I mention this because in my pursuit of perfect trading algorithms, I’ve looked innumerable ways to predict the future.

Historically many trading systems have shown keen insight into “the future” such as Elliott Wave analysis, or momentum trading, and the algorithms that keep making money by front-running trading by a millisecond or two in high frequency trading systems. 

Let’s define this as our “universe” for our thought-work this morning.

Let’s suppose that a new party arrives on scene and introduces a new way of trading.  We’ll call this system “Challenger” and its working are kept totally secret with the developer never revealing specific code, never sharing so much as a single screenshot, and holding tightly to the specifics of how this system works beyond flowery descriptions.

Where there is only one user of such a new trading system, it may appear to work for a some period of time.  However, if the system works well enough, it will over time average down its results because more and more people will adopt it and begin trading accordingly.

Carefully note that the introduction of this new system does not end the existence of the other systems….it merely changes their behavior  slightly in the short-term. 

As more people adopt “Challenger” the results of other systems may even rise as followers leave them: the future is disinclined to change the total number of “winners.”

Statistically, among all predictive trading approaches, there seems to be a bounded number of winners.  Only the distribution among systems changes.  new systems may win early, but as traders adopt the most successful models they can find, their results suffer because of the “bounded winners” limit implicit in markets.

Let’s take this a step further:  Soppose the creator of such a  “new system” claims it is the only true trading system.  Can such a claim be valid? 

Especially because of a) the “bounded winners” limit and the pre-existence of other trading systems and b) the other pre-existing tecniques?

Obviously, multiple approaches may be used to predict the future and based on their successes, they rise or fall over time on their own merit.

In his book Antifragile: Things That Gain from Disorder, Nassim Taleb begins with a discussion of this sort of duality as he points our air may feed fire, or too much air – wind (for a candle) actually ends fire. 

What he doesn’t get into the underlying principle of air.  It’s the underlying variable, however.

In the analysis of trading systems, it becomes apparent (after some work) that the future does indeed seem to have a boundary to it:  Although, it’s more obvious in dealing with stock market predictions than perhaps a more generalized study of future, perhaps, but a bounded future nevertheless.  It suggests the future generally has these bounds.

If a new system’s results begin strong, but declaine in accuracy over time, traders will abandon it as the investor’s constant quest to optimize returns drives exploration.

That a system of divining future events claims exclusivity when dealing with something as widespread as “the future” is absurd.  As they say in Las Vegas “everyone’s got a system.”

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There is not a class of investors who stand head and shoulders above all called “Remote Viewers” at least which I’ve found yet.  This hints to  me that remote viewing may have limited application to investments.

Yet, can you think of any more demanding metric than returns?

Thus, the test of any future prediction system is the accuracy of the numbers it delivers.

Whatshould the sincere researcher do when faced with a future predicting system that steadfastly refuses to make tradable predictions? 

One wonders which of three reasons exist:  Sincere moral objection?  Inability to be specific?  Or, that numeric results and standard deviations really matter?

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Lots is being written about “future seeing” and this morning’s post by Statibartfast over at Sidewalk Catharsis is closely related.

Let me be very clear on something here:

Since our Nostracodeus software has not been sold, is not yet for sale, is not deployed, etc., any failing of other predictive systems is self-arising and not related to Nostracodeus research.  Any assertion otherwise is crap.  

There is no blaming Nostracodeus for any “effect.”   It was NOT out there and IS not out there.

In fact, Nostracodeus continues in pre-release hold.

On Wednesday, we’ll discuss further implications of the emerging Big Data paradigm world for subscribers to Peoplenomics.com.

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