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  • First Call of a Double-Dip Recession: Setting Up a Market Bottom? [View article]
    An innovative use of Google Search. But Hui has missed discussing the obvious seasonality in this time series: Searches for the "Great Depression" rise during the 4th quarter, sharply dip during the week of New Year's, rise again during the 1st and first half of the 2nd quarter before making a bottom during the summer. Indeed the latest week's dip seems to be typical of the New Year's week dip of the past and we might now predict it to rise again during the 1st and 2nd quarter.

    Why there should be such a seasonality is not immediatly clear, I suspect (as a parent) it has to do with student's writing term papers for their high school or college history classes (Google now being the first reference these days rather than the library). The drop in the summer is the give away I think as well as the New Years week dip (when students are on vacation). I'm not sure what all this has to do with the stock market other than more social studies teachers are using the current economic crisis as a "teachable moment" to assign more term papers on the Great Depression.

    Still, I confess to having bought JK Gailbraith's The Stock Market Crash of 1929 last month. So maybe there is something predictive about it after all!

    although I confess to buying a copy of JK Gailbraith's The Stock Market Crash of 1929 last month.
    Jan 4, 2009. 09:34 PM | Likes Like |Link to Comment
  • Peter Thiel's Hedge Fund Troubles [View article]
    I'm not sure what you mean when you say "what chance do the rest of us have". I run my portfolio pretty much on classical bread and butter hedge fund principles and while I haven't really made any money this year, I haven't lost anything either. First, you run your quanitative risk/reward screen on the universe of securities and sectors every day. The more bullish selections you find the more you become 100% invested with a higher long/short ratio. When you don't find as many bullish selections you move more into cash and lower the long/short ratio moving towards market neutral for the remainder. By the begining of Sept I was 75% in cash with the invested portion net market neutral. Since then I've been mostly out of the market entirely except for some long dollar and treasury positions and a few select stocks. I probably will miss the great turn at the bottom, since I don't try to predict market action, but whenever that happens I will be getting long for the next cycle soon enough. Although I do have a Ph.D (and I think Taleb mentions one of my books in his bibliography) this really isn't rocket science.
    Nov 9, 2008. 11:24 PM | Likes Like |Link to Comment