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Higgenbotham wrote: Fri Nov 06, 2026 2:36 pm There will be a new set of winners who can be identified later. Kind of like how Joe Granville was the man in the 1970s.

What Happened: On this day in 1981, Joe Granville warned his newsletter readers to "Sell everything!"

Where The Market Was: The Dow closed at 1,004.69 and the S&P 500 traded at 138.12.

Granville's Bold Prediction: On Jan. 6, 1981, in his weekly newsletter, Granville warned investors that a stock market crash was on the horizon and they should dump all their stocks. The following day, the Dow tanked 4.2% on record trading volume of 92.9 million shares, making Granville look like a genius.

A year after Granville's call, the Dow was still down 14%, and Granville had become famous for calling the drop. At the time, Granville has 11,000 newsletter subscribers paying $250 per year for his insight. Others paid $500 for urgent phone alerts.

Granville's followers praised him for his 1981 call, his prediction of the bear market in the late 1970s and his bearish call ahead of the bursting of the dot-com bubble in 2000. Critics point out that he completely missed the bull market that started in 1982.

While Granville gained notoriety for his 1981 call, his overall performance was far from impressive. From 1980 through January 2005, Granville's stock picks for investors lost 0.5% on an annualized basis compared to an 11.9% average yearly gain from the market as a whole.

aedens wrote: Fri Nov 06, 2026 12:05 am Every five percent down one percent sell...

Higgenbotham wrote: Sat Oct 03, 2026 2:18 pm

Higgenbotham wrote: Thu Sep 24, 2026 3:10 pm I did the last 7% last week and am 100% in triple inverse. The 10 year has been up to multi year highs the past 2 days, climbing more today, but not over 5.3%. Meantime, some are explaining why that is not a problem. If the stock market collapses, then some will explain why it is a problem after the fact.

Now I'm all in with the investment accounts. As the market holds or climbs I will be adding some fresh cash and putting it directly into triple inverse. I added some yesterday. Due to the interest rate rise, the triple inverse is returning about 5 percent per year with average volatility at a constant market.

Now let's do some math. This is ideal and just for illustration. If the S&P loses 98 percent of its value at a constant 1 percent daily loss, this is 0.99 raised to the 389th power. Therefore, the triple inverse would increase by 1.03 to the 389th power, or about 98,000 fold.

Higgenbotham wrote: Thu Nov 05, 2026 2:35 pm The algos will do what they do also which is to mimic the irrational emotional actions of traders, just in a more convoluted way.

Do algos mimic the irrational emotional actions of traders but just in a more convoluted way?

AI Overview

Yes, algorithmic trading often mimics human irrationality and emotional volatility, but it does so through systemic, mathematical loops rather than actual feelings. While an individual line of code cannot feel "fear" or "greed," algorithms are built by humans, trained on human historical data, and adjusted by stressed human operators. When market panic hits, these factors combine to make algorithms behave exactly like a hyper-rationalized, highly convoluted version of a panicked crowd.

How "Emotionless" Code Becomes Emotionally Volatile

The tech industry sells algorithmic trading as the ultimate cure for human psychological flaws. In reality, human psychology is simply pushed further up the chain of production.

1. Overfitting (The Math Version of "Recency Bias")
The Human Flaw: A trader loses money on three tech stocks, gets spooked, and vows never to trade tech again (recency bias).
The Algo Equivalent: A developer forces an algorithm to match historical data perfectly to ensure it looks flawlessly profitable on paper. This is called overfitting. When the live market changes even slightly, the "perfect" algorithm panics, triggers a cascade of hardcoded stop-losses, and crashes because it cannot handle unpredicted reality.

2. Momentum-Chasing & Cascades (The Math Version of "FOMO")
The Human Flaw: Retail traders see a stock skyrocketing, get Fear Of Missing Out (FOMO), and pile in late.
The Algo Equivalent: Trend-following and high-frequency algorithms are programmed to spot micro-momentum. When a trend triggers their entry parameters, hundreds of massive algorithmic funds simultaneously buy or short the exact same asset. This creates an artificial, feedback-loop snowball that leads to sudden "flash crashes" or massive asset bubbles.

3. Strict Stop-Losses (The Math Version of "Loss Aversion")
The Human Flaw: A trader sees their portfolio drop 5%, panics, and sells everything at the absolute bottom.
The Algo Equivalent: An algorithm has a strict, unyielding risk threshold. If a sudden liquidity blip drops the price past a specific decimal point, the algorithm automatically dumps millions of shares into a falling market. This isn't "emotional panic"—it is a cold calculation that yields the exact same, destructive market result.

The Human "Off-Switch" Problem

The most convoluted aspect of algorithmic trading is that humans still control the master switches.

Scenario The Human Discretionary Trader The Algorithmic Trader
Market Drawdown Panics and manually sells positions at a steep loss out of fear. Panics, loses faith in the system, and manually turns the algorithm off mid-trade.
Winning Streak Becomes overconfident, doubles their risk size, and overleverages. Becomes overconfident, tweak the code to maximize profits, and breaks the risk safety parameters.

Ultimately, algorithms execute orders without a heartbeat, but they are trapped inside a framework dictated by human biases. They do not eliminate irrationality; they just automate it at the speed of light.

Higgenbotham wrote: Fri Dec 02, 2011 12:02 am

Barbara Tuchman wrote:
If the sixty years seemed full of brilliance and adventure to a few at the top, to most they were a succession of wayward dangers; of the three galloping evils, pillage, plague, and taxes; of fierce and tragic conflicts, bizarre fates, capricious money, sorcery, betrayals, insurrections, murder, madness, and the downfall of princes; of dwindling labor for the fields, of cleared land reverting to waste; and always the recurring black shadow of pestilence carrying its message of guilt and sin and the hostility of God.

Mankind was not improved by the message. Consciousness of wickedness made behavior worse. Violence threw off restraints. It was a time of default. Rules crumbled, institutions failed in their functions. Knighthood did not protect; the Church, more worldly than spiritual, did not guide the way to God; the towns, once agents of progress and the commonweal, were absorbed in mutual hostilities and divided by class war; the population, depleted by the Black Death, did not recover. The war of England and France and the brigandage it spawned revealed the emptiness of chivalry's military pretensions and the falsity of its moral ones. The schism shook the foundations of the central institution, spreading a deep and pervasive uneasiness. People felt subject to events beyond their control, swept like flotsam at sea, hither and yon in a universe without reason or purpose. They lived through a period which suffered and struggled without visible advance. They longed for remedy, for a revival of faith, for stability and order that never came.

The times were not static. Loss of confidence in the guarantors of order opened the way to demands for change, and miseria gave force to the impulse. The oppressed were no longer enduring but rebelling, although, like the bourgeois who tried to compel reform, they were inadequate, unready, and unequipped for the task. Marcel could not impose good government, neither could the Good Parliament. The Jacques could not overthrow the nobles, the popolo minuto of Florence could not advance their status, the English peasants were betrayed by their King; every working-class insurrection was crushed.

Yet change, as always, was taking place. Wyclif and the protestant movement were the natural consequence of default by the church. Monarchy, centralized government, the national state gained in strength, whether for good or bad. Seaborne enterprise, liberated by the compass, was reaching toward the voyages of discovery that were to burst the confines of Europe and find the New World. Literature from Dante to Chaucer was expressing itself in national languages, ready for the great leap forward in print. In the year Enguerrand de Coucy died, Johan Gutenberg was born, although that in itself marked no turn of the tide. The ills and disorders of the 14th Centruy could not be without consequence. Times were to grow worse over the next fifty-odd years, until at some imperceptible moment, by some mysterious chemistry, energies were refreshed, ideas broke out of the mold of the Middle Ages into new realms, and humanity found itself redirected.

A Distant Mirror: The Calamitous 14th Century
1978

Higgenbotham wrote: Sun Feb 05, 2023 6:39 am My mother grew up in a small town in one of the red counties of the upper midwest. edit: Actually, her county is orange. When I was a boy, she told me it takes 2 generations for a newcomer to town to be fully accepted by the people in the town. For anyone making a move to one of these areas, you would be advised to, first of all, understand the culture and, second, to expect that your family will be giving more than you take for a very long time. It's been my experience that some people will spread rumors, and some of those will not be very flattering. It is what it is.