Gravity

"The one thing I still know is you're keeping me down." S.B.

New York's hottest club is OverStatement  - it has everything, complex algorithms, pedestrian explanations and correlation charts that look like the Chicago skyline when held sideways.

 

I use a simple mathematical model to  help me know when to bet on an unknowable future event. I named it Hooper after the Richard Dreyfus character in the movie JAWS. Quint would always say to Chief Brody, "Hooper drives the boat Chief." And Roy Scheider, like my trading, would grudgingly shovel chum.

The thing is I don't need to understand the complexities of the universe to make it work. Today, too many market pundits are caught up in complexity. I utilize what I call the Gravity Effect.

Gravity - It's not just a good idea, it's the law.

Complex systems do not lend themselves to predictability. That is, they are uncertain. Uncertainty is not the same as risk, however, so Hooper guides my risk decisions in an uncertain complex system. I don't need a lengthy explanation for a given. The "gravity" is there, we all agree, it sucks, next.

Here's one of my favorites from the Khan Academy on the subject:

https://www.khanacademy.org/math/probability/scatterplots-a1/creating-interpreting-scatterplots/v/correlation-and-causality

What I do know for certain is the Ultra-Bond has declined from 168 to around 154 since Dec 2017. Over that same time frame the SP has gone from 2700 to 2727 but the trip to nowhere is wrapped in an awfully chaotic seizure between 2883 and 2532 ! So what's the point? The point is trying to calm investor fears or extrapolate general economic activity by looking for correlation between 1 day of bond movement and 1 day of equity movement is the last bastion of a charlatan.

"We thought the good times were yet to come, we didn't know we were in it. Oh gravity, don't let go" Infamous Stringdusters

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