In For It

A hedge fund manager friend emailed me an article from which the graphic at right comes from. It is a perfect metaphor for so many recent events — the market collapse, demise of the GOP, the end of the Bush era — that I had to throw it up here.

The article itself strikes me as part wit, part nonsense.

The wit is the Hunter S. Thompson analogy; the nonsense is the belief regarding the cycles of history and the markets based on the formula for the circumference of a circle as a reliably investable thesis:

“[stock perfromance] was based, he said, on the formula for the circumference of a circle—the idea that 2πr might apply to the financial cycle—and, in combination with various Fibonacci fractal techniques, it had made him a lot of money. You could slice up history into what he called pi cycles, each lasting exactly three thousand one hundred and forty-one days, or 8.6 years. You could subdivide these, by the hours on a clock, say, or the signs of the zodiac, and detect mini-cycles of 8.6 months. He rattled off a series of inflectionary dates and occurrences: the Nikkei high, in late 1989; the ruble collapse, in mid-1998; the historically tight credit spreads in early 2007. By God, he was onto something.

Sure he is. I suggest the writer mortgage his home and immediately invest all of his money with this circle thesis manager, saving only enough to purchase a barrel at right.

That’s probably why this graphic made me smile.

Enjoy your evenings . . .


In For It
Nick Paumgarten
The New Yorker, November 17, 2008

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