As mentioned on the cover, it is all about Math, machines and wires markets... I think for those who are keen on the said subject, this book serves as a very good introduction on how maths and machines become part and parcel of wired market these days. However, for those who are not really keen; they might find it boring. I thought the writing is quite rigid(stiff?LOL) for certain chapter. After all, the author needs to explain the chronology in wired markets from day one. Besides, this book is actually a collection of articles written for technology magazines from the mid-80s to the mid-90s. As such, there are certain items which we may not know since those were the days where computer was still an expensive luxury stuff.
Then, we have some irrelevant stuff in the final few chapters. (In my humble opinions...) Even the author mentioned that he did not planned for that in the first place. Well, it was the sub-prime stuff. But, I honestly do not see any correlation with our topic here. Perhaps a little bit, but not necessary at all. End of the day, the author's view in regards to the said issue seems misleading too...
Ok, some bad stuff... What about the good stuff? Well... to be honest, a lot! In my humble opinion, this is a book that was arranged neatly in a way that tells the whole stories thoroughly. (Bear in mind that this is a collection of articles) End of the day; like I said above, it is a good start for those who are keen on Algo. In fact, I thought it is good refreshment for those who are familiar with Algo stuff. Hence, overall, despite some weaknesses, it is one of the very best investment book(articles?) in the market.
I personally love chapter 6 on the topic of "Stupid Data Miner Tricks". It serves as a good reminder for those who thought they can be a good miner. A few phrases are good enough to prove my point. "Whatever raw materials you choose, fooling yourself remains an occupational hazard in quantitative investing. The market has only one past, and constantly revisiting it until you find that magic formula for untold wealth will eventually produce something that looks great, in the past." Further to this... "When doing data mining, it is important to be very careful of what you ask for, because you will get it." Then, it is followed by "A computer lets you make more mistakes faster than any invention in human history- with the possible exceptions of handguns and tequila." Finally, we got this very nice quote: "The easy access to data and tools to mine it gives new meaning to the admonition about lies, damn lies and statistics. The old adage caveat emptor, buyer beware, is still excellent advice. If it seems too good to be true, it is."
It was then followed by a very details description on manipulating via Chapter 11. Check out list of messages as below (a remarkable stuff published in year 2000 by someone named Tel212):
Message boards guidelines, used by shorters that short sell stocks:
1. Be anonymous, of course.
2. Use 10% fact and 90% suggestion... Facts give credibility, while suggestion does the "sell".
3. Let others "help" you learn about the stock thereby developing rapport and support base.
4. Use multiple handles, but develop a unique style for each.
5. Use multiple ISPs.
6. Start each new handle slowly to build acceptance.
7. Occasionally, use two handles to "discuss" an issue.
8. Do not show all your cards at once when slamming a stock. It's a war- it's ok to lose a battle as long as you save enough ammo to win a war.
9. Know your enemies - they will end up being your best weapons.
10. Only slam until the tide starts to turn. Let doubt carry the stock back with the tide.
11. Maintain an appearance of being open minded but slant in either direction is acceptable.
12. Don't appear meek. No one follows the meek.
13. Strike just as your opponent starts to gather momentum but not before or you lose your sting.
14. Don't worry if people beg you for a slammer. The doubt will remain and that's what you are after.
15. If pegged, put up a brief fight, then let them feel they've won. This puts their guard down within a few days and your other handles can take over from there.
16. When slamming a stock, the intent is to minimize its rise, not to create an instant plunge.
17. To slam a stock requires you only to kill the dream not the company.
18. Use questions to invoke critical thinking and use statements to reinforce.
19. You can be liberal in your questions but be specific and precise in your statements.
20. Don't lie, but bend the truth.
21. When slamming, encourage research beyond calling the company. You know people are far too lazy and it's only doubt you are after, not confirmation.
22. When slamming, discourage people from taking the company's word- encourage them to seek outside proof. If the company's history is bad, point them there.
23. When slamming, refer to missed deadlines and weak financials.
24. When slamming, if the price rises, blame it on a temporary mass reaction to a press release rather than real interest in the stock. Point out low volume and emphasize the selling.
25. Pretend to share the same concerns by learning what they want to hear.
26. And above all else, be unpredictable.
Such "pump and dump" strategies sound frightening... The only thing I can comment: the author (the anonymous?) seems revealing too much through this "frightening" posting! LOL.
Final thoughts... Out of 10, I am going to rate it at 7. Overall, this is a very good book to explore. Although there are some weaknesses from my very own perspective, it is confirmed not a polluted stuff, LOL.
Despite some nice quotes above, I preserve few as below to serve as a soft reminder to myself. Enjoy it...
A computer does not substitute for judgement any more than a pencil substitutes for literacy. But writing without a pencil is no particular advantage.
Life would be so much easier if we only had the source code. - Hacker Proverb
To err is human. To really screw up, you need a computer.
If you give someone a program, you will frustrate them for a day; if you teach them how to program, you will frustrate them for a lifetime.
Be careful what you ask for - you might get it.
In the real world, potential alpha is reduced, and sometimes eliminated by transaction costs. Trading is the implementation of investment ideas, and poor implementation can negate the potential value of any idea.
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