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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: EPS who wrote (324)	10/4/1998 12:02:00 PM
From: Worswick	Read Replies (2) \| Respond to of 2794

Well, we seem to be stirring the stew up here. Wonderful things that are being posted. PLease all of you keep it up. Rmember a place called Japan??? In these scenario of unconttrolled risk and perhaps uncontrollable risk do keep thinking about Japan. I wanted to call you attention to the very good posts of Paul Berliner over on the Asia Thread. He has been watching the Japanese markets and reports, "Tundra, the saddest part is that the data on the unrealized losses is almost useless. Since the secs. havn't been marked-to-market in a dogs age, the unrealized G&L in the equity section of Japanese bank balance sheets is a fairytale, also because data on the positions & their purchase prices have all been manipulated. I'd take the # they give & multiply it by at least 3. yesterday I was working on Kubota, a Japanese farm & industrial equip. Co. Their Annual report contains a stern warning from the auditors that the investments value of the balance sheet secs. may have been manipulated and do not comply with international accounting standards. So the problem also lies outside the banking sector.

To: EPS who wrote (324)	10/4/1998 12:44:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 2794

As a mathematician I'm familiar with all the details of the abstract machinery. During the '70s I wrote equations and computer programs to extract advantages from expectations. Ah, there's the rub. There exists in a fair game of Blackjack a way of playing such that the player can achieve a positive expected return. With enough repeated trials and a deep enough pocket to cope with a non-systematic negative run, you can gradually build a fortune. However, there is autocorrelative feedback. I know it, therefore other mathematicians know it. The casinos couldn't handle all the traffic if it got out that you could expect to win. They would soon go broke. They have to change the rules. The house must stay open and pay its bills. In the old days they would simply have a cocktail waitress spill a drink on you to disrupt your concentration. Then they asked you to leave when the overseers noticed methodology. Now they changed the rules so that the player has a negative expected return. Same process has occurred repeatedly in Wall Street. The whole idea is based on the a priori mistaken idea of getting something for nothing. People do 100 times more work trying to get something for nothing in comparison with just having a day job. I believe this occurs because it is a pathology arising from being raised in poverty. The great trader, Jesse Livermore, was destroyed when after the '29 crash, the government changed the margin rules. Actually he went broke because he came back too early and bought low, then couldn't take a loss because he knew he was right. He was, but it took time and he didn't have time because he was on margin.