U.S. stock markets are roaring. What does it mean? You should be long. Why? They are going up. How long will they keep going up? No one knows. “That’s not a good enough answer for me! Why not? What is the alternative?

Barry Ritholtz writes at his blog:

…this video clip from the South African jungle. It is utterly fascinating — I can guarantee you’ve never seen anything like this before. Perhaps there are some lessons in it for life.

He is right, this video of the “wild” is teaching a lesson for many aspects of human life.

A good read that adapts Leonardo Da Vinci precepts to trading.

From the AP comes news of the new Chinese “stamp tax” on trading:

BEIJING (AP) — China’s move to raise a tax on share trades, aimed at slowing a boom that could lead to a possible market bubble, seems to have worked, at least for now. The main Shanghai Composite Index tumbled 6.5 percent to 4,071.27 Wednesday after hitting a record high on Tuesday. The Shenzhen Composite Index for China’s smaller second market fell even more, closing down 7.2 percent at 1,199.45. The decline in Chinese shares hit other markets, too, although not as dramatically as on Feb. 27, when investors around the world flinched from a nearly 9 percent slide in the Shanghai index. The retreat in Chinese shares came after the Finance Ministry tripled the “stamp tax” on stock trades from 0.1 percent to 0.3 percent, effective Wednesday. The ministry was trying to “cool (the) stock market,” the official Xinhua News Agency said. “This policy change reveals the government’s concern about a possible stock market bubble,” said Citigroup economist Minggao Shen, describing the tax hike as Beijing’s first formal move to cool the boom. “The market didn’t know what the government was thinking until now.” Despite the drop, Shanghai’s benchmark index is still up 52 percent for the year, following a 130 percent jump in 2006.

Why doesn’t the AP reporter have the guts to say that sounds nutty as hell? A stamp tax? Picking bubbles? Deflating them a little, but not too much? All organized by typical government busy bodies? But perhaps they have figured out, perhaps this all ends well. I smell the same kind of aroma that took over America up until March 2000.

We never see the future.

John Allen Paulos is his book Innumeracy writes:

Some would-be advisor puts a logo on some fancy stationery and sends out 32,000 letters to potential investors in a stock letter. The letters tell of his company’s elaborate computer model, his financial expertise and inside contacts. In 16,000 of these letters he predicts the index will rise, and in the other 16,000 he predicts a decline. No matter whether the index rises or falls, a follow-up letter is sent, but only to the 16,000 people who initially received the correct “prediction.” To 8,000 of them, a rise is predicted for the next week; to the other 8,000, a decline. Whatever happens now, 8,000 people will have received two correct predictions. Again, to those 8,000 people only, letters are sent concerning the index’s performance the following week: 4,000 predicting a rise; 4,000 a decline. Whatever the outcome, 4,000 people have now received three straight correct predictions. This is iterated a few more times, until 500 people have received six straight correct “predictions.” These 500 people are now reminded of this and told that in order to continue to receive this valuable information for the seventh week they must each contribute $500. If they all pay, that’s $250,000 for our advisor. If this is done knowingly and with intent to defraud, this is an illegal con game. Yet it’s considered acceptable if it’s done unknowingly by earnest but ignorant publishers of stock newsletters, or by practitioners of quack medicine, or by television evangelists. There’s always enough random success to justify almost anything to someone who wants to believe.

This is a great example showing how unsuspecting (& hopeful) people can be swayed into believing that a guru has magical predictive powers. It happens all the time.

From LiveScience.com comes another attempt to have nature be more important than nurture when it comes to achievement:

A quick look at the lengths of children’s index and ring fingers can be used to predict how well students will perform on SATs, new research claims.

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