Mapco

Some guy got shot and retired from the game Saturday morning at the Mapco, a little over a quarter of a mile from my house. 

As I drove past the Mapco coming home Saturday morning, I noticed eight or so Metro Nashville Police Department Ford Explorers arranged randomly in the parking lot. I mentioned it to my wife on Sunday when I remembered, and then tried googling for the story.

The Mapco on Neelys Bend is about three miles down from Gallatin Pike. South of the Mapco, Neelys Bend starts to transform into farmland, then into a city park at the flood-prone end. Neelys Bend Road ends at the Cumberland River. There is no crossing from here.

The section of Neelys Bend coming down from Gallatin Pike is a heavily traveled two-lane road, and more or less, the only way in or out. In large stretches, there is no shoulder. Sober, the walk up Neelys Bend to Gallatin Pike would be unpleasant.

At the Gallatin Pike intersection is a large Methodist church with a homeless shelter and various treatment and outreach programs. Once a week, a "Shower Bus" parks there.

The other side of Gallatin Pike has a Bojangles and a dying strip mall featuring a drive-through only Chase bank, a blood donation center, a Dollar General, a pawn shop, and a furniture rental store. The Fresh Market there has a surprisingly good Quesabirria. An LGBTQ+ friendly Vape store is just a few blocks down Gallatin Pike by the Kroger. 

Anyway, Saturday morning, some Mapco customers observed one individual acting disorderly and asking patrons for a ride up Neely's Bend. The police report that a disagreement occurred between the disorderly individual and a Mapco patron when gunfire broke out. The Mapco patron left the scene.

The police at the scene rendered aid to the formerly disorderly individual and transported him to a nearby hospital, where he died.

This is Tennessee. Discression and courtesy are important considerations in your public interactions.

Flashback from the hell of commuting in New York

I'm sitting in the front (quiet) car of a commuter train heading north along the Hudson River a bit after 6:00 in the evening. 

I'm wearing the clothes I put on after showering at 5:30 that morning to catch the 5:45 train to Grand Central so I could be at my desk by the 7:00 pick-up of trading from London.

I'm shoulder-to-shoulder with some guy who has sat in the seat next to me on previous occasions.

I'm sweaty from the rush to catch the train. I am desperate to take off my shoes. I am desperate to shower, brush my teeth, and put on a clean cotton T-shirt, jeans, and socks.

The phone in the pocket of the stranger next to me rings. He looks at me and says, "I have to take this."

I don't want to go to jail. I don't want to get fired for assaulting a fellow commuter. This mother f#cker has run this game three times before on me.

How I Get My News

My freshman year at Oberlin, on my way to piano class my piano teacher asked me, “so did you hear we have a new president?” I said, “Oh shit! Did Danenberg die?” No, my teacher explained “Jimmy Carter beat Gerald Ford in the yesterday's election”.

When I started working in New York in the early 80's I didn’t really pay attention to the news, read newspapers or watch television. If I did read a paper I was more likely to read the Post or the Daily News to pass the time at work or riding the subway. When I started trading in ’84 I learned pretty quickly that I had to pay attention to the news and started reading the New York Times on my way to work. I moved to Chicago in '86 but still read the New York Times for a while. I would buy it at a news stand in the loop and read it before trading started. Then one morning a trader bumped into me on the escalator to the trading floor and mentioned, tapping the paper with his knuckle; “we don’t have a communist problem here at the CBOT”.

At the CBOT, the exchange had installed giant Trans-Lux screens that scrolled real time Reuters headlines on the trading floor and terminals where I could pull the complete story if I wanted it. I do remember how hard it was to make sense of the ’87 crash. Network news aired what amounted to headlines for 30 minutes at 5:00pm in Chicago. Newspaper writers (NYT, WSJ, Tribune) were clueless about what was actually going on between New York and Chicago. I didn’t understand it back then but the journalist knew less about the situation than I did and generally lacked any of the background in economics and finance necessary to properly explain it. Back then the news weeklies (TIME, Newsweek, US News, Economist) provided an adequate recap and semi –competent analysis but it was not news by the time I read it.

A girl I was seeing said to me; “the sexiest thing in the world is a man who reads the Economist and can talk about volatility”. I swear to god she said that…so I read the Economist fairly religiously for a long time. I would buy it at a news stand and read it over coffee on Saturday morning. I did try subscribing to the Economist only briefly. I canceled because it wouldn’t be delivered until Monday and by Monday evening it was last week’s edition as far as I was concerned. For the same reason I’ve never subscribed to the New York Times or the Wall Street Journal – they can’t seem to deliver their product to me until after I’ve read it. I refuse to subscribe to the electronic editions because they are bundled with a dead tree edition that would go directly to the recycling bin.

After finishing my undergraduate degree at Northwestern I moved over to the CME in late ’89. I ran into Leo Malamud on the floor one day and suggested that the exchange get a cable subscription; there were “complication”, he explained. Just prior to the first gulf war the CME installed CNN on cable in the break room just off the trading floor. I remember standing there in the jammed break room one afternoon listening to a State Department spokesman who said: “Unfortunately…”. The break room emptied and the currency markets exploded. That evening John Holliman - CNN’s science correspondent – was in Baghdad for “shock and awe”. Bernard Shaw – CNN’s anchor -was hiding under the bed while Holliman hung out the window of his hotel room giving play by play. I was hooked on cable news for the next fifteen years.

By the mid ‘90s back in New York City I was reading the Wall Street Journal every morning (purchasing it from the guy that watched the papers for the news stand around the corner on Madison avenue before catching a taxi down to wall street). After 9/11 I watched cable news around the clock for days.

Around that time I stopped reading the Economist, it having gone progressive. I mentioned to my sister one day how CNN had become too left wing to me. Her matter-of-fact response was: “CNN is right wing”. Long about “W”s second term I stopped watching cable news completely. It had by then become all bloviating pundits. At a risk management conference I attended in 2007 I was pointed to the video of Jim Cramer (who I could not stand) ranting about how clueless the fed was about the state of the economy. I went home and watched it and It did scare me, but everywhere I looked the opposite seemed true. I did not work in securitization or credit derivatives, and found the people associated with them the most craven sort and avoided the subject. So the 2008 crash caught me completely unaware.

I continued reading the Wall Street Journal which I bought at a news stand every morning for a very long time. When Amazon offered its “Kindle” edition back in 2010 or so I subscribed to it for about a year and a half. I could download the WSJ to my Kindle every morning and read it on the train. Then Amazon or the WSJ broke the Kindle edition – requiring a network connection for anything more than headlines – and I canceled my subscription. Back then mobile data was useless on my commute. I haven’t read the Journal since.

I have Reuters (globalist) and Bloomberg (progressive) terminals on my desktop at work. I have no need for news after that. I read articles pointed to by bloggers and aggregation sites. My favorite aggregator is Hacker News (tech progressive / libertarian) and RealClear Politics and Markets (seem to try to show a broad range of opinion) . I look at Marginal Revolution most days (progressive academic) and Instapundit (libertarian law professor) every day. My wife Patricia subscribes to the Sunday New York Times. I have found that, for the most part, all the articles in the Sunday times have been tested on the internet before making the Sunday edition.

Disruptive Technology / Disruptive Innovation

Disruptive innovation grew out of the management consulting world of the second half of the nineteen nineties; McKinsey, BCG, and Anderson. Corporations were told they needed to innovate or be swept away by global competition. Technology promised, and global markets threatened. The banking 2008 crisis destroyed Wall Street's control of the economy. The iPhone 4 release in 2010 provided the initial platform. To that point, a mobile phone was a corporate perk, but the iPhone got millions of hipsters to shell out for one of their own.

So the west coast boys tried on their libertarian suits and went to work thinking up ways to disrupt stodgy, old-fashioned industries. They delivered stripped-down apps to hipster early adopters on their phones. The product was mostly information, a repackaging of the TV model for the twenty-first century or an app that brought together buyers and sellers.

Network effects allocated huge rewards to first movers. And that money was deemed to be the reward for bringing change to the old way of doing things; money is taken from the fat lazy old boomers and their golf-playing pensioner grandparents.

What the sellers were selling mostly was the leftovers from their now ruined physical lives; stuff, parking spaces, rides, rooms, rentals, gigs, personal services, and of course, sex; and buyers could get cheap stuff they wanted. The app builders took a piece from both sides, plus information about the market that they could resell.

The TV model stole the intellectual property of writers, musicians, artists, photographers, and filmmakers; then offered it out at a price of zero - conditional on the consumer giving up private information that could be sold to old-fashioned businesses. Not that the writers, musicians, etc., didn't set themselves up for confiscation. You can't offer a product to a global audience that has a zero marginal cost and expect to get $20 a copy; not for very long anyway - that's another story: twentieth-century property rights.

What the disruptors were disrupting was mostly state and local regulation and government. They were disrupting the institutions that granted certifications and operating licenses, set zoning regulations, controlled rents, and regulated wages and quality. Not that a lot of that stuff made a lot of economic sense; rent controls, minimum wages, beautician licenses, etc. However, they were the institutions of long-established civil agreements.

I don't have a lot of empathy for the owners of Google, Amazon, and Facebook or Uber, Lyft, and Airbnb.

I'm not entirely convinced they are entitled to their wealth or use it for anything but evil.

The second and third drafts will not be kind to the winners in the first two decades of the twenty-first century.

Panama Papers and Mossack Fonseca

Consider the non-scandal generated by the "Leak" of the Panama Papers. What piques my interest is the absolute lack of names of North American Politicians, Celebrities, Tech-bazillionaire, and Hedge Fund hot shots.

The UK Prime Minister apparently knew somebody on the list, and the Prime Minister of Iceland was forced to resign when his name showed up there. Here in the USA, a couple of small-time crooks stashed some cash in case they had to leave the country in a hurry. Some democrat-connected Beltway lobbyists were engaged in lobbying on behalf of a Russian bank that was on the list. But a big nothing.

I read that Walter Wriston said, "Capital will always go where it's welcome and stay where it's well treated." For the most part, here in the USA, people can acquire great wealth but also be relatively secure that their wealth will not be arbitrarily taken from them. As long as that is true, there will not be a lot of demand for "off-shore" or anonymous bank accounts. The wealthy of this country would still rather have their money here anyway. And because it is here, it funds more wealth creation.

If the government were to try to confiscate the wealth of Zuckerberg, Gates, Schmidt, Bezos, Ellison, and Balmer, it would destroy the country. First, the wealth of these plutocrats, for the most part, can't be confiscated, only destroyed; it still has the form of knowledge and process, not things. The government could probably get a little bit of the wealth of Buffet, Soros, and Koch but not much. Second, once the government confiscated the wealth of the richest of the rich, no one possessing wealth would ever bring it into the country or work to create it here if there were better alternatives.

How bizarre; congressmen calling for higher taxes on corporations, then scrambling to try to block them from leaving the country. Right, who's going to pay for all his great ideas?

Never Trade an Error

A long time ago, I was the floor manager for the Chicago Board of Trade operation of a firm called Timber Hill. I had a junior trader working for me along with three clerks. Our job was to quote the MMI Futures market and execute futures trades to hedge the stock index option arbitrage that was the firm's specialty. The MMI futures were a Dow Jones look-alike index with the ticker symbol MX and were usually referred to as "missile futures" (Reagan was still president). For a futures contract, the action was very fast. The clerks rotated around their three roles: working the desk for data input, quoting from the pit, and chasing tickets and paperwork. I traded off with Kenny, my junior trader, executing the trades in the pit and overseeing the market quotes. Kenny had served in the Marines during Vietnam, and his demeanor typically oscillated rapidly between hyper-vigilant and fearfully paranoid. He had grown up in Chicago and seemed to know everybody on the Board.

At that time, the MX contract traded twenty to thirty thousand contracts per day. Our floor operation would execute seven to eight hundred contracts, sometimes up to two thousand, but always in small batches. Our job was not to speculate in the contract; instead, we executed as precisely as possible and provided market insight for the option traders. Typically we "faded" the market. Buying as the market fell and selling as the market rallied.

Late one afternoon, probably in the summer of '87, we missed the input of a trade I had executed. Kenny was the first to become aware of it - we had bought 10 futures contracts about twenty minutes earlier and at much higher levels. Those 10 contracts had yet to be reported on our trading system. If we had entered the trade into the system at that point, we would have had to explain to the head of the firm in New York how our carelessness cost the firm six or seven thousand dollars. We could also sell the contracts back into the market and establish the loss.

Each of us went through our logs to try to figure out how we had messed up and to be sure that we actually had messed up. By the time we were sure, we were ten thousand dollars in the hole and losing fast. It was near closing, and the market continued to sell off. Kenny floated the idea that we just lose the ticket and come back in the morning. We would treat it like an "out trade." An "out trade" is a trading error found in the overnight clearing process and reconciled prior to opening the next day. There were almost always "out trades," and we could probably bury the mistake with the typical noise of the clearing process. Hey, maybe overnight, the market would rally.

And then I very clearly saw the problem. An honest mistake was quickly becoming a conspiracy to commit fraud. I entered the trade into the system, booked the trade to our position, and called the New York office. It cost us about seventeen thousand dollars.

Never trade an error. Close the trade, establish the cost, and get back to your business. If you profit from it, you'll be tempted to do it again. Most likely, you'll make a series of increasingly bad decisions, ultimately resulting in an enormous cost or even ending your career.

I'll bet that's what happened to Nick_Leeson.

The population distribution of ambition and intelligence 

(This post is hypothetical - I have no data)

My intuition is that career outcomes have some correlation with an individual's score on the attributes of ambition and intelligence.

The values of these scores have some sort of skewed distribution. The lower end of the distribution is truncated, and the upper end of the distribution is subject to large outliers; the bulk of the population (the center of the distribution) falls below the mean on both these attributes.

An individual, simply having an "average" score for both these attributes would have a relatively high likelihood of career success.  If an individual's score for either of these attributes falls into the upper end of the distribution, certain paths seem much more likely.  An individual with both these attributes in the far upper end of the distribution is, by definition, "deviant."