Elliott Wave Principle

things learned:

• structure of most price formations
• wave 1 is start, 2 is disbelief from short sellers, 3 is the strong wave where smart money gets in and always the longest, 4 is where smart guys get out and 5 is when all the dumb ones get in and then the upward climb is over as everyone who wanted to buy is already in...then u have A wave down, and B which is disbelief from the slow and dumb who want to buy on dips, and C is strongest as it completes the correction as there is emotional selling
• there is a structure to how price moves...more than just stages or bull vs bear trends
• fib retracements are very useful...38, 62 are most important
• corrections are complicated and they can give insight as to how strong or weak the countertrend party is...
• flats vs zizzags
• tough to count waves many times
• works best with SPX as it has many participants...only works well because its based on human emotions
• small volume stocks don't have much human emotions so doesn't necessarily work
• every wave is part of another wave...can zoom in and zoom out and always still see the 5 wave up and 3 wave down, even when in downtrend...
• everything is related
• more to the way a stock move than just a pattern...can be broken down more to understand where in the trend is it in and see the strength of it based on its correction waves
• can even use it to help make targets using fib and channeling
• good info as supplement but won't use this to change my entire system
  

Super Freakonomics

Chapter 1: How is a street prostitute like a department-store santa?

• they both take advantage of short-term job opportunities brought about by holiday spikes in demand (some are normal girls but do some prostitution only on holdays such as july 4th where prices spikes as demands goes up as relatives-visitors come to visit big cities)
• hookers salary went down throughout century went down because casual sex and oral sex became more socially acceptable...
• free casual sex is the biggest competitor to paid sex (prostitution)
• oral sex was once a religious sin that only hookers would do...but as it became more common and less of a stigma, men were able to get it from their girlfriends or wives
• hookers make more more money working with pimps than alone as pimps are like real estate agents...they market the hooker's services...even with the pimps cut taken off, hookers make more and need to turn less tricks to make more money
  
• pimps also provide protection from cops and beatings from johns but since they take about 25% off the price, its also a price hookers need to decide to take...turns out its worth it...
  
• high priced prostitutes make lots of money because they can market themselves using the internet nowadays
• many reasons for why men make more money than women...one is that money is not as big a motivator for women as it is for men...women take more days off because of kids and pregnancy and period...women once they have a family or marry well, leave their jobs
• rarely are hookers or johns arrested for prostitution...very rare...
• most sex is not with a condom but also very low chance of HIV...less than 3%
  
• discount for sex: paid with drugs ($7 off), sex outdoors ($6.50 off), use condom ($2 off)
• average price for sex acts: manual stimulation (26.70), oral sex (37.26), vaginal sex (80.05), anal sex (94.13)
• % of sex act: oral (55%), vaginal (17%), manual (15%), anal (9%), other (4%)
• better way to curb prostitution is to toughen the penalty to johns, not hookers...punishing hookers only drives down supply which increases the price of sex but not decrease the demand....if target the johns such as castration for the john, the demand will drop hugely which will make prostitution less desirable for women to partake in
  

Chapter 2: Why should suicide bombers buy life insurance?

• terrorists DON'T COME from poor, uneducated backgrounds...they tend to be people who care about politics...they care about the vote
• terrorism is very scary not because of how many people they can kill but by the possibility of it happening anywhere...
• terrorism is strongest when its unpredictable and everyone feels they can be targeted...reason why we not scan every passenger and require people to take off shoes even though the probability of it happening is very very little
• beauty of terrorism is that u can succeed even by failing...the shoe bombing failure causes so much time lost of americans to take off shoes through the scanner, that its actually a success
  
• genius is not born, its created....its the amount of "deliberate practice" that ones does
• deliberate practice has 3 key components: setting specific goals, obtaining immediate feedback, and concentrating as much on a technique as the outcome
• people who become excellent at a given thing aren't necessarily the same ones who seemed "gifted" at young age...this suggests that when choosing a life path, people should do what they love because if they don't love what u are doing, you are unlikely to work hard enough to get very good at it.
• an algorithm based on exhaustive data is the best way to predict the odds of an ER patient will die soon after being admitted as well as help spot a terrorist just from his bank account
• in this algorithm, many things u think would relate to the subject is not and there will also be some surprising commonalities amongst some trivial facts...
• most important thing is knowing that an algorithm is very very effective, much more so than other methods we currently use for ER patients and terrorist spotting
  
• why should terrorists buy life insurance? because it will allow them to more easily slip through the scans as it is a strong indicator that they are terrorists if they don't buy life insurance
  

Chapter 3: Unbelievable stories about apathy and altruism

• story starts and ends about the Kitty Genovese murder in queens where there were supposedly many innocent witnesses who did nothing to help, not even to call 911, even as the killer assaulted her twice...not just once
• turns out that the story is a fake...more people were said to be witnesses than not...and some actually called but police was slow on the responce...turns out that it was fabricated by the police so as to not take the blame for the murder
• altruism was once believed to be a real human nature thing...and even more so in americans...turns out to be false...humans work with incentives...if the incentives are big enough to help, we will, if not, we won't...research was originally wrong as it did not isolate altruism

Chapter 4: The fix is in - and it's cheap and simple

• many times, the best solutions are the cheapest and simplest....but many times also not loved by the public as they want a complex solution
• childbirth death rates were huge because of puerperal fever but the solution was very simple and easy...washing and sanitizing hands after playing corpses during autopsies did away with the problem...very cheap...very easy
• food production used to take much time and people and space...it was a worry that the world can never produce enough food to take care of the rising world population....ammonium nitrate was the key...cheap and effective crop fertilizer that made for higher yielding crops.
• law causes many unintended consequences...ex. is american with disabilities act which was made to protect the diabled from getting fired...result was that companies didn't hire them because it would be so hard to fire them.
• best safety device in cars is the seat belt...cheap and efficient...but not made for kids...but performs just as well vs car seats and much cheaper...from 3-6 yr olds...all the same...for younger, its not very good...
• now all states and the EU require child safety seats til 6yr old...
• in a study, it does help out a lil bit in terms of 30mph crashes of 3-6 yr olds...and this lil bit is enough to make parents buy it...peace of mind is important
• child safety seats say they help prevent deaths by 50%...but thats vs no seatbelt...nearly identical if vs seatbelt
• hurricanes are caused becuase of warm water on surface of oceans...simple idea is to build an innertube device with long cement pillars that go down to the ocean 600 ft deep and thereby replaces surface water with cold water below when waves go over it...its a way to cool down the surface water...costs way less than the amount of damages a hurricane can cost...

Chapter 5: what do al gore and mount pinatuno have in common?

• many exaggerations in an inconvienent truth
• carbon dioxide is not the major big greenhouse gas...its water vapor...but no good numbers on water vapor thus yet
• in fact, the 70s climate temp went down as carbon dioxide was high and temp went up as we started to clean up the air recently...the carbon dioxide blocks the strength of sunrays hitting earth
  
• carbon dioxide was way higher before....but is rising rapidly lately due to humans...its the rapid rise thats bad, not the amount of carbon dioxide...plants actually grow faster and more efficiently with more carbon dioxide...need less water
• sea levels are rising and have been since ice age stopped...but most of the rise has already happened and early on...lately, in past century, only risen 8 inches (total rise is 425 feet)...
• best estimation is water level will rise 1.5 feet by 2100
• global warming models now are crude...will take many years to have computer good enough to give us smaller and more accurate grids to be able to include actual weather into the equation...
• now all models give same results because they are not good enough to give specifics
• trees actually make for warmer climate as its dark leaves absorb more heat than grasslands, ice, etc.
• increasing number of airplanes in the sky reduces climate temp...during 9/11 when all USA flights were downed, the temp went up several degrees
  
• huge volcanoes like mount pinatubo cool down the earth by shooting surfur dioxide into the stratosphere...pollution in the stratosphere blocks the sun so cools the earth...
• can imitate a huge volcano by piping sulfur dioxide into the stratosphere...leverage is key...putting it into the stratosphere with its winds, it can circle the earth which will block out much of the heat...budyko's blanket will take 10 days time to circle entire earth because of earth's 100 mph winds
• sulfur dioxide is refrigerator coolant...and it is nearly free in canada where they extract oil from sand.
  
• seems bad as its polluting the earth to stop a problem that started with pollution of the earth, but experts agree that it will work...and won't cause more damage to the earth...and if it doesn't work, they can stop the pipeline immediately
• would cost fraction of how much it costs each year to try to stop global warming
• another option is to extend smokestacks all the way up to the stratosphere and having that pollution cool the earth...this way, for sure we are not adding more pollutants into the earth
• another way would be to grow clouds on top of the oceans by the use of boats and a salt water spray which would in turn reflect back much of the heat back out of space...as the ocean now since its dark absorbs much heat...
• all these seem like great ideas but hard to have people buy the idea...
• problem with al gore's solution is that there is little reward for companies to limit consumption and very weak penalties even if they don't comply...it doesn't make sense in terms of incentive to lighten consumption
• as with doctors and making them wash hands before surgery, its a tough thing to sell as the doctors don't feel the bad effects of them not washing hands...its the patients that suffer...same with polluters now as they don't feel the pollution problems
• what do al gore and mt pinatubo have in common? the answer is that gore and pinatubo both have a way to cool the planet, but costs are an universe apart...
• with aids, its nearly impossible to make men wear condoms as its very hard to change behavior...instead of changing behavior, the solution was circumcision for the men as they could keep their behavior...all they need is a 1 time fix...
• therefore if u think about the global warming solutions, it should be way easier for the world to accept a volcano simulated solution than to make then stop polluting...
• intellectual ventures based near seattle is the name of the company that came up with the hurricane thing and the global cooling ideas
  

Epilogue: Monkeys are people too

• study that when money was introduced to monkeys, they learned how to use money...they knew how to exchange for food
• also when prices went up for one item, they learned to buy other items..and when it went down, they bought more...pure supply and demand at work
• gambling problem: 2 gambling games. first, he is shown 1 grape and dependent on the coin flip, either got only that grape or won a bonus grape as well...2nd game, he sees 2 grapes, but if coin flip went against him, the researchers took away 1 grape and the monkey got only one...
• on average the monkey will get same number of grapes no matter which game decided...but the first game is framed as potential gain and 2nd as a potential loss
• monkeys, like humans, and daytraders prefered the 1st option of a potential gain.
• in a freak accident where money was tossed to all other monkeys (ones who were not taught about money), through observation they grabbed all the money and would not give it back til they were bribed..they learned easily that the money had value...
• funny thing is at one incident, 1 monkey gave another the money and they had sex...pure prostitution..then the receiver monkey used the money in exchange for food.

Rating:

• book ok but not great...fun read and learned some stuff but still not great...dunno why
• felt too short...preferred first one for having more stories
• but always enlightening to hear about how incentives drive everything and how conventional wisdom is many times not best
• also great new moral is that there usually is a cheaper, simpler solution...
  

What the Dog Saw

Main Idea: conventional wisdom does not always work...these stories explain why

The Art of Failure

• panic is thinking too little
• choking is thinking too much
• panic occurs when in unfamiliar situations that reveals that either your practice or experience is lacking
• choking is being placed in a situation where u start to overthink your actions because you place too much emphasis on the outcome of the situation
• perfect example of choking is davydanko vs fed or hewitt vs fed or murray vs fed...they all were in a position to beat the best and all did well...but then they all faltered because they felt the burden on their shoulders and gave too much respect to fed...
• fed knows of the choking phenomenon and knows thats what separates the champs from the runner-ups...he exploits it with this interviews that makes them care more about the match and also makes them question their own ability to beat the world's number 1
• solution to choking is to get yourself out of that uncomfortable situation...relax the mind and resort back to your intuitions
• when choking, u don't allow intuitions to work...instead u focus on the minor mechanics as if u were first learning how to hit

Million Dollar Murray

• power-law solutions = involves special treatment for people who do not deserve special treatment
• works best and needed in cases where problem is not a bell shaped curve but more shaped like a hockey stick where the edges, the minority, make up most of the problem
• smog check - best to post a scanning device in street to check car emissions and have cop give them a ticket..much more efficient and effective than requiring everyone to do a smog check...but people would not want it
• homeless - best is to give homes and special care for the very worst homeless...the ones who stay homeless no matter what...most homeless actually are only on streets for 1 day so all the normal homeless programs don't help as the truly homeless, who cost gov't the most money, will never change that way.
• police - best to just fire the ones who cause all the problems...better than doing department wide policies
• all these are best ways to handle the problem as it hit the 5% that cause all the problems but people don't like it because they feel that the problem is with the whole, not the few...rather fix everyone, not just the few is their mindset....

Troublemakers

• stereotyping criminals does not work
• they can change how they look and act to be less detectable...
• better is to get a better set of characteristics of these criminals using research and hard data....think terrorists...problem is that to get these characteristics, we need much effort and work...
• the lazy thing is just to stereotype but will always run the risk of including the innocent or overlooking the guilty

Open Secrets

• mystery vs puzzles
• mystery = too much knowledge...lack of knowledge is not the problem...way to find the solution is to learn how to use the data better
• puzzles = not enough information...with more data, the problem would be easier
• for mystery, need a way to simplify the data...need a better understanding of it...most modern problems are mysteries...
• with modern technology we have more data than can be handled...need to find people who can understand the data and use it effectively
• enron was a mystery...all the data was there but was too complicated for anyone to understand..if it was understood, enron would have fallen faster
• subprime mess is also a mystery that should not have been one...should have been figured out earlier but the financial instruments used were too complicated for the regulators...

The Pitchman

• can't separate the pitch from the product...its 1 thing...not 2 separate ones
• if popeil were to make something, it would be able to be explained in seconds and user friendly in every way...would never have made a VCR so complicated with small buttons and black
• popeil's inventions work well, are easy to use, and always have a great pitch
  
• a great pitch features the product, not pitchman and shows u how easy it is to use and how it can help you out in your life

The Picture Program

• pictures are not as perfect as we believe
• we believe that photos are the whole truth, but its not always the case
• satelite images, mamograms, xrays...all are photos and all are ambiguous, even to professionals...
• reason why we have so many wrongly diagnosed breast cancers...also reason why we though iraq had WMDs

Late Bloomers

• genius comes in 2 forms...those that start off early or those that take many years
• its because of 2 types of personalities and the way they approach things
• prodigies like picaasso rarely engage in open-ended exploration. they tend to be "conceptual"...they start with a clear idea of where they want to go, then they execute...picasso once said "i can hardly understand the importance given to the word research...in my opinion, to search means nothing in painting. to find is the thing....the several manners i have used in my art must not be concidered as an evolution or as steps towards an unknown ideal of painting...i have never made trials or experiments
• late bloomers tend to work through experiements. their goals are imprecise, so their procedure is tentative and incremental...they do much trial and error and never feel they have succeeded as their goals are imprecise. each work leads to the next and they rarely plan their paths with sketches or plans...instead they feel that the production of a painting as a process of searching, in which they aim to discover the image in the course of making it. they typically believe that learning is a more important goal than making finished paintings. they build their skills gradually over the course of their careers, improving their work slowly over long periods. these artists are perfectionists and are typically plagued by frustration at their inability to achieve their goal
• because late bloomers take a long time, they need certain things that allow them to continuously work at their art. they often need people around them to give loyalty, steadfastness, and the willingness to keep writing checks to support what looks like failure...many of them come in the form of a wife or family, or group of artists or friends...

The Talent Myth - enron's smart people overrated?

• enron hired the best and brightest...let them do whatever they want like start new departments, do new businesses, etc and keep moving around the company as they please...sounds correct to base your entire company on the mind of the best...then how did it fail?
• failed because companies don't work that way...can't just have people moving around and doing as they please
• successful companies are successful because they create great team environments...and many times, it is not the best and brightest that make these teams because many don't work well in teams...

Dangerous Minds - criminal profiling

• criminal profiling does not work, despite it having such a great reputation on tv
• they are the same as horoscope writers or mind-readers..they are effective because they are so ambiguous...they use words and phrases that can be taken in many ways and when the criminal is caught, something is bound to stick with what they say
• they don't provide anything useful in terms of finding people criminals...too vague...too unimportant...such as "he will be wearing a buttoned shirt"

The New Boy Network - first impressions in job interviews

• people judge others very quickly...and usually their opinions don't change even after much more contact
• in a study a teacher got the same rating from students when shown for 2 seconds on tv as when he was shown for the entire lesson
• we believe that people display the same character traits in different situations but this is many times wrong
• we habitually underestimate the large role that context plays in people's behavior
• job interviews basically fail because its based off of snap judgements that gets expanded into the interviewer belieiving the interviewee is the same in all situations
• many times, the ones who get the job are the ones who prepared the best and who do best in interviews, not necessarily the ones who will work best in that position
• a better way is called "structured interviewing" where the structure is fairly rigid and every applicant is treated precisely in the same manner. the questions are scriped and the interviewers are carefully trained and each applicant is rated on a series of predetermined scales...
• it isn't really an interivew...they don't try to get to know you in the traditional sense....
• an effective question is "you're in a situation where u have 2 very important responcibilities that both have a deadline that is impossible to meet. you cannot accomlish both. how do u handle that situtation" as opposed to "tell me about a time where u had to do several things at once and how u handled the situation".
  
• if answer is "i would think which job i am best at and do that"...the key issue would be that of self-centeredness. it would be interpreted as: in a time of of work-related crisis, he starts from a self-centered consideration...and perhaps a bit of a solo practitiioner....this is opposed to someone who would concider what the company most needed and do that...

Connecting the Dots - picture is clear only in hindsight

• easier to say where things went wrong after its happened, but hard to predict the future if it never happened yet
• example is 9/11...after it happened, u can see which leads were important but during that time, it was impossible to sort through the thousands of leads to know whats truly legit
• many possible outcomes and scenarios with so many leads..nearly impossible to connect the dots til after too late
• rare to have all the info that makes it possible to narrow down the intelligence to connect the dots well
• problem is that after hindsight, measures are put into place so that the same mistake won't happen again, but in doing that, actually worsens the system...

Most Likely to Succeed - who to hire when dunno who will be right for the job

• evaluation methods put in place now for quarterbacks in college and evaluation of teacher's skills are not good
• quarterbacks might look great in college but rarely can they make the big transition to the nfl...nfl has better defense and faster players...not as easy for a quarterback to read the defense...instead of many seconds to figure it out, they only have a split second in the nfl...only way to really test them is to put them in higher pressure situation where they are getting unable to stay in the comfortable situations of college football
• teachers are evaluated on test scores of their kids and the progess of those numbers....doesn't work because teacher's skills cannot be determined like that
• a good teacher can teach 1.5 years of info in 1 year, bad teachers teach 0.5...1 yr difference means that its very important to find the best and fire the worst
• best way to evaluate teachers is through watching how they teach and how they discipline and work with the students...only way is to watch them on a videotape or watch them live...can objectively see the good vs bad traits of the teachers
• when u dunno who will do the best, need to evaluate them in a scenario similar to the real job
• teachers need to be evaluated after they are hired, not just prior....
• long tenures should not be given so easily

Blow Up - higher safety makes us take more risks

• nature of humans is to want to wake risks
• advances in safety have been made but all that usually does is make us confident that we can take bigger risks, therefore counteracting all the newer, better safety measures
• best example is ABS for cars...should make for us to have less accidents but instead caused drivers to be more risky, tailgating more and driving faster and breaking harder which caused for even more accidents...
• normal accidents = accidents caused from many small problems arising at one time that causes a big accident
• its the case with NASA's challenger and the 3 mile island explosion...its many small things that are within guidelines safe but when many of those small things happen, big problems arise...
• with modern technologies, many small things can go wrong...and its expected....but when they go wrong all at the same time, a big catastrophe can happen and usually, in these causes, no matter how much investigation is done, it cannot be avoided...

Cesar Milan - what the dog saw

• dogs are experts at reading humans...they study our movements and can better understand body language than even humans
• cesar's movements is what makes him different....a dance that doesn't intrude but also doesn't show weakness
• played with dogs all his life...from mexico on a farm with many dogs
  
• dogs don't get confused with cesar's actions...
• dog masters mess up many times as they show ambiguous actions that confuse the dog
• as with the scenario of 2 dog owners with their dogs walking across eachother...the dogs observe the master to see what emotions he gives off...if the owner is frightened, the dog will get aggressive to protect the dog...problem is that many times the owner is frightened more for the dog barking or getting aggressive...problem is owner...not dog...owner needs to be calm and confident when in that situation
• watch cesar on dvd with sound off to understand what the dog sees and how calming it is to watch cesar's movements...