Norm Wattenberger: Jim Cramer interview

[Norm Wattenberger]

Interview with Cramer on MSNBC just ended. He's the screaming stock analyst that does a Howard Beale (Network) act. Anyhow he spent a bit of time talking about how much he loves Blackjack. Says you can make a lot more money in the market - but BJ is a fairer game.

[BJinNJ]

> Interview with Cramer on MSNBC just ended. He's the
> screaming stock analyst that does a Howard Beale
> (Network) act. Anyhow he spent a bit of time talking
> about how much he loves Blackjack. Says you can make a
> lot more money in the market - but BJ is a fairer
> game.

Cramer was screaming "Buy Tech" all the way up to the
NAS bubble peak in 2000. He's entertaining, but his
advice is suspect. I wonder if he dons a wig for camo
when he plays BJ! LOL

I presume he made decent coin when thestreet.com went public
in '99. Herb Greenberg is still there, too.

BJinNJ

[young gun]

> I presume he made decent coin when thestreet.com went
> public
> in '99. Herb Greenberg is still there, too.

> BJinNJ

The guy was one of the top performing hedge fund managers in the world while he ran his fund. His results were stellar and his claim to fame was that he was in cash for the crash of 1987. Judging from his interview, he doesn't have an edge at blackjack, but surely does in the markets.

[bfbagain]

of backing off high-profile individuals, regardless who they know, their current celebrity and/or personal megaphones they have access to.

Once upon a time, the mob boasted that they "were bigger than U.S. Steel." The mob, at least as far as we know, aren't running Vegas these days, but that doesn't mean these large corporations don't act like them - in spirit.

Cramer IS a smart guy and by even mentioning blackjack and advantage (I didn't see the interview so I'm making that assumption here) in the same sentence or segment, with Tim Russert, he has to know (and no doubt he does) that casinos will hear of his comments.

If he "is" an AP, then he knows that he has to have a different strategy to play off of due to his celebrity. If a lot of people, who are APs, think the way you do or come to the same conclusion, then he did it right. Either way, if there is doubt, then he still pulled it off, even if he didn't know what he was doing. As long as doubt exists, he'll be ok. At least for awhile and in AC, maybe even longer.

If I had to place a bet, I'd say that he was a counter.

When I'm at a blackjack table, I'm not gambling - at least as far as the public has come to know what gambling means. When I want to gamble - a very rare occurrence - I'll play some baccarat, a little dice or play the horses, all knowing that I'm playing at a disadvantage. Blackjack? The odds are in my favor. I'm investing with an expectation of a positive return.

It would be very hard for me to accept that successful options players, hedge fund managers et al, who have to assess their risk by the minutes at times, would knowingly play blackjack with a disadvantage when having an advantage is so clearly within their grasp. To do so one would have to assume them to be too lazy to acquire the skills necessary to increase their odds of winning. I just don't equate traders, options players, hedge fund managers et al with the word lazy. They're used to winning, why would they now act out of character?

JMO
bfb

[jblaze]

It's an interesting point - the link between investment strategy and blackjack strategy. Everyone seems to realize it is there - there's a stocks page on bj21, and on bjfonline there seems to be an article coming soon about a gambler's guide to stocks and commodities. I'm interested in hearing what that has to say. And of course, this website is in the hands of a finance professional. I also believe Thorp founded his own hedge fund that was based on some exploitable market inefficiency that could be modeled similarly to BJ. (I haven't read Fortune's Formula, so I could be completely wrong).

I thought I could just trade pairs - as a pair trading strategy was the closest in my mind to market inefficiency, expected return and standard deviation. Luckily, I read the Black Swan before I really thought about jumping in. Of course the stock models I had come up with made awesome returns when applied to past performance. But as Taleb says, a chicken that gets feed well everyday could either reaffirm it will survive tomorrow, or understand that tomorrow brings it one day closer to its demise - both are equally valid and logical.

The problem when trying to merge AP and stocks is that AP has its setting in a bubble world, where all statistical possibilities can be known, and thus correctly modeled on Gaussian statistics. Not so for the market. There are only 52 cards, there is a finite number of ways they can come out. Even in poker, which has a much more human/unpredictable element, there are ranges of possibilities, drawing odds, etc.

Then there is also another article at bj21 about how someone invested in the market and compared that to their BJ returns. BJ was far superior. So there's no real point to my rambling here except: beware! I'm always amused when good friends and family (mostly just family) think I'm nuts and bound to lose at some point or get in trouble (with the mob?? who knows what they are thinking). But anytime I put money in the stock market, that's a wise decision in their mind. And then they go buy a lottery ticket.

> of backing off high-profile individuals, regardless
> who they know, their current celebrity and/or personal
> megaphones they have access to.

> Once upon a time, the mob boasted that they "were
> bigger than U.S. Steel." The mob, at least as far
> as we know, aren't running Vegas these days, but that
> doesn't mean these large corporations don't act like
> them - in spirit.

> Cramer IS a smart guy and by even mentioning blackjack
> and advantage (I didn't see the interview so I'm
> making that assumption here) in the same sentence or
> segment, with Tim Russert, he has to know (and no
> doubt he does) that casinos will hear of his comments.

> If he "is" an AP, then he knows that he has
> to have a different strategy to play off of due to
> his celebrity. If a lot of people, who are APs, think
> the way you do or come to the same conclusion, then he
> did it right. Either way, if there is doubt, then he
> still pulled it off, even if he didn't know what he
> was doing. As long as doubt exists, he'll be ok. At
> least for awhile and in AC, maybe even longer.

> If I had to place a bet, I'd say that he was a
> counter.

> When I'm at a blackjack table, I'm not gambling - at
> least as far as the public has come to know what
> gambling means. When I want to gamble - a very rare
> occurrence - I'll play some baccarat, a little dice or
> play the horses, all knowing that I'm playing at a
> disadvantage. Blackjack? The odds are in my favor. I'm
> investing with an expectation of a positive return.

> It would be very hard for me to accept that successful
> options players, hedge fund managers et al, who have
> to assess their risk by the minutes at times, would
> knowingly play blackjack with a disadvantage when
> having an advantage is so clearly within their grasp.
> To do so one would have to assume them to be too lazy
> to acquire the skills necessary to increase their odds
> of winning. I just don't equate traders, options
> players, hedge fund managers et al with the word
> lazy. They're used to winning, why would they now act
> out of character ?

> JMO
> bfb

[Jim]

> The guy was one of the top performing hedge fund
> managers in the world while he ran his fund. His
> results were stellar and his claim to fame was that he
> was in cash for the crash of 1987. Judging from his
> interview, he doesn't have an edge at blackjack, but
> surely does in the markets.

The markets are designed to take your money. Those at the center of the action, that is, those really in control, are simply waiting for new money to enter the markets to take it from you day after day. That's their blackjack house edge of the markets.

You might think if we can make money counting cards, why can't we also beat the house at the markets? We can't because it is manipulated whereas blackjack house rules are not manipulated. Once they offer the game, they can't manipulate it against you, and if they do decrease the penetration, you can just go to the next casino, but in the markets, you can't move to the next market, because there again, whether it is US dollar index, wheat, oil, S&P, or individual stocks, there is always someone at the center who is manipulating each product by moving the markets around against the new money. This is observed when you enter a trade, almost always you notice how it moves against you a few cents immediately. This is a day traders nightmare that can not be overcome, but the same is true on weekly or even monthly moves in the markest. Those who are not day traders, but hold a security for a couple months will also discover the market will be held against you for a prolonged period of time till you finally give up (the technical term is puke out!)

For example, you may think Oil will never stop going up and is a good long to $120 because we have hit hubbert's peak, but on the other hand, if those at the center of the action want to trip you up, they will push it down until you can't take it anymore. They look for weak hands, and most of us are weak hands.

The key to their ability to keep doing this is they know what your margin call point is at.

[young gun]

Nice post and I agree with your comments on day traders. The bid-ask spread and commissions more than eliminate any talent one may have. Cramer is on the inside however, and is seemingly one of the best, so he can overcome it.

> The key to their ability to keep doing this is they
> know what your margin call point is at.

Who is they? Seems that you're acting like individuals are trading with each other with knowledge of who the other side is. It is not done like this anymore. Especially in big markets (oil) one traders margin call means nothing.

[Jim]

> Nice post and I agree with your comments on day
> traders. The bid-ask spread and commissions more than
> eliminate any talent one may have. Cramer is on the
> inside however, and is seemingly one of the best, so
> he can overcome it.

> Who is they? Seems that you're acting like individuals
> are trading with each other with knowledge of who the
> other side is. It is not done like this anymore.
> Especially in big markets (oil) one traders margin
> call means nothing.

You can't win at the markets in the long-term. Only the guys at the center of the action are in control. That leaves only God's warriors coming in wave after wave at blackjack. Like all evil systems there is some anomoly like Neo in the Matrix.