Traders Way Off Quotes

Simons and his team are among the most secretive traders Wall Street has encountered, loath to drop even a hint of how they’d conquered financial markets, lest a competitor seize on any clue. Employees avoid media appearances and steer clear of industry conferences and most public gatherings. Simons once quoted Benjamin, the donkey in Animal Farm , to explain his attitude: “‘God gave me a tail to keep off the flies. But I’d rather have had no tail and no flies.’ That’s kind of the way I feel about publicity.

Time and again I am asked why no one has successfully replicated Trader Joe’s. The answer is that no one has been willing to pay the wages and benefits, and thereby attract—and keep—the quality of people who work at Trader Joe’s. My standard was simple: the average full-time employee in the stores would make the median family income for California. Back in those days it was about $7,000; as I write this, it is around $40,000. What I didn’t count on back there in the 1960s was that so many spouses would go to work in the national economy. When I started, average family income was about the same as average employee income. The great social change of the 1970s and 1980s moved millions of women into the workplace. Average family income soared ahead. But we stuck with our standard, and it paid off.

By 1900, a small white minority radiating out from Europe would come to control most of world’s land surface, imposing the imperatives of a commercial economy and international trade on Asia’s mainly agrarian societies. Europeans backed by garrisons and gunboats could intervene in the affairs of any Asian country they wished to. They were free to transport millions of Asian labourers to far-off colonies (Indians to the Malay Peninsula, Chinese to Trinidad); exact the raw materials and commodities they needed for their industries from Asian economies; and flood local markets with their manufactured products. The peasant in his village and the market trader in his town were being forced to abandon a life defined by religion, family and tradition amid rumours of powerful white men with a strange god-on-a-cross who were reshaping the world- men who married moral aggressiveness with compact and coherent nation-states, the profit motive and superior weaponry, and made Asian societies seem lumberingly inept in every way, unable to match the power of Europe or unleash their own potential.

In the two decades after I left, I waited for the end of Wall Street as I had known it. The outrageous bonuses, the endless parade of rogue traders, the scandal that sank Drexel Burnham, the scandal that destroyed John Gutfreund and finished off Salomon Brothers, the crisis following the collapse of my old boss John Meriwether’s Long-Term Capital Management, the Internet bubble: Over and over again, the financial system was, in some narrow way, discredited. Yet the big Wall Street banks at the center of it just kept on growing, along with the sums of money that they doled out to twenty-six-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it and sell off the pieces?

But what about the spot brokers themselves? A few drifted to banks where they became traders or, more commonly, salesmen. Some simply retired or found work outside finance. Anecdotally, a number of them became London black-cab drivers. In around 2003 I met one who had done just that. I struck up a conversation with him as he took me home from the office; his name was Mickey. ‘I used to be a spot broker,’ he told me after he found out where I worked, ‘it was great.’ We reminisced for a while about the way the FX market had been, then, as we approached my street, he said, a little sadly, ‘But it had to end, we couldn’t beat the computers – they ate us all alive.’ We arrived outside my house where I got out and paid him. As he began to drive off, he slowed down and shouted back at me, ‘They ate us alive – and they’ll do it to everyone!’ With that, he turned the corner and drove out of sight.

At the end of the same summer, Aristeus the Corinthian, the Lacedaemonian ambassadors Aneristus, Nicolaus, and Stratodemus, Timagoras of Tegea, and Pollis of Argos who had no public mission, were on their way to Asia in the hope of persuading the King to give them money and join in the war. […] On the very day of their arrival the Athenians, fearing that Aristeus, whom they considered to be the cause of all their troubles at Potidaea and in Chalcidicè, would do them still further mischief if he escaped, put them all to death without trial and without hearing what they wanted to say; they then threw their bodies down precipices. They considered that they had a right to retaliate on the Lacedaemonians, who had begun by treating in the same way the traders of the Athenians and their allies when they caught their vessels off the coast of Peloponnesus. For at the commencement of the war, all whom the Lacedaemonians captured at sea were treated by them as enemies and indiscriminately slaughtered, whether they were allies of the Athenians or neutrals. (Book 2 Chapter 67)

To summarize my trading strategy for VWAP False Breakouts: Once I’ve made my watchlist for the day, I monitor the price action around VWAP at the Open and during the morning session for the Stocks in Play. A good Stock in Play shows respect toward VWAP. If the Stock in Play sells off below the VWAP but bounces back and breaks out above the VWAP, it means the buyers are gaining control and short sellers perhaps had to cover. However, if it loses the VWAP again in the Late-Morning (from 10:30 a.m. to 12 p.m.), it means that this time the buyers were mostly weak or exhausted. This provides a short opportunity with a stop loss above VWAP. The profit target can be the by then low of the day, or any other important technical level. I try to go short when a Stock in Play has lost the VWAP. Sometimes I go short before the price loses the VWAP, to get a good entry while it is ticking down toward VWAP in the anticipation of a VWAP loss. However, be very careful, for the job of a trader is identification and not anticipation. Take small size and add more shares on the way down if you have truly identified a good trading setup.

headquarters permanently to Rome. Rome was at the center of world affairs, as it was also the center of world corruption. Where else could be better suited—especially now that Monteriggioni was no longer a viable option? He also had plans for a system of distribution of the Brotherhood’s funds in response to individual Assassins’ successfully completed missions. Those diamonds he’d taken from the slave traders had come in very handy, a welcome addition to the campaign fund. One day… But “one day” was still a long way off. The Brotherhood still had no new elected leader, though by common consent and by virtue of their actions, he and Machiavelli had become its temporary chiefs. But they were still only temporary. Nothing had been ratified in formal council. And Caterina preyed on his mind. He had left Claudia to oversee the renovation of the Rosa in Fiore without any supervision or interference. Let her sink or swim in her own overweening confidence! It’d be no fault of his if she sank. But the brothel was an important link in his network, and he admitted to himself that if he really had had absolutely no faith in her, he might have leaned on her harder in the first place. Now was the time to put her work—what she had achieved—to the test. When he returned to the Rosa in Fiore, he was as surprised as he was pleased. Just as successful, he hoped, as his own previous transformations in the city, and at Bartolomeo’s barracks, had been (though even for those he was modest and realistic enough not to take all the credit). But he hid his delight as he took in the sumptuous rooms hung with costly tapestries, the wide sofas, the soft silk cushions, and the white wines chilled with ice—an

The tyro knows nothing, and everybody, including himself, knows it. But the next, or second, grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don'ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don't be a sucker! This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top. In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly. He makes most of the money until one of the healthy reactions takes it away from him at one fell swoop. But the Careful Mike sucker does what I did when I thought I was playing the game intelligently according to the intelligence of others. I knew I needed to change my bucket-shop methods and I thought I was solving my problem with any change, particularly one that assayed high gold values according to the experienced traders among the customers.

Every day, the markets were driven less directly by human beings and more directly by machines. The machines were overseen by people, of course, but few of them knew how the machines worked. He knew that RBC’s machines—not the computers themselves, but the instructions to run them—were third-rate, but he had assumed it was because the company’s new electronic trading unit was bumbling and inept. As he interviewed people from the major banks on Wall Street, he came to realize that they had more in common with RBC than he had supposed. “I’d always been a trader,” he said. “And as a trader you’re kind of inside a bubble. You’re just watching your screens all day. Now I stepped back and for the first time started to watch other traders.” He had a good friend who traded stocks at a big-time hedge fund in Stamford, Connecticut, called SAC Capital. SAC Capital was famous (and soon to be infamous) for being one step ahead of the U.S. stock market. If anyone was going to know something about the market that Brad didn’t know, he figured, it would be them. One spring morning he took the train up to Stamford and spent the day watching his friend trade. Right away he saw that, even though his friend was using technology given to him by Goldman Sachs and Morgan Stanley and the other big firms, he was experiencing exactly the same problem as RBC: The market on his screens was no longer the market. His friend would hit a button to buy or sell a stock and the market would move away from him. “When I see this guy trading and he was getting screwed—I now see that it isn’t just me. My frustration is the market’s frustration. And I was like, Whoa, this is serious.” Brad’s problem wasn’t just Brad’s problem. What people saw when they looked at the U.S. stock market—the numbers on the screens of the professional traders, the ticker tape running across the bottom of the CNBC screen—was an illusion. “That’s when I realized the markets are rigged. And I knew it had to do with the technology. That the answer lay beneath the surface of the technology. I had absolutely no idea where. But that’s when the lightbulb went off that the only way I’m going to find out what’s going on is if I go beneath the surface.

Kode’s older sister, Kira, was leaning over a display of jewelry, fisting a jade-green necklace in one hand. Her nose was two inches from the Braetic across the table, the two exchanging intimidating glares. Eena watched for a few seconds as Kira all but crawled over a pile of merchandise, her face scrunched up with resentment, yet enviably stunning as always. “Hey Kode,” the young queen whispered. “Hey, girl.” “What’s going on?” “Kira’s bartering.” Eena watched the fistful of necklace come within a whisker of smacking the merchant’s nose. “She isn’t going to hurt the guy, is she?” Kode snorted on a chuckle. “Not if the dude’s got any sense.” Validly concerned, Eena inched closer to the confrontation, straining to hear their growled dialogue. Kode and Niki crept closer too. Efren, however, stayed where he was, testing the flagpole’s ability to support his body weight. They watched the feisty Mishmorat hold up a small pouch and shake it in front of the Braetic’s eyes. Kira’s fingers curled like claws around the purse. She seemed to smirk for a second when the merchant flinched. In a blink he was back in her face again, shoving aside the purse. “What is she trying to trade?” Eena asked, her voice still hushed as though she might disturb the haggling taking place across the way. “Viidun coins,” Kode said. “Ef gave ‘em to her.” “Are they worth much?’ Kode grinned wryly, “He sure as hell don’t freakin’ think so.” Eena foresaw Niki’s disapproving smack to the back of Kode’s head before he even finished his sentence. He cursed at his girlfriend for the physical abuse, an unwise response that earned him an additional thump on the head. “Freakin’ tyrant,” Kode grumbled. “Vulgar grogfish,” Niki retorted. Still unable to hear well enough to satisfy her curiosity, Eena stole in closer to the scene of heated bartering. She stopped when Kira’s strong voice carried over the murmur of the crowd. Kode and his girlfriend were right on her heels. “This purse is worth ten of those gaudy necklaces. You oughta be payin’ me to take ‘em off your hands, Braetic!” “That alien money is worthless to me, Mishmorat. In all my life I’ve never left Moccobatran soil. And even if I were to take an interstellar trip someday, you’d never catch the likes of me on a barbarian planet like Rapador!” Kira jerked her head, causing her black, cascading hair to ripple over her shoulder. The action made the trader flinch again. His eyes tapered, appearing to fume over what he perceived as intentional bullying. “You ain’t gonna sell this crap to no one else,” the exotic Mishmorat said. “Be smart and take the money. Hell, you could make a dozen pieces of jewelry from these coins. Sell ’em all for ten times the worth of anything you got here.” The Braetic shoved his finger at Kira’s chest, breathing down her throat at the same time. “Why don’t you just take your pretty little backside away from my table and make your own Viidun jewelry. Sell it yourself and then come back with a reasonable offer for my necklace.” His palm opened flat, demanding she hand over the jade stones still in her fist. “You wanna make me?” Kira breathed. “What do you plan to do, steal it?” The merchant challenged her in a gesture, nostrils flaring. “I’m no thief, but I’m not above beating some sense into you ‘til you choose to barter like a respectable Braetic!” Caught up in the intense interaction, Kode supported his sister a little too loudly. “Teach the freakin’ crook a lesson, Sis!” Niki smacked her boyfriend upside the head without missing a beat.

Andrew Hall may be positioning himself now for the next coming boom cycle, but the market will need more than the predictions of some good traders to turn around. One thing that absolutely must happen is a real and measurable leveling off of production here in the U.S. Early in the bust phase for shale, with crude prices, budgets, and rig counts collapsing, I was of the opinion that indeed, production cuts would come a whole lot sooner than either the EIA or most of the bank analysts believed was possible. But I’ve been impressed by the free flow of capital that has come in to the markets looking to ‘save’ shale oil companies from their excesses, and slowing what I thought would be a violent progression of bond defaults and outright bankruptcies. In a recent note on the state of E+P, Morgan Stanley also noted the trend, when one of its analysts, Evan Calio, wrote: “Secondary offerings have been positively received by investors as a means to shore up balance sheets and pre-fund drilling programs in light of falling crude prices. Secondary offerings remain a logical way to delever [a financial term meaning to reduce debt], but also has the potential to extend the trough rather than hasten its arrival.” (emphasis mine). In other words, there is too much money still chasing oil for a quick weeding out of the weaklings. We might see a longer period of ‘survivability’ before the real wall hits.

As I described in the “Uncorked!” chapter, the economic background in 1970 was turning grim, and sales were weakening. I was concerned. And then, once again, Scientific American came to the rescue. Each September that wonderful magazine devotes its entire issue to a single subject. In September 1970, it was the biosphere, a term I’d never seen before. It was the first time that a major scientific journal had addressed the problem of the environment. Rachel Carson’s Silent Spring, of course, had been serialized in the New Yorker in the late sixties, so the danger to the biosphere wasn’t exactly news, but it could be considered alarmist news. The prestige of Scientific American, however, carried weight. In fact, it knocked me out. I Suffered a Conversion on the Road to Damascus Within weeks, I subscribed to The Whole Earth Catalog, all the Rodale publications like Organic Gardening and Farming, Mother Earth, and a bunch I no longer remember. I was especially impressed by Francis Moore Lappé’s book Diet for a Small Planet. I joined the board of Pasadena Planned Parenthood, where I served for six years. Paul Ehrlich surfaced with his dismal, and proved utterly wrong, predictions. But hey! This guy was from Stanford! You had to believe him! And in 1972 all this was given statistical veracity by Jay Forrester of MIT, in the Club of Rome forecasts, which proved to be even further off the mark. But I bought them at the time. Bob Hanson, the manager of the new Trader Joe’s in Santa Ana, which was off to a slow start, was a health food nut. He kept bugging me to try “health foods.” After I’d read Scientific American, I was on board! Just how eating health foods would save the biosphere was never clear in my mind, or, in my opinion, in the mind of anyone else, except the 100 percent Luddites who wanted to return to some lifestyle approximating the Stone Age. After all, the motto of the Whole Earth Catalog was “access to tools,” hardly Luddite.

In the background, given my commitment to the outer ecology of environmentalism, I replaced all the company cars with diesels, which used less crude oil and lasted longer than gasoline engines. The diesel cars did pay off briefly during the Second Energy Crisis of 1979, but they gave us a lot of trouble in the long run because the diesel-powered Oldsmobile station wagons that General Motors rushed into production had nothing but a beefed-up gasoline engine (internal pressures are much greater in a diesel) and they were in the shop more often than on the road. We aggressively redesigned the stores to conserve energy. To this day, Trader Joe’s stores don’t have very many windows, and all panes of glass are very small, an idea that had an accidental payoff in every subsequent earthquake and riot. As the young lady said back there in the God of Fair Beginnings chapter, I did the right thing for the wrong reasons.

I had some idea of what had to be done, thanks to all we had been learning during the previous six years—from breaking Fair Trade on imported wine, developing private label California wine, and busting the price of health foods and cheeses. But to an extent we were just like a little kid running around while being kept from harm by a kiddie-keeper. We were “protected” by price controls on almost 50 percent of what we sold. Now we were ready to throw off the leash.

Here’s a good question: Given my need to get away from convenience stores, why did I stick with small stores? If in 1967 it was justified because I had eighteen of them already, surely it was no longer justified in the 1980s when Trader Joe’s had become a powerful, successful operation. The answer was verbalized for us in In Search of Excellence, Tom Peter’s best-selling book on management that appeared in 1983. He called it “The Power of Chunking”: The essential building block of a company is the section [which] within its sphere does not await executive orders but takes initiatives. The key factor for success is getting one’s arms around almost any practical problem and knocking it off. . . . The small group is the most visible of the chunking devices.

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The most important question for us humans is, "What is human?" "What is life?" "What is life?" If you can't answer this question, you can't live your life seriously. So Tolstoy, Russia's main gate, for a long time of 15 years I wrote my last book at the end of my career. What is life?It's 입니다. In this book, Tolstoy defines life like this. "Life is holding onto a thin arrowroot vine in a desperate situation where it doesn't know when it's going to break off." What do you think life is? Someone said that life is about luck. What is "WOON 7G3"? It means that luck is 70% and opportunity is 30%. Life is luck. Do you really think life is luck? Then you're lucky to live well, Is it bad luck not to be able to buy it? Being healthy is good luck, Is it bad luck to be sick? That's not true. Life is not luck. Victor Wigor thinks about what life is and then expresses it in one word. It's a voyage. Life is a voyage in which a boat floating on the sea plumped and sailed through a port. Ships floating in the sea of the world have calmness, rough waves, and scary typhoons. Life is not easy. So Job says life like this. "Isn't there hard labor in life on this land?" (Job 7:1) There is a theory of life in today's text. Section 13 of the body. "Those who say they will profit by doing business" (approximately 4:13) What is business and profit? Business is selling things to make money. What are the benefits? It's money from the business. Jews thought it was important to make money. So Jewish tactics are world-famous. The Jews were the geniuses of the tactics. In the old days, money was all coins. Our country also made money into a not. This is called Yupjeon. Heavy coins were very uncomfortable for traders. So the Jews made bills instead of coins, they made checks, they made bills. And the Jews thought about how to sell things without discounting them I made a department store in America. The Jews also taught their children this way. "The whole world is a business. Even white clouds become rain when squeezed." These people are Jewish. Trade was the best way to make money in the days of the First Church. Especially in the early church era, it was the best environment to make money from trade. In this era, it was Pax Romana.

1. Don’t buy stocks that are hitting 52-week lows. We have already discussed this point, but it bears repeating, simply because so many new traders lose a lot of money trying to catch the proverbial “falling knife.” In spite of what everyone will tell you, you are almost always much better off buying a stock that is hitting 52-week highs than one hitting 52-week lows. Has a company that you own just reported some really bad news? If so, remember that there is never just one cockroach. Bad news comes in clusters. Many investors recently learned this the hard way with General Electric, which just kept reporting one bad thing after another, causing the stock to crash from 30 to 7. There is no such thing as a “safe stock.” Even a blue chip stock can go down a lot if it loses its competitive advantage or the company makes bad decisions. A cascade of bad news can often cause a stock to trend down or gap down repeatedly. If you own a stock that does this, it is often better to get out and wait a few months (or years) to reenter. Again, there is never just one cockroach. Never buy a stock after you have seen the first cockroach. When a stock goes down a lot, it can affect the company's fundamentals as well. Employee and management morale will deteriorate, the best employees may leave the company, and it may become more difficult for the company to raise money by selling shares or issuing debt. Conversely, when a stock goes up a lot, it can improve the company's fundamentals. Employee and management morale will be high, everyone at the company will want to work harder, it will be easier to recruit new talent, and it will become easier for the company to raise money by issuing stock or debt. If you stick to stocks that are trading above their 200-day moving averages, or that are hitting 52-week highs, you will do much better than trying to catch falling knives.

2. Don’t trade penny stocks. A penny stock is any stock that trades under $5. Unless you are an advanced trader, you should avoid all penny stocks. I would extend this by encouraging you to also avoid all stocks priced under $10. Even if you have a small trading account ($5,000) or less, you are better off buying fewer shares of a higher-priced stock than a lot of shares of a penny stock. That is because low-priced stocks are most often associated with lower quality companies. As a result, they are not usually allowed to trade on the NYSE or the Nasdaq. Instead, they trade on the OTCBB ("over the counter bulletin board") or Pink Sheets, both of which have much less stringent financial reporting requirements than the major exchanges do. Many of these companies have never made a profit. They may be frauds or shell companies that are designed solely to enrich management and other insiders. They may also include former “blue chips” that have fallen on hard times like Eastman Kodak or Lehman Brothers. In addition, penny stocks are inherently more volatile than higher-priced stocks. Think of it this way: if a $100 stock moves $1, that is a 1% move. If a $5 stock moves $1, that is a 20% move. Many new traders underestimate the kind of emotional and financial damage that this kind of volatility can cause. In my experience, penny stocks do not trend nearly as well as higher-priced stocks. They tend to be more mean-reverting (Mean reversion occurs when a stock moves up sharply from its average trading price, only to fall right back down again to its average trading price). Many of them are eventually headed to zero, but they are still not good short candidates. Most brokers will not let you short them. And even if you do find a broker who will let you short a penny stock, how would you like to wake up to see your penny stock trading at $10 when you just shorted it at $2 a few days before? I learned that lesson the hard way. It turned out that I was risking $8 to make $2, which is not a good way to make money over the long term. To add injury to insult, a penny stock might appear to be liquid one day, and the next day, the liquidity dries up and you are confronted by a $2 bid/ask spread. Or the bid might completely disappear. Imagine owning

Anyway. Back then, women had to be able to do a lot of different things. Think of different ways to do things.” “And the men didn’t?” he asked innocently. She’d come to a bird-pecked fruit. She tugged it off, shied it at him, and went on picking. “Of course they did. But that doesn’t change my point.” “Which is?” He opened his own pack and was loading it now. What was her point? “That at one time, Trader women proved themselves just as men did. By surviving.

If you could go back to Trehaug, would you want to?” “What?” “Last night you said you couldn’t go home. I wondered if that was what you really wanted to do.” He followed her silently for a time, then added, “Because if it was, I’d find a way to take you there.” She stopped, turned and met his eyes. He seemed so earnest, and she suddenly felt so old. “Tats. If that was what I really wanted to do, I’d find a way to do it. If I left now…well. It all would have been for nothing, wouldn’t it? I’d just be Thymara, slinking back home, to live in my father’s house and abide by my mother’s rules.” He furrowed his brow. “ ‘Just Thymara.’ I don’t think that’s such a bad thing to be. What do you want to be?” That stumped her. “I don’t know. But I know that I want to be something more than just my father’s daughter. I want to prove myself somehow. That’s what I told my da when he asked why I wanted to go on this expedition. And it’s still true.” They’d come to the next trunk and Thymara started up it, digging her claws into the bark. The same claws that had condemned her to a half life in Trehaug might be her salvation out here, she thought. Tats came behind her, more slowly. When Thymara reached a likely branch, she paused and waited for him. When he caught up with her, his face was misted with sweat. “I thought only boys felt things like that.” “Like what?” “That we have to prove ourselves, so people would know we were men now, not boys any longer.” “Why wouldn’t a girl feel that?” Her eyes had caught a glint of yellow. She pointed toward it, and he nodded. At the end of this branch, out over the river, a parasitic vine garlanded the tree. The weight of hanging yellow fruit sagged both vine and branches. It swayed and she saw the flicker of wings. Birds were feeding there, a sure sign the fruit was ripe. “I don’t know if the branches will take your weight.” “I’ll find out.” “Your choice. But don’t follow me too closely.” “I’ll be careful. And I’ll stick to my own branch.” And he was. She ventured out onto the branch, and he transferred to one beside it. She crouched, digging her claws in as she ventured toward the vine. The farther she went, the more the branch sagged. “It’s a long drop to the river, and shallow down there,” Tats reminded her. “Like I don’t know,” she muttered. She glanced over at him. He was belly down on his branch, inching out doggedly. She could tell he was afraid. And she knew that he wouldn’t go back until she did. Proving himself. “Why wouldn’t a girl want to prove herself?” “Well.” He gave a grunt and inched himself along. She had to admire his nerve. He was heavier than she was, and his branch was already beginning to droop with his weight. “A girl doesn’t have to prove herself. No one expects it of her. She just has to, you know, be a girl.” “Get married, have babies,” she said. “Well. Something like that. Not right away, the having babies part. But, well, I guess no one expects a girl to, well—” “Do anything,” she supplied for him. She was as far out as she dared to go, but the fruit was barely within her reach. She reached out and took a cautious grip on a leaf of the vine. She pulled it slowly toward her, careful not to pull the leaf off. When it was near enough, she hooked the vine itself with her free hand. Carefully she scooted back on the parasitic vines had very tough and sturdy stemwork. She’d be able to pull it from here and pluck as much fruit as she wanted. Tats saw that, and she credited his intelligence that he stopped risking himself immediately and backed along the branch. He sighed slightly, watching her. “You know what I mean.” “I do. It didn’t used to be like that, with the early Traders. Women were among the toughest of the new settlers. They had to be, not only to live but to raise their children.

Charles Koch had finally built a machine that was poised to thrive, even profit, in the midst of violent market corrections. This capability derived, in part, from something that Charles Koch called “the trading mentality.” This mentality held that it didn’t matter so much if markets were going up or down; what mattered was that the traders could see ways to exploit large shifts in the markets. During volatile times, companies and governments and competing traders were thrown off balance. Prices diverged. Supplies were interrupted. Gaps emerged between market prices and underlying values. Koch became nimble, even expert, at exploiting those gaps for its gain.

Charles Koch did, this new effort carried its own slogan: “10,000 percent compliance,” meaning that employees obeyed 100 percent of all laws 100 percent of the time.II This slogan might have seemed banal, even empty, to Koch Industries employees in the beginning. There isn’t a company in America that doesn’t profess to obey the law. But the glib nature of the slogan was deceiving: it represented an entirely new way of operating. Koch Industries expanded its legal team and embedded them into the firm’s far-flung operations. Now if process owners like the managers at Pine Bend decided to release ammonia-laden water into nearby waterways, they often had to first consult with teams of Koch’s lawyers. Koch’s commodity traders consulted the legal team when devising new trading strategies. Teams of inspectors from the legal department descended on factories and threatened to shut them down if managers couldn’t prove that a valve had been properly inspected. The mandate to comply with the law was very real, and it served a strategic purpose. Koch would keep state and federal regulators off its property.

My God!” Sophia sat back, her eyes wide with horror. “It’s a drug! He’s drugging her and she doesn’t even know it.” Here we go. “It’s common knowledge that we’re genetic traders—the fact that we have more than one means to attract a mate of an entirely different species should come as no surprise,” he pointed out. “You…you cold blooded bastard.” Sophia shook her head. “Poor Liv—she has no idea what he’s doing to her.” “It wouldn’t matter even if she did,” Sylvan explained patiently, ignoring her insults. “The mating scent is too strong to fight, even with advanced warning. Stronger species than yours have tried and they have all failed. With very few exceptions.” He closed his eyes briefly thinking of Feenah, of her pure white hair and pale crystal eyes. I’m sorry, Sylvan… “It’s not right. You’re not fighting fair.” Sophia’s words pushed back the painful memory and Sylvan opened his eyes again to see the look of despair and anger on her lovely face. She looked almost on the brink of tears. Wonderful—she was even more upset and irrational than he had thought she would be. He supposed he ought to feel irritated. Instead, the illogical urge to hold and comfort her came over him so strongly that he had to sit back and cross his arms over his chest to keep from reaching for her. “I believe you humans have a saying that covers this—‘All’s fair in love and war.’ Is that right?” he said softly. “Yes, but that doesn’t mean—” Sylvan leaned forward again and took her soft, small hands between his own larger ones. “You must understand, Sophia—Baird isn’t trying to trick your sister into anything. He’s simply using every power at his disposal to keep her. Because he needs her—he loves her. She is the only woman in the entire universe for him and the bond that will form between them will be one of undying love and devotion.” “Maybe for him.” She looked down as though mesmerized by the sight of her own small hands being engulfed in his much larger ones. “But not for Liv. He’s going to trick her into having bonding sex with him —whatever that is—and then she’ll spend the rest of her life hating him once she finds out how he did it.” She looked up at Sylvan. “You don’t know her like I do—she hates being lied to. Her last boyfriend cheated on her and then lied about it and she dumped him and never looked back. If she knew what Baird was doing to her…” “It’s not as though it’s a conscious choice on his part,” Sylvan tried to explain. “It’s the way our bodies react chemically to our chosen mates. We can’t turn it off, even if we try. Sometimes it comes even when it’s not wanted. We have a saying for it—‘The blood knows what the mind does not wish to see.’” Lifting a hand, he cupped her cheek and brushed away the single tear that had escaped her wide green eyes with his thumb. “It cannot be helped.” Sophia

Households supply their labour and capital in return for wages and profits, and then spend that income buying goods and services from firms. It is this interdependence of production and consumption that creates income’s circular flow. And that flow would be uninterrupted if it were not for three outer loops—involving commercial banks, government and trade—that divert some income for other uses. The model shows banks siphoning off income as savings and then returning it as investment. Government extracts income as taxes but re-injects it as public spending. Overseas traders need to be paid for the nation’s imports but in turn pay out for its exports. All three of these diversions create leakages from and injections into the market’s circular flow but, taken as a whole, the system is closed and complete—not unlike a circular set of plumbed pipes with water

De Beers set up a purchasing office in Monrovia in 1954 where they bought diamonds, with the intent of keeping as much of the diamond trade under its control as possible. However by 1956, while I was still in Monrovia, there were approximately 75,000 illegal miners, who were smuggling these valuable stones on a vast scale. At that time I was offered the opportunity to get involved in this bonanza, which I fortunately did not do since some of my friends who did, went missing never to be seen again. At that time I was the Captain of a Farrell Line’s coastal ship and made additional pocket money running booze into the Liberian interior. In those days when someone disappeared or fell off of the grid, as we would say, the chance that they would be found again was exceedingly slim. In 1984 the De Beers Group (SLST) from South Africa, sold its remaining shares, under duress, to the Precious Metals Mining Company controlled by Lebanese National, Jamil Sahid Mohamed Khalil, was a questionable local businessman, as well as a diamonds and commodities trader. He became known throughout the world’s diamond industry as a wheeler-dealer and a politician, influential in Sierra Leone, where the majority of the blood diamonds came from. In 1999, when South African mercenaries invaded Sierra Leone’s capital city Freetown, Jamil attempted to flee from this West African country but was stopped prior to leaving his home. During this altercation, one of Jamil’s sons was shot to death right in front of him. The following year, Jamil died of a stroke after having successfully made his way to Lebanon.

This book should never have happened. If it wasn’t for the most bizarre and twisted sequence of events involving a diverse array of people it wouldn’t have. Let us explain. If someone we, the authors, had wanted to impress - a publisher, say, or a book reviewer - had asked us how it had emerged, we could have come up with all kinds of things to establish our credentials for writing it. But they would have been only a small part of the story of how it came about, and not the interesting bit either. The truth is much more human and fascinating - and it also gets to the heart of the book and shows how networks really work. Greg has always been fascinated by ‘network theory’ - the findings of sociologists, mathematicians and physicists, which seemed to translate to the real world of links between people. Early in his professional life at Auto Trader magazine in Canada he got to see an extraordinary network of buyers and sellers in operation. Later, when he became a venture capitalist - someone who invests in new or young companies, hoping that some of them will become very valuable - he applied what he’d learned. He invested in businesses that could benefit from the way networks behave, and this approach yielded some notable successes. Richard came from a different slant. For twenty years, he was a ‘strategy consultant’, using economic analysis to help firms become more profitable than their rivals. He ended up co-founding LEK, the fastest-growing ‘strategy boutique’ of the 1980s, with offices in the US, Europe and Asia. He also wrote books on business strategy, and in particular championed the ‘star business’ idea, which stated that the most valuable venture was nearly always a ‘star’, defined as the biggest firm in a high-growth market. In the 1990s and 2000s, Richard successfully invested the money he had made as a management consultant in a series of star ventures. He also read everything available about networks, feeling intuitively that they were another reason for business success, and might also help explain why some people’s careers took off while equally intelligent and qualified people often languished. So, there were good reasons why Greg and Richard might want to write a book together about networks. But the problem with all such ‘formal’ explanations is that they ignore the human events and coincidences that took place before that book could ever see the light of day. The most

I discovered something else, and that is that suckers differ among themselves according to the degree of experience. The tyro knows nothing, and everybody, including himself, knows it. But the next, or second, grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don'ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don't be a sucker! This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top. In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly. He makes most of the money until one of the healthy reactions takes it away from him at one fell swoop. But the Careful Mike sucker does what I did when I thought I was playing the game intelligently according to the intelligence of others. I knew I needed to change my bucket-shop methods and I thought I was solving my problem with any change, particularly one that assayed high gold values according to the experienced traders among the customers.