The Art of Speculation

That title belongs to a book written by a man I met online and by telephone, for the first time, over ten years ago. His “pen name” is Arthur Fixed and the full title of the book is “The Art of Speculation During Civil War” with the byline; “Sun Tsu meets Jesse Livermore” but I know the old man (he’s 72) as Alex.

Alex graduated from Harvard in 1964, with a PhD in Law. It’s important to note that he was an immigrant to the U.S, so English was a new language for him as well, added to that, back in those days the policy was that 33% of Harvard students (each year) did NOT pass (nowadays almost everyone makes the grade). Getting a Harvard degree is still a major accomplishment, but in 1964 to come-out, while in your mid-twenties, with a PhD, is a monumental achievement. Alex would prove again and again that he was an over-achiever. This is an excellent guide I’ve read so far.

Harvard was just the start of what would become an illustrious and highly successful, albeit very diverse career, spanning over five decades. At one point in his journey Alex developed an interest in economics and the stock market. Like everything else with Alex, if there was a point to doing something, then there was a point to over-doing-it, he immersed himself in the academics of money, finance, and stock market trading. What made his approach slightly different was his strict belief in the teachings of the Austrian school of economics by Ludwig Von Mises and even more influenced in his thinking by Mises protégé Murray Rothbard with his famous tome called “Man, Economy and State”.

For sure Alex was not the first trader to have a penchant for Mises and Rothbard, truly it’s probably more the norm, for anyone involved with the stock market to have a strong belief in the Austrian economic doctrine, but not like Alex. This ideology was much more than just ideas to Alex, this was the code for economic law. As clear as physics and as predictable as chemistry. According to him, the way to understand the stock market scientifically is to apply the principles of economic law, create multiple methods of observation and analysis. Then using reason and logic, based on having enough data from observation, to then formulate assumptions, that which when acted upon in the correct manner, will create the same results (in similar market situations), over and over again.

Alex’s hypothesis is that when economic law is applied to the markets, the end-result is as obvious as gravity.

In 1987 Alex had the opportunity to apply his theory and methods, against a market that suffered a full year of decline. Starting with a trading account of $10,000 USD he began his speculation, one year later he had grown the account to $5.5M. The critical factor was the size of the correction in the market because that is the crux of understanding the economic law as it relates to stock prices. See, according to Rothbard, in the aspects of his book that refer to “man”, that all value is subjective and prices of everything will rise and fall, knowing what to do about it and when is the key and that’s where Alex embellished upon Mises and Rothbard to push the science beyond where it stopped.

The year 2016, according to Alex and personified by Arthur Fixed in the “Art of Speculation During Civil War”, has all the hallmarks of a market cycle where the subjective value of the stock market changes (or corrects), as well as the subjective values of all currencies and commodities. To set-up the circumstance, where economic law mimics gravity and when specific option trading methods are applied, a very predictable outcome is recreated, again and again, until the correction is over.

Alex invited me to join him and learn how to make a fortune on speculation by trading options. The account was opened months ago but we had to wait until the science (observation and measurement) told us to start. We’re on!

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