Fond manager cracking
"Lemming behaviour and the stockmarket"
by Curious George and Maxine+
(20 February 1997)
Courtesy of fravia's page
of reverse engineering
Well, I got Curious George's and Maxine+'s essays almost at the same
time. As you will see, they pass pretty good together :-)
Anyway we are only 'warming the
reversing muscles' at the moment. I hope that each one of these 'paths' will
develop in a full fledged cracking sector soon or later... and god knows if
these bastards that manage funds don't deserve to be cracked black and blue!
cutting real mustard (another essay by Curious George, 20 February 1998)
let me disagree somewhat with your complaint about so-called theory.
Granted my first essay was abstract. But if one focuses on the other
extreme, one fails to see the bigger picture.
Sure, we can identify the fact that "they" use basic psychology in the
design of the supermarket layout. Or we can learn about how salesmen use
body language to their advantage.
One beneift of looking at these very specific examples of "their" methods
is we can be quite sure that we're not going off an unsupported tangent.
We have evidence of what's going on.
Even if we identify all the methods beign employed currently, new ones
are being developed as we speak. We know that the reason the supermarket was
designed to be couter clockwise is that it will get us to by more of what we
But if we consider the next level up, braving to veture into the realm of
speculation, we get a more alarming result. Why do they want us to buy useless
So we stay in the habit of buying. If we never manage to identify what we
actually need, and stay blinded to it, we will continue to grab junk
off of the shelves. If we are deluded even more, then they can start
to reduce the quality (and expense of producing) the junk they sell us!
Eventually, we will be continuously laboring for nothing.
Really, though, the concept of reality cracking isn't new. We merely uncover
contemporary examples of what is going on. Do you remember your Communist Manifesto?
Marx identified the trend of degradation of quality of life long ago.
Unfortuately I don't have a copy of it laying around here, or I would
support with quotes. Let's see...something like the nature of capitalism is to
expand into new markets, then as those fill up, more must be extracted from
existing markets...the slave class of the proletariat is thus driven below
So, in summary, working at the low level is great, but not to the
exclusion of a higher level understanding.
If not for that alone, at least for a way to direct your next low level effort.
One note about the essay: in case you're curious about how I came up
with it so fast, it is an issue that I identified a while ago, but hadn't bothered
to write about.
Understanding a new and devious "free offer" scheme.
Good for all readers, no difficulty level.
Follow the Money
The Truth Behind Free, Online Portfolio Trackers
by Curious George
20 february 1998
One approach to reality cracking is to view the world purely in terms of money.
You ask yourself, how would "they" make money off of this particular situation
Rest assured, if you think of a way to make money off of something, its already
Another approach is to thoroughly investigate the motives of whatever party you
are suspicious of. Both of these, of course, are nothing new.
Any critical thinker should already do this. The problem is that many people aren't
critical thinkers... so we have to teach it, giving it the fancy name, "reality
Let's think about one very familiar commercial gimmick: the free offer. We all
know about this. It's been around for ages. I play on your greed by dangling a
juicy carrot in front of your nose.
I say, "take it, its completely free! No strings attached!" Well, because I
play on your greed, you delude yourself into thinking that that carrot floats
in the air by itself.
But really, it is tied to a stick that I hold by a string...what I want from you
in exchange for the carrot is your personal info to flesh out my database.
That way I can sell it to spammers.
Everybody knows this, now. We all know that the motives behind any tangible gift
is marketing info.
Some of us don't care and sign up anyway.
Others despise this form of prostitution.
So, I'm still trying to get stuff out of you. I'm tired of simple personal info,
like associating hobbies with names and addresses. There's no big money left in
that area. I want to do something much grander.
Today, on the net, there are far more devious tricks that appeal to the "smarter",
richer portions of society.
And this is the choice target audience. These people have money. How did they get
First they worked for it. Second, they invested it.
Aha! There are millions of upper-middle class people who are semi (quasi?) net
I can manipulate them by the dangerous little bit of knowledge they have.
They want to be cool, modern, net savvy.
Another trait is that they care about money. Many of these people spend their
free time trying to get more money by speculation. It takes dedication and skill
to become a great investor, however.
Most of the volume that is traded on the markets daily comes from little bitty
transactions by these millions of people.
The big swings in the market are determined by a critical mass of these people
acting together like lemmings.
So, one could make money out of this, no? I could create an online service where
people pay to have access to real-time stock quotes and can circumvent expensive
That would make most of wall street very very mad. It would put lots of powerful
people out of business.
Instead I can offer delayed quotes, enough that the people on the floor still have
an advantage over the individual.
I can't let Joe average have the same power over the market that I do.
But I can gain more power can't I? This is what I do: create an online service
that offers some benefit to the individual but not so much that it begins to erode
my power...enough that he will be motivated to use it despite his suspicion of the
I can't charge him because there isn't all that much content in what I offer.
I get him to submit his portfolio to us so that I can give him the results back...
But, what do I have now? Thousands of Joes and Janes have joined my service!
I know what a sample of the lemmings on the market are doing! If my sample grows
enough (admittely a big if), I can watch as the herd begins to move in a direction...
say there are rumors about the fed changing interest rates.
People start getting nervous.
They start to hedge. This feeling begins to spread.
I can see all of this because I have the dirt on what the lemmings own.
I can watch transactions take place (they do it through me).
I can act accordingly. Bet downside, whatever. I can control -to a little extent-
the market! I can buy, supply a rumor, then watch as the lemmings begin
to move on it.
Large brokerage firms already have this power and use it. What we see
here is smaller companies trying to grab some of this power with new technology.
Micro$oft is doing it. Infoseek is as well. On my web search on this matter, I found
several dozen services that are almost identical.
More interesting, A company called Reality Online supplies contracts with BOTH MS
Below is a excerpt from one site. The sales pitch could be from any
one of the sites. Notice the keywords:
"couple minutes", "simple", "hassle, pain free", "FREE!", etc.
This particular site is especially noticeable because the propaganda man wasn't
very creative with his prose.
Visit the MS site for a much smoother pitch.
Its all about functionality and service to the user (as opposed to an overt push).
"Monitoring your portfolio on a daily basis doesn't have to
be a hassle. Portfolio Tracker helps you painlessly track up
to 10 personalized portfolios with up to 40 securities in
each. Signing up just takes a couple minutes, and then you
enter the symbols of the stocks, mutual funds and options
you want to track and how many shares you own. It's that simple.
You can connect to Portfolio Tracker whenever you wish for your
latest portfolio update (quotes are delayed at least 20 minutes).
Or even better, use the personalized e-mail service and we'll
deliver a personalized portfolio snapshot to you up to twice a day.
It's hassle-free. It's pain-free. In fact, it's just plain FREE!
Sign up now to get started.
© 1997 Reality Online Inc., A REUTERS Company 1000 Madison Avenue,
Norristown, PA 19403, USA. All rights reserved."
So, we've seen that as a result of new technology there is a push by
smaller players into the big boy's pond.
The world of super money is all about gaining control of the markets.
Nations do it. Super wealthy companies and savvy investors like Warren
Buffet do it. Now Bill wants to do it too.
If we extrapolate to the next level, we see that big money is all
about the few super powers vying against each other. They make a move
to bump the market in one direction to hurt their enemy's holdings...but
theyr enemy responds with another move. This giant game of intrigue
is what we think is a free market.
I can almost guarantee this: Direct access to buying and selling will
never happen for the individual investor. The whole power structure
would topple if that happened.
Now, because I am a big picture guy, I will put a bit of "theoretical
junk" in my conclusion. The concept of free market capitalism is a Paradigm.
They, those in power, want us lemmings to believe that what goes on
is totally random. Theyr system is too big and complex to be controlled.
We could never model it.
As we have seen, that is not what is actually happening. There are a few big
powers who fight each other for dominance in the world of big money. Each has
tremendous influence over an aspect of the global market, but not enough
to truly dominate. Wherever somebody looses money, somebody else makes it.
But, now we have stepped outside the Paradigm.
What presumptuous lemmings we are!
(c) 1998 Curious george & Maxine+ All rights reversed
The truth behind the fund managers
20 february 1998
Darts beat fund managers
Stock markets boom and crash, like roulettes. In recent years, they have
boomed very nicely, a fact that for sure has quite a lot to do with
the disappearance of the only existing, if abysmal, alternative to this
awful society (the doomed poor Soviet Union) and the consequent immediate
nuking of everything the working classes all over the world had ever
gained, from social insurances to free schools, a process eufemistically
called 'globalisation': letting gullible people believe that it is 'correct'
and 'a natural trend' that they have to work more (if they ever happen to
get a job in the first place) in order to be paid less.
But I don't want here to simply denigrate globalisation (that would be
a much too easy task for a reality reverse engineer, like red-cross
shooting ;) I want to show you some 'hidden truths' behind fund management
practiques. And, quite interestingly, I believe, I will DEMONSTRATE these
same truths right now.
Proceed to a little experiment.
Take the wall street index (the page with all the shares, most newspapers
publish this roulette wheel every day), now carefully pin it to your wand
and throw 10 darts at it (great fun). Put inside your spreadsheet those
10 'pseudo-random' actions. Now choose the ten 'best' fund managements you
know of (or copy them from "Money" magazine). Get their relative performance
Put them inside your spreadsheet as well. Get the dow jones and the standard
and poor indexes as well (to check).
Now comes the interesting part.
Follow boom and crashes for a couple of months. Compare the results. Your
pseudo-random actions will have OUTPERFORMED more than 50% of the fund
managers guru. You don't believe it. Try it again. If you still don't
believe it, try it again until you do.
Why this happens.
Most people believe that when they turn their money to a fund, it will
grow by leaps and bounds or shrink depending on the market savvy of the
A 'good' fund will rise faster than the indexes, or, conversely, fall
less than the indexes when the indexes fall (decaying more slowly).
Now the simple truth is that the number of funds that outperform the
market is, in average, INFERIOR to the number of casual packed group
of shares that outperform the market. I repeat: a very stupid fund
manager can very easily loose MORE than the market average, the best
fund managers will never do (in average) as well as your darts. That's
because your darts are (more or less) random. And, as strange as it
may seem to you, the market is not a perfect-oiled well working
machine, it is a crazy and silly roulette (which is also tricked and
jammed in order to shift money from little to big and very big
shareholders, among other things also through the funds themselves).
Given their abysmal performances, the fund managers would probably
like a lot to throw some darts themselves, and renounce to any
preposterous and totally useless market analysis, since such analysis
do not make any sense at all (else you would have many more fond
performances that outperform the market, and not LESS than the
statistical average ;)
Alas the behaviour of fund managers, far from being random, is watched
and analyzed by hundred of little lemmings shareholders. It's a
society build on lies, but it helds pretty tight. This is, of
course their ultimate doom. Even in a booming market they will loose
something. As soon as the rollercoast goes down (which has already
started in July 1997) this will nuke them.
Curiously, the simple truth that MOST funds perform LESS than the
statistical average does not bother the 'little guy' in the least,
and they will lie awake at night lulled by the fund managers frill
heavy presentation advertisement, wondering how the 'successful' ones
manage it. But, as I told you (and as you can quickly check) the number of
'successful' fund managers is statistically inferior to the average
do-it-yourself shares packet.
Therefore your chances with darts are MUCH better than your chances with
You don't believe me? Try it, a spreadsheet run won't cost you no money
at all and will be, I believe, VERY instructive.
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