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Buddy, judging from this post and your posts in other threads, you have a real issue when it comes to being able to draw logical conclusions. Yes, the management is bad. It's one of the major factors leading to the company's failure (militant unions and a background of recession didn't help...

Cutten, thanks for injecting some sanity into this thread. Speaking of which, this week's economist had an interesting article on this issue. It appears that auto dealers have a hugely powerful lobby and it's actually very difficult for the company to shut down dealers. They've wanted to do it...

Agreed. You are obviously entirely right, but you missed the gist of my post. The problem is, how do you determine the loss that is "the maximum likely" in a time horizon. That's the literal million dollar question. If you can do that right, the rest is just arithmetics (or, at least reasonably...

So, your entire strategy to the complex problem of trading sizing is... don't bet too much? well.. yes. no kidding. It's about as true as it is tautological. The whole problem is what is "too much" and how to recognize "too much" before it bites you in the ass. You got to put a stake somewhere...

What part of "End consumer prices are not directly correlated with input commodities prices." can you not read? Do we need to send you for some basic education on what "correlation" is? http://en.wikipedia.org/wiki/Correlation

Um.... I would argue otherwise; In the long run, there's definately no elasticity. Fuel is a special case. The input price of oil is a major component of end product pricing. It also has a relatively elastic demand curve. That's why fuel prices are volatile and why it's excluded from...

A direct correlation implies both will move up and down together. Correlation carries the same sign as beta and therefore works in both directions. Note that I'm using the word correlation in the statistical sense, not in what not common sense that you are used to using. Please look up what it...

Christ... if you actually read what I wrote... higher input prices results in higher end product price. lower input price doesn't equal to lower output price. Hence, not directly correlated. Price levels don't revert to means. Otherwise, we wouldn't have inflation.

There seems to be a pretty common theme these days on ET. Posts that basically run, "I don't understand [xyz]. Is it manipulation? Must be!"

You do realize... that when grocery bills get lower when buying the same food, that means deflation, right? Given that deflation hasn't occured in some decades to say the least, there hasn't been a case in recent memory that your grocery bill got lower (aside from temporary sales). End...

... um... you need an accounting firm rather than a website. Certainly, E&Y, PriceWaterhouseCooper and the likes all have auditing arms. I suspect there are plenty of middle-market firms with certified auditors who can do the same. Are you sure you need to audit your returns... there are very...

This kind of a service is called an "audit". It costs money and time. Unless a track record is audited, just posted to a website somewhere doesn't exactly make it special.

I feel bad for this guy, but it was in his contract. That he signed. He isn't some uneducated dullard who signed things he doesn't understand. He's been in this business for decades. He signed a contract. A contract that expressly allow this to happen. He goes on and on about how this could...

Don't kid yourself. Options aren't nearly as complicated as a ER procedure. It's been around for centuries. I simply can't fathom why anyone can't understand what buying "option to do something" means.

There's no single answer to this. There's a lot of custom work to figure out what exactly are you trying to achieve, create measures and tools that hopefully measure your goals, and then design optimizations that will get you there. At some point, this process will involve monte carlo path...

I don't have it handy. I did the analysis some years ago. Forgive me, I'm also not inclined to recreate it from scratch. That being said, here are some of the more important points I got from the exercise: (1) it doesn't take infinite amount of periods before the negative expectations...

Why not? Kelly is only optimal if returns are iid. iid isn't a fairly harmless conceptual assumption for kelly. It's the a core concept without which it is no longer optimal or valid. Try a simple AR1 model of returns. There are very wide ranges for the autocorrelation that would show that...

I'm not sure why this is particularly applicable - especially if it's for position sizing a strategy. The basics of kelly and all of its derivatives is that it's optimized for gambling, where randomness is iid (independently and identically distributed). This assumptions is false in general in...

If this is a big phrase, you need better friends.

Just say that it's option that gives you the right, not the obligation to buy something. Everyone in their real life has dealt with real options: the options to buy a property; an option is exactly that, "an option to do something"