Index

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A

AAPL, 57, 79, 83

Academia, Wall Street and, 3–7

Actions, emotions and, 94, 96, 224–225

Adaptive markets hypothesis, 67

Advanced workshop lectures

fractal geometry playing market mind, 147–167

mark-to-market emotions, 121–134

mental capital and psychological leverage, 111–120

regret theory, greed and, 135–145

Against the Gods (Bernstein), 12

AIG, 68–69, 114

Alcmaeon, 34

Allen, Paul, 17

alpha, 112, 120, 132

Ambient building blocks, 82–83

Ambient reality, 73–80

Ambiguity aversion, 14

Angelides, Phil, 96

Anger

frustration turning into, 128–129, 132

turning into meltdown, 128–129

as one of five basic emotions, 126

role of, 37

Anthropomorphizing, 66–67

Anticipation

of feelings, 228

of regret, 142–144

Anxiety

on FAD spectrum, 127–128

of uncertainty, 136–138, 180

Apple, 57, 83. See also AAPL

Approach, 127

Aristotle, 34

Arithmetic, 73–74, 80

Army, intuition and, 198–199

The Ascent of Money (Ferguson), 139

asset allocation, Markowitz’s concept of, 27–28

Athletes, market, 115–117

Attentive deliberation, 200

Auctions, 69–71

August 2007 market swings, probability of, 12

Automaticity, 127, 135

Avoidance, 127

B

Barge, John, 150

Barrett, Lisa Feldman, 74, 122

Battle training, 195

Bear Stearns

demise of, 68

in March 2008, 25

Tannin of, 13

Beauty contests, winning, 53–56

Behavior

collective, relationship with, 162

emotions and, 36

irrational, 33–35, 95

pattern recognition of, 63

Behavioral economics, 35, 94–95, 122

Behavioral finance executive class, 55

Beliefs

confidence and, 38

context of, 68, 112

as curator, 85–86

emotions, feelings and, 84–86

importance of, 30–31, 35, 41

mortgages and, 31

perception and, 46, 83–86

risk and, 31

water-skiing example, 46–48

Berlin, Heather, 85–86

Bernanke, Ben, 68, 96

Bernstein, Peter, 12, 27

Betting, human choice and, 24–25

“Beyond the Pleasure Principle” (Freud), 153

Bicycle accident, influence of, 205–215, 217–221

BIKB. See But I know better

Bilal, Dania, 134

Bin Laden, Osama, 180

Biopsychology, 5–6

Black Swans, 13, 16, 27, 69

Blade Runner, 92–93

blink (Gladwell), 121

Blocked fractals, 190–193

Body

in body-mind-brain reality, 177–178, 199

emotions felt in, 38–39, 124–126

Bottom-up emotion generation, 180

Brain. See also Unconscious brain

arithmetic and, 73–74

in body-mind-brain reality, 177–178, 199

building process of, 163–164

cells, 17–19

development, 74, 123, 152

“jigsaw puzzle” mode of, 78–79

language and, 74

triune model of, 37, 74, 122

wiring by firing, 161

Brooks, David, 68, 122, 150

Bruguier, Antoine, 63

Buffett, Jimmy, 132

Building blocks, ambient and situational, 82–83

But I know better (BIKB), 128–129, 163, 228

Buyers, perception by, 57–58

C

Call and raise, 25–26

Captain Kirk, 93

Carey, Benedict, 198

Cauliflower, Roman, 147, 149

Caveats, of early quants, 21–32

CDO. See Collateralized debt obligation

Celebration, 229

Children, acting out, 96

“Christopher Smith,” 46, 49, 105–109, 172–173, 199–200, 214–215, 233

Circuit, uncertainty, 77–78

Circumstantial reality, 73–80

Classic decision theory, 77

Cognitive revolution, 36

Cohen, Stevie, 65

Collateralized debt obligation (CDO), 179

Collective human behavior, relationship with, 162

Colors, trading, 89

Communication, global, 15

Complex decisions, non-deliberate, 200

Compulsion to repeat, 151, 153–154, 163–164

Confidence

belief and, 38

context influencing, 86

Watson’s, 19, 36, 41

Consciousness, perceiving and, 86–89

Context. See also Emotional context; Feeling context; Fractal-emotional context

of beliefs, 68, 112

building blocks, 82–83

confidence influenced by, 86

diagram, 227

of dice, 78

external, 82–84

of facts, 75

of fear, 38

importance of, 37–38, 112

internal, 82–84

of judgment, 38

leverage of, 179–182

of mark-to-market emotions, 122–124, 126–129

mental capital and, 227

of numbers, 27

of perception, 68

principle, 75

qualitative, 61

of quantitative analyses, 59–60

reality and, 75–80

role of, 179–181

social, 179–181

of uncertainty, 76–80

of vision, 87–89

Contingent reality, 73–80

Controlling your emotions (CYE), 48, 92–94, 97–98, 118, 165

Coup d’État Capital. See also Monthly workshops

“Michael Kelley” at, 109–115, 205–215, 217–222, 231–233

Monaco pitch by, 231–234

name of, 110, 231

psychological leverage for, 175–176

rise of, 171–173

training manual, 223

Credit default swaps, 114

Curator, beliefs as, 85–86

CYE. See Controlling your emotions

D

Damasio, Antonio, 38, 95

Darwin, Charles, 37, 42, 96

Data

emotions as, 40, 95–96, 121, 124–126, 130, 136, 188, 226

fear as, 136

self-data, 125–126

tortured, 30

Dealing with uncertainty, new hire training for, 53–72

Debt, downgraded, 82

Decision making

classic theory of, 77

emotions in, 38–41, 122

experience influencing, 199

impulsive, 121, 136, 197–203

non-deliberate complex, 200

physical game of, 176–178

in poker, 14, 24–25

Defense mechanisms, 194

Deliberation without attention, 200

Descartes, Rene, 34

Descartes’ Error (Damasio), 38

Dice

context of, 78

risk illustrated by, 24

Discipline, best moments for invoking, 129–130

Disgust, 126, 224–226

Diversification, 70

Dollars per day, 182–183

Doubt, on FAD spectrum, 127–128

Dow 10,000, 75–76

Dreams, record of, 188

E

Eagleman, David, 122, 150–151

Early quants, caveats of, 21–32

Earthquake, Japanese, 16

eC. See Emotional context

Echoes, 152–153

Economics

behavioral, 35, 94–95, 122

neuroeconomics, 39–41

of uncertainty, 28

Ego, 235

Electrical counting machine, 19

Embodied-embedded model, 74–75

Emotion(s). See also specific emotions

actions and, 94, 96, 224–225

analytics, 89, 125

behavior and, 36

beliefs and, 84–86

bicycle accident and, 205–215, 217–221

bottom-up generation, 180

control of, 48, 92–94, 97–98, 118, 165

as data, 40, 95–96, 121, 124–126, 130, 136, 188, 226

in decision making, 38–41, 122

entertainment and, 92–93

fear of, 126

felt in body, 38–39, 124–126

five basic, 126–127

fractals of, 154–156

future, 129–130

importance of, 39–42

judgment and, 38, 41

knowing, 97–98

leaning into, 191–193

meaning made by, 50–51

memory influenced by, 123

in models, 49–50

neuroemotion, 39–41

in neuroscience, 36, 159–163

non-consciously perceived stimuli of, 159

perception influenced by, 97–98

philosophers on, 36

as signals, 118–119

top-down generation, 180

traders embracing, 134

vision and, 87–89

Emotional architectures, 152–153

Emotional context (eC). See also Feeling context; Fractal-emotional context

defined, 113

diagram, 227

importance of, 122

irrational behavior explained by, 95

predictability of, 123

recovery and, 224–226

in risk management, 96–100, 122–124, 126–129

role of, 179–181

traders and, 99–100

of vision, 87–89

Emotional templates, 152–153

Empiricism, 35, 37

Energy

models and, 178

perception and, 114

physical, 113–114, 116, 177–179

Entertainment, emotion and, 92–93

Entries, missed, 144

Exercise, 177–178

Exits, difficulty of, 190

Expectations, 11

Expected value, 58

Experience

decision making influenced by, 199

value of, 106–108

Experiential knowledge

defined, 197–199

fractal fuel v., 200–201

impulse and, 197–203

“Exploring the Nature of ‘Trader Intuition’” (Bruguier), 63

The Expression of the Emotions in Man and Animals (Darwin), 37

External context, 82–84

F

Facts

context of, 75

perception and, 56–58

FAD spectrum. See Fear, anxiety, and doubt spectrum

Fat tails, of curves, 49

Father

“Michael Kelley’s,” 3–4, 171–172, 218–222

relationships with, 3–4, 159–160, 171–172, 218–222

“Renee Smith’s,” 46, 49, 105–109, 172–173, 199–200, 214–215, 233

fC. See Feeling context

Fear

context of, 38

as data, 136

of emotions, 126

FOMO, 75, 127, 132, 138–144, 211

turning into frustration, 128–129, 132, 142

of losing, 127, 132, 135–136

meltdown from, 128–129

as one of five basic emotions, 126

role of, 37, 42, 96

spectrum of, 127–128

Fear, anxiety, and doubt (FAD) spectrum, 127–128

Fear of missing out (FOMO), 75, 127, 132, 138–144, 211

Feature-function assumptions, 74

F-eC. See Fractal-emotional context

Feeling context (fC)

defined, 113

diagram, 227

fractals of, 155

happiness, 131

importance of, 144–145

knowing, 97–100

predictability of, 123

recovery and, 225–226

role of, 179–181

strategy, 141

unconscious, 159–163

Feelings. See also Emotion(s)

anticipated, 228

beliefs and, 84–86

ignorance of, 201–202

intellect’s relationship to, 202–203

resistance to, 193–194

Feldman, Lisa, 127

Ferguson, Niall, 139

Fields, R. Douglas, 18, 122

Financial advisors, role of, 28

First rule, of trading, 22

Five basic emotions, 126–127

Flash Crash, 42, 71, 195

Floor traders, 48–50

FOMO. See Fear of missing out

Football analogy, 175–183

The Foundations of Arithmetic (Frege), 75

Fractal geometry

blocked fractals, 190–193

building process and, 163–164

emotions in, 154–156

experiential knowledge and, 200–201

fC and, 155

Freud and, 151–154

Incognito and, 122, 150–151

key idea of, 148–149

love of trading and, 164–165

Madoff and, 165–167

Mandelbrot discovering, 14, 148–150

market mind and, 147–167

multifractals, 150, 154–156, 158, 165–167

not feeling good enough and, 156–157

price and, 148

psychology of uncertainty and, 147–148

Rajaratnam and, 165–167

simple fractals, 150, 154–156

The Social Animal and, 68, 122, 150

unconscious brain and, 150–153, 159–163

Fractal-emotional context (F-eC)

decoded, 185–193

diagram, 227

ironic solution to, 191–193

leverage from, 136

Michael’s, 218–222

recovery and, 225–226

role of, 179–181

in unconscious brain, 185–193

Frege, Gottlob, 75

Freud, Sigmund

“Beyond the Pleasure Principle” by, 153

fractals and, 151–154

Project for a Scientific Psychology by, 37

Frustration, 128–129, 132, 142

Fundamental value, 55

Future

emotions, 129–130

expectations about, 11

impossibility of knowing, 15–16, 103–110

numbers and, 15–16

perceptions, 107, 112

G

Game, of markets. See also Getting back in game

as game of perceptions, 86

game plan plays, 178–179

mark-to-market emotions enhancing, 99–100

mind, 99–100, 235–236

physical, of decision making, 176–178

The General Theory (Keynes), 53–54

Geometry, fractal

blocked fractals, 190–193

building process and, 163–164

emotions in, 154–156

experiential knowledge and, 200–201

fC and, 155

Freud and, 151–154

Incognito and, 122, 150–151

key idea of, 148–149

love of trading and, 164–165

Madoff and, 165–167

Mandelbrot discovering, 14, 148–150

market mind and, 147–167

multifractals, 150, 154–156, 158, 165–167

not feeling good enough and, 156–157

price and, 148

psychology of uncertainty and, 147–148

Rajaratnam and, 165–167

simple fractals, 150, 154–156

The Social Animal and, 68, 122, 150

unconscious brain and, 150–153, 159–163

unconscious fC of, 159–163

Getting back in game

BIKB trades and, 228

celebration and, 229

dealing with intensity, 226–228

by “Michael Kelley,” 223–230, 233

recovery, 223–226

success as skill in, 229–230

Getting the Love You Want (Hendrix), 186

Gladwell, Malcolm, 121

Glia cells, 18

Global communication, 15

Gold

approach to, 172–173

US Treasuries and, 212

Goldman Sachs, 62

Goldrin, Gary, 65

Government bailouts, 96–97

Greed, regret theory and, 135–145

Gretzky, Wayne, 198

Guilt, 118

H

Happiness, 131–133

Hendrix, Harville, 186

High-frequency trading (HFT), 49

Holy grail, of risk, 91–100

Home Depot, being lost in, 194–195

HSBC ads, 40–41

Hsu, Ming, 76–78

Huettel, Scott, 78

Human(s)

choice, betting and, 24–25

collective behavior of, 162

high-frequency set, 140

model of markets, 69–71

understanding of, 62–64

Hume, David, 37

Hussein, Saddam, 180

I

IBM, Watson of, 19, 36, 41

Implicit learning, 198–200

Imprecision, distaste for, 13–15

Impulse

differentiators of, 200

experiential knowledge and, 197–203

intuition v., 121, 136, 197–203

“In Battle, Hunches Prove to be Valuable” (Carey), 198

Incognito (Eagleman), 122, 150–151

Independent money manager, blocked fractal of, 190–193

“The Influence of Affect on Beliefs, Preferences and Financial Decisions” (Kuhnen and Knutson), 85

Information and Emotion (Nahl and Bilal), 134

Insiders, 64

Insurance companies, 16

Intellect

feeling’s relationship to, 202–203

optimized, 113

Intensity, dealing with, 226–228

Internal context, 82–84

Internet bubble, 4

Inter-temporal discounting, 130

Intuition

army and, 198–199

defined, 198–200

differentiators of, 200

impulse v., 121, 136, 197–203

IPOs

in 1999, 26

truth of, 58

Ironic holy grail, of risk, 91–100

Irrational behavior, 33–35, 95

“It’s a Rag Top Day” (Buffett), 132

J

Japanese earthquake, 16

Jeopardy, 19, 36

“Jigsaw puzzle” mode, 78–79

Joining, the resistance, 191–194

Judgment

context of, 38

emotion and, 38, 41

machine of, 177

responsibility for, 31–32, 35

“Just knowing,” phenomenon of, 198

K

Kanter, Robert, 67

Keynes, John Maynard, 53–55

Knight, Frank

as quant, 23–25, 28

Risk, Uncertainty, and Profit by, 23

Knowledge. See also Experiential knowledge

BIKB trades and, 128–129, 163, 228

of emotions, 97–98

of fC, 97–100

of future, 15–16, 103–110

“just knowing” phenomenon, 198

self-knowledge, 202, 236

Knutson, Brian, 85

Kuhnen, Camelia, 85

L

Labyrinth, perception’s, 81–89

Lake Geneva, 21

Landman, Janet, 142

Language

brain structures and, 74

numbers as, 60–61, 112, 172

Learning

implicit, 198–200

machine, 19

Lectures, risk psychology

ambient, circumstantial, and contingent reality, 73–80

dealing with uncertainty, 53–72

decoding thoughts, 185–195

fractal geometry playing market mind, 147–167

invitation to, 7

ironic holy grail of risk, 91–100

lying numbers, 9–20

mental capital and psychological leverage, 111–120

mis-remembering caveats of early quants, 21–32

missing obvious, 33–42

perception’s labyrinth, 81–89

quarterbacking of portfolio, 175–183

LeDoux, Joseph, 122

Lehman Brothers, 68–69, 96–97, 114

Lerner, Jennifer, 123, 131–132

Leverage

of context, 179–182

for Coup d’État Capital, 175–176

F-eC offering, 136

lecture on, 111–120

mental capital and, 111–120

multiplying, 229

old-fashioned way v., 118–119

plan, 182

Lexington Avenue, 63

Limitations, of numbers and neurons, 17–19

Linear thinking, 40

Linebacker, falling, 88–89

LinkedIn IPO, 26

Liquidity crunch, 71

Livermore, Jesse, 66

Lo, Andrew, 67

Long-term debt, downgraded, 82

Losing, fear of, 127, 132, 135–136

Lost, terror of, 194–195

Love, of trading, 164–165

Lying numbers, 9–20, 31

M

Machine learning, 19

Madoff, Bernie, 62, 165–167

Mandelbrot, Benoit, 13–14, 148–150

Marathon analogy, 230

March 2008, Bear Stearns during, 25

Market(s). See also Game, of markets; Social market

in adaptive markets hypothesis, 67

athletes, 115–117

August 2007 swings, probability of, 12

dislocations, 27

human model of, 69–71

Japanese earthquake influencing, 16

law of physics of, 112–113

mind, fractal geometry playing, 147–167

personal becoming, 130–131

poker decision parallels with, 14, 24–25

quantitative view of, 4, 30, 59–61

real traders predicting, 65–67

relationship with, 154–158

reversion to mean, 29

theory, 4

thin, 207–208, 210

Markowitz, Harry, 6, 35, 54, 99

asset allocation by, 27–28

“Portfolio Selection” by, 27, 83

as quant, 27–31

Mark-to-market emotions

advanced workshop on, 121–134

best moments for invoking discipline, 129–130

context of, 122–124, 126–129

embracing of, 133–134

emotions as data and, 124–126

five basic emotions, 126–127

happiness and, 131–133

mind game enhanced by, 99–100

personal becoming markets and, 130–131

as risk management, 121–134

Mean, reversion to, 29

Meaning

emotions making, 50–51

gap, 80, 112

Meltdown, anger turning into, 128–129

Melt-up, 127

Memory

emotions influencing, 123

points of view of, 188

Mental capital

context and, 227

defined, 113–115

initial deposit in, 100

meltdowns and, 129

psychological leverage and, 111–120

Mesquita, Batja, 74, 122

“Michael Kelley”

brother’s bicycle accident influencing, 205–215, 217–221

at Coup d’État Capital, 109–115, 205–215, 217–222, 231–233

education of, 3–7, 9–10, 17, 26–27, 41

father of, 3–4, 171–172, 218–222

F-eC of, 218–222

getting back in game, 223–230, 233

Monaco pitch by, 231–234

new hire training of, 51–53, 55, 68, 78, 97

new job of, 105–110

“Renee Smith’s” relationship with, 5–7, 9, 14, 36, 45–51, 97, 104–105, 206–208, 210–214, 231–234

thoughts decoded, 217–222

on Wall Street, 4–5, 45–53, 55, 68, 78, 97, 103

The Mind in Context (Mesquita, Barrett, and Smith), 74, 122

The (mis)Behavior of Markets and Fractals and Scaling in Finance (Mandelbrot), 13–14

Missing out, 75, 127, 132, 138–144, 211

Models

as approximations, 22

embodied-embedded, 74–75

emotions in, 49–50

energy and, 178

human model of market, 69–71

options pricing model, 22

recalibrating, 56–57

regret, 142–143

triune, of brain, 37, 74, 122

Modern Portfolio Theory, 6

Monaco pitch, by Coup d’État Capital, 231–234

Money manager, independent, 190–193

Monthly workshops

decoding thoughts, 185–195

impulse v. intuition, 197–203

quarterbacking of portfolio, 175–183

Mortgages

beliefs and, 31

number crunching and, 15–16

Mother, relationship with, 151–152, 156, 162–163

Mourning, 224

Moy, Michael, 87

Moynihan, Daniel Patrick, 150

Multifractals, 150, 154–156, 158, 165–167

N

Nahl, Diane, 134

Narcissistic defense, 194

Natural-born traders, 65–66

Neural doctrine, 17, 74

Neuroeconomics, 39–41

Neuroemotion, 39–41

Neurons, limitations of, 17–19

Neuroscience, emotions in, 36, 159–163

New hire training

ambient, circumstantial, and contingent reality, 73–80

dealing with uncertainty, 53–72

ironic holy grail of risk, 91–100

of “Michael Kelley,” 51–53, 55, 68, 78, 97

perception’s labyrinth, 81–89

New psychology of uncertainty, 112–113, 147–148

Newspaper beauty contests, 53–56

1999 IPOs, 26

Non-consciously perceived emotional stimuli, 159

Non-deliberate complex decisions, 200

Nuances, in risk, 31

Numbers

analysis of what they can’t tell, 20

appeal of, 45

context of, 27

electrical counting machine and, 19

expectations and, 11

future and, 15–16

imprecision and, 13–15

as language, 60–61, 112, 172

limitations of, 17–19

lying, 9–20, 31

mortgages and, 15–16

right role for, 59–61

statistics and, 11–13

O

Obvious, missing, 33–42

Oil, approach to, 172–173

Omissions, misleading, 16

Options pricing model, 22

The Other Brain (Fields), 18, 122

P

Pain, 194–195

Pattern recognition

of behavior, 63

probability and, 112

unconscious, 197–203

Paulson, Henry, 68, 96, 114

Percept, 86

Perception

beliefs and, 46, 83–86

by buyers, 57–58

consciousness and, 86–89

context of, 68

from embodied-embedded model, 74–75

emotions influencing, 97–98

energy and, 114

facts and, 56–58

future, 107, 112

game of, 86

labyrinth of, 81–89

price influenced by, 26–27, 50, 57–58

reality of, 34, 72, 193

by sellers, 57–58

of sensory input, 87

speculation and, 56–59

Perfectionism, 145

Personal, becoming market, 130–131

Physical energy, 113–114, 116, 177–179

pIFS. See Posterior inferior frontal sulcus

Plato, 34

Pleasure, 126

Poker

call and raise in, 25–26

market decision parallels with, 14, 24–25

probability and, 24, 30

uncertainty illustrated by, 24–25

Portfolio

quarterbacking, 175–183

selection process, 29

“Portfolio Selection” (Markowitz), 27, 83

Posterior inferior frontal sulcus (pIFS), 79

Predispositions, 30–31

Price

at auctions, 69–71

fractal geometry making sense of, 148

Livermore predicting, 66

options pricing model for, 22

perception influencing, 26–27, 50, 57–58

in volume at price over time, 107

Prince, Chuck, 140–141

Probabilistic rationalism, 40

Probability

of August 2007 market swings, 12

context of, 27

fat tails and, 49

from past patterns, 112

poker and, 24, 30

relevance of, 13, 16, 22, 41

Project for a Scientific Psychology (Freud), 37

Prop traders, 103–104

Proprietary trading, 3–4, 103–104

Protagoras, 34

Psychological capital, 113–115. See also Mental capital

Psychological leverage

of context, 179–182

for Coup d’État Capital, 175–176

F-eC offering, 136

lecture on, 111–120

mental capital and, 111–120

multiplying, 229

old-fashioned way v., 118–119

plan, 182

Psychology, of risk. See Risk psychology lectures

Psychology, of uncertainty, 112–113, 147–148

Psychology coach, 173

Q

Qualitative context, 61

Quantitative view, of market, 4

revolution, 30

right role for, 59–61

Quants

early, caveats of, 21–32

Knight as, 23–25, 28

Markowitz as, 27–31

Quarterbacking, of portfolio, 175–183

R

Raise, call and, 25–26

Rajaratnam, Raj, 64, 139, 165–167

Rally, last people in, 140

Rationalism, 34–35, 37, 40

Real traders, market prediction by, 65–67

Reality

ambient, circumstantial, and contingent, 73–80

body-mind-brain, 177–178, 199

context and, 75–80

of perceptions, 34, 72, 193

uncertainty and, 74–80

of unmeasurability, 23

Recalibration, of models, 56–57

Recovery, 223–226

Regime change, 173

Regret theory

anticipated regret in, 142–144

anxiety of uncertainty in, 136–138

defined, 59–60

fear of losing in, 135–136

FOMO in, 138–144

greed and, 135–145

model of, 142–143

perfectionism and, 145

Relationships

with collective human behavior, 162

with father, 3–4, 159–160, 171–172, 218–222

of intellect to feelings, 202–203

with market, 154–158

“Michael Kelley” and “Renee Smith,” 5–7, 9, 14, 36, 45–51, 97, 104–105, 206–208, 210–214, 231–234

with mother, 151–152, 156, 162–163

Reminiscences of a Stock Operator (Livermore), 66

“Renee Smith”

father of, 46, 49, 105–109, 172–173, 199–200, 214–215, 233

“Michael Kelley’s” relationship with, 5–7, 9, 14, 36, 45–51, 97, 104–105, 206–208, 210–214, 231–234

Monaco pitch by, 231–234

Repetition compulsion, 151, 153–154, 163–164

Resistance, 191–194

Responsibility, for judgment calls, 31–32, 35

Reversion to mean, 29

“Richard Kelley,” 3–4, 171–172, 218–222

Risk

beliefs and, 31

dice illustrating, 24–25

happiness and, 131–133

ironic holy grail of, 91–100

neuroeconomics and, 39–41

new psychology of, 41–42

nuances in, 31

offsetting, 12

physical game of, 177–178

sleep deprivation influencing, 114–115, 213

uncertainty v., 23

of unconscious, 235

Risk, Uncertainty, and Profit (Knight), 23

Risk management

advantage in social market, 67–69

eC in, 96–100, 122–124, 126–129

edge, 182

gaping hole in, 61–62

mark-to-market emotions as, 121–134

Risk psychology lectures

ambient, circumstantial, and contingent reality, 73–80

dealing with uncertainty, 53–72

decoding thoughts, 185–195

fractal geometry playing market mind, 147–167

invitation to, 7

ironic holy grail of risk, 91–100

lying numbers, 9–20

mental capital and psychological leverage, 111–120

mis-remembering caveats of early quants, 21–32

missing obvious, 33–42

perception’s labyrinth, 81–89

quarterbacking of portfolio, 175–183

Roman cauliflower, 147, 149

Rules, of trading, 22

S

Sadness, 126

Schiller, Bob, 92

Self-data, capturing of, 125–126

Self-knowledge, 202, 236

Self-recrimination, 129

Sellers, perception by, 57–58

Sensory input, 87

Sentiment. See Emotion(s)

September 2008, reversion to mean and, 29

Short squeeze, 55

Simple fractals, 150, 154–156

Situational building blocks, 82–83

Situational specifics, 75–76

Skill, of success, 229–230

Sleep

deprivation, 114–115, 213

as edge, 177–178

Smith, Eliot R., 74, 122

The Social Animal (Brooks), 68, 122, 150

Social context, 179–181

Social market

gold and, 172–173

hypothesis, 60, 68

oil and, 172–173

risk management advantage in, 67–69

Sorkin, Andrew Ross, 69, 114

Spectrum, FAD, 127–128

Speculation, perception and, 56–59

Spock, 93

Sports, 77–78, 176, 223, 230

Star Trek, 93

Statistical correlation, 63

Statistics, seduction of, 11–13

Steidlmayer, Peter, 107, 109

Steiner, Rudolf, 201

Stenmark, Ingemar, 198

Success, as skill, 229–230

Symbols, 60, 62, 112

T

Taleb, Nassim, 13, 16

Tannen, Deborah, 141

Tannin, Matthew, 13

Technological change, 15

Technology companies, 12

Theory of mind (ToM), 63–64, 100, 178, 232

Thin markets, 207–208, 210

Thoughts, decoding

lecture on, 185–195

by “Michael Kelley,” 217–222

ToM. See Theory of mind

Too Big To Fail (Sorkin), 69, 114

Top-down emotion generation, 180

Traders

eC and, 99–100

emotion embraced by, 134

finality and, 83

floor, 48–50

as market athletes, 115–117

natural-born, 65–66

prop, 103–104

real, market prediction by, 65–67

sports and, 77–78

Trading

BIKB, 128–129, 163, 228

colors, 89

crowded, 179

first rule of, 22

HFT, 49

love of, 164–165

as physical game, 176–178

proprietary, 3–4, 103–104

recovery in, 223–226

tiring, 114–115

traditional education, 11

Traditional trading education, 11

Training manual, Coup d’État Capital, 223

Transference, 151, 163–164

Treasuries, US, 212

Trends, fighting, 160

Triune model, of brain, 37, 74, 122

Truth

existence of, 58

of speculation, 56–59

Twitter, scraping of, 105

2008 crash, 25, 29, 98

U

Uncertainty

anxiety of, 136–138, 180

circuit, 77–78

context of, 76–80

economics of, 28

lecture on dealing with, 53–72

neuroemotion and, 39–41

new psychology of, 112–113, 147–148

pain of, 195

poker illustrating, 24–25

reality and, 74–80

risk v., 23

wagering and, 24–25

Unconscious brain

fC in, 159–163

F-eC in, 185–193

fractals and, 150–153, 159–163

pattern recognition and, 197–203

risk of, 235

Understanding, of other humans, 62–64

United States (US)

downgraded long-term debt of, 82

Treasuries, 212

Unmeasurability, reality of, 23

US. See United States

V

Value

assessment, 70

expected, 58

of experience, 106–108

fundamental, 55

Vanity Fair, 65

Vision, context of, 87–89

Volume, at price over time, 107

Vulcans, 93

W

Wager, Tor, 127

Wagering, uncertainty and, 24–25

Wall Street

academia and, 3–7

“Michael Kelley” on, 4–5, 45–53, 55, 68, 78, 97, 103

Water-skiing example, of beliefs, 46–48

Watson, 19, 36, 41

Wilkinson, Jim, 97

Winton, Don, 66–67

Workshop, advanced

fractal geometry playing market mind, 147–167

mark-to-market emotions, 121–134

mental capital and psychological leverage, 111–120

regret theory, greed and, 135–145

Workshops, monthly

decoding thoughts, 185–195

impulse v. intuition, 197–203

quarterbacking of portfolio, 175–183