it is me against the crowd

I have argued repeatedly that one of the greatest ills of present Portuguese society is that people talk too much while doing too little, being utterly conservative despite their big talk. This is specially true with intellectuals but applies to the general population as well. Now that intellectuals have found the new political flag of liberalism, I find it infamous to see so many people in the blogosphere and the newspapers chanting the virtues of entrepreneurship and the market while at the same time they blame the size of government for our present difficulties. And they usually do all this from their comfortable government positions - more often than not, government universities - and from their assured spots in government payrolls. My own conclusion is that the risks involved in market activity and entrepreneurship are good for other people, not for themselves.

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More recently, I argued that Kant's epistemology is nonsense. Kant denied the possibility of man reaching the truth individually. According to Kant, individual judgements about reality are mere persuasions or illusions. They can gain the status of truths only if they are validated by other people. I could not disagree more about this. I believe that one single man can hold the truth while the whole crowd disagrees (Christ, I am afraid, died for this belief). Thus, I decided to test myself against the crowd.

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The test I intend to perform does not involve words. It involves real money. Over the next several weeks I will be speculating live on the internet here at Portugal Contemporâneo. It is me against the crowd as represented by the market. I shall be speculating on the Nasdaq Futures Index quoted in the Chicago Mercantile Exchange. This index ended the session last Friday at 1827.50.

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I shall make use of a speculative strategy which I call Appolo, according to the following rules:

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1) Every day, at 2:00 PM (Lisbon time; 8:00 AM Chicago time), starting on Monday, August 21st, I will take one of the two following decisions:

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-The Nasdaq Futures Index will rise (called a Long position); or

-The Nasdaq Futures Index will fall (called a Short position).

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2) The position is closed and the game is over once the Nasdaq has moved 1% up or down from its 2:00 PM value. If the Index does not move 1% from its 2:00 PM value, then the position will be closed at 9:00 PM (Lisbon time).

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3) The amount of money (capital) invested every day is constant (I do not disclose the amount). I will consider myself the winner if by December 31st I have beat the market.

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Let me figure out some examples of my investment decisions. Suppose that at 2:00 PM on Monday the Nasdaq Futures Index is at 1800 and I decide to take a long position (betting the market will rise). If the market indeed rises I will close the position once the Index reaches 1818 (1% above the entry value of 1800) and I win 1% on my capital. If, on the other hand, the Index falls, the position will be closed when the Index reaches 1782 (1% below the entry value) and I lose 1% on my capital. If the Index never reaches any of these two values (1818 or 1782), then the position will be closed at 9:00 PM. If, by this time the Index is, say, at 1809 then I win 0.5%.

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If my decision is short (betting the market will fall) and the entry value on Monday is still 1800, then I win 1% if the Index reaches 1782, and will lose 1% if the Index reaches 1818. If the Index does not make any of these values and at 9:00 PM is at 1809 then my short position loses 0.5%.

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Thus, each day my maximum gain is 1% and my maximum loss is 1%. It is me against the crowd (market). Let's see who knows more, the market or myself. Just watch, starting on Monday at 2:00 PM.