here’s an excerpt from a letter to potential high profile investors. i sent the letter after a personal meeting, in 2016, but the project never had a go.. thus i publish the letter now, editing out names and some other private information..
A project of testing on stock exchange the mathematics borrowed from the analysis of random fluctuations of roulette.
The testing should begin with EUR 10’000 to 100’000 (or with other currency of related value), which would only be the initial total investment needed to test the idea, but if a large random wave takes a huge leap down, spreading over whole the portfolio of securities right in the beginning, then the investment needed may in extreme cases rise /…/
The general idea behind the strategy is to gradually increase investment with very little but frequent steps when prices go down and gradually decrease when prices rise, thus whatever the size of fluctuations there will always continue some sales/purchases of stocks (only ‘long’, no ‘short’), which process continuously creates profit without waiting and guessing for good/bad moments to arrive — each exactly calculated number of stocks will be specified with buy/sell margins in advance. /…/ The exact mathematical model and the precise values to apply the formulas, to make sufficient profit without risking to lose all, is my know-how — I will disclose the strategy in detail only after signing a contract with someone I can trust for not leaking the information. The mathematical strategy is not that easy to apply as it sounds, but totally achievable if you know exactly what to do in constantly changing conditions, especially in extreme cases. More importantly, you must know what NOT to do, and here’s what the 20 years of experience in analysis of random fluctuations comes into play. I know exactly with which strategies it is impossible to make profit and why, and the few mathematical approaches that are working in all realistically possible conditions.
/…/ Huge rises in whole the economy are not a risk for the funds becoming stagnant (by not making enough overall investments, as the investment can simply stop due to closing all positions arriving at minimum investment level) — the minimal initial investment level on market can be risen to a higher margin (value of selected shares individually across the portfolio), calculated by the risk of overall realistically possible fall of the market (depending on volatility etc). Significant volatility (particularly high frequency) is necessary to make any reasonable profit but it cannot be too high (too deep) as the total backup funds needed will increase /…/.
Some types of securities may end up completely worthless (this is the main difference from roulette, because on roulette all the numbers always remain in play, distributing equally over a long period of time), thus the mathematical strategy must only be applied on those securities that theoretically can’t go to complete zero, is possible to hold onto physically for a long period of time without losing value completely, and manage after ending up with ownership. These could be commodities like precious metals. Shares of specific companies could also be gambled with, if the amount of shares is limited to the extent investor can handle and would like to own, taking total control of the shares. Investors should be able to handle these extremely rare situations to play safe, /…/.
To put it very briefly: the method is about rising stakes gradually when you lose and lowering stakes when you win, which makes more probabilistic sense than any methods of technical analysis. I would call my method “mathematically probabilistic”, which has no relation to the probabilities of the methods of technical analysis currently in use.
Those investors rising the stakes when they win (reinvesting profits) are gambling against the mathematical principle of random fluctuations (there will always be ups and downs, small-medium-big ups and downs, endlessly). They are winning small and losing big, if not yet then one day for sure. Those hedge funds who’ve been continuously winning are either very lucky (losers have dropped out, balancing the probabilities across the funds) or using dirty tricks (insider information, manipulating with news or big money etc.). I’m talking here only about technical analysis, fundamental analysis is a fair game and totally makes sense.
By current methods of technical analysis which I know of it all comes down to human factors (news, greed, fear, discipline, etc.) for someone making profit or losing money, but mathematical sense is rather absent. That’s my personal opinion, which comes from just one week of intensive study of basics of stock market (never been interested before). My opinion may change along the way with learning new details, but having already a big picture I see no reason why my mathematical expertise in random fluctuations cannot be applied to stock market. It is worth testing out.
In a long run all those random fluctuations on stock market can be stabilized with simple mathematical methods (with lots of money available obviously) and in the process is possible to acquire whole the world finance.. not overnight of course, but mathematics allows it to happen over a long period of time.
If you know someone who may be interested to test my formulas in real life, feel free to give my contact. You can forward the whole letter to people who may be interested and have the means to do the test — this is why I wrote the whole concept in general, for others to understand what it is all about. /…/
With Best Regards,
PS. Some additional explanations:
I cannot use my methods in casinos because they use fraud, especially online or any digital roulette, harassing people who use smart strategies, particularly when other gamblers see and begin to follow a strategy which makes mathematical sense, etc. For example on real roulette are used calculated slow spins by croupiers while not allowing to place or change bets after the spin, planted gamblers who push and distract smart gamblers, non-payments of winnings by ‘mistake’ forcing to use security tapes to review the game, which pauses and distracts the player, offering toxic drinks and several other tricks — which are not theoretical — I’ve been through these experiences personally in several casinos in several countries. Sometimes the ball jumped out from the number of my winning bet after stopping there, like by magnetic influence, on which I simply had to leave without arguing not to get into trouble. Some casinos been even caught using drugged air and been fined for it without forcing to close the casino, which should give you an idea that chances to make constant earnings in casino with real roulette with mathematics is practically zero, not to talk about electronic/online roulette which are strongly skewed in favor of casino when stakes go high allowing to win only with small bets. /…/ I have approached media channels to prove my mathematics and disclose the fraudulent techniques used by casinos, but media seem to be not interested. I have written articles about it and am currently collecting material for writing a book on the subject. As I have understood that I cannot put my mathematical models into practice on roulette I turned my attention to stock market.
In random number graphs anything can happen, absolutely anything if taken in infinite terms, and you will never know at which sector of the infinite graph you happen to keep your eyes on. But realistically (not applying the concept of infinity) the only things that cannot happen are the absolute stop of the graph going to complete zero (in average over whole the portfolio) and an endless rise. In these respects graphs of prices for some commodities on stock market (like precious metals) will always look exactly as random number graphs. Even skewing of the graph in one direction over an extended period of time is very common in true random number outputs. For certain scientific research which utilizes true random numbers, this skewing has to be undone by applying special unskewing formulas. The prices of the precious metals can perfectly be addressed with the research tools of true random number fluctuations, for testing financial tools to make profit on those constant changes.
after that brief attempt to find finances for the project, with no success, i basically stopped looking around for investors, because as you know my philosophy, money isn’t priority in my life. of course i prefer to have it, and lots of it, to make my life more comfortable (and also for my larger research projects in different subjects), but i’m not going to slave for it or waste too much time insisting if i see that people simply don’t get it. i rather dedicate my time for studying new things.. that’s more interesting than turning my life into a routine, repetitive actions. from time to time i say something about my mathematics to someone who may be interested, but generally it’s a waste of time: most people assume that if you have such a powerful math available you should be rich already, and if you’re not rich then your math is wrong. well, let them have their opinion, i don’t have time to argue.. my life goes happily on without ‘being right’.