Vladimir, you know, we are crazier than you. Just watch...
[ Sept. 17, 2022 ] - We are Long and Wrong. - And that is just the truth of it. The AI has been pointing down for many weeks. We held, and that was a bad decision.
We should probably just follow the damn
computer. It works actually not bad. Just like the nuclear launch things, we find that having the human in the control loop, is not the best strategy. The damn human has feelings and emotions.
These are not optimal,
when critical decisions are required. FD: We remain long in financials and telecoms. The telecoms are working fine, and holding up very nicely. The mining stocks, not so well, and our banks are getting kicked to the curb, and
Harsh times, being made more harsh by a long list of unwise actions, by folks in positions of power.
[ August 16, 2022 ] - Wild World of The Mad, Bad and Glad - As indicated above, we remain long.
Ugly downturn, and ugly times, despite the lovely summer we have had. I got so little done at the Northern Office. Losses being mostly recovered. We would have been taken out, except for the AI & our theory re: Rising rates
=> Rising rate of return on captial => rising stock market & rising inflation. We are seeing it play out, in spades.
Weird and strange feeling. We bet against the world, and we seem to have won the bet. We are
not getting rich, but we are preserving capital, we are almost debt-free (except for tiny bit of margin debt for some extra shares purchased cheap), and all is good. We can pay our (increasing!) bills. This is a win.
Strange times - post-pandemic
nutty action maybe? Like the "Dancing Sickness" that came after the Black Death in the later-1300's? Unclear. Do we now get a big technological liftoff? Maybe. (After the coming nuclear war ends...? like maybe next
week? Or next year?)
We read that last year (July-Aug. 2021), the "Ignition Lab" in California claimed to have achieved fusion "ignition" - for a few nano-seconds. This might or might not, be a big deal.
If this can be replicated (and there is difficulty doing this), then this might be a big deal. Phil Farnsworth (the inventor of electronic television), would be happy, as he was trying to do this, back in the 1960's.
If we can make fusion actually
work commerically (to yield net power), then everything changes. And it changes a lot. Glad we got this result.
[ Apr. 7, 2022 ] - Ok, Yes, We are Down. Still Long. We Got Whacked Today. But Not As Bad as
the Russian Kill-Squads Near Kherson. - I don't feel so bad, about the loss we are taking because we did not unload our position in our financials, when I see what horror our friends in Ukraine are having to deal with. Putin and his Terrorist
Military are being cruel, foolish, dishonest and appear to be truly insane. The corpses on the streets of Bucha are telling the world what really happened.
Strange and nasty times. Trudeau's government brought down a Budget.
At least it was not live rounds of high-explosive artillery... Trudeau and the Liberals seem to think that they know something about economics, which it appears they really don't. They raise taxes on the banks, to get 5 billion extra dollars over
the next 4 years, and they take probably more than 50 billion off the collective stock prices of the bank shares held by the Canada Pension Plan. And even more than that, probably, for all the mom-and-dad average Canadian bank-stock shareholders.
So - if you owned bank shares in Canada, you just took a crap-kicking from the Federal Liberal Government. You are poorer today, thanks to the Liberals. Your shares have fallen across the board. Bank stocks are 70% owned by local Canadian
folks, who like the dividend stream the banks throw off. Poor Trudeau. He just can't quite seem to get the program right.
Meanwhile, in Ukraine - the Ukrainian military forces are dealing with all that nasty, cruel artillery
fire that keeps hitting the city of Kherson. Watch these Ruski boys - with their big murder-rocket trucks pounding the city - runaway like rabbits when the hunter's shotgun fires:
Ukrainian: Військові знищили артилерійську позицію Росії на Херсонщині
[ English: The military destroyed Russia's artillery position in the Kherson region ]
Key takeaway: When you need to get moving, and change your position, you probably want to move quick like a bunny. These Russian lads were a tad slow, it looks like. Good for the good guys.
[ Mar. 31, 2022 ] - We've Been Trying to Stop a War... so I have not posted on market/trading info for a bit. Insane and evil what the Russians are doing in Ukraine - send money to Ukraine Military, use the links in this Youtube
video of Russian murder-ships being blown up at Berdyansk Harbour (note Berdyansk is *occupied* by Russian invader forces!: (Note: on Youtube display, click the "show more" text, to show the details on how to send cash to support Ukraine's Military.
Now, to help you get cash, here is some economic info. We are in strange times. Our research suggests we should have rates
around 4% to 5%, at the Central Bank/ Federal Reserve administered-rates level. (Market-set rates for loans, and bond yields will need to be higher. A typical commerical loan rate, for a revolving line of credit for a business, will be that administered
rate, plus 2 or 3 percent, etc.)
The risk, otherwise, is for a serious "stagflation" environment. I studied this economic hellworld in school, and then graduated into a "No, we are NOT hiring" labour market, upon leaving school in 1978-79
timeframe. Bloody Volker-driven hellrates were 18% in 1980, on Canada Savings Bonds! (a crap retail product that used to be sold in Canada - until the yields flatlined like a heart-attack victim). The 1980 timeframe was a "stagflation-depression",
much like the 1930's.
I remember getting a crappy tiny apartment in Toronto, and getting a computer-programming job that paid $18,000 per year. I toughed that out for 6 months, and then decided to go free-lance, and would do projects
where my billings could be that much for 4 months work. I would eat lunch at fancy restaurants, and be one of only two or three tables in a place that had 20 tables. It was a *very* weird, depressionary time - all these businesses just blew
up and went "pooof" and failed. They had loans, and when the loans went to 25%, they just failed and died. So, "stagflation" is really bad. The prices are going up, there are no jobs, and rates have to be jacked *HIGH* to break the
inflation psychology, and make people save their money, instead of spend it fast.
Our research suggests we need at least 4% to 5% Federal Reserve "Bank Rates" - minimum! - given the 5% to 7% inflation we are seeing (and is getting entrenched as I key
And so do some other smarter-than-us folks (or at least they have more data and staff!):
These "Breven-Howard" dudes are probably right. Their shitstorm prediction matches our shitstorm prediction. Maybe we are both out-to-lunch, but I fear not.
And given the horrible-awful murder-madness terrorist exercise the Putin
Thugs-of-Russia are doing to the Ukraine, we might be on the cusp of an economic hellstorm of Biblical proportions. Or not. But it looks a lot like the 1973 Arab "Oil Shock", except it is going to be with FOOD also, not just OIL, so that
makes it even more wicked, dangerous and nasty. Inflation is a bad thing.
[ Note: But we *own* a farm. How about that? People thought my farm was a dumb investment, 20 years back. Those folks are dead now, sadly. We rent
the land to a farmer who has a dairy-cow herd, who uses the hay to feed his cows, and produce a lot of milk. Milk is good. Milk goes up in price. I raise my rent to my farmer guy. He gets paid more for his milk production, and I can
pay my (rising) taxes. It's all good, unless pirate-killer-terrorist bandits, come to try to hurt us, and take our land. So we own guns, we do regular training, and I have a pilot's license. You can grasp why we are *very*
sympathetic to what the Ukrainians are going thru. We send them money. You should also, if you are reading this. We must completely defeat Putin's murder squadrons, and his kill-conquest strategy. That man must die in prison,
and his grave must be pissed on.]
We knew the world would move back to these ancient models. There is a good book, written in the 1926 - called "The Richest Man in Babylon" - all about a young dude who had too much debt, and was trying to borrow
money to pay his bills. He met an old guy, who gave him some good advice, and the young man eventually paid off his bills, became very rich. The advice sounds simple - but it is not simple at all. It is hard thing, to "live within your means"
when you are young, and want to experience life in big bites, and take big gulps of action and excitement.
[Update: Four hours later: I found a copy of the book on an archive site. Here it is, URL below: ]
The whole story is told as a 4000 year old parable, like what one finds in the Bible, or in other religious teaching. Except it is about living life, having money, and being wise. Being wise sounds simple and easy. But it is not.
It also seems unlikely that starting life by being poor and in debt, can be the path to becoming rich. This seems far-fetched.
But it is all true. And it is *especially* true, in a world where credit is easy, and paper-money is printed endlessly
by national printing presses. Stand in a bookstore and read it (like I did), if you are too cheap to buy it (like I was!).
Just because the advice sounds easy and simple, does not mean that it is easy and simple to follow it.
Want to have more money? Just lock all your credit cards in a box, and write a note on the top, indicating when you will open it. Try for a month. Do at least a week. Put cash in pocket. Watch how your spending changes.
Match your spending to your available cash. Observe your own behavioural changes. :)
We remain long, in bank stocks and phone-company shares. Bonds are almost garbage ("Certificates of Confiscation", bonds were called, back in the
inflationary 1950's and 1960's). And they are now, too. You only hold that kind of zero yield paper, if you need to hold collateral for your high-rate loans. (But once the yields get up to the inflation rate, you might have a few.
Just don't buy bonds that come from weird foreign places where they play some trick so you don't get your money back at all. (eg. Greece, Argentina, etc.))
Investment now is hard. We figure there is really no place to hide. So we own stocks,
because they have worked well for us for 20 years now. We have real-estate, a tiny bit of proxy gold (gold mining shares), and other stuff. Banks should benefit - a bit - from higher rates. But business conditions will degrade, and house-prices
will fail, and hurt mortgage action - both origination and existing servicing of the high-level debt. But loan margins will rise, and trade patterns will shift. We like South America. It might finally wake up, and try to run itself
correctly, without stupid Marxist garbage-thinking, and Leftist-idiot foolishness.
South America has great climate, good resources, and smart, educated people. If they can just get honest political people, who do the right
sorts of things, they can all be rich, healthy and happy. So we like companies that have some exposure to improving North-America <=> South-America trading action. If not damaged by stupid taxes, dumb economics, and bad government actions
(ie. asset theft), the folks there should be able to really prosper. And trade with them, should benefit us all in a big and non-trivial way.
Also, we just used some trading profits, to pay down a revolving, outstanding loan amount.
our little enterprise has no debt. None. Even as we move into ugly inflation, since we might find that the price-inflation, is combined with a collapse in business conditions. (Normally, you want to have debt in times of inflation -
but only if there is a lot of money sloshing in. That will not likely happen for most people, unless the Central Banks become *really* stupid.)
This is economic herasy. It is not really supposed to happen this way - inflation plus recession
of business activity - but this is exactly what DID happen, back in the mid-to-late 1970's. It was called the "Backward-bending Supply Curve" in the IS-LM macroeconomic models. I wrote a paper on Nixon's Anti-Inflation programs as a
student economist, and I worked as a very (very!) junior G-man Economist for Trudeau's (version 1.0) Anti-Inflation Board. I think I know pretty much just how bad, bad can get here. (Eg. Unions demanding - and GETTING! - 20% annual
wage increases, because their employers are Government Agencies, and elections are looming... Does this sound like a future-picture of our world??? F*ck, yeah...)
So, be careful.
FD: We remain - all in, long. But today,
it hurts a bit. But we have no margin debt of any kind, and no personal debts, and no mortages. We even have a tiny bit of dry powder. ( And I just bought a Yugoslavian 7.62x25 Tokarev war-trophy/antique semi-auto. Why?
Because I could! :)
Strength to Ukraine. Pray for them, and send your spare dollars to their Military. And if you have a MIG-29 or two (or maybe 20?), go on a little mission, have a "radio failure", and set down on a road over the
border in Ukraine. Ukraine must win this Russian Terror War. They simply must, or we will have to nuke Russia in the far future, at some point. Russia must be de-militarized, and all the world must help.
Meanwhile - stay invested,
but don't get stretched, and be prepared for economic hell-storms as well as for wild prosperity. Strange times. Very strange times, indeed.
[ Mar. 23, 2022 ] - Madness and Mass Murder by Russian Terror Forces in Ukraine -
This is simply insane. World future history is now altered, and regardless of war outcome, the massive and brutal assault on Mariupol will paint Russian Government Forces as terrorist enemies of the World, for the rest of this century. The Russian
State under Vladimir Putin is harming civilization, and creating unnecessary hell-on-Earth for over 100,000 people. This stupid exercise in terror and abusive cruelty, will wreck Russia until Putin is hung from a lamp-post, or put on trial for mass-murder
and State terrorism. We view these outcomes as unlikely.
The Russian terror assault against peaceful Ukraine is so wrong - especially after Lavrov and the lying socksuckers who act for Putin swore that no such war-action would take place
- is so wildly abusively and grotesquely freaking wrong, that it will mean a future of war and conflict until this group of murderers are taken down, and brought to justice.
This is making the market crazy twitch, especially as it comes at the end of
the pandemic, and the need to raise interest rate to combat the runaway inflation we are seeing.
We have no choice, but to trade. Good equity in profitable, trans-national companies, is probably better than holding cash, as long as the company
can *benefit* from changes in global trading patterns, and higher interest rates. That makes the choice of stocks to pick pretty clear.
We are back to being all-in, long. Little choice, really.
Mar. 18, 2022 ] - As Promised, Latest C-Machine FCST at Top. Insanity Rules Now in Russia. - Again, we were *so* right to focus on the illegal actions taken against Alexi Navalny. It is curious, this strange feeling that comes from
taking paths that are contrary to the entire viewpoints of the world, and then watching these curious "worst-case scenario" situations play out in the current course of immediate history. We are not making much money, but we are well-insulated, and have
a bit of "dry-powder" (extra cash) which we hope to deploy, if we are given the opportunity to do so (at really, really low, silly prices for situations which we can influence and/or control - we have become uncomfortable with passive situations, where
we surrender control to market-place events which pretty much are programmed to move against us, to attempt to trigger our "puke-points" and liberate our wealth from us. The Algos are good... )
The times of big inflation are coming, and
stocks and other neo-equity postions probably offer as much protection as anything. We avoid USA stocks, since we don't live there. We focus on real stuff that actually works right, and has big moats around it. This has been a viable
approach, it has done well, and we are OK. But many will not be. Our forecast price-track projections are upward-sloping, but there remains great fragility to all the operational economic systems - everywhere.
We are in a time of great piracy
and madness. Some people seem to be so curiously angry, and seem to be seeking situations where they can stand toe-to-toe, so each can punch each other. It's just nuts. Seems to be a side-effect of the absurdly stupid national
"lock-down" strategies, which are probably the stupidest thing the Government folks could have done. Maybe make a city "off-limits" or something, but telling everyone they have to stay inside, was just the height of unscientific foolishness.
So curious. But now, we pay the price.
High-death rates or not, this fool-stupid pandemic nazi-shit is over. It's done. Let's defund the WHO (World Health Organization) - and the rest of the "United Nations" - as they are the
most useless, ineffective institutions that big-money has ever been spent on.
Better we should put the funds into missile-defense technology, and "Star-Wars" type research. Old Ron Raygun was absolutely genius & spot-on.
We put big plasma weapons or "smart pebbles"-type launch facilities in space, and if any Napolean or Hitler or Stalin "wanna-be" launches any nuclear missile, we just vapourize and/or neutralize *all* their offensive weapons capability - from orbit.
(We actually, really do, need to destroy that missile-base at "La Puta")
*That* is where global funds should be spent, on a trans-national basis. The UN is as worthless an organization, as was the old "League of Nations" - just a bloated "talk-shop"
for failed political hacks from all around the world. It has done *nothing* to stop or limit the Ukraine Invasion and Terror-War by Russian military gangsters. It's days are over. The "United Nations" is a failure.
be better at everything we do now. And that means we study how to solve the big problems. And we all now know what the biggest problem in the World is. The idiotic madness and horrific violence in Ukraine has showed this to us all, quite
[ Feb. 9, 2022 ] - Time Tunnels & Wormholes - I re-read "The Money Game". What a great classic - really piece of History - but like stuff written by Thoreau and Shakespeare, it just bears re-reading every few decades.
You get more hard knowledge and even new knowledge from a book when you read it at age 56 than at age 26. You just do. It's quite a curious feeling.
Sometimes, I feel like I was there in 1925, looking at some Hollywood type drive by in his
or her Isotta Fraschini, and wondering if it was Valentino, or maybe a "Norma Desmond"...
Nothing really changes in the markets - only
the names and the players. The process and the nature of the Game remains pretty consistent. The 1920's, the 1960's, the '80's and the last 12 years. We are long into a time of wild, runaway boomtime excess. Seriously.
a big break coming. Maybe today, it has already started. The Dow-Jones Industrial Average is just under 36,000 (which was the title of that book, remember??) I think things have gotten crazy, but if you sell your stocks, what
do you do? Where do you put the puffed-money? How do you protect yourself from the advancing inflation, the possible Third World War, and maybe even the Zombie Apocalypse? See, I don't really have an answer to that.
I missed the tech stocks. I never bought Google. I was gonna buy 100 FB when they went pubilc at around 35, but their IPO was such a sh/tshow, that I figured the whole thing was a piece of sh/t. Wrong, eh?
I also wanted
a Model S Tesla - but the price seemed silly - both for the car and the stock. Plus, the Symphony of Hate that was directed at Musk and his company was pretty hard to ignore. In USA, when they hate you that much, they can usually kill you.
(As happened to that Epstein character). But of course, Trump and Musk proved the wuckfits wrong. I am not a fan of Trump, because he ordered an Iranian General - and his drivers and advisers - be killed by Murder Drones as he was driving
in from the airport in Iraq. Perhaps Trump should be put on trial for ordering a gangland style murder, and end his days in a cell next to John Gotti or some other gangland boy. But maybe not. I don't have all the facts. A sitting
President is also the top leader of the Military, and perhaps targeted assasinations are sometimes required. Perhaps he may rightly claim Executive Privilage. But if targeted assasination is legally ok, then really - everyone becomes
a target, don't they? It's a problem, and I thought we had all agreed this sh/t would not be done. <big sigh...>
Anyway, it is curious, because I am having trouble sleeping. I seem to hear
this calamity echoing down and backward from the near future. A 10% downtick in the DJIA is a 3600 point drop, and a 20% downshift, 7200 points. This seems to be looming, but I can't say when.
Just for amusement, take your charting
program, and have it create a linear-axis open-high-low-close chart of any major Canadian Bank, from January 1995, to February, 15th 2009. I have a little low-quality image of a chart of that date range, on the right, for a bank stock which I followed.
FD: "Selling down to the sleeping point" right about now, means going to cash, despite the inflation risks. I just feel that a some sort of event is coming. Both trading - and NOT trading - is really quite difficult now. I
am paying the "Lord Keynes Fee" in the currency of Gambler's Pain.
[ Feb. 3, 2022 ] - Silly Symphony - I've posted the Feb. 1st forecast for our testbed security, and note that we went to cash in the Trading Portfolio. See
graphic with summary above. This trade exit was difficult, and immediately showed us to be on the wrong side (mkt moved up smartly, after we sold. This we find, is typical nowadays.). The AI model from the C-Machine is very
clear, however, and clearly suggests a local top in market price has been made. Also, a complete hornets-nest of risks are on the horizon going forward from here - from war in Europe and Taiwan, to serious inflation - and the resulting Central
Bank necessary responses, to a curious constellation of unwise and poorly-acting political leaders. The weather is also doing it's part to make life difficult in a curious number of locations. The AI forecast knows only the price
action, and it suggests a turn-over in market prices is expected. (So far, it's wrong..)
[ Jan. 21, 2022 ] - Idiot Wind - Ok, so I went long two days ago. Ha ha. I have made this mistake so many times (it usually
makes money in the end), but I think I might have pooched it this time.
Memo to Self: Do not f*cking buy the dip. This is what dipsh/ts do, since one takes a real risk of being dipped in the sh/t. Generally, this stupidity tends
to make money, but I have this ugly feeling we might be on the cusp of World War Three. Putin is bored, broke and has built his big house. All that remains now, is for him to blow it all up. For some reason, if you look at history,
this is what all these meglomaniac "Big Leader" guys do. Not sure why.
The AI stuff still says we move up from here. But my personal necktop machine is running it's imagination process, and it sees a bad moon rising. And
this scenario is now begining to play.
And really, if you are speculating to make money to live, you need to be aware that it is easier to buy an advancing stock, and sell it after it runs for a few days, than it is to buy the dip, and play for a return
to trend. You might just have caught a turning point, and will be destroyed, as all active idiots typically are.
Really. Do not buy the dip. Better strategy is to buy the new high, difficult as that sometimes is to do, psychologically.
[ Jan. 5, 2022 ] - Killing Me Softly - The Trantula jumped on the Banker's back,
And shouted with obvious glee:
"I'll poison this nasty son-of-a-hack,,"
"If I don't, he'll surely kill me!"
[ Dec. 27,
2021 ] - Egg Nogg for Dummies - Ok, so it is the goddamn holidays, which I don't like much, and the Cdn markets are closed for two days, post Christmas. But USA is up and running, and so were the stocks. My AI machine is so much
better a decision-maker than I am, that it is comical. I should just drink Egg Nogg, and leave all the trading to the machine. The Dec. 17th chart of the forecast, shows our testbed security flying straight up. I thought
that was unlikely. Seems it has been exactly what has happened.
I seem to have actually built a machine that can forecast - rather accurately - the movements in stock prices. Except I am too foolishly arrogant and opinionated to actually
follow the machine's advice. For the testbed security, indicated, I unloaded my trading-account's positions, expecting that Covid-19 Omicron would kill the market, and maybe part of the world. Wrong and wrong.
wrong. Stock shot up again today, as did all in the group. Which is pretty interesting. It's like the guy who takes the knife to the gunfight, and the gunfighters all shoot themselves, and he quietly picks up the suitcases with
the yaya (whatever McGuffin the author has chosen), and also the money - and quietly leaves the scene and drives to the airport, meets his pretty girlfriend, and flies to Costa Del Happyending.
Pretty weird. Not typically my picture of things....
[ Dec. 14, 2021 ] - Too Much Fake Stuff -
There is too much fakery now. Great chunks of what is on the internet now - even on good sites trying to be honest - is fake.
Not sure - except it is the pressure to make
revenue. The sites now, have to generate income, or they die. It seems that we have a choice between deception or darkness.
Not very good. It makes the investment process curiously toxic. More costs to eat, it seems.
[ Nov. 12, 2021 ] - Fish-Head Soup - They're serving "Fish-Head Soup" on the TSE today. Sniff-sniff.... it's that funny smell - a combination of rotting fish and raw sewage. Don't know why, but I always seem to be able
to smell this mixture. It is the very strangest thing. If I watch the numbers, I can smell the outcome. Not sure why... I think it might be my own internal neural-network, dumping it's final vector output into my olfactory
bulb or something.
The Toronto Stock Market just smells fishy. Just liquidated our big position...
and I cannot even tell you why, except the TSE smells funny... God's honest truth (plus, there was profit in the action), and it is Friday, and we wonder if Russia will launch an attack on Europe over the weekend. Or maybe China tries for
Taiwan. The folks running things seem to be either senile, stupid, crazy, cruel-nasty, and/or all of the above. This weekend seems to concern us more than any other has in a long time. Again, can't say why. The
world smells bad.
[ September 23, 2021 ] - Run Baby, Run - The DJIA is up over 603 points as I key this. Our portfolios are recovering. I had typed a very long and interesting note here, but it was all lost, because of the
shit-stupid editor, (and the shit-stupid typist?). I have to remind myself, that I am using some shit-crap browser-based editor here, and I because I tried to move this section before the images, the shit-crap editor simply vapourized everything I had
written! Goddamn fucking hell.
So, now I have another way I can be blown up. By the crap-awful software I have to use to edit this fool website. Maybe time to pitch this whole thing, since it does not make any
[ September 13, 2021 ] - The Follies of Fall Will Make us Fall? - It seems to be starting to look that way. I've watched a solid, comfortable upmove in the financials we hold slowly drift away today
- and have the sense that some sort of unwinding is beginning, though it is not shown in the technical models yet. Stuff like GOOG and FVRR and GME are blasting along nicely, while the conservative stuff is getting kicked to the curb.
This has the smell of a blowout. It reminds me of that old adage the sailors have, about when to reef the mainsail: "The time to reef your main, is right when the very thought first occurs." Since it is always easy to undo the reef, if
you are wrong, but it is diffcult and dangerous to do the reef, once the real blow begins, and the rain and storm is evident.
Oil is up, crypto is down, and the both the Nasdaq and the S&P have gone negative. Today needed to be an up day (like
it looked at the beginning of the day), and I just cannot shake the feeling that the extreme lack of wisdom being demonstrated by the Washington Democrats, is soon going to be priced into longer-term forecasts. It is not there yet, but it may well
I feel worried. So do a lot of others, and I suspect it is overdone. Our forward AI model showing only a tiny upward bias. If we close negative today, then I expect it to turn down. FD: We remain long, and
[ August 18, 2021 ] - Joe Bye-Done has Done Us In? - I think that US Air Force Unit Number 1109 is running an air strike against the Takarabune. That US Air Force unit is gonna go down in
history beside the Enola Gay. I am concerned that the Treasure Ship has taken fire, and some of the Gods have been hit hard... The God of Wisdom especially looks to be pretty badly wounded.
There are some fine and good and wise
Americans. I have met some. They actually exist. But where are they? And not all the Americans in their military are cruel, kill-crazy nutters. Many - most - are fine, intelligent men and women full of courage and
focused on doing the right thing. They left the scene early, it seems? Or they have retired? WTF is going on?
Folks in the USA government seem unable to grasp the scale and extent of the fucking shitshow of madness and
stupidity they are now engaged in. An entire generation of folks are being thrown under the bus - both overseas and in the USA. And for what reason?
Folks who are betrayed - and their families - have LONG memories, guys.
Sure, for now, the market does not care too much. But we cannot see how this insane debacle can be just swept under the carpet of the next news cycle. No one gives a ratshit about news anymore - but the images of those three folks falling
from that C-17 - that makes the 1975 Saigon horrorshow look orderly and well-run.
If I lived in Taiwan, I would begin my active exit planning. The Chinese and the Russians must be watching the Afghanistan Shitshow of American Failure with
Biden's stupidity and weirdly gruesome Big Demonstration of Weakness and Betrayal, will not be a cost-free project. America has taken a real hit here. Everyone now KNOWS that American government entities
cannot be trusted, and that working with them in foreign lands - risks being a dangerous and seriously unwise exercise. The whole plan is just over-the-top insane.
We remain long - but we are concerned, as this level of stupidity looks to
be tracking outside the model. USA stocks are very expensive, and the USA government looks like it is run by people who can't maybe even tie their own f***ing shoes. This is not a good situation, and it suggests the possibility of a real,
widespread "loss of confidence" scenario, which could become a major investment tipping-point, and create one of those old fashioned snowballs-of-disaster.
To invest, one simply must have some degree of faith in the operational viability of the future.
Biden's *team-of-idiots* looks like it could seriously put that necessary confidence at real risk.
And I am thinking that maybe, these folks don't even realize how their overseas military-driven ability-to-dominate, is directly connected with, and responsible
for, American market-driven commerical prosperity. Once Rome fell, the Roman trading ships no longer ventured to Wales for tin, or the Malabar Coast of India for pepper. The entire global-trade business model collapsed, and many hundreds
of years of increasing poverty followed.
Biden's actions risk turning the "chip shortage" into a "no-chips-available" scenario, if Taiwan is attacked and successfully invaded by China. I am trying to see some way, that this ugly scenario
can be avoided. If I were Xi, and really had my heart set on being a conquerer, I would move right about *now*. I hope sanity prevails - and we retain peaceful relations everywhere - but this fiasco suggests something is deeply wrong
and broken in America - and such times are rare and present real opportunity for bad guys to gain ground.
The "Pax-Americana" has been shot in the back of the head, and it's corpse dumped into the ditch of political failure.
We can expect
the Federal Reserve to keep pumping out fiat money, and the SEC to expand it's assault on foreign businesses listing in New York.
We can also expect every non-American nation to expand it's defense budget, and develop more independent
defense strategies - if they are not stupid. (Germany today said it is already planning now to do this). The Japanese need to tech-check those really super-secret new-clear weapons they have buried in those super-secret underground bunkers.
Oh, right - they didn't do that project, did they. And neither did the Germans. So, we have basically France, the UK, India and Pakistan left, to help defend the free-world from a combined assault by Russia and China?
(Oh, right.. there's Israel also. Except after Taiwan, we start thinking which score will next be settled...? If your plan is to address the "American threat", someone from the North might just start with those folks. Just speculating, of
course. My point here, is that we might become hot buttered bread. "Chicks and cars, and..." - what was that third one?)
What the Americans don't seem to get - yet - is that once America leaves the building, the entire global commercial
"supply-chain" is put at real risk everywhere.
And Biden *really* wants to leave the building, it would appear.
[ August 17, 2021 ] - Holding On to The Side of an Airplane - I think this is how some investors feel lately - rather
like those poor Afghan f**kers falling to their deaths after holding on to the side of a US Airforce Jet leaving Kabul Airport. You know that you won't be able to hold on for much longer- but ya just gotta try - since your survival now depends on it.
I have a suspicion that the folks at GE will really regret their big share-consolidation. What we foresee happening, is the GE share price slowly drift down to the 40 or 50 dollar range - since maybe there is not much actual equity value really
there. They would have been better to let the GE shares creep up to the 20 dollar range - on pure speculation of better days far ahead - rather than wipe out their float, and see their high, 3-digit share price slowly drift down as the interest-rate
increase unwinding begins in the next few months, to gather steam.
You cannot hold on to the outside of a flying jet for very long. Maybe for a little while - but unless you are a "gremlin" in a Twilight-Zone episode - you are just not going
to make it. And once interest rates start to return to some sort of sanity (which they will have to do, someday, else the global financial system will fail in some new and interesting way), your hyper-leveraged business model (whatever
it is), will come under real financial pressure. You will find it impossible to meet your monthly financing costs.
That is a long way off - maybe. But to engineer mass-default, it just needs to be a shorter distance than the destination
GE might survive. But it also might be a 40 or 50 dollar stock, post-consolidation price, instead of a 20 or 30 dollar stock, from the pre-consolidation price, which was around 12 dollars, IIRC.
consolidation they did strikes me as a really dumb idea. That 12 dollar share price might have been 20 dollars in a few years. But so might the new 100 dollar share price.
If the USA really blows up (and it really
is looking like it might, given the level of stupidity that seems to be driving their political machinery now), then the whole American equity market phenomenon might implode in a really dramatic fashion.
FD: We do not think that will happen.
But: Since I have seen - up close and personal - 5 major market shitstorms in my short life, I am *very* sensitive to how quickly things can go pear-shaped in the markets. (Viz: The 1987 Market crash, where the DowJones lost over 20% in a couple
of days, the 1998 Russian Default, the 2000 "dot-com" crash of most technology stocks, the 2001 terrorist attacks that destroyed the World Trade Centre Twin-Towers, and blew up the Pentagon in Washington, and the 2008 "Financial Crisis" caused by wildly inflated
house-prices, and bogus financing models used to support crappy, high-risk paper used to fund that whole process.
And of course, now the recent "SARS-2-Cov" Covid-19 global pandemic, which has killed over 4-million people so far, and is not yet
over, and took our low-risk portfolios down something like 30 percent for a few weeks in March of 2020. )
[Note: I can't count well. That is actually **SIX** shitstorms - and does not count the John Meriwether LTCM meltdown (which
was really part of the Russian Default of 1998), as it was localized to the paper they held and the silly (really silly) models they were using (from clever academic "experts") to make their bond-market mean-reversion bets.]
I use mean-reversion.
Sometimes it actually works - but it is like playing catch with bottles of nitro-glycerin. Just drop one trade, and it can ruin your whole year - and maybe even take you out of the game.
We are down 500 points today on the DJIA - which is
bugger-all, given the thing is at 35,000. But I wonder if someday in the next few years, if we will not see a 3500 point down day. Such a move would only be a 10% "correction", so we should all be expecting this, since it is in the math,
and even if spread over a few days (because of silly "circuit-breakers", which should not exist), it might still be enough to trigger liquidation algorithms, and thus become self-reenforcing in the worst possible way.
Even if interest rates are
less-than-zero, leverage is still dangerous, since it has to be paid back somehow, and in a falling market, as the margin-calls start coming in, you might be automatically taken out, if you are levered-up. Just ask Bill Hwang how this works, if you are
We suspect we are entering a curiously high-risk time. So don't let the market kill you, since not everyone is a fat billionaire! :D
[ August 10, 2021 ] - Biohacking & Central Bank Normalization Plans
- Local J-girl had a wild reactive response to a hydrocortisone injection - so much so we might file a report with one of the monitoring agencies that keep track of curious drug side-effects. One never really knows exactly if the cause-effect
vector is as observed - there can always be secondary or hidden factors - maybe a mosquito bite introduced a new viral pathogen or some extreme exogenous thing like that occured. But basically, a surgical operation that was healing up nicely,
went seriously south, with swelling and extreme pain - so much so, she could not even stand. Oxycodine was required, just to address the extreme pain. She was *not* taking this drug, even after surgery, using 500mg Tylenol instead.
The pain-flare seems to be the side-effect of a hydrocortisone injection for "trigger-finger", which is clearly the indicated treatment for the condition.
All medical personel did exactly the right things - but a curious response was this radical
change in the healing of the foot-surgery. The healing was going well, and J-girl was walking around without pain. The cortisone - injected in the hand, to address the locking-finger issue, seems to have caused the foot to swell, it's
temperature went way up, she showed evidence of a rapid onset of infection, was unable to walk, and yesterday, threw up her lunch.
This was quite an extreme adverse reaction. No doctors are available on the weekend, so she just
toughed it out.
Today, she is much improved, able to walk again, and her immune system seems to be more stable. Cortisone is an adrenal hormone synthetic, and it works primarily by surpressing the inflamation response. But inflamation
actually *helps* sometimes. It is part of the body's immune system response to infection assault, and if you turn it off, you can get a wild flare-up in rate and intensity of infection. One of the documented side effects of hydrocortisone is reduction
of surgical wound healing. This is curious. The whole response is curious. Years ago, she had had a cortisone injection to treat a "frozen shoulder" that was causing real pain - and the cortisone worked like a magic bullet - completely
healed the "frozen shoulder" in a few days, and it never came back as a symptom. But this was 15 years ago. We had not expected the cortisone to provoke such an extreme reaction in the healing foot.
It's possible that the cortisone will
actually be *beneficial* to the healing of the foot surgery wounds (results of a bunion removal operation - quite signficant surgical procedure, which involves reseting the bones of the foot, and using metal pins to hold the pieces together while the new,
reset foot heals up. The surgery was well done, by a very good specialist. It was healing without major pain, until the cortisone shot was applied in hand.)
The whole response reminds me of how trades sometimes unfold. Often, the best
trades seem to first be characterized by an ugly market response, against the obviously correct postion. I have just had this happen so often, it almost seems to be a signature condition of doing the right thing. You take the clearly correct
postion to take - and it moves *rapidly* against you. This seems to occur, as the result of the market knowledge leaking out into the world. Many folks know what will happen, and shrewd high-frequency traders take advantage of this fact.
(I have done exactly this myself, if and when we are doing high-frequency stuff - which I find can be made to consistantly work - but you have to *fast*...)
You get this initial, ugly, reactive-response. But then, the reality of the process kicks
in, and the slow grind towards what rather must happen, slowly beings to happen. Our investments in bank stocks and phone companies have been like this. We know what will happen long term, assuming that the world does not die, or crash into thermo-nuclear
war. But the grind towards the future price levels can be interrupted by violent reactive response events.
Cortisone injections seriously alter the body's homeostatic stability characteristics. It's rather like how the body drives
it's own metabolic actions *way* up, to fight a viral infection. The system runs very hot - you get a terrible fever which can actually damage brain function if it runs too hot - yet this fever will often kill the virus agents, or stop their replication.
So, taking drugs to bring down a fever can help or hurt, depending on when the drug is administered. Too soon, and you damage the immune response - too late, and you risk fever-damage side-effects.
I recall visiting the birthplace of John Lettsom,
the founder of the Medical Society of London, founded in 1773. His society was a genius idea (it still exists today), as he sought to bring together diverse groups of medical specialists into a common Society, so they could share knowledge.
There was a little poem about him: "I John Lettsom, Blisters, bleeds and sweat's 'em. And, if after that, they choose to die, I John, lets 'em!" Lettsom was born on Little Jost Van Dyke island, in the British Virgin
Islands - possibly one of the most lovely places on all of this Earth.
Lettsom (sometimes spelled: "Lettsome") was a close friend
of Benjamin Franklin (the brilliant American polymath who graces the US $100 bill), and also was a founding member of the Royal Humane Society. When his father died, he returned to the BVI, freed his father's slaves, and became the only educated
medical doctor in the BVI (British Virgin Islands), and made enough money to go finish his medical education in Holland, getting a Medical degree from Leyden University. (Leyden was a very special place. There, the "Leyden Jar" was invented - the
world's very first electronic device - what we now call a "capacitor"). Lettsom is one of the great figures in Medicine - and was also apparently a fine, and honourable fellow.
The Medical Society Lettsom founded has often been a key venue
for the presentation and dissemination of critical medical knowledge:
The very nature of attempts at medical treatment, make it very similar
to trading - one never really knows for sure - you do the diagnosis and try the treatment (or trade), and maybe it works and maybe it does not - and even if it seems to work (patient gets better, trade makes money), the treatment may have been ineffective,
and recovery occured via the patient's own efforts. (Your trade was profitable not because your model worked - you just got lucky!) It is so very hard to actually know anything for certain. :)
With the whole world running a bad
fever, but showing signs of recovery (where it matters - here, in my part of the world!), we can again start to think about how the central banks will withdraw their signifcant stimulus. The UK Central Bank (the oldest and first one), is
thinking they will just not re-purchase new "Gilts" (UK Government Bonds) as existing bonds mature. This would have the effect of removing liquidity from the system, over the next few years, but it would not scare the markets - maybe. It
looks like a sensible strategy:
This "stealth tightening" might be the
prescription to allow stabiliy and "sustainability" to be established. (I love that word: "sustainable". It is so bogus. WTF is actually "sustainable"? Are *you* sustainable? I know I am certainly not.
[ July 17, 2021 ] - A Whispered Eureka - Curiouser and curiouser. It seems to work. My current AI model thing gave a hard core [:sell:] indication for Friday (on Thursday). We did not heed this, as there
are long-term trend-configurations that have not been violated - and personal circumstances are ticking along that mandate and encourage stability and a "steady as she goes" strategy.,.
But of course, my experience in the world has taught me - honestly
- that human *feelings* and one's own situational parameters simply should not enter into trading decisions. They just should not. They will - but they should not - and this is the most basic truth of human reality.
This is one reason why
"dead hand" models can work so well. It also explains market twitchiness and volatility. What is your "puke point"? The market will find it - and often reverse just after you have closed your position. Trading is not
an academic exercise - any more than a knife-fight is. Your objective is to approach both with a deep sense of tranquility and yet also with extreme awareness and a willingness to take quick action. These traits are so mutually exclusive in most
human beings - myself included.
Here is a picture of the ideal we have to try and reach (from National Gallery of Canada images):
This image is from is Albrecht Durer's famous engraving. The trader who is successful, must be like the Knight - and the Knight's dog - and ride thru the forest of chaos and ugly reality - and remain resolute and indifferent to the distractions
- and focus one's gaze ahead, and move to one's own inner plan and knowledge of evident truth. And it will be the knowledge of one's futility of effort - the certainty of death and decay - that is the most powerful force that prevents us moving forward.
The Devil has Death as a companion. Your own death is an absolute certainty. You cannot prevent this final outcome. Your best-case scenario ends with your own termination.
We know all our actions are futile - the more we learn
and study and observe and document, the more we have to accept the truth of the human condition. Nothing we do will really matter - but we still should move forward and try to either build or improve that which exists in here and now. That improvment
- the civilized and ordered and fabricated - the better world, is symbolized by the fine city on the hill, in Durer's image. Nature can be beautiful - but in truth, it is a maelstrom of chaos and decay. Nature wants to kill you, and She will
succeed, in this effort.
There is no "god-myth-jesus-junk" in this genius image of Durer's. Jesus-fraud and godism nonsense are completely absent from this image (unlike many of his images - crafted for the public, and so designed to appeal
to the popular, dominant mythology of the times.) Here, he decided to show something above and beyond the typical religious mythology, and instead focused directly on the most critical human truth - the certainty of death, and what should be the appropriate
human response to this. It is just a genius work - especially given the times within which Durer was living. The mythology of godism and jesus-mary foolishness is completely absent - there is only the certainty of approaching death
(Death holds the hourglass, and tries to distract the Knight, who represents humanity. The single-horned Devil represents the certainty of evil and wickedness - something that exists everywhere, even if god does not. There is no saving-god or
saviour-jesus mythology in this image.
What saves the Knight - and what defines his actions - and his dog's actions - is his resolute indifference to these two ugly agents - Death and Evil. The Knight is not saved by god or by any
mythic nonsense. The Knight survives the dark forest of reality by virtue of his own focus and inner strength - by his unwillingness to surrender to Death's taunting, or the Devil's evil.
In any successful investment or major enterprise effort
- we are similarly assaulted by these same forces. A good horse, good armor, a good dog, and a good spear (adorned with the fox-fur for good luck - another protective device) are needed - but it is that resolute forward focus of the Knight - shown in
his face - that will save him - and maintain and enhance and grow the City on the Hill. That city on the hill is not some mythical nonsense "city of god" or some such foolish dream-image. It is a real and tangible result of human effort and
human planning and human workmanship.
All human effort - every trade, every day's work, every action we take - requires we take the risk to navigate painful truths and ubiquitous evil forces (there are always so many). To do this, we have no choice
but to be like the Knight, if we are to do this successfully. The true "Taunt of Death" reminds us that even our success will end with our destruction. Yet if we remain resolute - and avoid evil - at least the human City can be built
and can prosper.
That's the best outcome possible, so we fix our focus on the forward path, and ignore the distractions of truth (most ventures fail, and most traders lose) and evil (there is so much fraud and deception and so many
clever thieves.) Yet, still, we must participate and engage.
The one key fact we have to grasp when trading - is that we must focus past the trade - and see the process. If the trade-nature has changed - and the model says to act -
then like the Knight, we must de-couple emotion, and close the position. The Knight's resolute forward focus is not stubborn foolishness.
We have the tools - and the algorithm. The image of Durer's Knight shows us clearly how
we have to proceed, and shows us a clear picture of the risks we face.
We seem to be able now to get a handle - for a few moments - on the future course of things - which of course changes over time. Now, we need to connect this knowledge,
with action, at the right frequency. And add to the City. :)
[ July 11, 2021 ] - "Los! Los! Los!" - (see the top picture of the SP500 Trailing P/E chart...)
[ July 9, 2021 ] - Ab-Fab
Crazy as We Sail the Big Takarabune - It really is "Crazy Time" - like Heinlein predicted - but a tad too early. The Haitian sh/t-hole is really holding true to the Trump-name it was given. Sad and bad - yes, sure - but well, I talked
to a guy who spent six months building stuff for people who are too lazy to pick up a fucking hammer and a bag-o-nails, and he indicated it was a challenging environment, let's just say. If you make laziness and violence and cruel ignorance a cultural
virtue, then you get a certain set of results. Dominican Republic and Jamaca have problems - but nothing like Haiti. Haiti can be remembered as the birth-place of AIDS and Voodoo, if one recalls the news-feeds of the 1980's.
too lazy to read Heinlein's great books - just read some of his quotes.
I started reading his stuff as a young kid in school
- and it kind of changed my life, which was a good thing, since l had always felt I was living in some sort of *zone of insanity*, as most shit made no sense - everything I wanted to do - I was not supposed to do - and everything I didn't want to do - I had
pretty much to do. But after reading Heinlein, it all made sense. As a kid, you have to *learn* responsibility and self-discipline. You have to learn it - like fucking learning to read and do math - it is a skill that must be taught and
learned, before you are given the tools of power and wealth. Once you learn these skills - you can be given an aircraft (and a mission!) or a machine-gun, and maybe even a troop of your own guys, to give orders to, so you can really get some serious
shit done - for better or for worse. (And you even have to learn about "giving orders" - to do that right, you first have to learn to *take orders* - which is the flip side of the same coin, and is again a learned skill.)
is a good book.. The film that was made was a piece of shit, curiously. Too bad. But such is what happens, when it all gets insane.
My flipping models (and my back-of-the-envelope calcs) told me to do something today - but I didn't do it,
since it seemed crazy - except it was spot on... very very curious. Yes, Virginia, the man is the weak link in the chain. To do trading correctly, and make consistant money at the task, it is - honestly, believe me - it is as much (or more) **work**
as any other professional task. It is real, hard-core, sweat-making WORK. You don't think it will be. But it is. This is even more curious. The more I work at it - the more money I can take out of the process.
But if I slack off, then I miss big shit, and the miss means I miss a fat, fine chance to put a few kilodollars into the account. One just does not think it is that kind of process. But it is.
But what is really most interesting, is
how the smiling Fat Bastard with the fish and the hammer, nailed it - and that picture, plus my sense of inertia (and a long-wave picture I am tracking) kept me onside and long. We are up over 400 pts (= 1.20%) on the DJIA as I key this.
So, it is not the time for the "Taper Terror" just yet, eh? Fat-boy was right. Arigato, Daikoku.
There is a fair bit of evidence that liquidity is starting to be removed from the system. And I learned something key about
why T-bills and T-bonds in the USA are *always* oversubscribed. It was an article on Booberg - really interesting. It all hinges on the nature of double-entry bookkeeping - and that typically (like always, mostly) holding T-bonds and T-bills
is a better trade (since they are easy to trade, and pledge as collateral) than holding reserves at the Fed - for the banks. The banks always would rather hold Treasury paper, rather than have cash on deposit as reserves - so the Treasury paper is *always*
well-bid (typically more than 2 times over subscribed at the auctions.) And the way the paper stuff (auctioned bonds) are on the books at both banks and the Fed (when they buy them), means that effectively, there is no limit on how much of
these the Treasury can sell. They can sell any amount they want - until it starts to affect the real economy - since the sales are double-entry booked (as they should be.)
This is why the inflation debate is so fucking important. And
why - as it looks like inflation is not going into a lift-off phase - the market can look and do ok - for now. Except liquidity is being withdrawn, as reserves are increased - by means of the reverse repurchases - which now are offering better,
slightly above zero yields on the trade. I've encountered precisely *two* persons who have caught onto this key fact. (One privately, and one on Boomberg).
But there still seems to be a lot of cash sloshing around. The parking
lot at Costco is, like, full. As is the store itself. Product is flying off the shelves at velocity, it looks like (but I am not sure - just a spotcheck). Everyone seems to be driving a new car or truck, and any house or property that
comes up for sale, has a big "SOLD!" sign on it, a week or less later. It smells and looks like a bit of a liftoff in prices - but it is only in real-estate where it seems to be getting hotish. The whole issue is that there is very
little supply - nothing is being build - or was being built for a year and a half - so there is a bit of a backup, perhaps, as things re-open.
The CDN-$ is also back above 80 cents US (80.18 cents), and was below it yesterday, in the high 79's.
Oil and gold are looking spunky again today. The VIX spot, which was above 19 yesterday, is ticking around 16.17 as I key this, It showed a typical burpfart up above 20 yesterday, but quotes at 16 and a bit today. Useless thing to try
and trade - without a full pro workstation - but interesting technical indicator of market foolishness. (Who the fuck could possibly assume that the markets are "efficient"? Market action typically resembles a manic-depressive female, on
benzedrine, drinking coffee laced with Bombay Gin. Ya gotta really stretch your brain to view something or someone acting like that, as "efficient". I honestly don't know what the fuck is wrong with the folks in academia.
Do they push their heads up their assholes at night, so that each day, they get a nice picture of reality that conforms to their dreams, or something? It honestly mystifies me. :D
(The history of Benzedrine is really interesting.
If you are "hyperactive", it's stimulative effects can calm you down, and *really* help you focus. Popular drug among folks like muscians and mathematicians. But it is damn dangerous to make it a long-term habit - like any powerful pharma product.
Evidence suggests it helped us win World War 2. Seriously. You can't fly a bomber when you are asleep. Well, actually you can. And that's the problem, of course. )
And yes, coffee and Bombay Gin also help. Just be careful you don't get *too* efficient, eh? :D
[ July 8, 2021 ] - Boat Notes - I posted the code [previous note] for the bear-picture on July 7th, as a bit of a joke
- but only because my "Inner Trader" voice was whispering stuff like "This market smells like dog-shit. But it probably is Bear-shit, since we know that China is militarizing and planning a fucking war, Afghanistan is looklng like a full-on collapse,
and the other shit-hole nations of the world are doing their usual shit-hole stuff, since - you fucking know it - they are shit-holes. Sell the fucking stocks and don't be a fuckwit stubborn putz" Now, my "Inner Trader" is a foul-mouthed
prick, with a bad attitude - I only keep him around, because he makes me money and keeps be from blowing myself to bits. He had a valid point, it turns out.
"The world is run by fucking morons." is one of his most popular expressions. My
inner dialogue sounds like a comedy show - since I also have the fat-bastard with the big fish and the hammer (he is modelled after a Japanese diety that represents *Prosperity* - he is actually an amalgam of two mini-gods - Daikoku and Ebisu -
one has a hammer (kinda like Thor) and one carries a fat carp (wrong: It's a Sea Bream. Good eating, apparently)... and a bag of wealth - and the two represent wealth and good-fortune. My personal image of prosperity is Daikoko+Ebisu They
take the other side of my negative "Inner Trader" and are fat and happy and rarely worry and they assert that mostly, stuff turns out just fine - if you are careful, wise and patient. Link below to a site with explanation of the Seven Lucky Gods
of Japan - the Shichifukujin:
The fat golden gods laugh and say "Look at the long-wave picture, dude.
And look at the money supply charts, and the fact that there are shortages of stuff - but folks have money. We are all doing fine. The market is full of shit - like it always is. They are gunning for the stops, and the pussy-cats are liquidating
because they have no fat on their bones, and get scared easily. They are like squirrels running back and forth across a highway - eventually they turn into roadkill - when if they just collected their nuts and then sat still - they would be fine.
Don't emulate them. They're stupid."
But today - it is 12 C (and was 32 C two days ago!), so I suppose mostly - it is the nutty volatility that makes us uneasy. We are living in "Crazy World" now - characterized by Covid and USA weakness
and it's foolish, unwise policy decisions. USA sneezes, and Canada catches the fucking cold - is the old line. Seems to be playing out today. Commodities are fuck-all in Canada now. They are almost nothing to do with the Ontario
economy - Canada is mostly a manufacturing nation - we export more cars and trains and planes and weapons than we do oil and gold and wood and shit for fields.
But the world still pisses on the Cdn $ when oil prices have a burpfart. It's
hilarious. I should really trade against it, since this link is pretty fucking stupid. But it is dangerous as fuck to short stupidity - since as Issac Asimov correctly stated - "the most common element is not hydrogen, as most scientists suspect
- it is actually: stupidity." And so ya don't want to go short of what is most easy to supply - right? :D
I have actually lit a fire in the big wood-stove - since it is really 12 degrees C outside. And it is raining
with rumbling thunder. Pretty volatile, I would say... :)
PS: We remain long - but my stats-based AI also said "downturn ahead". Funny how it works so well. We mostly have banks and telecoms - this is
Canada after all - and if the banks fall down into shit-hole territory - we will be buyers. Summer is always full of storms. :D
PPS: The Starlink thing is sometimes choppy - but mostly, it's a fast Satellite-of-Love. It works
during big-boom rainstorms, which is pretty impressive. (Only 350 miles, not 22,000 to the geosync orbit. That's the SpaceX magic secret sauce, and they look like they are getting it working. Fewer drop outs lately - we can stream radio stations
and mostly they play most of the time. I wrote some BASH shell-script code to bring the stream back on-line, if/when it gets dropped. Seems to work.
PPPS: Best goddamn operating computer system of all time: Linux, with init-scripts,
running on a single-processor Intel Pentium-class machine. It just works and works and works. I've heard stories of little local Linux boxes being locked in a closet for 10 years, and run continously for the whole time - and only taken down
for upgrade when the business changed hands. As NASA bloody well knows - the "peak reliability" for computer platforms - was Linux/Unix, on a single uni-processor, circa about 10 to 15 years ago - that's basically what is running the latest Mars Rover.
I'm learning "systemd", and it is a fucking horrorshow. Really - that whole dog's breakfast only exists to make use of the fuck-stupid "multi-processor" designs that are being fabbed now, because "Moore's Law" hit the "width of the electron"
wall. Just hilarious. We now have a world were even Linux machines can *hang*. Just great, kids. Well fucking done - not. I've got three different kernels on each of my CentOS-7 boxes - and each one has - at one point
or another - just fucking locked up.
This *never* would happen on older Linux boxes with the old 2.6 kernel running on uniprocessors - not fucking *ever*. Seriously - NEVER. Maybe I was just lucky. I have old 2.6 uniprocessor
boxes that run real stuff - and it JUST WORKS. But if you have a systemd multi-processor core - you are gonna have issues, since the complexity is up by several orders of magnitude, and it is now not possible to test/exercise/verify every possible process-to-process
possible interaction. So - we now have an *unreliable* platform model running the world's internet and computery stuff. It's the fucking "Peter Principle" applied to technical innovation. Of course the shit is
fragile and hackable. It's designed-in. :D
[ July 7, 2021 ] - Tense? Future Imperfect? What Do We See Coming at US??? - What does the future hold? Try this program... copy/paste it into a text
file, but give it the extension '.svg' (for scalable vector graphics..) and save it to FILEPIC.SVG Then, navigate to the file using your web browser - with: "file:///FILEPIC.SVG"
<!-- Generator: Adobe Illustrator 19.0.0, SVG Export Plug-In . SVG Version: 6.00 Build 0) - then MCL hack -->
<svg version="1.1" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"
viewBox="0 0 400 400" style="enable-background:new 0 0 400 400;" xml:space="preserve">
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I actually don't think this guy is the immediate future. But the market seems to be pretty concerned
about this guy.
[ July 1, 2021 ] - Hack Me, 8 (bits) to the Bar (or maybe: Nothing Beautiful Lasts) - says the Stock Market. Curious times - as the whole Covid-19 thing is yet another 6 or seven standard-deviation event that should
only happen every 100 or more years, blah blah blah. You have to be real careful in market action now - since everything is wired together - and when the shit-storms hit - every single fu-king trade becomes almost perfectly correlated with every
single other trade. It's just hilarious - there is no where to hide - not even under the bed.
And with the new recognition that - ah - maybe now is *not* the time to balance the budget - since inflation is less of a risk than riots, cities-on-fire,
and social and financial breakdown - the solution to keep liquidity in the market and the economy - is liquidity. But the liquidity injections drive interest rates to zero - or below - and this makes for a whole new bunch of problems that the world
has not often faced - and has little knowlege of - even at the level of experts and pundits and academic daemons.
Zero and near-zero interest rates destroy the investment process for folks who need to invest to have any retirement
income - and for the pension managers who are trying to fund those generous, fat, government pensions that so much of the Western-world economies seem to be living upon. It makes for a complex and gnarly economic problem for the cen-bankers
and for the fiscal-fiddlers in the Halls of Government (I almost wrote: "Hells of Government" - but that is where the taxpayer lives, isn't it...? )
So, crazy times all around. Just got word that the recent ramp up in bank reverse-repos
in the USA, with the Fed have become non-trivial. From a liquidity perspective - this is interesting, since in the opinion of a wise old clever Hidden Imam - this dial-up in reverse-repos has the net effect of draining liquidity from the economy/financial
system. "Hmmm...", you might stroke yer beard, (if ya have one...) and puff on yer pipe, (if ya got one...).
And with a little cognition, you might just come to the conclusion the game is afoot... And then think:
Oh my... if you are draining liquidity from the system... then even if you are still purchasing $120 billion of gov-bonds and MBS's each month - it suddenly sorta looks like that the "Taper Terror" has begun - and is running along at a serious little clip.
Well, try to hold yer fudge. I can't prove it - but there seems to be enough slosh and froth in the system now, to let the equity-land markets run along for some time yet - 6 to 12 months at least - and maybe even double from where they
are now. That would not be great - since it would seriously increase the probability of a wild and ugly retracement event. But a gentle taper - kinda like a foot on each pedal - might let us all put the big bird of the global economy into
a stable cruise for a while, and bring low-risk yields back into a regime of sanity - say 2 to 3% - maybe even 4% (but not five, and six is right out, ok?)
The real risk is big tax increases, which of course, will blow the whole world all to hell.
and probably cause World War Three. We hope we can all avoid that outcome. The USA will have to implement some sort of GST/HST/VAT or some sort of National Sales Tax - so that revenue can be raised without punishing those who make growth
and profit. "Income" tax is simply insane, and should probably just be ended as it is so astonishingly stupid and unwise. You should tax consumption - not income generation and/or wealth-creation. Even better, would be to just
end most Federal Government programs, hand all the work over to the States, and only have Washington consist of a committee of a 50 or 60 folks that meet once a year. But this is just dreaming - and sounds a bit too much like a "Politbureau" doesn't
Not much will ever change, of course - except we can be certain there will be more > 6-SD disasters that blow things all to hell. Our models suggest these will happen with increased regularity - and with probably increasing
levels of amplitude - regardless of any action taken by regulators or government authorities. The S will H The F - with cyclic certainty, it seems.
And it wonders me, why folks would think otherwise. It's right there in the data.
Stability is generally a very false, and dangerous illusion. It is just not how things work.
Nothing beautiful lasts. :)
[ June 14, 2021 ] - The Word for Forest is World - Sometimes, you just have
to take a look at the whole forest as one single, big organism. And even when it is under attack by worms and chainsaws and Emerald Ash beetles, it still manages to get greener and bigger each year. This is one of the real benefits of actual,
true diversity. It's very hard to kill everyone and everything - in the market and in the forest and in the human world. Co-ordinated collectives of living systems show a remarkable ability to survive nasty assaults that would sometimes be thought
to severely damage and destroy them. And this ability to survive and prosper, is enhanced by simple diversity.
You want a forest full of different types of trees, a market-place full of different types of investments, and a nation full of different
types of people. Each thing - the forest, the market-place, and the nation of people - is made stronger and better able to survive lethal shocks, by having different types in the group.
Diversity isn't some bogus political concept. It's
actually an authentic, observable scientific fact. Systems of living organisms are stronger and healthier as groups, if they are less self-similar. A diversified portfolio of good investments can work very well, as can a nation made up of diverse
people, and a forest made up of diverse types of trees.
But with diversity comes volatility. A diverse group will have more conflict, and the parameters that control things will change quickly, and rattle around more. This may not
be peaceful or gentle at all. But it might be the price we have to pay for the strength and resilience that comes from having acquired true diversity.
[ June 10, 2021 ] - Loving the Alien? - No space travel for me, I fear
- unless the "Tic-Tac" ship comes by to take me for a quick jaunt around the system. (Not a lot of chance of that, I am pretty sure...!) I noted with amusement that a Fortune "think-piece" on the online payments/transactions business-models
- was being *retailed* on my trading-system news-feed. What a hilarious world - the news-feeds now are offering "real" (ie. maybe accurate) news, but you have to explicitly pay *extra* for it.
Why can't I make a deal directly with Pfizer,
and get some mRNA vaccine that I want to get, in a similar manner? Strange world. What we learn now - is just how worthless and nasty and cruel and useless the "organs of government" really can be. It is "government" that shits on
science - not the conspiracy nutters. The nutters just make noise - they do no harm. But the governments stockpile and restrict that which you need to live, so you don't die needlessly - and they give it to the folks that *they* prioritize.
But not the healthy, tax-paying folks who fund the operation of the entire system.
What does that actually tell you? Can you grasp the underlying message here? I don't think it is too difficult to predict what the future will look
like. When even the middle-class white folks become comfortable with the idea of hanging the gov-people high from lamp-posts, then it is not hard to predict that change is on the horizon, and just what that change might look like.
times. A time of manufactured "crisis", the purpose of which is clearly the careful dismantling and quiet destruction of pretty much all our dearest and most important social and cultural values - like free-speech, the right to effective self-protection,
free assembly for political purposes, and so on. And all this carried out by fraudsters who have scammed their way to great political power, and are exploiting the Covid-crisis to ramp up their abusive, repressive political models of control and subjegation.
Pretty nasty-weird trade, eh? You voted for "open government" and you got something very much different - with a little beard. Just hilarious, eh folks? This clever little guy imports real hard-core, deep-driven conflict into
Canada - rather than attempting to assist in the necessary corrective action in the lands where this struggle must take place. He shuts down our war-fighting missions that were showing real, positive results - and when the sad (and un-necessary,
and awful tragic) violence starts to happen here - the little poo-flinging fraudstar begins the process of exploiting the anger and violence he has carefully engineered, to his own political advantage. This is the worst, lowest and most nasty
form of political trading.
Look, it is a brilliant bit of political theatre - exploit and milk every awful event for political advantage - from Covid to the horrible multiple-murder of a Muslim family, down in London-town, Ontario. That
was really awful - mostly, because it did not need to happen. But it shows just what a "very bad political trade" can look like. The actual real assaults that our own government is now planning to engineer - are very real, and very
dangerous, and represent a clear and direct threat to Canada's basic democratic foundation.
This Trudeau person is actively working to damage and degrade and effectively de-stabilize the entire operational political foundation of Canada.
It's a helluva thing to see it begin to play out - and it will probably create terrible damage and un-needed conflict far into the future. It has a real chance of putting the long-term survival of the nation at risk.
I fear this strange man does
not have any idea what a very bad trade he has made, as is still making. He may just blow us all up. It did - and does not - need to happen.
[ June 3, 2021 ] - Don't Do Lines - One needs to be careful with lines.
I don't like standing in them, and I get quite uncomfortable in these modern times, doing them. In "The Zurich Axioms", one of the key caveats is "Beware the Chartist's Illusion" (It's actually labelled as "Minor Axiom VI"). I use databases to
construct and then look at price charts. Most folks do some version of this. The old stock-market folks wisely know that trends happen, and that trends can go on for a while. But shit also happens - and in this modern world, shit
happens rather quite a lot.
And the effect of "shit happening" is that trends crack and break and collapse - and now they seem to do this on "internet-time" - ie. really goddamn quickly. This is just what the data says.
But so did
Max Gunther, many years ago (after learning the hard way - first from his famous father, and then from that harsh teacher, Mr. Market...). Max wrote this about charts: "The calm, steady change implied by the upward-sloping line is an illusion.
The truth is that the relationship is one of increasing disorder." He then goes on to warn about the risks of being deluded by charts, and says clearly: "A chart line always has a comfortingly orderly look, even when what it depicts
is chaos." The hockey-stick chart up top, of the USA M1 money supply, provides an illustrative example of how quickly lines can change.
What actually happens with a trend is much like what happens with weather systems. A vortex
gets created which sucks stuff into it. In weather, it is air. In markets, it is money. (In space, it looks like it might be a singularity of neutronium, or a "black hole"... our galaxy looks very much like the organizational structure of
a typhoon or a hurricane.)
The "trend" in the market results from the money-suck into the share-purchase process. Price must be bid up to encourage holders to sell their increasingly valuable shares. And this is *not* an orderly
process. Gunther nailed it, when he recognized it as a movement from some level of order to an increasing degree of disorder. This is a very big deal. Sure, the trend might be your friend - until the day comes when it is not your friend
at all - and suddenly is trying to kill you!
What astonishes me, is that really smart folks fail to see how this process plays out. It's rather unpredictable - but the nature of the vortex can be assessed, and the flow can carry
your efforts for a while and make some money.
But the vortex can destroy the money also - and it has to, if one thinks about it. The Market has to regularly crash and smash and vapourize capital - that is it's critical job, and that job must be
done, else the World would be awash in money-made "wealth" - which would cause the money "wealth" to become like those German Marks of 1922 - and thus become no real wealth at all.
The key point here is that the rising trend line on the chart is a movement
from a level of order, to a level of rising dis-order. Rising dis-order is falling level of order. That just means that risk is rising as you ride up the line - and it might be rising at a super-exponential rate - even though the line looks like
a nice, smooth, gentle, linear pathway.
This is the "Chartist's Illusion".
The lines on charts are bloody dangerous, because they encourage "self-delusion" - you start to see patterns that are the result of pure, random, action. And
that movement from order to dis-order - although it is making you money - is also placing you at greater risk.
Charts are fun to look at - but they mislead - you see a "plateau" and you think the process has somehow "plateau-ed" - but that is
completely wrong. All you are seeing is a very unstable dynamic balance between rushing forces - like opening your car window in winter-time while driving fast on an icy road, and turning up the heater to full-blast, while drinking a beer. Rather
a lot like that silly metaphor, actually. One tiny change in any single parameter, and the entire process rushes (quite QUICKLY!), into another state of organization - like your car in the ditch with the engine off, and the snow blowing inside
onto your spilled beer! (MEMO: Do NOT drink and drive - especially at high speed in winter on icy roads, while running real-time experiments evaluating the nature of stable dynamic equilibrium process models. That's just silly.)
upward-sloping line on your chart shows a rising level of dis-order. The process itself is fabricating it's own increasing breakage-probability.
Oh, and further on the topic of NOT BLOWING UP - here is another
example - this time, a professionally-managed investment fund, that bought a stake in a mothballed (since 2012) oil refinery in the American Virgin Islands. If I had been retained to evaluate the feasibility of this project - I would have begged them
to avoid this rusting mess like - well, like the plague. What the fuck is wrong with people now? A shutdown, broken, rusting mess of an oil refinery in a beautiful tropical vacation spot? Unless the whole thing was made of stainless-steel
(damned unlikely), it probably had *negative* asset value - since it is probably was, and still is, a hard-core "brownfield" site that will require expensive cleanup. It's only value would have been the land it was sitting on - the rusting pipes are
worse than worthless. Can people not think clearly anymore or something? This is just comically sad:
[ June 1, 2021 ] - Tripwire Trading - Markets are completely captured now by algorithmic methods. Quite curious and interesting. If you took Larry Livingston (a fictional character, remember - but based on a real fellow we all
know) who was a Master-of-the-Bucket-Shops of the early 1900's, he would be right at home, as he would simply use his little book of previous prices - and would have a pretty good idea of where the "tripwires" were located. Once you know that - you
can trade against the silly action of the monkey-shakers, and do ok. Modern trading is a lot like a Boston bucket-shop of 1899.
What happens now - is we don't really even "see" the real trading - it is taking place in the "dark-pool" markets
(there are something like 11 or 12 now in little Canada alone!), so we see this kinky, twitchy and rather violent, jumpy price action on the modern markets that are visible to the putz-traders and punters (like me!), and the price action looks almost insane
- until you figure out that you are simply not seeing what is really going on. It's like trying to figure out who is winning the NASCAR race, by catching the smell of the exhaust-pipes, and the volume of the noise - but being unable to actually
visually inspect the actual action. Comically curious, actually.
I get a bit concerned that the old economic concept of "price discovery" is being placed on it's head, and we are getting "head-in-the-sand" fabricated "price obfuscation".
But - what the heck - everything is obfuscated-by-design now, so it would be silly to expect the markets to actually appear to be something rational and sane.
We are actually living in a world now, where the fcuking nasty-bastard shithead liars
are pretty much winning it all now. It's always been a bit like that, of course. Think of the toxic nonsense bullshit of the "aristocratic blue-blood" who was somehow *better* than the average peasent - or the absurd and outrageous lies
of god-fraud religion promulgated by the Catholic Church lie-machines, and enforced by horrific, cruel legalistic methods - astonishing lies of the most extreme - yet they drove the machinery of society for over 1000 years!
I remember seeing the "Rocky
Horror Show" as live theatre in London, in 1977 - right after seeing R.D. Laing at a lecture the day before. I was fortunate to be able to spend an amazing summer in London and Paris that year - back when those two cities were the Centre of the
World. It made me aware that the future would be pretty much insane - and perhaps offered a cultural-vaccination for us kids on the course. Europe has this crazy, horrible history of blood and violence and madness. But it had some good
boom-times also. I remember going to Holland, and seeing the Rembrandts and the Van Goghs - quite wonderful and amazing.
(The art of Holland makes the French - who have many very seriously wonderful artists - still look a little bit down-market.
) The Dutch really were the "Masters" of the Art of Painting - probably because they had to live in an awful place, and fight like daemons just to survive and free themselves from the evil Catholic Spanish overlords. Folks forget now, that
it was Holland that was the model for the USA ( the United Provinces of Holland - won by war that removed truly evil Spanish rule). Rembrandt's painting of "The Night Watch" was actually a bunch of militia-guys, who would patrol the city, looking out
for murderous (Catholic) bandits who might try to bring ruin and destruction to their hard-won - and free - city-states. Holland was the place where the good people who were beginning to create Science and rational thinking process had to live
- John Locke and Rene Descartes, for example.
The world has always been fucking crazy, and the governments have (mostly always) been run by arrogant, murderous psychopathic, meglomaniacs. So one has to realize that our modern shit-storms
of deception and mad cruelty, are not really too far outside of the historical norm.
It's just that they teach such silly, nonsense bullshit foolishness in the schools. If you want to learn how to trade profitably (and live correctly)
- don't fucking believe *ANYTHING* until you have checked it out for yourself - first in the goddamn library - and then out in the actual, insane maelstrom of the World. And even then - when you think you know a little - even then, remain skeptical,
and realize you might be being subjected to crafted deception, by bad people.
Arm yourself with *knowledge* and *experience* - even before you get yourself some fine ballistic technology. And remember - nothing but death is final. Churchill
said it best: "Success is not final. Failure is not final. What matters is just the courage to continue."
[ May 23, 2021 ] - It Never Ends Don't blow up. Have hard risk-reduction/exit plans.
Make them hard rules, and don't whine or wail or bitch or complain if the market swings down - takes out your trade - and then runs the other way. It is supposed to do that. And don't sell good shit that is being bid up - but try to have
a very-long-term target price, and if that gets hit or exceeded - then you can start dialing down the trade - so yes, you will sometimes be selling into a rising market, and feel like an idiot as it keeps rising. If you have to (and things have really
changed ) then grit your goddamn teeth, and buy back the shit you sold. It will piss you off (as it will probably fall, right after the purchase), but I neglected to do a buyback, and have watched the price run away and up - just like a very-long-term
model suggested it might do - someday. But when if finally does - I am out, so I feel like a fucking idiot. I understand why an automated trading software engine can do better than a human - it has no feelings - and that
is very large and significant goddamn advantage. I am seeking this level of action - but I will never truly reach it, because I am too fucking human. It really is a weakness to feel things. You need "sang froid" (cold blood) to do the
important stuff and really make money. I am still working on this... :/
Meanwhile - on the topic of blowing the fuck up completely - and taking down all your investors - there is more than just a little bit of history on
Ok, so we know the clever boys, the clowns, the genius-types, the pros and
the fraudsters all blow up and kill their investors capital. They do this *regularly*. What is a sane and rational investor to do? How about: Buy some good stuff, hold on to it, and make sure it throws off a good dividend
stream, and is not owned or run by criminals or idiots. In otherwords, find good stuff, buy it, and hold it. This can work, sometimes. Sort of. Mostly. Except when it doesn't, of course. :)
But really - the best thing to do - is learn the goddamn game - and suit up and enter the play your self. You may get the living shit kicked out of you. But maybe not. Try to make wise decisions, and realize that the guys on the
other side of each and every one of your trades - probably have more money, and better knowledge than you do. But not always. If you can learn just to hold your own, and not get crushed and stomped - like a rat in a closet (Hunter S.
Thompson's expression - the guy who wrote the book on the Hell's Angels in California) - then you might have a chance. The trick is to take - when the risk-free interest rate is 1/2 of fuck-all - the trick is to take 4 or 5 or maybe 6 or 7 percent (or
better) each and every year, out of the fucking market.
Maybe you have a good year - and make 20%. But then you have a stinker, and lose 30%. Try not to do that - and that is rather hard. Being active is shitty now - because
so much is stacked against the average little guy. The automated algorithms are *really* good. Chances are, if you buy and sell - your counter-party will be a software-controlled machine, making statistical arbitrage type decisions - and it will
just grind you down slowly into the dust and dirt.
But keep learning - reading, researching, model-building, AI-system building - whatever. Try to hold your fire until you see *really* attractive situations - and then go in big and as hard
as you are able. But be willing to "Run Away!" if wrong. (Like in Monty Python's "The Holy Grail" => King Arthur's command: "Run Away! Run Away!..." In trading - it is often good advice, if the trade is not making money.
Just remember - there will still be armies of liars, cheaters, fraudsters, government thieves and all the other wild rats nests of bad folks aiming to kill you, and take your money. Same as it always is ... :)
9, 2021 ] I've made detailed studies of how and why guys (it's always guys) blow up as traders. From Jessie Livermore, to the Meriwether's LTCM, to Soro's Victor Niederhoffer, Barings Bank's Nick Leeson, and Société
Générale trader, Jérôme Kerviel. And so many others - such as the details of the South Seas Company (the great English "Bubble") and what eventually happened to the company (a great little essay by Charles
Lamb in his "Essays of Elia" - the first little story in the 1905 edition is: "The South-Sea House".
Does anyone remember "IOS" (Investor's OverSeas Services) or Dome Petroleum? Or how about Nortel Networks or Royal Trust or Laidlaw Transportation
or even General Fucking Motors? (Their secret Detroit motto: Buy our cars, we fuck you. Buy our stock, and we work with the Government - to *REALLY FUCK YOU*!) Or how about Lehman Fucking Brothers? Remember them? :)
If you were long and concentrated in any of that shit (True Confessions: My Dad had IOS stock, I used to try to short Nortel (since I knew it was a money-losing shitshow run by idiot fuckwits, and enabled by corrupt government toadies - but I could
never hold the trades - always got bid up on me, and I had to bag out) - but any of it - if you owned it big - you blew up and got carried out.
I met two old folks at a Starbucks who had some fuckwit broker put all there money in Nortel
- and then hold the position until it went asymptotic to the zero line. It's fascinating - this pattern just repeats and repeats and repeats. (I had thousands of GM shares. Once I was down 50%, I sold most of it. That hurt.)
I did a really stupid dumb-assed thing once - and lost half my money. I had to turn on automatic, pre-programmed behaviour to pick up the phone, and close the position at a monster loss (my 50% rule. You lose half - and you are automatically
out.) I remember the broker trying to talk me out of selling the shit that eventually went to zero. I remember walking up Yonge Street, feeling numb and in a trance. But by the next day - the City and I were still there, and I decided I just had
to be more careful in the future. There are bad companies, crooked schemes and - and - there are the dumb guys (like me, when I was young and stupid) that hold and invest in this goop and sludge and muck - and get crushed.
It is like
learning to fly airplanes - but without an instructor. You prang a few air-craft. It gets a little expensive. But some sort of worm-of-desire keeps you on track, wanting to learn more about both the process, and your own self.
then, there are also the good and honourable fellows - who just take on TOO MUCH RISK - and a magnified minor burpfart in the price series completely destroys them. This is different. They *MUST* know better. (They must, right?)
So, the Bill Hwang story has caught my attention - and I have been researching it. It might be the biggest, fastest vapourization of one guy's private wealth - in all of history. I think the fellow was a good and honourable man - and also a
fair-dealing fellow. His story will be (or at least should be ) taught in schools. I honestly hope he comes back. He did nothing illegal - and his actions did not hurt the market. He was just heavily (heavily - like FIVE
times - margined (retail traders are only allowed to be 1/2 times margined - ie. if you have 1 million dollars of stock - you can borrow 500,000 dollars - not 5 million dollars.)). But if you are 5 times margined, and you have to market-to-market
your swap contracts-for-difference every night - then a 20% price delta WILL PUT YOU THE FUCK OUT OF BUSINESS BY REMOVING ALL YOUR WEALTH. Jesus Christ - I want to scream - this guy MUST HAVE KNOWN THIS. He was - is - most probably not a stupid
person. He did this on plan, my super cynical inner-trader whispers to me. He wanted this outcome.
I think - sub-conciously - this guy WANTED to self-destruct in this manner. He wanted to show how GODDAMN GOOD he was to the whole world.
I don't think he would even admit this to himself... But I think this has to be part of the explanation.
Each of us has the possibility of the worms-of-madness being inside our thinking process. Every single person does, I am sure.
Neuro-science research and modern Behavioural Finance experiments demostrate this truth - consistantly.
Like in David Bowie's death-song, "Lazerus". "Everybody knows me now. I've got nothing left to hide (or was it "lose"?)".
Eventually, secrecy just gets really, really boring and annoying. We all know Bill Hwang now. Like that Korean airliner crew: Captain Sum Ting Wong, First Officer Wee Tu Lo, Navigator Ho Lee Fuk, and Flight
Engineer Bang Ding Ow. (This was on CNN, so it must be true, right?) In Greek Tragedy, the hero has a fatal flaw. And the Greeks wrote Comedy also. Comedy and Tragedy are tied together, like co-joined twins. We need them
Oh, and remember Enron? Fastow and Enron? Jeffery Fucking Skilling? It just keeps coming and coming and never ends. It is how we are wired, it seems. You have to laugh - Bang Ding Ow indeed. (The airport
fire crew, rushing to rescue the people from the crash-landed Korean Airliner - drove over a young girl who had simply fainted on the grass, and killed her. The Americans to the "rescue"! What can you say?)
Poor Mr. Huang was a god-believer.
And of course, that is so wrong and tragic.
Dear Mr. Hwang - I have to tell you this - honestly, trader-to-trader, and as someone who respects Asian culture deeply - "God" is an asshole. You *cannot* and must not rely on that silly
prick - because he does not exist. God is an artificial mental construct. He exists only in the imagination of humans.
We are on our own, in a maelstrom of Chaos. That's why risk management is so important.
You need that, to keep your charitable programs like LINK, running. We are the only gods there will be. Without us - goodness just disappears completely. Humans create and define what is good. Honestly - there is nothing else there.
That is why moral action is so important. We are all there is. Without us, there can be no morality at all.
Bill Hwang - I hope you can come back. Don't die yet. You still have work to do. Put
the Bibles in the dumpster. Read better, more accurate history books. And have better risk-control next time, eh?
Every investor should read Jessie Livermore's life story - not just the "Reminiscences..." book by Lefevre (which
is very good, yes). Livermore's story is a classical tragedy - and an important lesson for us all. Even if we have nothing at all to do with the financial markets.