A Covid-19 Fever-Chart of One of our Positions in the Market. Chart is daily percent change in market price of the stock. More than a few standard deviations, eh? (max at 9.2, by our reckoning)... Every few years now, we get this stuff that "should only happen once every few hundred years or more" yatta-yatta. Maybe the lads who use models like that should be sent back to school for some remedial education? :)
Note: The right statistical models actually work pretty good, even if the Statisticians do not operate quite right... :D What is funny, is that lots of guys have written much on what is really likely to happen - and what always in fact, pretty much does happen.
Nowadays, everyone seems to know everything knowable - but that still leaves a very large ocean to float your boat in.
[Note: Here, I will let my *inner trader* speak in a clear (foul language) voice. Maybe even NSFW, is this section. Truth matters. Trading and speculation seems to be in my blood and DNA, not sure why. I might even
post pictures that are NSFW here. You have been warned. Exit this section, if easily offended. ]
[ 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 money! :)
[ 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 be soon.
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 nervously uncomfortable.
[ 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 wide-eyed astonishment.
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.
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 my. (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 airport, right?
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.
That 1-for-8 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. )
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 confused. :)
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.
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:
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. :D )
[ 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">
<circle id="left_outer_ear" class="st0" cx="125.6" cy="117.6" r="31.4"/>
<circle id="right_outer_ear" class="st0" cx="289.6"
<circle id="left_inner_ear" class="st1" cx="127.2" cy="119.2" r="15.8"/>
<circle id="right_inner_ear" class="st1" cx="285.2" cy="118.2" r="15.8"/>
id="face" class="st0" cx="208.2" cy="190.4" r="99"/>
<circle id="left_eye" cx="177.5" cy="159.1" r="8.2"/>
<circle id="right_eye" cx="238.5" cy="160.1" r="8.2"/>
<path id="right_eyebrow" class="st4" d="M280.2,160.2c-50.2,-29.2-52,-8.4-71.2-0.8"/>
<path id="snout" class="st2" d="M263.4,217.4c0,34.4-24.7,62.3-55.1,62.3s-55.1-27.9-55.1-62.3s24.1-43.6,54.5-43.6
<ellipse id="nose" class="st1" cx="208.1" cy="205.4" rx="26.4" ry="10.4"/>
<path id="mouth" class="st3" d="M243.2,247.2c-50.2,-29.2-52,-8.4-71.2-0.8"/>
<!-- <path id="mouth" class="st3" d="M243.2,246.2c-50.2,29.2-52,-8.4-71.2-0.8"/>
<!-- <path id="mouth" class="st3" d="M243.2,234.2c-20.2,19.2-52,18.4-71.2-1.8"/> -->
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.