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. ]
[ 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.
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.
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.
If you're 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.)
"Starship Troopers" 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).
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.
(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?
[ 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.
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.
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"
<?xml version="1.0" encoding="utf-8"?>
<!-- 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" x="0px" y="0px"
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"
<circle id="right_outer_ear" class="st0" cx="289.6" cy="117.6" r="31.4"/>
<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"/>
<circle 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="left_eyebrow" class="st4" d="M210.2,160.2c-50.2,-29.2-52,-8.4-71.2-0.8"/>
<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="M243.2,246.2c-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
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 it? :)
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
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.
Very curious 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.
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.)
The rising 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
[ 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.
Bill - I have to tell you this - honestly, trader-to-trader, and as someone who respects Asian culture deeply - God is an asshole, if he exists. You *cannot* and must not rely on that stupid
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. 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.