Have to post this - I actually found out what is wrong with this Bank Stock that we hold - by digging into my 1934 copy of Graham and Dodd's "Security Analysis". This Bank Stock yields over 6%, it has satisfactory Basel capital ratios, and it is trading at 8 and 1/2 times earnings. WHAT THE HECK IS WRONG HERE??? This piece of shit has been FALLING LIKE A SMALL STONE IN WATER ALL YEAR, and nothing seems able to sustain it. This is more than just interest-rates rising. Just after I captured this image (from a trading platform we use), this ugly little thing went straight down another 20 ticks. It's like one of those nightmare scenarios - if we sell this, we get no dividend, and our income takes a big hit. And all the Banks+Financials are in the toilet today. But this one we hold, is showing particularly nasty action.

The AI model said to hold, shares look to be turning upward. But the ancient (and curiously useful) technical indicator stuff, said it will likely crater. We know (again) which one is right.

What I really detest - is the cowardly "Analyst community" that will not put a SELL on this sort of equity, when it is on the rocket-sled down the toilet. The analysts all work for the banks, and so they put "HOLD" or "Market Perform" or other silly weasel-talk like a politician does.

The answer to what is happening, is right there, in ye old Graham and Dodd's most excellent work. (And it's not just bank equity acting like long-duration bonds...)

I will post this info, on the Dec. 5th log-entry later, (page down past the images, to the log..) I feel like a right fool, for not grasping how bad, this kind of stupid-bad investment can actually be. I now have another BIG MISTAKE to add to my great long list, of BIG MISTAKES I have made.

But it's ok. You have to do this. You have to swing at a few that look viable. But if I was running one of these big banks, I would run the show with some sort of attempt to engineer a bit more share price stability, and a better sort of asset-liability matching, than what still appears to be being used.

And lets be clear here: The big Banks in Canada are regularly screwed-over by the politicians in Ottawa, that are pretending to be our federal government. Banking - safe, sensible, low-risk, well-run banking - is one of the things we do very well in Canada. So what do the Liberal clowns in Ottawa do? They put serious *extra* taxes on the banks, to screw them over, and steal their profits. This really makes me ANGRY - since those bank profits BELONG TO ME, (and others) SINCE WE ARE THE SHAREHOLDERS - but instead, our little PM clone and his crocked henchmen, expropriate those profits, so they can funnel funds to their skank buddies. Sure, this happens everywhere now, but it is nasty when it hits home, and blows your own asset base to hell.

This sort of programmed abuse of equity holders, needs to be fixed. So much here is wrong, and needs to be corrected. Like the ugly, abusive way that dividends are double-taxed in Canada. It is just political-science-fiction level stupid. It Really needs to be fixed. The successful, well-run enterprises are punished - at an increasing rate of punishment, the better they do - and when their dividends are paid-out to shareholders - the dividends are "grossed-up", so that the shareholder not only has to pay tax on a bogus amount of money that he did not even earn - these dividends have already been taxed, at the enterprises corporate rate. Sure, one gets a "dividend tax credit", but that is way down the list, and an honest shareholder person has to file a tax-return that shows a fictional number that has been artificially increased by this absurd "dividend gross-up" tax-trickery. You end up reporting a fake (higher) income number, that does not reflect the shareholders true, actual income. And this "grossed-up" number - this *fake* income number - is used to tripwire all sorts of nasty tax-traps.

It's completely silly, and it makes dividends unattractive now, given the trickery that our "Federal" government engages in.

But the clever Mr. Market figures this out - and he sells out, and walks away. Or these days, maybe he sells and he *runs* away - that is what it looks like. This is a silly, not-good outcome, and can and should be corrected.

The Only Trade that Really Matters - How Good a Trade, is our National and NATO-Level Security?

Well, in our opinion, it is not bad. We particularly like the new re-furbished B61's, that can be "delivered" (like an Amazon package, eh?), using the F-35 super-stealth platform, with all it's little bells and whistles. Bloody thing finally seems to work, which is good, since we might need them all. We would like the see good old USA put together some new stuff, and move back towards the large numbers of the late 1960's, since we now seem to be in a similar kind of extreme-threat environment. The Russian lies are growing into monster whoppers now, and this is not a good sign for the future. One way or another, we are gonna have to do something, and maybe pretty soon. Putin is seriously insane, and Xi has just put all his toad-boys in charge of China, and they appear to be spoiling for some action. We need to "stand on guard" more then ever now, no choice. It's the only trade possible that matters.

Just because a trade is risky, and involves some pain, it still may have to be established. There are times - sadly, when the entire dance-floor is threatened with destruction - when *everything* - even the Marketplace - has to become a battlefield. When war *must* happen, then it is best to commit to winning it, with everything you have at your disposal. We must accept and act on this truth. The Market is not a battlefield - but sometimes the whole World must become one. If this reality is forced on us - then we better get our act together, our technology in gear, and bloody well win the coming war by focusing all our efforts in that direction. Our fathers and grandfathers did this.

And so can we. It is the very essence of what we are.

The "Long Equities.." trade might be over. And this might not be a good thing, at all.

The Kids Are *Not* Alright. This "security" - (what an amusing name for a very insecure thing) is a Canadian Bank stock, and it has just fallen another $2.00/share, as I key this, on Oct. 6th, 2022. We don't own any, but we did, once upon a time. Killing our own banks might not be a good idea.

How exactly are dialed-up Bank of Canada rates and jacked-up USA Federal Reserve rates, going to fix the high oil and petrol price problem and the OPEC+ new supply restrictions? How will 25% loss of private equity portfolio values, and massive increases in debt-service costs for mortgage holders and businesses which have revolving credit lines, induce lower product prices to be offered?

Consumers will *strike* for higher wages and/or salaries, and businesses will raise their goods-and-services prices, to pass through to the final demand vector, their higher operational costs.

The models that the "government economists" are still using, are basically wrong. And guys, we goddamn well learned this lesson already, back in the 1970s, with both Nixon in the USA, and Pierre Trudeau in Canada, trying various idiotic schemes to reduce the oil-shock-triggered inflation spiral. The 1970s inflation was due to USA's cost of the Vietnam War (an insane, stupid unwinable war, like Putin's insane war is now), which forced Nixon to abandon all traces of USA's "gold standard", combined with the rapid increase (more than doubling) of the price of crude oil, in 1973, by the original OPEC cartel.

Gov-guys, go to your datasets, and check the numbers, if you doubt me. I worked, as a summer-student Junior Economist, (a CR-3, the very lowest classification in the Canada Federal Civil Service), for Trudeau's "Anti-Inflation Board", which implemented Trudeau's wildly unsuccessful Wage and Price Control scheme, in 1976. I got datafiles, (tapes, really!) of all-Canada economic data, and wrote computer programs to see what was actually happening. Increased prices (from higher costs, including debt-servicing costs) would just get passed forward, as higher prices for products, or fees for services. Raising rates did *not* reduce inflation. It just added more costs, since the inflation was *not* driven by too much demand. A new word was invented: "stagflation", where the economy slowed down, unemployment went way up, jobs were scarce, and business was bad. And, we had serious inflation, and interest rates in the 8% to 11% range (since inflation was also 8 to 11%, or even higher, for energy-prices. Trudeau and others tried price controls, which then did even more economic damage, and governments bought oil an gas companies, and tried to create "Made In Canada" prices, and decouple our internal prices from the world prices for oil and gas products. These programs were spectacular failures. Know this.

You have to fix the structual issues, and re-connect investment with savings, so the financial system can work right. High interest rates alone, will not do this. Somehow, you have to increase productivity, and lower factor costs. And the key parameters to adjust are technology, technology, and technology. (Lower taxes, which means lower, more efficient and reduced government spending) also help. They help a lot.

It wasn't so much Volker's 20% interest rates that fixed things, it was the massive and significant uplift in our technological capabilities, that saved us. That, and in the USA, the Americans got the hell out of the Vietnam mess. And We learned how to build cars with engines that did not pollute the air. How? By using cheap computers - where CPU's fell in price from $250,000 per unit, to $250 per unit, and kept falling.

I've researched this. Volker's 20% super-high, business-destroying interest rates, were actually just nasty noise - an unwise action, done by an unwise person, who honestly believed that "putting sand in the gears" of the financial machine, was maybe a good idea. It was not, and it is not. Know this.

We must stop being foolish & stupid, people. We must learn from our own history, and not do unwise damage to the financial machine. It is a beautiful machine, that channel's savings into investment, and lets the World pull up itself, by it's own economic bootstraps. Please learn this.

If you cannot trade, you can still build. We've set up a position that will need some time to develop. Unless we have a collapse like 1931, we expect sanity to be restored to the market next year, and inflation and sanity-restoration driven by leadership changes, will motivate substantially higher stock prices, eventually.

And our analysis confirms, real-estate investments, which can be *improved*, and have attractive characteristics, are oftem *vastly* better investments than most kinds of "financial paper", which can often be discounted far below the original value it was acquired at. The markets actually often destroy substantially more wealth, than they create.

Since we are in a time of madness, where very unwise and foolish leaders are in control of most nation-states around the World, we anticipate major changes will eventually take place, at the top, in political agencies, governments and businesses. For now, we must sit tight. But with our human energy, we can build. That is itself, a viable trade.

Summer Engineering - The Great Dock Repair Project: My dock was destroyed by the ice last winter - folded up like an accordian and smashed to broken bits. I had to build a crib, fill it with rocks from the old crib, position some remaining structural pieces (old surplus electricity poles), build a superstructure of wooden beams, and create a couple of new decks. Just completed this week, in the nick of time, as we are running out of summer. Tomorrow is the first day of Autumn, and the weather tends to turn, like a switch gets thrown. Leaves are already changing colour, and rain and cold nighttime temperatures are in the forecast.

Kind of like the World. But once the nasty weather passes, spring & summer tend to come around again. And the cold, clear sunny winter days, themselves can be very lovely. The gamble, of course, is will this new structure survive the winter? One never knows for sure. Massive destruction seems to be the one constant we can all count on having to deal with in these strange post-modern times.

Sept. 17th, 2022 - The AI is pointing DOWN with a vengence. We remain long, in spite of this. so far, this has been a sub-optimal strategy, to say the least.

We face the old problem - the computer trader thing, is better than the human. But the human likes to get the dividends, and the AI is not concerned with this requirement.

Aug. 17, 2022: This forecast from the AI seems insane, and I suspect there is some kind of flaw in this projection process. But this strange (and maybe incorrect) forecast projection (the green line), seems to have curious predictive value. When the curve swings to an extreme like this, it seems to be followed by market movement in the same direction. FD: We hold this security, and our portfolios remain fully invested in equities. We find most investments offered to non-professional investors are either unattractive, or keyed to market fashion and/or have not-good risk features associated with them. Gerald Loeb wrote a book called "The Battle for Investment Survival", and when I was young, I thought the title was a curiously extreme. Of course, now that I am not young, I recognize the accuracy and wisdom of that title. (Note: We recommend the book. My copy was given to me by a guy I very much respected, who died in a foreign land, trying to protect his company's investments.) Loeb was an honest broker, a good investor, writer, and a fine fellow. And he was right. Investment is like warfare. It is a real battle, just to survive and prosper. Know this, as great are the forces that will be arrayed and deployed against the honest investor.

Our data research and our AI stuff, gives us a tiny edge. We are still learning how best to exploit this edge. - M.

Patterns in the Neural Forest-2 - studies in evolution and devolution. Our "Picture of the World" looks a bit like this image, which I captured a few cycles back, in the forest.

But I have not put enough emphasis on the problem of fraud, deception and carefully crafted dishonesty. More and more, as we do our research, we discover that deception is the great force that drives the engines of the political world. And that ugly political world, dominates us all, whether we know it and realize it, or not. It takes effort, time, focus, determination, and real concentration, to see things as they truly are, and not as our counter-parties would have us see them. This most necessary skill, can take a lifetime of serious effort, to even begin to master. Know this, as it is your only chance to win the World.

You will be bombarded with a rainstorm of lies, all the time. Each of us must seek our own path out of this wild rain of deception, that this ongoing human storm produces. There will be no gods to help you - only your own knowledge and your own efforts to enhance and improve upon that knowledge and turn it into action, will be of value. Know this also.

Aug. 17, 2022: There was so much negative nonsense talk. Our AI stuff pointed down, market went down, and then, near the point where we might have had to exit, the AI turned up. At first, market continued down. And then, market turned up. And both the AI and the market, continue to re-trace upwards. In this inflation environment, this makes sense, and is seen in historical examples. But the AI saw the turn first, and it kept us in. The AI is mechanical, it is not aware. But we are aware, and this awareness can be targeted by methods dangerous. The AI lets us step back, and remove the human (me!) from the process. This seems to improve investment results. Our recent research suggests that if we wired the AI results more directly to the trading process, results would improve even more.

We remain long, all in, fully invested in equities, with a bit of margin. Curious times.

[July 1, 2022 update] - Just to be clear, we remain long, invested in our positions, despite the 20% downturn. We expect difficult times ahead, but the valuation metrics remain quite attractive in the financials we hold, and we expect the brutality of the expected downturn to be so great, that it will provoke a reactive response on the part of the governments and central banks, and be fairly short term in duration. Once the Central Banks realize their actions will do serious economic damage, and the governments will realize they cannot sustain the high debt-service costs, without runaway fiscal collapse, we suspect sanity will prevail, and rational, structural policies will be pursued, instead of this rapid, reactionary knee-jerk monetary policy. Governments will have to cancel their "Green-Nazi/Global Warming" tax policies, encourage oil-production, make more direct longer-term plans to support the needed infrastructure for an "electric economy", build several nuclear plants, reduce tarrif barriers and other trade-restrictions that are degrading supply chains, and perhaps the USA might actually offer Ukraine the necessary weaponry it really needs to address the illegal Russian invasion. The solutions to all our current problems are lying there on the table - all that is lacking, is the political courage to simply pick them up, and deploy them.

If the current crop of political people are unable to act, then we are most likely to correct the local insanity, and install new political actors who can get the job done.

Historically, our banks have been able to weather these government changes, and retain their ability to provide prosperity to our homeland and it's people.

Longest Day - June 21, 2022 - From the Northern Lake property we have. Very lovely weather. Makes one think: "What then must we do?" Wasn't it Tolstoy who said that first?

https://en.wikipedia.org/wiki/What_Is_to_Be_Done%3F_(Tolstoy_book)

We moved the AI Forecast experiment results to "Forecasting" section.

Old traders develop instincts, and they know about "puke points", which are typically well below usual "stop-loss" points. The trade unwinds to the point, where survival is threatened, and your stomach tells you - close this position, or keep vomiting. You have hit your puke point. It means forced selling - or at least rational, survival-driven forced selling - you want to stay in the game, and not lose all your capital.

Put your ear outside in the big cities of the world, and listen carefully. That awful rumbling, retching sound you can just make out, is millions of traders and investors, who have reached their puke-points. It's not a nice sound.

Big reactive-response Friday, DJIA up 587 as I key this, SP/TSX up 342. Positive day, but financials are lagging, many only up half or three quarters of a percent. Forecast by the Market is for Recession, with sporadic periods of Depression-level shifts. Our sense is that this is overdone, and most of the inflation is due to broken supply chains, and dysfunctional labour markets - and Central Bank fiddling with interest-rate increases, will just stimulate more unwanted inflation. So, we expect rate-rises to moderate, once the Central Bankers realize they are just increasing the overall price level. Rate rises are inflationary. They can only work, by causing investment demand-destruction. Rate-rises *must* trigger recessions in order to operate to be deflationary. This was learned in the late 1970's to early 1980's period. Go look up and read the literature. Structural repair efforts to fix the supply-side systemic damage, will be much more effective at reducing inflation. Once the Central Banks realize they are adding to inflation-pressure with their rate-rises, we expect them to pause, and seek to limit the damage they will be causing.

This will make for difficult time for investors - but a wild casino of funhouse economics, for hard-core speculators.

In all honestly, the best model to assess "investment" action, is to go to Las Vegas, and watch how the sheep get sheared. Most gamblers die broke. These same games-of-chance algorithms drive most market processes - except the range of outcomes is not bounded by the limits of the card-deck, or the number of numbers on the roulette-wheels. (Variance is unlimited...)

Know this: In a world of paper and digital "money", the role of the markets is often to *reduce* wealth, so as to counter the runaway characteristics of compound growth. Without Bear Markets, every family becomes billionaires, after a couple of generations of compound-growth investing. Markets must crash hard, repeatedly. Resets must happen, like in Japan, Germany, and many other nations, after the Second World War. We are concerned that we might be tracking towards this outcome. Too much "fake wealth" has perhaps been created. Fluid and functional markets - and/or corrupt "socialist" governments - are effective at making this paper/digital wealth simply "go away". Caution is indicated.

[April 7th update:] The forecast curve turned down a few days ago, but I was busy with something else. At least the model worked well, even if the human trader failed to move quickly enough. See "log" section further down, to see why moving quick is important... We probably should have just stayed out, and not repurchased, both the model and the actual stock prices are tracking down now, and all government actions in Canada and USA are acting to amplify this weakening process...

[ Mar 23, 2022 ] - The Russian Terror War in Ukraine is insane. Putin is a madman, and a Holocaust is taking place in Mariupol that is both deeply unacceptable and will also have very far reaching consequences. We closed out our position in this testbed equity position at a profit. First time in my life I truly fear for the future.

[ Mar. 25th Update: ] Fear of inflation and historical research induced a full re-purchase of positions at a lower price level. Crazy but necessary.

[ Mar. 18, 2022 ] - The AI projection is now positive - the C-Machine Forecast (green line) has turned up. Confirmed by todays action, which seems counter-intuitive. (Very unusual, extreme re-trace action of our testbed security at the close - with heavy volume. We feel like the Forbin Project here ( there is another system, isn't there?))


What is so interesting, is that the model turned up, shortly after I posted the Feb 2nd-3rd note, (below). I re-acquired the full position, and have retained it, since early February. The market and the model stabilized, and we traded - and did well. Using an AI model is curiously helpful, as it removes some of the stress a speculator feels (as is evident from reading the Notes below!... - so interesting, really.) You have to keep notes. They provide the context you need, to see how the winds-of-change, and the storms-of-chance swing your own perception of things around.

The AI model, allows one to gain a real-time sense of perspective. We remained long, after re-entering on the long side in early February. And even with the horror-show of the Russian terror-campaign inflicted on the Ukrainian people, which began Feb. 24th, we have remained long, and done ok. The goofy market reaction to the completely signaled Federal Reserve rate increase, was interesting. (Mkt up in AM, zooms down negative, and recovers, zooms up, to close on strong and very positive tone).

I've been busy, but I will post a current (mid-March 2022) chart. Crazy, weird times - like I thought I would never see. We are seriously certain that Vladimir Putin has become insane, and/or is suffering from early-stage dementia. His actions are both stupid and evil. So very curious and surprising. He is not showing "strength" - he is showing self-destroying madness. He has blown up a rich and successful Russia, and replaced it with an insane, murder-State driven by deception and tragically pointless cruelty. The Ukraine Terror-War is pure, self-destructive militarized insanity.

This is a site for showcasing the results of our Artificial Intelligence research in the specific domain of financial markets, so we present this Feb. 1st forecast, here on Feb. 2nd, Ground-Hog Day, 2022.

Our forecast has turned cyclic negative (the green line in the chart), in one of our stocks which we have been using as an experimental testbed. FD: (Full Disclosure) We unloaded a profitable position in the trading portfolio, and retained a medium-sized postion in the non-traded portfolio.

We have a series of what we believe to be market-negative scenarios, for which we attach significant non-zero probabilities to their outcomes. And as analysts, we caution that inflation-fighting rises in government-administered interest rates, may not be as positive for financial firms, as many believe will be the case.

Storms happen - both in weather and in marketplace economics. History teaches us this repeatedly.

PM: (Feb. 2, 2022) It's interesting just how *wrong* this forecast is proving to be. The financials are continuing their upward march, and the DJIA and TSX index values have flipped from flat-to-negative, to firmly positive in a co-ordinated way. We typically make money in the trading portfolio - but not that much. It is the non-traded portfolio, that is doing so much better. Virtually any sales, in the non-traded portfolio, over the last several years, have been regrets. We have endured some extreme swings in the value of both portfolios, but the non-traded portfolio is doing *very much* better (by something like > 30%!), than the trading portfolio. We went to cash, and (yet again), it appears to have been the wrong decision. And yes, all our historical research points the the impossibility of calling market turns, and the attractiveness of trend-following over mean-reversion strategies.

We have been working on this problem of calling turning points in financial market prices, since the 1980's, and we just keep getting the same results, across different markets, and different world economic environments. It's quite uncanny. That's why I post the results here. We really don't have enough data to know if we have discovered anything significant - but repeated real-world action (we actually make meaningful bets in the markets, based on our research results) has confirmed a few things.

And of course, the professionals know these same things, and so market behaviour - as more and more detailed data on investment action is generated - more and better (more profitable?) action becomes possible. And yet, wild randomness (not *tame*, where you know the real distribution of possible results, and can calculate real probabilities) is mostly what drives reality. It just is. It's just the fact, Jack. Each person can invent brain-fictions (like religion, for example), and impose them on others using various means - but randomness is king. This is hard for a goal-seeking neural-net to accept (eg. "our little gray cells", to use Agatha Christie's Poirot's term), but it is the truth of things.

So, the scenario here today is strange. I made over $4000 on this trade - and yet because I closed out a position that was on a flying run, I feel like a right fool, of course, despite what this model suggests is the future path of the market price, as the market price continues to run up. Profitable exit action, is sometimes very unwise, and I feel this might be the case today. (Jesse Livermore specifically warned against this action...)

One never really knows. This makes this business, extraordinarily difficult, and deeply unpleasent. If it did not make us most of the money we need to keep the lights on, I would not do it. Honestly, I much preferred working as a programmer and software developer. Actively trading the markets - especially in the social-isolation that Covid-19 has created - is truly awful. But until you have done it - you simply cannot understand just how awful it is. To really make money, you need to rip apart and re-program the internal reward-punishment control-systems in your own mental makeup, and this is both difficult, and risks making a healthy person become unwell, in a number of curious ways.

It is now time to go cut down - and then cut up - a tree, and disconnect from the madness of the markets for a while. :)