November - 2017
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
1
 S&P +2.00
 USB +0.09
2
 S&P +1.90
 USB +0.23
3
 S&P +6.00
 USB +0.60
4
5
6
 S&P +6.00
 USB +0.18
7
 S&P -1.90
 USB +0.15
8
 S&P +4.10
 USB -0.11
9
 S&P -7.00
 USB -0.15
10
 S&P -4.40
 USB -1.18
11
12
13
 S&P +2.30
 USB +0.03
14
 S&P -4.00
 USB +0.15
15
 S&P -12.80
 USB +1.04
16
 S&P +20.00
 USB -0.14
17
 S&P -8.70
 USB +0.07
18
19
20
21
22
23
24
25
26
27
28
29
30

Nov

17

The price price of BTC is unlikely exceed 8,000 by much - a reader

Do you play poker? If so, have you ever made money from listening to the people watching the game?

The top call is interesting, but it would be a lot more interesting if you put money on it instead of making paper trade calls, as you have been since BTC was trading at 400.

I suggest 3-6 months of consolidation now that the 2x fork threat has passed (today) without drama.

The rest of the crypto market (i.e. alts such as ETH or app utility tokens such as REP) has been pounded indiscriminately in both BTC and USD terms since August. The attention has been entirely on BTC and its forks, with BTC dominance (market cap of BTC as a % of all crypto) climbing from 40% in June to briefly over 60% last week. The alt bear market has been relentless, taking 75% - 90% off the value of coins for solid, valuable projects with serious PE/VC backing.

Several of these apps will launch on the mainnet to great fanfare in the next few months, and will lift the price on many alts, including some that are undeserving. Coinbase/GDAX will begin allowing trading of some of these in January. Currently they only allow trading in BTC, Ether (ETH), and Litecoin (LTC). Coinbase is all that many new crypto investors know of the market (USD and crypto deposits are insured).

Also, now that Coinbase/GDAX has launched a custody program for digital assets, competitors will follow suit. Soon, institutions will have no compliance barriers to holding crypto and hedging with futures (launching this month on CME) or options (January on the CBOE).

But Wall Street and the CME are latecomers to this party, and with a few exceptions, haven't yet had the opportunity for many "liquidity events" such as what an equity IPO represents. I don't see a close analogy here. Most of the BTC that can exist has already been mined and is available to trade. Anecdotally, I know quite a few serious investors who are clueless about crypto who are champing at the bit to "short the bitcoin bubble" via futures. They haven't bothered to read any of the educational materials I have sent them, don't understand the market beyond what they read in the WSJ and Barron's, and have little but rock-ribbed certitude to justify their position. I expect them to get their education the hard way. IMO in the near term the debut of futures and options will create a tug-of-war. What someone treating it as just another financial asset does not understand is the degree to which network growth, miner hashpower, and difficulty adjustments have on the price. There are, in other words, fundamentals that are reflected in the long-term price trajectory, and complex stakeholder relationships.

I don't call tops (or bottoms), but I do expect a trendless consolidation period for BTC. Consider that following its 4000% run to 420 in June, ETH has traded in a range of 130-380, with trading action concentrated in the high end of that range. I expect ETH to rally while BTC stalls. Price growth has lagged network growth by a significant margin since June, and several of the closely watched use cases/apps are about to launch, which will increase network utilization significantly.

Nov

17

Today we had four people ask us about the likelihood of a current liquidity problem. Someone out there in Financial Journalist Land remembers the last line of the journalist in The Man Who Shot Liberty Valence: If the legend is more interesting than the truth, print the legend.

Here was our response (it's very short). As pictures and charts often do, these compel belief.

Mr. Theo writes: 

Thanks Bill. I would also add that historically the flattening of steep yield has been the best environment for equities.

Nov

17

 All the Slabs rest on these three words:  Might is Right. 

I will try to describe life here in a rational and straightforward manner. Human rights are not determined by justice, but my might. Hide it as you may, the naked fist rules and makes or breaks kings, as of yore. All of the other theories are lures and lies once you enter the town limit. 

It is the greatest human example of the Law of the Jungle that I have ever visited. The expression means ‘every man for himself’. I’ve been in every type of jungle around the world, and the code of survival is the same in Slab with reference to the superiority of brute force or self-interest in the struggle for survival.  

The phrase was used in a poem by Rudyard Kipling to describe the behavior and obligations of a wolf in a pack. In ‘The Law for the Wolves’:

Now this is the law of the jungle, as old and true as the sky,

And the wolf that shall keep it may prosper, but the wolf that shall break it must die.

For the strength of the pack is the wolf, and the strength of the wolf is the pack.

Every great Slabber is a lone wolf, for individualism runs strong in this anarchist community. But, when he must, he banks with others, to fight other packs on the trail. Everywhere Might is Right.

The Slabs consists of a warren of trailers and shanties on the dark squares of a checkerboard of WWII cement. The town rises in honor of Woodstock along the open road that Kerouac wrote about. It offers freedom lovers unmatched profoundness in contrast to the surrounding America.

A lion’s share of that freedom is accepting its tenet of social Darwinism. The term is used to refer to various ways of thinking and theories that emerged in the second half of the 19th century. It applied the evolutionary concept of natural selection to human society, especially in isolated ones like Slab City. Scholars still debate the extent to which the idea provisions opposing aggressive individualism. To roll it out into the open, Slab City believes that power, strength and superiority are the mark of a moral human being. Inherent human rights are nonexistence. Human rights instead are the spoils of the conquering man, and only to be enjoyed when they are taken and defended. 

The core Might is Right gives the superior brain and brawn an excuse to take control, and the weaker a reason to violent revolt. ‘And, that’s the way it is,’ as Walter Cronkite might sum the town’s morals. 

Moral values undergo a rampant change on passing the abandoned guard shack outside Salvation Mountain. They are the standards of good and evil which govern an individual’s behavior and choices. Individual morals are sure to differ inside and outside this town, and a visitor who stays long almost always undergoes a paradigm shift toward social Darwinism. There is no middle ground in defending yourself and, either, rising or falling. Strong personalities are built and broken here. 

The key is how to manage to live together? It is an outlaw town in the sense that there are no laws, and every disagreement that I have ever seen – thousands – have been solved by the threat or execution of the sword of principles defined in the Victorian book Might is Right by Ragnar Redbeard. Published posthumously in 1890, it heavily advocates egoistic anarchism, individualism, amorality, consequentialism, and psychological hedonism. Egoistic anarchism is particularly interesting in upholding extreme individualism without regard to how well or ill humanity may fare. It rejects conventional ideas of human and natural rights and argues that only strength of mind or physical might can establish moral rights. The response to the book has been nothing more or less than either love or hatred, which is the same reaction of every visitor to Slab City. It is regularly featured on the most-banned book lists, as this outlaw town is denounced as the most desperado to be shunned. 

The book and town are a veritable political and philosophical earthquake, marking the collapse of a false and depressing ideology that has held sway for 2,000 years. The thought is positively startling. Little of what you know is true. They may take who have the power. They can keep who can. 

Some Redbeard quotes echo what I see daily in Slab City:

‘If a man smite you on one cheek, smash him down; smite him hip and thigh, for self-preservation is the highest law.’

‘The natural world is a world of war; the natural man is a warrior; the natural law is tooth and claw.’

‘Nothing so lowers a lover in a virile maiden’s estimation, than for him to be whipped in a personal encounter with a rival.’

‘A condition of combat everywhere exists. We are born into perpetual conflict.’

‘Every man’s hand against every other man: except where living individuals have formed temporary partnerships. When one partner breaks the mutual agreement, the combine is necessarily dissolved, and all become enemies as before.’

‘Every organism, every human being, must conquer or serve. This is an ultimatum.’

‘Sociology is a biological problem and nations are herds of cattle.’


Slab City supplants the ideal of what is right, beautiful, and pleasant by the terrible consequence that Might is Right. It is fearful to think of what would befall humanity if such were to spread among the masses of people. And it has already begun to spread. 

The Law of the Slabs is that those who are strong and apply ruthless self-interest are the most successful. This is a zoo of predators offering contrast to the rest of USA. It urges us to face reality and deal with life as it really is rather than what we wish it was. The town is not what it should or must be but the way it is. 

I’m open to the idea of the Law of the Jungle having survived it in as many desperate situations as the spots on a leopard. There has been nothing else since stepping into the Slabs. However, it may take others a week to acclimate to Might is Right.

There are a lot of terms thrown around here – ‘Law of the Jungle’, ‘red in tooth and claw’, ‘survival of the fittest’ and ‘social Darwinism’ – but the waffle reduces to Might is Right. The town asks no questions and gives its reward to the strong.

Nov

17

 Slab City is the most recycling city in America. Recycling is converting waste into reusable material. The town is a giant recycling plant where the machines are the people on a desert surface, ever sifting, until the final unusable trash covers the town like volcanic ash. 

The types of recycling are:

For human waste, there are homemade porta-potties or dug holes in the ground, with some compost. One gentleman moves a tripod latrine around, sits and shits, with a blanket modestly covering him, to camouflage his droppings with the dogs’. 

There is no infrastructure of electric, sewage, or water. Everything is hauled in. There is no need for recycling bins.

Basically, the town looks like a checkerboard dump of scrupulously clean slabs kitty-corner to heaps of trash. It’s well picked through because one Slabber's trash is another's treasure. Light trash blows into the desert on weekly westerlies called the ‘garbage delivery’, and the heavier stuff has accumulated like slag over the decades.

No one can afford nor has the transportation to go to the county dump. There is no need to haul discards to the Goodies (Goodwill’s) and Sallies (Salvation Army’s) because Slabbers would have to bus long distances to retrieve them. 

The year-round population of about 200 are the have-nots. The snowbirds arriving by the droves each fall are the haves to dilute the disadvantaged population by 5:1. They put their discards on a 5-acre plot called Walmart, where everyone walks along somewhat organized aisles among cactus and creosote to pick what they like.

Sunday Madness is when the weekend tourists leave behind their valuables. My strategy is to radiate out from Walmart into their vacated campsites and collect items to redistribute among the worthy. I’ve given away a piano, motorcycle, car, bicycles, camping gear, food, clothes, bow and arrow, and musical instruments. 

One man stood at Saturday open mike at the Music Range and declared the town was a garbage dump. The audience knew better, and dragged him from the stage, beat him, and tossed him in the bushes.

Nov

14

"Low Volatility and Investor Complacency - the NY Fed Offers An Interesting Analysis":

As discussed in Robert Shiller's Nobel Prize lecture, the original puzzle in financial economics was why stock prices are so volatile relative to dividends. According to the Gordon growth formula, stock prices and dividends should have the same volatility. In the data, however, stock prices are significantly more volatile than dividends. Since the 1950s, stock prices have exhibited 16 percent annualized volatility. That is almost 10 percentage points higher than the "fundamental" volatility of dividends, which has been closer to 7 percent (for example, see Shiller's annual data).

Shiller interpreted these results as evidence that stock prices were inefficient, with investors potentially succumbing to animal spirits, or "waves of optimism and pessimism," to explain the large variation in stock prices (see John Cochrane's discussion of this view in a Grumpy Economist blog post) . Importantly, however, Shiller's analysis assumed a constant discount rate for computing net present values. Subsequent work provided evidence against this assumption. Time-varying discount rates are now a standard feature of asset pricing models that can explain the excess volatility of stock prices relative to dividends (see Discount Rates by Cochrane or Monika Piazzesi's summary of related asset pricing research).

As shown in the previous chart, today's realized volatility is about 6-7 percent. This level is what one would have originally predicted using the Gordon growth formula, suggesting that the low volatility puzzle is perhaps less puzzling than originally thought. Alternatively, if one subscribes to the more recent asset pricing theories, it appears that current volatility is either abnormally low or that discount rate variation has somehow been dampened, leading us back to concerns about investor complacency.

Larry Williams writes: 

The disparity is because investors are more influenced by price than dividends. Dividends are not a driver of emotions, prices are. The waves of optimism or animal spirits are in response to price changes which may feed upon itself.

Theo Dosis writes: 

Also worth mentioning that Schiller's data is garbage.

Ken Sadofsky writes: 

How so?

You needn't encumber your own studies, but perhaps a reference to anything, somethings - studies, that falsify.

I understand mu((c) or (s))h is too vague and convoluted to falsify; but then why false a void?

I ask, because you speak with authority.

Thanks,

a wannabe learner. 

Nov

14

 An elder affectionately called Elderberry for many years was the town 'Hangman'. He was handed by police and locals the extreme sinners to determine their public fates. He recently passed the gavel to the town Elders as a whole.

The Elders are old heads who appear continually groggy but regularly spurt beautiful answers to perplexing difficulties. Each has tutored for decades under the great instructor at Slab City, Dr. Time. They are tough, resilient, seasoned, and savvy. Prisons and the Slabs do not soften you up; they make you a piece of rock.

It is one thing to be fierce in battle, but it is important also, to be wise in council. The elders form a foundation of decency. They are modeled after the American Indian tribal elders, who are responsible for guiding the culture and philosophy when it goes askew. The elders are older, and have the respect of their own community. Not all are very old, but most are graying. They are closest to reminding me of the outer ring of Elder 'Guardians of the Universe' in Justice League of America comics. The Guardians were a ghostly race of extraterrestrials who are the founders and leaders of interstellar law enforcement. They are immortal and the oldest living things in the universe.

The Elders are watching. In Slab, they are a loose committee of seniors to investigate and deter horrible crimes. The qualifications for each is that he be on the far side of the following equation, looking back through the equal sign: As a child, one day I realized that all adults are imperfect and at that moment I became an adolescent; then one day I forgave them and became an adult; and then in one instant I forgave myself and became wise.

The Elders are not lawmakers, but instead mete out consequences for vulgar acts. It is their function to punish effectively, to remove the irritant and with the same stroke prevent others from stepping in. They meet in a council of texts (difficult to trace), and less frequently, by personal visits or trusted runners.

The situation is discussed, and recommendations made. This is modern frontier justice, also called extrajudicial punishment, which is motivated by the nonexistence of laws in this community. You just don't go out and hit wrongdoers – arson, rob, dislocate, or kill. It is has to be sanctioned by the Elders.

The justice represents what Mark Twain once observed, 'We have a criminal jury system which is superior to any in the world, and its efficiency is only marred by the difficulty of finding twelve men every day who don't know anything and can't read.' The Slab council is operated by men and women who are often illiterate, and able to blank their minds to pass cool decisions.

When a person enters this lawless society he doesn't necessarily agree to abide by the customs, but if he crosses them he becomes liable to the Elders judgement. The due process is that he is clearly warned. If he continues to cross the line, then he becomes an outlaw even to the outlaws. The verbal gavel falls. He may choose to stand and fight, or to flee. That choice is the essence of freedom.

The Elders have evolved a social system over time, a code of moral-political-economic principles, which determines the association of the members of the community. Only in rare instances do they rear up on their sinewy hind legs and roar. They usually hire in-house specialists – arsonists and strong arms – but nevertheless rarely call on old out-of-town relationships to pay old favors. The Elders do not involve themselves in the hour-to-hour bickering that is a part of town life as fleas are to an infested dog.

Ethically, the system is more forthright than regular American law and order. There are only two fundamental questions the outlaw town code must answer in order for the Elders to act: Does the social system recognize individual rights? And, does the social system allow physical force in human relationships? The answer here is 'yes' to both.

People come to Slab City just to disappear, to get off the grid, and they don't want leaders. The citizens without laws are the can openers of American life elsewhere, so their actions should be studied, and they should not be surprised to hear of the Elders taxing duty.

The Slab summer of 2017 will be remembered as the Battle of Good and Evil. It was three hot straight months of daily debauchery that has rarely occurred before. I look at the difference between good and evil as a kind of foul line in baseball. It's thin, made of flimsy lime, and if you cross it, it starts to blur where fair becomes foul and foul becomes fair. The line is determined by the individual according to his moral values. Examine yourself, set firm standards, and you create good and evil in Slab City. If you grow blind to the line, the Elders are the umpires.

Nothing was sacred this summer. The police were useless; even an obstacle. We needed one Texas Ranger, or the Lone Ranger, but lacking him, the task fell into the hands of two traditional strong-arm personalities. They were good, decent men. One was the drug lord who I did medical and legal for. The other was the primary Slab strong-arm and part-time arsonist. Each represented what the Godfather wanted to be. Few in town except the Elders knew they had died in back-to-back methamphetamine heart attacks. After they vacated, wanna-be enforcers quibbled for the alpha position and none possess the chutzpah to pull it off. Without limits, this outlaw town fueled by meth has gone haywire. The atrocities have been sad, interesting, and newsworthy. I started car camping in a widening radius from the center. There, still, I refused to underestimate the decency of the human race, particularly in America. The Elders stepped in, and the town is restored to even kilter.

Slab City is a town of young anarchists in a disenchanted nation, where the council of Elders keep the seams from bursting. Otherwise, I believe it, would evolve into a single strong-arm dictatorship. If you study the portraits of the most brutal dictators in world history – Hitler, Stalin, Leopold, Nicholas II, Lenin, Dada, and Hussein - they share the same facial features. The frown creases run down from the nostrils, mouth line forms a big upside-down U, thin chins, long ears, receding hairlines, and fiery eyes. However, if you could see the Slab City Elders around a kitchen table, there are only the fiery eyes and cheerful structures.

Grown men and women do not need leaders, but now and then they need little reminders. A rebel grows old, and sometimes wiser. He finds the things he rebelled against he must defend against the newer rebels. Even this leading lawless town in America needs some moral guidance now and then.

In schools where our elders are books, I once championed a teaching program in high school to bring in seniors as volunteer teachers' aides. No thrones or crowns, just gray hairs and wrinkles of men and women who had lived the longest to predict the students' futures by reflecting on their pasts. Their rule of accumulated wisdom was, 'Give them what you know, and let the kids make mistakes. Circle the wagons and hammer down if they cross the line.'

The people on the road leading to Slab City pity their buckle-kneed Elders, fearing the day they, too, will join their ranks. The elderly pity the younger generation, well knowing the trials and tribulations that lie ahead of them. Listen to your Elders, there isn't any better wisdom for you. In this way you have the advantage of living life backwards, and that is where your future lies.

Nov

13

Stocks looking pretty vulnerable in here.

Victor Niederhoffer writes: 

Yes. But remember the senator's golden apple and Vince's admonition that you have to be crazy if you're not long and refresh the dimsonian 40,000 a century and see how it works in Nov and Dec.

Nov

13

Reminder that Silver said:

“That Patriots drive took another 5:07 off the clock and actually dropped their win probability from 1.1% to 0.5%:”

AND

he said that Trump had a 2% chance of winning the Republican nomination.

After such low probability fiascoes it’s impossible to believe that he adds information beyond what can be gleaned from the gambling markets. If he were an active manager, you should go with the index fund.

Nov

11

1. Gann's son says rumors about his dad's fortune are false

2. Heiby didn't trade much but had a printing bus that paid bills

3. Senator is bullish but finds it harder to make the triple digit returns any more

4. A certain bear has 30 people writing bearish things for his followers

5. It was hard finding a place to trade during the hurricane in St. Croix

6. Arthur Merrill was a barbershop singer

"The Senator" Larry Williams writes: 

Heiby's business was selling printing presses or other industrial items as I recall, not printing business as such. Trying to locate him and may have a lead. He would be close to 100 now.

Gann's son said he "never saw all the money dad was supposed to have made, we lived simply and in a simple house; dad was a chartist". I also knew WDG's promoter, FB Thatcher. He had the best Gann stories.

Yes bullish long term may have a correction here, but no bear market in sight. Had a good run early this year but equity keeps going up to old highs and backing off–need a break out here but still treading water with equity curve.

Art Merrill was very much gentleman as is VN. Unlike me, Art was very good with details. Details are one of my great weaknesses.

Nov

10

 I have always thought of "If" by Rudyard Kipling as a fully developed trading plan. It's on my wall above my trading desk and head.

Charles Pennington writes:

Even this?!

"If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings"

That doesn't sound like a good trading plan!
 

Nov

8

 While everyone is focused on the no brainer outcomes in VA and NJ, it's quite interesting to observe that Dems swept all of the low level row office positions in the Bucks County and Montgomery County courthouses near Philadelphia.

This is interesting for two reasons.

1. It has never been the case that incumbents got booted out like this, let alone all of them.

2. These two counties flipping to R over the past three decades are a big reason why Rs have been able to do well in Pa. since these are/were the swing counties.

Apparently no longer. They booted out all the incumbent Rs, something which has never happened.

Wow, people must really hate Trump for that to happen. Of course things can change between now and the midterm elections and the next presidential election.

But this is a huge indicator of where things are going, at least for now, and one you may have missed because who tracks row office elections in county courthouses.

Nov

6

 Do you hear that?

This new and sudden silence is deafening.

No crack of the bat. No slap of the mitt. No murmur in the stands. No roar of the crowd. No police whistles as they break up a fight at Citifield. No melodious tones of the announcers as they describe how the pitcher overcame juvenile explosive diarrhea to attain Major League success. Hell, I would go even put up with Joe Bucks annoying cadence and nonsense of the would turn the lights back on and open the turnstiles once more. But it is not to be. The 2017 baseball season is gone now. It had a good, exciting long life-extending as far as the rules allow but it has left the world leaving us only memories of its glory and grandeur. Spring training is 100 days away, and the silence is deafening.

Gone are the bright colors and melodic songs of the Blue Jays. Cardinals and Orioles. The Marlins and Rays scamper among the waves no longer. The Padres and Mariners have both ended their voyages for now. Though they are champions only memories of the Astros light the night sky now. The Rangers and Indians alike have retreated from the plains. The delights of spring and summer are gone once again along with the extreme passion and grand intensity of October.

Ahead lies only winter with Timberwolves, Grizzlies, Warriors, and Raptors to hold our attention to any degree. They won't work for me as I find most NBA basketball to be absolutely unwatchable on TV. One can almost succumb to tears comparing Havlicek, Monroe, West, Frazier, Bird, and Magic to the run and slam version of the game played today. I must confess I do watch the highlights most nights but a whole game would be too much for me.

I have pondered my loss of interest in the NFL a great deal. Part of it is the fact that the game is shit. The referees seem to be determined to have more airtime than the two starting quarterbacks and flags fly out more consistency that many airlines have ever shown. While I am a fan of celebrating achievements watching some idiot do a victory dance because he sacked the quarterback while his team is losing 31-7 late in the 4th quarter disgusts me. If we are honest, it is just not a very good game anymore.

Part of it I think is social. Football is an excuse for the single, or no kids crowd to head to the bar at noon on Sunday and avoid the emptiness of an apartment on Sunday with no work or events to distract you. It is something to do when the snow is up to the low edge of your ass, and the idea of venturing outside is about as welcome as inviting a politician to dinner. It helps pass the winter and gives you something to think about besides frozen pipes salted driveways.

I am now married these past seven years and live in Florida. I am not a big fan of day drinking unless I can get a nap before dinner, so I don't head out to the sports bars much anymore. There is always something to do in Florida and weather that allows you to do things.

I am sure it is a combination of things, but the NFL just does not hold my interest. I follow and watch Notre Dame and Navy at the college level but have no interest in the pro version of the game. No, baseball is the game for me. An evening with a book, while the games played on the TV, has been the preferred activity of many of the last 249 days. Checking the MLB app on a regular basis when the wife wants to watch something else has also been a significant part of my life. Games on the radio version of the app while running around town doing errands while engaging in Florida things has also been a regular activity. Now, that's over. One catch, one toss from Altuve to first base and baseball is over. No more home runs, double plays, dumb baserunning, brilliant pitches, astounding catches, stretching a single or stealing a base. No more second-guessing the manager, yelling at umpires encased in my flat screen or wondering how in the hell Chris Davis could let that pitch go by without swinging. No more box score searching, mathematical determinations of how we can catch the division leaders with a little run of luck. There will be the hot stove league, trades and all sorts of managerial stuff going on all winter to follow. I will probably go sit at the bar during the Winter meetings next weekend to get a little fix. But none of it will enough.

The silence is deafening.

Stefan Jovanovich writes: 

There is the NHL - where all the fans and players stand for 2 national anthems whenever American and Canadian franchises compete and they know the words to both. It is the only team sport other than baseball where 1 player–pitcher, goalie–can single handedly lead a weaker team to victory–something neither Michael Jordan nor Barry Sanders could do.

Tim Melvin writes: 

I have gone to some minor league hockey games and enjoyed them…but find the sport unwatchable on TV. The only ice I want to see most of the time is my glass. While I am watching a baseball game.

Nov

6

 "We are facing a total reform to find a balance and to cover all the needs and investments of the country." -N. Maduro.

The reform is intended to restructure the debt. Down down like Charlie Brown.

anonymous writes: 

Venezuela is a lesson that things take longer to collapse than one expected. I am surprised that to date none of Maduro's bodyguards has plugged him. When will that happen? Probably when the residents fear the status quo more than change.

Parallels to North Korea? Not really. In the Hermit Kingdom the state has almost total control.

Nov

3

 "How Moneyball Tactics Built a Basketball Juggernaut":

AS A LONGTIME partner at Kleiner Perkins Caufield & Byers, Joe Lacob had a reputation for backing high-risk, high-reward startups. But when he paid $450 million in 2010 for the Golden State Warriors—then valued at a measly $315 million and considered the worst team in the NBA—even die-hard fans scoffed.Seven years later, the Warriors are two-time champs worth a reported $2.6 billion.

In his new book, Betaball, Erik Malinowski (a former WIRED staffer) credits the slingshot turnaround not to Steph Curry's swishing three-pointers but to Lacob's application of Silicon Valley strategies to revitalize a sluggish team.

Nov

3

"Russian Influence Reached 12 Million Through Facebook Alone":

"The internet search giant Google also confirmed earlier reports that the Internet Research Agency [a Kremlin-linked hasbara outfit] had purchased search and display ads from it. Google said the group had bought $4,700 in ads… How could poor Hillary, with only $1.2 billion and a virtual monopoly on the fervent support of the press lords—both American (such as Jeff Bezos of The Washington Post) and un-American (such as Carlos Slim of The New York Times)—hope to compete with Moscow's marketing might?"

In Facebook's earnings call this evening, Mark Zuckerberg emphasized at length how serious he is about investigating the Russians' use of Facebook to influence the US election, and how Facebook's increased security/preventive efforts will take priority over Facebook profits.Aside from the article quoted above (and linked to below), are there any major media news stories that have realistically analyzed and explained to the public the total $145,000 claimed to have been spent by Russia-linked buyers on Google, Facebook and other social media, compared to the over $1 billion spent by Hillary Clinton, plus equivalent amounts from the DNC and rich PACs supporting her?

$4,700 is what my auto parts company used to spend on Google EACH WEEK, and it did nothing to prevent the company from failing. I very much doubt the $4,500 spent on Google by the Russians (supposedly to foster racial tension by encouraging Blacks to attend protest events, as I recall, although possibly that was their Facebook spending) influenced even one vote.

Jeb Bush had a war chest of $100,000,000 early in the Republican primary contest and he could not influence the election.

Hillary Clinton and her supporters had a couple of billion dollars to spend and could not influence the election.

And if an easier comparison, how about the $145,000 the supposed Russian collusion with Trump spent compared to the $12 million the Hillary campaign and DNC spent to collude with the Russians in developing the anti-Trump dossier?

I realize reporters are usually not good at math, but don't they have any sense of the difference between $145,000 and $12 million? Or the difference between $145,000 and a couple of billion?

Nov

1

 The spectacle of public hangings in old England, where criminals were hanged in front of enormous crowds, were the largest social gatherings of the time. Picnics, children, barking dogs, and sweethearts on their boyfriends' shoulders were brought to watch the criminals die by hanging. A whole lot of offenses could get you stretched. Vendors would show up early to set up their food and mementoes related to the hanging. Pamphlets would be sold which claimed to have printed the dying speech of him with the rope collar. Known as the 'Last Dying Speech', the quotes were usually fake, as the truly inquiring rushed to get good spots close to the gallows, in hopes of hearing the final address. Sometimes he dropped still publicly shaming the hangman, the audience, and abuse of the times. It was not a quick process, since it was a short fall, the neck would often not break, and he would have to strangle to death, which took several minutes. Sometimes the families and friends of the dying would be asked to pull down on the legs to help speed the process along. This whipped the crowd up into riots, fighting and rolling in the mud; bets had been made on how long the hung would kick. After he was dead, the mob would rush the stage to try to get a souvenir. Hangmen were known to flog the body in order to cut off pieces of clothing to hand out. The rope was also cut up and sold, the cost based on the crime and fame of the hanged.

It was obviously an important occasion, that carried into the old US west. The collar carnivals were brutal things to witness, no matter how guilty. That was about as much conversation as is needed to sway the pop-eyed cowpokes away from the same position. Necktie parties saved many a young or potential criminal his life. Men were not hanged for stealing horses, but that horses may not be stolen.

In Slab City, the show of prevention carries on, with an intellectual twist. The more macabre and public the humiliation, the more reflective as a deterrent. Death is not so important as the shock and exposure. It has been determined in this outlaw town that an ounce of public example is worth a pound of cure.

There certainly is no harm among the lawless in striving for more graphic examples, which fall short of the death penalty. Public astonishment works where all else fails, despite what outsiders say, including the legal and penal process you are accustomed to in more civilized spectacles.

Here are some examples, in order of popularity, of how Slabbers punish in-house that others may be amended

1. Corporal Punishment – Corporal punishment is a tradition in Slab City, where due process is so slow and often unavailable. The thought process of residents seems to be, 'You have wronged me. I won't sue you, for the law is too slow or nonexistent. I'll ruin you!' This has been a bumper year for assaults on women. One I fetched water for was beaten on the body, but not head, by a pipe for stealing. She denied the light fingers but accepted the bruises on arms and legs philosophically without covering them up. Another female was hit in the face by the end of a 4×4" and, smitten, the next day moved in with her caveman. The black and blue marks seem to be like relief confessions with debts paid.

Any local punishment is colorful to draw attention. One thief was hitched like a piece of bacon to a truck bumper and dragged along the town streets for all to see, but slowly, until he was cured. Another resident, though not a churchgoer here, tied a cuckolding parson to a chair on his car bumper, and drove him to the front door of church on Sunday morning to greet his congregation.

You have not been assaulted or restrained until you have shaken with fear like a rabbit about to be mouthed and bruised, and then in a burst of adrenalin free yourself, and gone under a bush to think about what happened, and rehearse what better way to react the next time. Assaults like this are usually against overwhelming numbers, called 'making a mountain' on another person. After a few like this, the thing to look for early on in a fight is smiles. I like a man who grins while he fights, because if I am beaten he will let me live. For this reason I never smile, just for the psychological advantage. The best must be punished in the worst way where there is no other cure for the wrongdoing heart. Jack Black had the biggest, and he confessed, 'The whipping post is a strange place to gather fresh confidence and courage, yet that's what it gives me, and in that dark cell I left behind many fears and misgivings.'

Torture marks are extremely common in Slab City, where people wear them as extended advertisements. They are able to spew tales of awe, like Ray Bradbury's Illustrated Man whose tattoos jumped to life when you touched them, and each tells a story. There is an annual Rave party at the base of Salvation Mountain where, two years ago, a woman was found with 'Bitch' carved in script in her back. I believe handwriting analysts should be brought in for such travesties, although perhaps the victim's crime was worse, that she paid for with indelible stripes.

2. Rough Music - Recently in Slab a bully pinned down a girl and had to face the rough music. Her slight boyfriend rounded up a crew to take shifts following the Palooka around town banging on pots and yelling, 'Woman beater!' The public humiliation spread wherever the bully went for a full day, until he issued an apology. This technique was used throughout Europe, also known as Charivari, to draw public attention via discordant mock serenade.

3. Arson – Very black smoke caused by plastic or tires with obligatory gasoline is the best smoke signal. On first sight, a mob reaches the place to cheer, 'Eviction Notice', watch the fire engines arrive, and later sift the wet soot for valuables. There are about two burnouts per month here.

The most memorable was the AirBnB fire that charged tourists $100 a night for a hammock above a dirt floor crawling with scorpions in a thatched hut, and pancakes. I saw the smoke while hiking toward sunset, and veered to walk by the flames leaping from the apex. Already a dozen sifters had beaten the fire trucks, and thirty more joined after the department left. The owner was thus evicted for shooting a girl with a BB gun, videotaping it, and claiming to the police she had been trespassing. I treated the man who started it after Magnesium shavings from a VW engine block, that burns without oxygen, sprinkled and ignited on his arm.

This is a town of firebugs with the highest arson rate in the nation. The arsonists are highly-sought specialists who accept $10 - $50 for a simple burn. Their angles at a burn would stagger Pythagoras. Slab also offers amateurs to come knocking in the night, push over your tent, pick a fight as a pretense, and burn you out when you protest, collecting their fee in the ashes. You may think ahead and, wanting your place burned down, pick a fight with a torcher, and then collect from the warming heartstrings of the neighbors, local parson, and Red Cross. Losing a home can turn a fat profit, and you may relocate to a better site, or finance yourself out of town.

The most recent torch at the Sausage Camp was a double-alarm fire set by a clever arsonist using a cigarette fuse - gasoline balloon, while simultaneously lighting the corner of a tent across town as he shouted, 'Fire!' as an alibi.

4. Rail out of Town - $25 is the going rate to get someone run out of town. Locally, it's called 'walking' a wrongdoer to the town limit. $50 will get him beat up on the way. A small group of vigilantes overcomes the victim at his door, without allowing him to pack, and drives him to the limit, returning then to rob and occupy his camp as part of the payment. The rail is omitted from the old frontier method of the offender being made to straddle it held on the shoulders of two or more bearers, but from Slab he is usually dumped by the RR track where he may wait on a freight to continue. (Not a bad option.)

Most walk-outs occur in the middle when a party calls on Mr. Jones and urges him on. Sometimes, a meeting is held in advance to decide the place and time, inviting all to gather at the foot of the home and join the post-drive robbery. This is a rare mercy giving the individual a chance to prepare to defend, or to flee, in advance of the mob.

5. Badge of Shame - I've been to every major USA city. In Boston they ask, 'How much does he know?' In Washington DC, 'Who does he know?' In New York, 'How much is he worth?' In Chicago, 'Who were his parents?' In Slab City, 'Is his nose busted?' If you don't have a black eye, bruises, or broken knuckles, then you go unadmired here. I have devised to avoid a fight, or get a date here, by making a scratch under my eye or fall on the dirt bike, and let the blood dry without washing until the threat has passed.

A badge of shame is a mark of shame, a stigma, that works in reverse in Slab City. In old England, under the Poor Act, paupers in receipt of relief were required to wear a badge of blue or red cloth on the right sleeve in an open and visible manner, to discourage others from collecting relief. In other parts of Europe, people were made to go barefoot to platform their submission as is customarily associated with lower status. More recently, in Bangkok, Thailand, the police switched to punitive pink armbands adorned with cute Hello Kitty cartoons, as are seen tattooed on the bodies of many Slabbers, that were intended to be worn as badges of shame for minor infractions. Those displays are reversed here, reminding me of an incident a few months ago.

The victim was a golfer in a hovel, and his arsonist so displeased by public sentiment from torching the place with the Campbell cans that served as nine holes, that he sifted the ashes until he found the One-wood. He went to him, with the driver in an outstretched palm of penance, and the golfer grabbed it. He drove the head with gusto into the chest over the target heart of him, who fell back as though pulled by a giant bungee. He got to his feet, thanked the golfer, and paraded from slab to slab shirtless, showing the crimson mark on his chest to all, who examined the horizontal lines of the driver head. They forgave and admired him, and gave him beers, every time he said, 'He didn't drive me out of town!'

6. Pet Humiliation - Regularly the innocent are also shamed. The animals have few quarrels among themselves, but weekly are caught among their owners' tiffs. The Pet Cemetery has standing room only for the strangled, raped, and barb-wire muzzled dogs in this so-called dog lover's paradise. As a vet, I was called to Poverty Flat to examine the three-inch carving of 'PhD' on a Labrador puppy's thigh. The P and D were particularly painful to view on the curves. The owner had figured the pup as the best defense against repeated burglaries, and had posted him at the entrance. After, the dog shied from rather than barked at strangers. Feeling worse, the owner gave the pup away, who now answers to PhD, and gets lots of positive pats.

7. Execution – Murder makes no sense as a deterrent unless it is newsworthy. The executions are carried out by a group, plus an approved 'witness for the public' who is trusted in the community to speak the truth. He becomes the town crier of the event rather than the people flocking to the gallows as in England, because that would be messy with the law.

A victim is invited into the desert for a party, sometimes his birthday, or a supposed rave, or to participate in the execution of another. When he is positioned at the remote site, usually on the adjacent gunnery range, he is seized, and the punishment begins, as viewed by the witness. What follows turns the stomach, without detail here, and only the general images given.

Canal drownings are common, about biannual, and cement boots in the concrete lined canal are unnecessary because the victim is usually stoned, unable to swim, and with a ladder out only every 200 meters, it is a steep climb from watery death. These slayings are conveniently blamed on accident, and for the reasons just named. Drownings in the hot spring are less frequent but more effective, because the body floats around and bumps into someone late at night, driven to the shores by a bubbly jet up the center. That person tries to make conversation with the floater before finally admitting the death, which is lengthy in his drug-crazed monologue. He cannot go to the police because he will be implicated, so it just floats around town.

Some of the other slayings to curb violence have been tying the person to a target on the bombing range, and rely and the sharp eyesight of the US Marine gunships and bombers. Another standard for many years has been dropping the person screaming down a vertical mineshaft, and letting him perish from thirst and hunger. (You may see their old trousers at noon.) In another, the public witness of the rattlesnake pistol whipping to the face of a man, who had plundered the valley where I lived, last remarked that he would not return. Finally, a person was stripped and spread-eagled on hot black desert pavement for the vultures to have their say. These California scavengers spiral in on 7'-wingspans, alighting clumsily like Grandpa McCoys, but swift to the anus. Their feet are useless for ripping skin, but their powerful beaks plunge up the entrails, through the diaphragm, and to the lungs, flapping and screeching at their own display.

The guideline for execution is the offender is incorrigible and uncontrollable, so let the great axe fall. It must be spectacular to piggyback prevention on removal. One man was cut into small pieces and found over the course of a month by various scrappers strewn in a ten mile radius about the bombing range. No one figured out how they got there, as they were handed about town for appraisal, but the reason was clear – he had ratted on human smuggling.

Execution is a business. If they kill you, they don't consider it murder, only doing business. They don't get much publicity. They just disappear.

Is public humiliation useful? The first premise is that whenever a human being, though commission of a crime, has exiled himself from decency, he needs to be reintegrated with it through suffering. The second premise is that suffering should be inflicted with the aim of bringing his psyche to recognize freely some day that its infliction was just. The third premise is to be a deterrent, to the individual as well in the community where he is shown, the punishment must be made memorable. The fourth premise is that Innocent third parties should be left out.

Shaming is on the rise. Across the US, we've shifted to a mode of scrutinizing each other for purity, and punishing people for small transgressions or no real transgression at all, just to blow off steam. Donkey ears and dunce caps are back in style in schools. Online shaming is cool. Politicians call each other out in public. Surveillance is welcomed in the name of conformity. Digging up a target's personal information – name, cell number, address, SS#, family relationships, financial history –to encourage harassment from others is SOP. Recently, a judge ordered two convicted shoplifters to carry these signs in front of an Alabama Walmart, 'I am a thief. I stole from Walmart.' In Indiana, a 22-year old skipped out on jury duty, and was ordered by the court to hold a sign, 'I failed to appear for jury duty' on a public corner. There is no sign that the new call-out culture is fading away.

The psychology of public humiliation is the same wherever you go. An unpleasant emotion is brought about by feeling that one's social status or public image has decreased from peer pressure. It is shame, the opposite of pride. People experiencing public humiliation may have diminished feelings of self-worth. Humiliation is related to embarrassment, but it cuts deeper and lasts longer because others are involved. While guilt is generally associated with doing something wrong, shame is connected with feeling like a bad person because others are watching. The victim characteristically wants to escape, but cannot. The humiliated individual may develop a variety of symptoms including paranoia, apathy, anxiety, PTSD, and repressed fury that may erupt into lashing out against innocent victims, as a means of release, or suicide.

Humiliation can befall anyone at any time, and more so in Slab City. The town is a showcase of public spectacle. There is no other way because the law cannot handle the community. If you forgive the Slab fox for stealing your chickens, he will come back and take your sheep. But if you humiliate him it denies and destroys his status claims. The victim either has to find the strength and self-esteem to come to terms with his shame, or if that proves too difficult, he must abandons the life he has built here and move on to start afresh.

Public spectacle is a round-the-clock crime prevention in Slab City. Laws are sand, customs are rock here. And the shamers are elevated in status.

Nov

1

Announcement found here.

"The new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin. Bitcoin futures will be listed on and subject to the rules of CME."

Doug Martin writes: 

What do you think the notional value will be per contract?

100 Coins X $6500 = $650,000/contract

5% move per day. Margin requirements would be quite large per contract.

John Netto writes: 

There will be a mini-BTC

Henrik Andersson writes: 

I'm also curious so I called CME and asked. Each contract will represent 1 Bitcoin and when the contract settles you will receive the cash amount of the Bitcoin Reference Rate. 

Oct

31

 My son and I took up table tennis last year and started taking lessons in July. One thing I found interesting was the body structure required in order to strike the ball with consistency, and actually it was highly reminiscent of tai chi. The upper body needs to keep structural integrity whilst most of the movement is generated by using the waist and groin.

It occurred to me that table tennis could probably borrow a training approach used by tai chi players and other internal martial artists, that of holding standing postures (known as zhan zhuang). This form of training is regarded as a major key to making progress, though needless to say it is not very popular. I wondered if standing postures had ever been used to train tennis players, the closest thing I've ever heard of being the training done at the Spartak Tennis Club in Moscow, where the young students practice shots without hitting a ball for the first three months.

We use key structures to master chess, with certain typical positions (characterized by their pawn structures) being regarded as the most important. Many moons ago the chair pointed out to me that this had similarities to the countist's approach to markets, that certain typical situations could be identified and that when they arose they were favorable.

Anyway, my question is this: Do other spheres also have sets of key structures to work on and do these represent a cornerstone to mastery? And if they are not widely recognized in a particular pursuit, can they represent a way of gaining an edge?

Karl Rove comments: 

Certainly in guitar playing this is the case, but it would be boring to explain to non-players. But it is similar to your positioning concept in table tennis, with completely different configurations of course.

(No groin action unless you are imitating Elvis, which is generally uncool.)

Oct

31

 About the only thing that hasn't been stolen around here is the honesty to thieve with good judgment. The town is a circle of theft, like a bucket brigade out one shore and into the other. You would think it an infinite zero game, but new goods roll in faster than new hands to grab them.

Their methods are varied and creative.I'm going to write them down as I learned them – with a smile – as a victim and from other victims.

• The most common technique is door-to-door knocking. If you're not there, he goes in and takes something. If you're home, he says 'Hello', and comes back later.

• The second most common technique is shop and steal. This is a walking town, and the rows or trailers and shelters are like Walmart aisles. See something you like, put it in a basket. It is done primarily at night since neighbors tend to form neighborhood watches.

• Campfire thefts are the third most common. A thief walks from fire to fire, observing the participants, and visits each in turn's camp to rob.

• The hot pool is another tipoff to the burglar who phones a comrade to make the heist as the victim frolics.

• Thieves love Saturday night at the Music Range. They bop by, listen to a song, watch the dancers and audience, and go rob their camps. They return to the Range to substantiate their whereabouts, and at last call pickpocket the sleeping drunks.

• Arsons are timed to cause occupants to flee, so those who arrive to extinguish may plunder.

• Dog theft is rife to draw an owner from his camp to be robbed.

• It's not easy to steal where the landlord is a thief, but the man I rented from kept a key and stole from me.

• The most lucrative housebreaks occur weekly when someone is carted to jail, and the early bird gets the worm.

• Each summer people pass from heatstroke, and the thieves invade like maggots. They tear apart the walls for jewelry, marijuana, weapons, cash, and ID.

• The opportunist is a walking lookout, with eyes open and ears open and hands open every ticking minute of the day and night.

• The thief thinks, and is right, that the most conspicuous is the least obvious. Every bystander thinks the other bystanders would catch a wrongdoing.

The boldness of thieves is not surprising if you put yourself in their shoes. No one is going to notice if you train long and hard to act natural. Some actually prefer to break into the front door, and explain that they had been hired to work on it by the owner. I caught one burglar doing this, and called the owner, as he made his empty-handed getaway. Most thieves labor hard to make it so obvious that nobody notices.

Big city thieves use cars. You gotta have a car to burglar to carry the stuff and get away. You can't use a car in Slab because it would be one of the few running ones, likely to break down, and the cops would intercept it pulling out of town. So, crime is always afoot, making it more interesting for the spectators. The action scenes are contained and in slower motion, and you can take part if you choose by stepping up and tackling somebody running down the street, chased by someone else screaming 'Bloody thief!' It's guesswork to figure who's in the wrong. It could be a distraction while your own place is being plucked.

Since the robbers have only fast feet and ATV's, they must commission a pickup to haul big booty from the adjacent valleys and gunnery range. There is about one case per year, including my mine three years ago, where the burglars 'borrow' a truck from a silent partner who does not report it stolen. He is protected because, if the truck turns up, he can say it was 'stolen' and the cops will reclaim it for him. If it's not implicated, the robbers return it with a commission in the truck bed. That's what happened at my camp, where the Slab thieves hauled off about eight loads over the course of three days, and slept in my bed, and cooked on my stove. That's why I have to smile.

Another cunning ruse is circular thievery. One crime has to be concealed by another, and so others will hire you. It goes like this: A accuses B of a burglary he has committed to victim C. C hires A to beat B up, rob, or burn him out. A tells B that C was the culprit, and C turns around and hires A to perform the same crime on B. Usually, B and C end up at each other's throats, while A gloats over the ashes that have covered the evidence of his crimes. For good measure A broadcasts the circle throughout town, omitting himself, but should be the primary suspect per Shakespeare's Hamlet, 'Thou doth protest too much.'

When the enterprising burglar is not burglaring, he is planning the next one. Who has the tidiest camp, the greenest cacti, the darkest yards, dearth of dogs, or the shades pulled? A search for original simplification begins. The basic burglar MO is to get in the easiest way, avoid confrontation, and make the unnoticed getaway.

Crime is terribly revealing. Try and vary your methods as you will, your tastes, your habits, your attitude of mind, and your soul is revealed by your methods. Sooner or later you will get caught, and may think it was all worth it.

Slab City is a well-equipped laboratory to study theft, and the instruments and strategies that have been invented to thwart them. Since this may be the town with the highest per capita burglary in the nation, at the rate of about two nightly among 200 residents, it makes sense that some of the best thieves, methods, and defenses here have been fashioned here, that may be applied throughout the US.

There is a hierarchal triangle of theft in this outlaw town, where the smallest thieves are stolen from by the fewer larger thieves, until the apex is reached that is an omniscient eye. That eye does exist, high atop a hillside by Siphon #8 of the Coachella Canal. It is a 5-foot wood sculpture like the all-seeing eye of the 1" logo on the George Washingtons in your pocket. Here the smart thieves climb and perch with binoculars, telescopes, or night vision goggles, depending on the hour, to case their board in the everyday game of Slab City theft.

Almost everyone steals.

I'm about to develop a new theory of the structure of criminal activity in Slab City. Most people who do well at crime are called Slab businessmen. Just because it is illegal doesn't change the economics of a town.

Their booty is their status. If you take small things frequently without planning throughout the day you are a petty thief. However, if you steal something grand like arms from the adjacent military range you are a gentleman of society, and everyone stops by to visit. I've arrived at this by knowing many of them, from the bottom to the top of the robbing heap.

The bare bones of the skeletal structure with the omniscient eye on top are occupied by the zombie like meth junkies who rattle throughout the night sifting camps for nickel-dime stuff to exchange at two all-night drug houses for methamphetamine. Fifty percent of this town's occupants are these Jekyll – Hydes. They are creatures of habit and action who, by second nature and so without want for a design, see something they need or might need and pluck it as a normal person might take a four-leaf clover on a lawn of green grass. Living hand to mouth, their fate is to move on when they become too conspicuous, get run out of town, or thrown in the hoosegow.

The flesh of Slab, however, the fewer and best, are the lone wolves. They have a greater range, riding Mad-Max ATV's and stolen vehicles to larger jobs, utilize some planning, and sell their loot for cash to the drug houses or townspeople. They also take custom orders from the locals, as the town's mobile Sears and Roebuck catalogue. Since they have no reported income, they get the least strung out molls. They are marijuana stoners, save no money, collect welfare, and live out their final days on medication provided by the state slabbering tales of yore in depreciated trailers to their old cronies.

There are no organized thieving rings here, except catch-as-catch can. The people are just too damn independent. They are physically robust and mentally sharp to not need, and in fact, to ward off, any organization that attempts to cajole them. Those crime rings are reserved for the tiny fractions of specialists of meth manufacture, gun assembly, scrapping the military range, and smuggling illegal aliens.

Down these mean streets a man must walk who himself is not mean, who has a sharp stroke of kindness in his heart, or he would not be tolerated in Slab City. The two types of thieves – Jekyll-Hydes and Sears and Roebuck boosters – are not heroes to anyone, but neither are they villains. They are, as stated, businessmen. They are so common as to be called the common man of Slab. Each must be a complete man and yet an unusual man. He must be, in the weathered sense, a man of personal honor.

The peace of mind of these crooks is remarkable. Outside a criminal world, a guilty conscience is the emotion as a result of some action that we've labeled or perceived as being bad or wrong. However, this is trumped in this outlaw town by the idea that every resident has been so wronged in the past by a third party – authority – that he cannot be held representable for nearly everything he does. He is merely acting out against past injustices. That anyone might think he or she can do wrong proves his moral inferiority. It's a topsy-turvy world. I have yet to encounter a guilty conscience in town, which makes them all the more light-fingered, quick thinking, and fleet of foot.

None is an intellectual, and instead it seems these common men were given the weapons of light fingers to battle the intellectual man. I find petty and grand theft here like door-to-door selling: it seems easy, requiring little talent, yet few people ever will do it well, and few manage to stick with it for very long.

The brain of a Slab thief is straightforward. He has a grid in front of his mind, and for anything in the visual world to reach him it first has to squeeze through the bars. A shovel, book, bicycle, or can of beans might enter. That information has to be broken into small cubes, and then packaged in two dimensional squares which are preferable. They take up less space in his mind, and encourage him more to steal from the outside world.

Strangely, it cannot be exaggerated how important property is to the people of Slab City. For many of them, this is the first patch of dirt they have owned in their lives by right of squat on State land. The things they put on it – their trailer, shed, and belongings – are their first possessions. At the same time, there is no one but the owner to defend what is his. This is what makes the town interesting and dangerous.

For, by nature, these people who have not had are covetous of those who do. The love of property and consciousness of right and wrong have conflicting places here. The sparks fly daily! Private property was the original source of freedom. It is still the bulwark here. The Slabs they build their lives on is a broad foundation on which nearly all of their psyche rests. And then, with one match, or one large raid, the footing is gone. It happened to me, and I've watched it happen to a dozen others. The residents fall back into two groups: The fewer socialists with an idea that there is no private property, who are fond to say, 'We would live exceedingly quiet if these two words – mine and thine – were taken away.' And, the defenders who believe that property is everything, our sole guarantee of freedom, and who like to say, 'You will not rob me even for the greater good of the community.' I think that every person's property is an extension of his mind, that nobody else has a right to, but himself.

As much as property theft is a regrettable element of the human experience, this dream destination has become a University of Slabs. Like other branches of learning, its reputation spreads far and wide, drawing learners from the Atlantic to Pacific. The campus rests snugly on State property between the Salton Sea and Coachella Canal. It is a self-governed oasis where outside laws are supposed to apply at the University, but are unenforceable.

The dorms are what you bring or build from scrap. Meals and groceries are served weekly as pocket or need affords. There are cafes of old spools and tire seats, movies thrown on sheets, wide-screen cable TV at an Internet, a distinctive anarchist library, weekly concerts, an international shrine at Salvation Mountain, and frequent tourist visitors who inject a cosmopolitan sense to the campus.

The streets are safe, but absolutely crime ridden. Crime hides elsewhere, and by far the most terrifying things out there, but in Slab City it is in the open to be studied.

A monk in his cloister, a fish in the water, a thief in Slab City.Even a thief takes ten years to learn his trade, except in Slab on the accelerated program of so many teachers the program is compressed into one year. Most newcomers apprentice under an instructor and pay a 50% commission on all swag in the initial months, before a partnership often develops. Graduates of outside institutions – jails, prisons, and reform schools - may select to start alone, working steadily toward an advanced degree of education. For now, the majority of freshmen are simple observers on their lawn chairs and through astonished windows during the early months.

The instructors are among the slickest operators I've met, and I know most of them. The only ones who interest me must be things of power, handled with cat mittens, and wicked enough to inspire protest, but kind enough to forgive. I must fear him, and then triumph over the fear, and parallel his career in harmony with all of his previous developments. I am a sort of alter ego trustee.

One step into Slab University, and you will look down to see if your shoes are missing. Come, and learn from the best. And their defenses. If you're not inclined to burgle, thieve, pickpocket, or plunder, then this will be a character building experience. The study of crime at the U begins with the knowledge of oneself. All that you despise, all that you loathe, whatever that you reject, all that you presumably condemn and seek to convert springs from you.

Why am I here? Learning is treasure no thief can touch. Every single Slab shadow spells adventure. I would rather scramble around them, and right to their top and watch the criminals turn profits in a microcosm than languish on the outside. The most practical defense against the world of burglars and thieves is a thorough knowledge of it.

Oct

31

IQ, from Scott Brooks

October 31, 2017 | 2 Comments

Normal people can have extraordinary abilities. Prof. Haier writes about a non-savant who used memory techniques to memorize 67,890 digits of π! He also notes that chess grandmasters have an average IQ of 100; they seem to have a highly specialized ability that is different from normal intelligence. Prof. Haier asks whether we will eventually understand the brain well enough to endow anyone with special abilities of that kind.

The Neuroscience of Intelligence also includes a good introduction to the history of intelligence research, beginning with the development of the first IQ tests. Prof. Haier notes that a significant turning point was Arthur Jensen's famous 1969 article in Harvard Educational Review. Jensen wrote that genetic limits on intelligence meant that there were limits to what could be achieved through early education, and that there was a significant genetic contribution to the black/white gap in IQ. This so horrified liberals that for the 1970s, 80s, and part of the 90s, it was impossible to get grant money to study IQ. Even today, most research on the brain ignores intelligence, and instead concentrates on such things as schizophrenia, Alzheimer's, and other mental disorders. The Jensen article set in motion what Prof. Haier calls "a decades-old concerted effort to undercut, deny, and impugn any and all genetic studies of intelligence."

This campaign was a success. Despite the enormous body of evidence to the contrary, many people still think that no person has any inherent limitations, and that with the right role models, cultural sensitivity, and other mumbo jumbo, anyone can become a lawyer or scientist. Prof. Haier writes that one reason for this is that people who make policy are usually fairly smart and don't know anyone who isn't. They have no idea what life is like for stupid people. Prof. Haier adds that the other reason is that denying genetics is an attempt to explain away race differences in IQ.

Bill Rafter writes: 

Did Will Haier suffer the same fate as Jensen?

Another money quote:

"As Prof. Haier notes, there are 51 million people in the United States with IQs of 85 or lower. Their poverty and social failure are not their fault. After 50 years of "programs" that do nothing, we should recognize that a huge part of the problem is stupidity and try to cure it."

Oct

23

 Red Notice by Bill Browder is a true life story of present day Russian capitalism and the murder of Magnitski. The author's father was chair of the mathematics department at Chicago, and the two sons were chair of math at Princeton and Brown. Bill Browder inherited the parents intelligence and applied it to becoming the biggest investor in Russia. He found that Russian assets were being sold at 5% of their value and got Salomon to invest 25 big at the lows. The funniest part is how all his colleagues approached the news. "What's the spread between bid and asked?" "What are the advisory fees we can get out of it". He describes the market where the chits to buy the properties were sold and it's like an early version of the commodity exchanges with armed guards every where since all the transactions had to be in cash.

There are many intelligent observations he makes- eg Russians love children and it's the only place in world where you can bring a crying child into a restaurant and people will smile. That led to the importance of the adoption restriction we've heard so much about. When Magniski was murdered, Kerry refused to sign off on a bill to censure Russia but Browder put so much of a full court press on that finally it passed after the election when Kerry was going to become secretary of state anyway. So Putin in retaliation banned the adoption of Russian kids by US families.

It wasn't such a innocuous thing that the kids were involved in when they met with the Russian Prime minister but a cause celebre in Russia. It was amazing to see that Browder gave up his business to get vengeance for his lawyer Magniski who was beaten with a rubber hose shortly before he died. Above all, it the story of a very smart businessman and how he became a billionaire by buying headlong into an undervalue assets.

Anatoly Veltman comments: 

I assume Browder took a lot of profits out of Russia. And he lived, too.

Look, something had to be paid. He didn't. His employee did…

Vic started this thread with an ode to the wonderful risk taker/capitalist. Part of the truth was that privatization drive resulted in the wealth of the populace ending up in just a few hands. Browder included. Many a babushka in the vastness of Siberia have taken a cut in their $60 social security to buttress Browder's retirement. Browder's brand of capitalism was a lil' too much for the majority rank and file in that land. Yes, he did pay for that nation's former assets 5c on the dollar.

Oct

23

 An interesting aspect of baseball is that top competitive athletes fail 70% of the time and they are considered good and are paid millions. They play 160 games a year, and no team or player no matter how good can win them all. There are too many variables. They learn to think statistically, and go for percentages. Its a different way of thinking than normal. Specs also fail 40% of the time, at least statistically and that is considered good. Winning and losing tends to be overemphasized in conventional thinking. I wonder what kind of training for youth might change that.

Stefan Jovanovich comments: 

Baseball is about losing most of the/your time; for all the audience cheering and TV noise its natural pace is laconic. So is work. The game outlasts your skills if you are really good or great; it defeats most of us almost immediately. That is why its home has been the parts of "America" that have never had the pretense of being "winners" - the grain farms, the mill towns, the small city (NOT the Large) ghettoes and hoods. The people always knew that the real odds in life are never far from 50/50. 

Oct

23

I've been looking at the Internet of Things from the perspective of security. In medicine, this has become a concern—as it is everywhere else IoT is rearing its head, which is to say everywhere. The process of providing information from one node in a network to another is a transaction, and blockchains provide a means for securely effecting/tracking transactions. Why wouldn't one simply frame the transmissions from an IoT node, then, for an IoT system to assure a secure system (an oxymoron, I know)? I must be misunderstanding a bunch of concepts here, and thought someone might provide some insights that I'm lacking.

Oct

20

Yes.

Oct

20

 Memory enhancement is an area apparently in need of further research–the recent statement highlighted below by one in the field is surprising to read.

1. "Working memory and distractions were the subjects of the second speaker, Fiona McNab, a Wellcome Trust Research Career Development Fellow at the University of York (UK). McNab explained that working memory is important for decision making, reasoning, language, and mathematical processing.

She said there was no scientific evidence to show current brain training games could improve working memory; while games might improve the performance of a specific task intrinsic to the game, they do not have a transfer effect to other tasks. Instead, McNab highlighted the use of functional magnetic resonance imaging and behavioural studies to explore working memory and distraction. She also referred to the Great Brain Experiment, an app that allows users to play games to test their memories and provide data for neuroscience research."

2. There is certainly an interesting history to the idea of memory improvement though. Pelaminism was a popular subject in Victorian England.

It is interesting to consider what combinations of games and training would be most synergistic to improving memory. There are activities like climbing a tree or balance-related exercises that are thought to be helpful in this regard too. Link 2 suggests an IQ increase of 10-20 points over time–that's quite a claim. Further research needed though.

3. "The biggest lesson here was that — yes — intensive training strengthens cognition and the brain, but we still don't understand why and how," Courtney said. "We can't just jump onto a video game and expect that's going to cure all of our cognitive problems. We need more targeted interventions."

4. Here's an example of the dual n back program and here is one of the free dual n back games online.

Oct

20

It's where we get the saying "All I need is a chip and a seat".

Jeff Watson writes:

Some degenerates have been known to say, "All she needed was another furlong and she would have won."

Oct

20

TRUMP, YELLEN MEETING LASTED FROM 2:00 TO 2:30 - WH OFFICIAL: FOX NEWS

Odds on her staying? I believe she is not long for the Chair.

Oct

20

 The best Sunday alarm clock is sunshine on chrome. That's what the motorcycle is, a system of concepts worked out in steel.

My 1979 Honda Enduro XL 185 is cherry red with 9,000 original miles. It was produced for the highway and off-road as a specialist dual sport from 1979-83. It's a single cylinder, 180cc, four-stroke, five-speed, chain driven, air cooled, and with a top speed of 60 mph that I mean to reach before noon on a smooth stretch of desert pavement.

I began, paused in the black saddle, looking over the handlebars at the expanse of desert east of Slab City. Six distinct terrains appeared before me: dirt tracks, rutted tracks, washes, black pavement, overland, and sand. I would develop the best riding style for each by testing the two forces the desert would decree on the bike: center of gravity and angular momentum.

This was a tall order, because the last time I rode was a decade ago. My neighbor had rescued it from the mitts of Slab City thieves who had loaded it onto a trailer and were about to pull away. The neighbor had kept the bike in storage at his camp until I was ready to tackle it. I had obtained a DMV one-day 'Permit to Move' that was good for the Sunday ride.

I began like a baby, hardly able to crawl. Rather than try to be a natural on it, I took it in steps, gradually advancing toward the more difficult and speedier.

I experimented with each of the terrains, and the effect of the two forces over them, to arrive at the best riding style. The terrains were:

•    Dirt track – Undulating with some sand, but free of ruts and stones.

•    Rutted dirt tracks – Trickier with old tire or water cuts.

•    Washes – Dry streambeds, except during flashflood.

•    Desert pavement – Smooth worn surfaces of interlocking rocks that has a glassy appearance.

•    Overland – Open desert.

•    Sand – Includes sandy spots, and deep sand like dunes.

Most people just get on and ride, but I prefer a scientific approach of identifying variables, quickly testing each, saving the best, and then ride relaxed for the rest of my longer life. The two primary factors in dirt bike riding are center of gravity and angular momentum. These in combination keep the bike upright over rough land. Center of gravity is self-explanatory, but angular momentum is not. Each wheel acts as a gyroscope to hold the bike in the same plane that it is spinning. The faster the wheels turn, the stronger the effect; if you go fast enough, theoretically, your wheels need not touch the ground to stay upright.

Knowing that the Honda functioned entirely in accordance with the laws of reason was a comfort, and I loosened up on the saddle. I didn't study books for this … The best techniques for each of the landscapes were:

•    Dirt tracks - The bike may be brought up to its near maximum of 60 mph. The science that keeps it upright on 21" front knobby and 18" rear tires is astonishing. It 'drifts' above the ground surface touching it as little as possible and using solely the angular momentum of the wheels for balance. The bike cannot tip over since it is essentially floating through space on two vertical gyroscopes. I put a mental governor at 50 mph to honor my common sense of the voices of thousands of ghosts of survival.

•    Rutted dirt tracks – The technique uses the ground surface for traction in an odd way. The tires are 'shrunk' like a sports ball for greater density by the bounces to provide greater angular momentum. It is palpable. I could do 40 mph on these roads, slowing for ruts not by breaking but by downshifting.

•    Washes - These are an all-out blast using ground traction with twists and sudden waffle iron cracking from drying past sweeping Palo Verde branches. The wash races uphill in a wind for miles at 25 mph, until it narrows to a stenosis. It's like riding a pinball in a busy machine with many natural 'bumpers', and the usual speed is an interrupted 25 mph.

•    Desert Pavement - The runway of black pavement of volcanic rock may stretch for a quarter-mile into the foothills. I took off like the road runner cartoon. The technique is to float along with little traction, relying on angular velocity to keep the bike stable. If you start to skid, give it a little gas, as angular acceleration increases the stability by the square of the increase of mph. I kept the sprints to 30 mph to not kick up rocks to preserve the beautiful smooth canvas.

•    Overland – The stage is a march of changing terrain at the front tire. The recurrent surprises are bushes, rocks, trees, Ironwood stumps, sand traps, dips and rises, dust devils, cacti, and rattlesnakes. The faster you go, the more you have to be on your toes. I felt like a midget operating a sledgehammer, constantly being bullied around over rough ground, and tossed out of the seat like a raggedy Andy.

•    Sand - I mastered last sand. The normal technique is to deflate the tires from 25 psi to about 10 psi to spread the surface area of the tire, until the tire is so flattened it is able to ride on the sand itself. However, deflating was not practical on alternating sand and hard patches, so in 10" or deeper sand on stretches of a quarter-mile or longer, I used a Frankenstein technique where I sat in the saddle at 5mph, and took looping 10' steps with either foot on the cycle sides.

I hadn't ridden in ten years, and there was only one spill per annum – always at slow speed in surprise sand traps, and the bike came tumbling after. A computer generated model of the bike and its rider on an uncontrolled turn shows only his helmet, and his conscious taking the shape inside the frame, hoping beyond hope. It got to be like leaving an animal scent: the bike left a little oil, and I a little blood. I just pulled out the toilet paper and duct tape to make compression bandages to stop the bleeding.

Once I tumbled into a red ant hill, and got stung about twenty times, which was more memorable than any of the falls. The fascinating sequence of pain is twenty minutes each of sting, as the venom streaks up the lymphatics, followed by ache, as it enters the muscles, concluding with a burning of the skin, and final relief. Each time the 260 lb. bike fell, it was a clean-and-jerk effort to upright it again, shaking the ants off before they clogged my air filter.

Once I developed a satisfactory ride for all six terrains, I slowed, and cruised. The six now had to be blended into each other to meet head-on the quick changing pattern of the desert. It was like orchestrating a band to suit the audience. I mentally rehearsed as I cruised blending one into the next, with all combinations, and solved the Sunday ride mentally before applying it physically. Now in my mind, like the parts of the Honda, there was a working mobile synergy.

With the short learning of two hours out of the way, now I could ride any surface and enjoy the sightseeing. Heading overland on the fringe of the Chocolate Mountain Gunnery Range, my eyes lifted to three helicopters approaching low from the south. I pulled instinctively before being spotted like a chased animal under an Ironwood. The fat copters looked like Mil-17's, pregnant with troops, as they swooped overhead so even the Ironwood branches rustled. They landed a scant half-mile away on a black pavement. The rascal in me took hold, and I shut the engine, and started walking up a draw to toward them. As I neared, the choppers rose lighter, it seemed, and took flight. When this happens, a dust cloud is thrown a quarter-mile out in all directions, and several stories into the sky.

In that cover, I walked another few minutes, guessing they had deployed about sixty US Marines for desert training. I would be a good object for them, but knowing a little of their bureaucracy, thought that they might mistake me for an official observer in a camouflage tank top, sunglasses, and black boots. Abruptly, I rounded a bend and spotted fifty yards away the first group of ten Marines in field dress, scrambling to their feet with weapons at ready. I raised my sunglass, waved nonchalantly, and did an about face. They didn't follow, but wouldn't have mattered because it was unclear if I was on the unsigned range or not; the US military makes mistakes, and so do I.

I rode the Honda thirty minutes away, and stumbled on a 30-foot military dumpster with 8-foot sides and a ladder leading to the top. I climbed, and peeked over like Kilroy. The floor was littered with dozens of unopened MRE (Made Ready to Eat) rations. MRE's are self-contained complete meals packaged for the US Armed Forces. I knew each contains an entrée, side dish, crackers and spread, drink, and desert. Just looking at them made me hungry. They are coveted by Slabbers, and I could have opened an MRE stand, selling packets for $3 while they lasted. I greedily teetered, but noticed there was no inside ladder leading out. I could have survived for about a month down there, and would have expired before the packages, that have no expiration date. Instead, I used a length of rope to lasso one Beef Stew, which took a dozen throws for five minutes, and decided that one was enough.

Besides, the sun was setting. It closes fast in the desert. My camp drew near on the Coachella Canal. I squinted, my face wrinkled up like a chipmunk under the baseball helmet. I arrived at sunset back at the Slab Camp, on a near empty two-gallon tank. At about 50 mpg, I had gone nearly 100 miles over rough terrain on this Sunday drive. Beef Stew is nearly as important as petro at the end of a Sunday ride.

I felt exhilarated. I felt I had achieved a rare distinction. I had driven a vehicle in a way that would terrify a New York cab driver, and felt safe. The dirt bike is the most versatile machine out there, except for the life form. You look at where you're going and where you are and it never makes sense, but on looking back at where I had been a pattern seemed to emerge. Slowly, by nuts and bolts, I had built a mental manual for open desert riding and life.

The lessons are: Never hesitate to ride past the last stop sign at the edge of town. Don't hesitate to practice on the roughest ground. Well-trained reflexes are better than luck. The more you look around, the more you see. You don't stop riding because you're getting old, but you get old when you stop riding.And, the real cycle you're working on is yourself. I filed everything away in the back of my mind, to use next week.

Not everyone has a cherry red motorcycle, but everybody has different theaters of life. The goal is to develop the best character in each, and then to meld them into one whole self. In this way, one Sunday ride can last your whole life.

Oct

18

 I am asked, "what were you doing 30 years ago Oct 19th, 1987".

I got very long bonds and stocks at the close. And had a huge profit in bonds at 5 pm. But then I hedged it in the cash market. I walked home with the palindrome that afternoon and asked him if he wanted to borrow some money from me. He sold all his stocks Thursday at the opening and made fortunes for all the guys who took the other side. We played tennis on Saturday at the columbus racket club with the head bond guy at Morgan Stanley. He had a good overhead. And Susan said, "at least we won't have to truncate the prices when we put them in the trs 80 again. The German market rallied Thursday at noon, when everything was down the limit, and that fixed things. A big options trader bought 2 S&P futures and held them for 10 years, and made a million bucks on it. Jim Lorie had been short from 200 pts lower in SPU and covered at breakeven on the limit down open. My broker on the floor was filling orders for a fee for others during the crash and I fired her because she could have been hit with an out and bankrupted us. I did not get much sleep that week as I often don't now, 30 years later. I didn't realize that prices were locked limit in the morning with a big overhang to sell at the limit. And I bought at the limit when it reopened around noon, to find myself holding a huge immediate loss as the real price was much lower. Baker did it by saying we had to weaken the dollar which caused bond prices to fall. I met his daughter and showed her an article about King Canute realizing he couldn't control the waves, and told her that's what her father should have done. She kept calling him Daddy and she called me up afterwards to chat but I hung up on her because I thought she was a salesman.

Oct

17

 On my way with Aubrey on Grand street at 4:00 pm, I notice a line of 100 people waiting at the entrance of a store.

What were they selling—- pickles.

I believe they were the Pickle People store.

Right adjacent to a bagel store in China town with about 25 people waiting outside.

Also noted, I had  Penguin ice cream and it was the second or third best banana ice cream I've had in 50 years.

Oct

15

 The process and speed of Weinstein's demise is an excellent example of the "critical angle of repose." Weinstein's angle of repose was very steep–any number of his widely-known misdeeds could have triggered an avalanche–but his personality, relationships and business acumen resulted in a morphology that had a very steep angle.

One can find numerous analogies in markets and individual companies–John Gutfreund is one example that comes to mind. An astute investor might claim to be able to exit a position/relationship before the angle of repose is reached, but it is nearly impossible to discern luck from brains in this regard.

Oct

13

 The all-leather executioner's trench coat is a classic seen riding around Slab on the wide shoulders and bowed legs of a man who was gifted the coat by Sonny Barger of the Hells Angels.

From burnt-out detectives to comic book heroes, countless tough guys through the ages have worn trench coats to add mystery, intrigue, and gravity to their character and actions.

Famous people who have worn trench coats are Winston Churchill, Dwight Eisenhower, Adolf Hitler, Humphrey Bogart, Audrey Hepburn, Steve McQueen, Rock Hudson, Ali MacGraw, and the Blade Runner.

The Slab City executioner is in step with the Marlboro Man. He is college educated, a champion athletic, and swift to strike for justice.

The trench coat wasn't exactly invented for use during the war that gave it its name. The WWI officers were mired in muddy, bloody trenches across Europe. No other ranks were permitted to wear them. But there was a tragic consequence of officers' distinctive dress: it made them easier targets for snipers, especially as they led the charge over the top of the trench. By Christmas 1914, officers were dying at a higher rate than soldiers. Since the combat strategies of WWII were less trench focused than WWI, shorter multi-functional field jackets replaced them in the military. Thirdly, however, Hollywood stars showcased the trench coat in films across the US, and continue to be the cultural treasures of he-men and she-women on the silver screen.

The trench coat is also the style that west coast hobos wear called a 'California Overcoat'. For soldiers and hoboes to be able to move quickly, every trench coat has a vent, storm flaps, and maybe a dozen pockets. Everything one owns in life on the road is carried in it. I wore one through an autumn on the rails in lieu of a backpack or bindle, and found it kept me warm, dry, protected from scrapes, offered enough pockets to hold everything I needed to carry, and left my hands free to climb up and down ladders.

That's why I inspected the executioner in his shining jacket whenever he walked by in Slab City. But it is not why I began seeing his daughter.

A call went out … the executioner's coat had been stolen! That's like stepping on King Kong's toes. The owner told me it was priceless because of the Hells Angels history of being passed from executioner to executioner. A $1000 reward was offered. I made the rounds, and someone knew who had taken it. This was relayed to the owner, and he recovered it.

Now he owed me $50 that I had given an informant to get the coat. Business must have been off, because the executioner was broke. Weeks passed, until he sided me on a special Saturday night at the Music Range.

It was prom night, and he had a pretty blonde on his leather sleeve. On this special annual night under the stars, a photographer snaps Polaroids for all of the contestants running for King and Queen of the Slab Prom. When the date couldn't take the crooked elbow of her man because of the jacket, the photographer suggested he take it off and lay it down. He did remove the jacket, but draped it over the crook of his other elbow, for the flash.

Now, 'Here comes old Flat top, he come grovin' up slowly…' in his long black trench coat. He sided me, stage left, brushing my elbow. He reached deep down into one pocket … and withdrew nothing. Then the next pocket, and the next … taking out and holding open palms of air.

He pulled no money, but no weapon either!

Then he turned his face out of the amplifier shadow, and looked at me for the first time. I'll say it again, for the first time. His right eye was glass. It stared at me with a fixed pupil, neither dilating nor contracting. Then it winked!

I like to think that I turned the executioner's coat inside out that night, to make a friend.

Sure enough, one week later, he charged me with a Louisville slugger baseball bat on a slab over a bad pitch of misinformation. The bat stopped short of my nose for my last home run. The following week, he rushed up with a foot-long Rambo knife, and I carefully drew his attention to its sheath. He holstered it, and chuckled.

A black trench coat over a gold heart is the best of fashion that has given me a tranquility that no religion can bestow.

Oct

13

 I was called Shoeless Steve in some hobo jungles because I would walk in barefoot. There is no way anyone is going to rob, or even bum cigarettes off a man without shoes. In fact, it brings out the goodness that, although not innate in every man, lurks in every dark heart. I get offered wine. I have walked into a shoe store barefoot and gotten a discount.

So, the other day at Walmart when a shoeless man asked me for mine, I gave them to him. He whined that they were too small. I told him to put them on the opposite feet, which is also my habit. It feels good with the arch on the outside, gives greater space for the small toes to uncurl, widens the shoe with walking, and wears on the opposites for a longer life. You have to learn to think outside the shoe.

Oct

13

 Here in Shangri-La, aka the SF Bay area, the air is full of the smell of oak. Burned oak. What you might smell if you're downwind of your neighbor burning oak logs in the fireplace to warm a house in winter (the few times one needs to do so in these environs) as I do. It can be a pleasant enough smell. Except in this instance, it's the smell of communities dying. Or at least undergoing significant body blows. The concentration of particulates in the air south of San Francisco is high—among the highest recorded in the SF Bay area. Ever. My wife tells me that trying to run in it is at best challenging. She gave up after a half mile. I don't run, but I can attest to the effects based on how sore my eyes have felt when I've been outside for more than an incidental period for the better part of the week.

This invasion of particulates has its origins in the North Bay, with those particulates noted (and impactful) 80-90 miles to the south in the South Bay. In the North Bay, the area is known as Wine Country. One of the tourist Meccas of California. Fire. Lots of fire. We have such fires on a regular basis across the state. When I lived in San Diego a few years back, we had such fires just northeast of the city. At their height, the fires were moving a football field every 5-10 minutes. We were about 7-8 miles from them—you could smell the burning wood but no vision of the fire. That didn't mean there wasn't concern. Sometime one afternoon, the local authorities concluded that with the breezes would push the flames across I-15, where a last ditch effort was being mounted to staunch the spread of the burn. Evacuations were ordered.

It's one thing to see an evacuation like that in New Orleans in the wake of Katrina. It's another to be part of one. In this case, 750,000 plus persons evacuated. Going up I-5 near Camp Pendleton. Something I can't recommend as one of those life experiences to be savored.

In the North Bay, there are a variety of fires with lots of evacuations. Some are for communities likely familiar to enophiles—particularly those of Napa and Sonoma wines. For instance, Calistoga, a quiet community of 5K or so persons. There are wineries all around it, some award-winning, most not. Lots of vineyards. Only 15 or so wineries are known to have burned to the ground, but it seems likely there are others still to be found. An energetic effort is being mounted to staunch the flames from jumping across State Route 29. With 40 mph winds expected tonight, I have my doubts about the chances of success.

A friend of mine lives (or at least lived) in Santa Rosa. She's at least 10 miles from any forested area. According to the last appraisal (about 3 years ago), she had an art collection worth $8-9 million. Past tense. One of her neighbors snuck back into the neighborhood before being noticed by the MPs and escorted out and told my friend that her house no longer exists. Her husband's prized XKE that he was restoring was still in what had been the garage, its tires melted into the concrete floor, the green body now covered with acidic ash. He doesn't know how disfiguring the ash might be, but he's hopeful that there's something left to work with. My friend is prepared to find otherwise. They left the house with about 5 minutes before the fire hit—and they weren't cavalier. But it's hard to know to evacuate to avoid a fire moving 3 football fields every 5 minutes. Or least thought to be moving that fast.

The areas of the fires are still off-limits because of concerns of re-burning or simmering embers. We'll see soon enough, I'm sure. As the number of wineries impacted goes up, so do the lost jobs. I guess the rebuilding will generate jobs too, just not those that the employment-displaced have the requisite training. Then there are the hotels and restaurants and the rest of the now no-longer functioning tourist industry. Gone. At least for a little while. Long enough that many of those in those communities living from paycheck to paycheck are already assessing where to move to be able to provide for their families.

Once the fires have been extinguished, the assessments of the damage will begin. Expect those estimates to rapidly climb. An estimated 5+ percent of the housing stock in Santa Rosa is now gone. Scenes of those neighborhoods look like pictures of Berlin after WW2 (or Hiroshima after the appearance of Little Boy). If the winds fulfill their feared effects, other parts of Santa Rosa will also cease to exist. The current estimate is that there's at least $1.5 billion of damage just in Santa Rosa, but an insurance adjuster who lives in the area opined on the radio this morning that that amount is "way low." How low? He paused and said that while it wasn't Harvey, it would be "significant just in Santa Rosa." He refused to speculate on other areas. Lest you think that the damage is limited to Calistoga, Santa Rosa, or Sonoma, consider: the eastern side of Napa (the city) has been progressively evacuated. There's still many residences between the fire and downtown, but the country fire chief said at a press conference this afternoon that if the 60 mph winds predicted for tonight, downtown Napa will be at risk. He's not sure how to stop the fire from moving west after that. There's too much wood housing stock available to burn on the west side of the city.

How will this end? Possibly over the weekend. Possibly not. While the winds are forecast to return tonight, the temperature is expected to warm into the upper 80s/lower 90s on Sunday/Monday. Perfect burning weather. Perfect for re-ignition. Maybe the firefighters will get at least enough of a respite to catch some sleep before again take on an earthly form of hell. So even if you hear that the fires have been controlled and the worst of it has now passed, don't be surprised if those statements turn out to be off the mark.

Shangri-La indeed.

Jim Sogi writes: 

My theory is the smoke and ash will block the sun, cooling the air down, and seeding the clouds resulting in more snow, and cooler temperatures this year. While its good for skiing, I wonder if it will affect agriculture and commodities in Western US?

Anecdotally, there have been early snow storms across the West this year. One ski area in Colorado is opening today.

Oct

12

 I recently got conned also about my books which I love and are part of my soul. Out of clear blue sky like Mr. Grain's mom, I get a call from a letter dealer. He's been refraining from contacting me the past 25 years because he's such an ethical guy and didn't wish to compete with the other dealers he sells letters to and then I buy them.

He comes to my house. And he sees lots of rare books. Well he can recommend a great book dealer who can give me a great deal, a special deal. But because there is some mold on some books, and they can't tell the condition until they see them, I am recommended to ship all my books to the dealer.

"Okay, I say, but don't send any books worth 2,500 or less. I go to the book dealer and I'm thinking about my trades and Aubrey is there. They offer me 350,000 for 200 books and I say I'll reflect. They raise the offer to 400. I wasn't thinking and because the books are part of my heritage, I didn't look at the list of books they took. I like to do a deal, and since they're recommended by my letter dealer as special and I've done much business with the book seller before, I say yes.

Then I realize that I sold 200 books with min of 2,500 and max of 20,000 for about 1200 a book. I immediately write back that I'll pay them a 100 break up fee if they cancel the transaction. "You see, they can't do that because the books are already in play. The letter dealer then tells me that "how did you expect me to be compensated. Of course I was partners with the book seller".

Every day, I make a mistake like that in the market. But it doesn't hurt as much because the books were part of me as my parents had more books from the book sellers dump than I had and I loved the books. I still think about it every night, and haven't gone into my library in the 3 weeks since the con.

Aside from Mr. Grain's mol, I am the easiest to con in the world.

Another con is to involve the victim in some wrongful behavior so that he doesn't wish to bring in the police. Frank Perdaux was great at that in the railroad con where the confederate whispers to the mark that he can see the hole card and therefore they are sure to win. The confederate also shows empathy with the mark by joining him in fleecing the southern rube who is so brash and naïve and saw the women in scanty clothes.

One of the most reprehensible things to me in the recent con played on me is that the con man read my book and knew I loved and admired my dad. The con man sent me a video of his father who supposedly was a colleague of my dad, to show me how he respected his father just as much. To add icing on the cake, he told me how his son was a great basketball coach and had the integrity of Cato refusing to bow to the rough and tumble unethical behavior of the other coaches. It was a very nice touch but it still rankles. 

Bo Keely writes: 

I enjoyed your post on being conned. You have read as many books as I about getting conned, but the most important point they omit is that a smart person is conned when he is rushed or tired. I have tried to solve this in my daily transactions that are susceptible to cons at Slab City by mentally causing myself to pause before saying, or signing something. When money is flashing, I reinforce the pause by stepping back. I only make mistakes when I'm compromised, and imagine you are about the same. Regards to your rare letter man. 

Oct

12

 A call for preventative measures–less Lamotta, more De Niro?

"Raging Bull: First study to find link between testosterone and stock market instability":

"Based on our findings, professional traders, investment advisories, and hedge funds should limit the risk taken by young male traders," continued Nadler. "This is the first study to have shown that testosterone changes the way the brain calculates value and returns in the stock market and therefore- testosterone's neurologic influence will cause traders to make suboptimal decisions unless systems prevent them from occurring."

anonymous writes: 

That paper fits in well with the overall plan to feminize males in the West. I'm sure this latest generation won't have to worry much about high T levels between the estrogenic impact of leftist culture, environmental toxins, and hormone treatments in youth.

Oct

11

 Recalling that the panic of 1907 was caused by insurance losses after the San Francisco earthquake, today I see an estimate that more than 11,000 homes in Santa Rosa and Napa with a value of more than $5 billion are at risk of fire damage.

Indeed whole sections of the city in Santa Rosa are burned to the ground (my nephew has been displaced as he was staying at a friend's house, and the house burned down).

Oct

11

 I was confronted on a public road outside Slab City by two men in a battered green truck with an old emblem on the side that was so scratched and dusty that it was obscured. The men's uniforms were so wrinkled that their names could not be read, until one at my demand smoothed it out to be legible.

The men harassed me for 30 minutes, or tried to.

They said they stopped me for not having a front license plate, and because I was on a private irrigation road. It was a properly plated Arizona car, and the road is public. They were also concerned that I was driving in underwear. They had zero knowledge of the area, laws, and admitted it was their first time to patrol here.

I would not let them search my vehicle.

One went for his gun, and I asked him to identify his home office.

They provided a Fish and Game office in Los Angeles that I've contacted, and been told they don't have officers by that name, nor that they cover this Imperial County.

There was an unoccupied old tow truck parked a mile off as I drove away.

I've written various authorities telling them of the unprofessional conduct and possibly masquerading officers. The thought is that they are 'trick or treating' in trying to search and steal from my car, and to be in cahoots with a tow truck to 'impound' new model cars to their own disposal.

There currently also are two men in old auctioned sheriff's cars with uniforms and badges who are canvassing the area who have been identified as bogus.

You should ask for identification in this season before trick or treating.

Oct

11

 Publisher's Clearing House directs it's advertising towards the elderly. The advertising format of Publisher's Clearing House (PCH) attracts con men who piggyback on their message and try to extract as much cash as they can from the elderly and unsuspecting by declaring them winners of the big prize.

This hit close to home this week. A few weeks ago, my mother in law called my wife to tell her that Publisher's called to inform her that she won the grand prize of 70 million dollars and a new Mercedes. My wife, ever the skeptic, told her mother that she didn't believe the whole thing, and please don't send any money. Mother in law assured my wife that she didn't send any money.

She mentioned a lawyer/representative of PCH she spoke to who was named Dave Sayer (an actual prize patrol spokesman of PCH). My wife googled this name and got a zillion hits of this Dave Sayer/PCH scam and how to know it's a con. My wife called back and told her mother it was a scam but my MIL didn't believe her. My wife then reported it to the state Attorney General's office, and had one of the officers call my MIL to inform her that this was a total con.

After speaking to my MIL, the officer then called my wife back and said that my MIL had indeed sent cash to this guy via Western Union. She sent $6,000 cash, at least that's what she admitted. The officer thinks it was probably much more as most victims won't ever admit the true damages. My wife confronted her mother to tell her to not send any more money. My MIL said that her money is her business, and to butt out. The problem is that she believes the guy and expects to have a brand new Mercedes delivered this afternoon (Oct 10) and her check for $70 million by the end of the week. Of course it won't show and she can kiss her 6K goodbye. She won't get her 70 million either.

Incidentally, the 6 grand was the tax and delivery charges for the Mercedes. Here's the deal, my MIL is in her early 80s and is quite aware of things. Her mental facilities are not diminished and she's quite bright. Her problem is that she does not believe that people would call on the phone and misrepresent themselves. She thinks she's streetwise enough to recognize a con. The MIL believes in the goodness of human nature and is also a old South Christian woman. She is quite naive and she's also $6K poorer.

My MIL does not think she has been the victim of a con at all, quite the opposite, she is ready to drive her new Mercedes and is ready to sell the Toyota I bought her last year. One thing she does have that all con victims share is an out sized sense of greed, of getting something for nothing. She was never a customer of Publisher's Clearing House. Needless to say, we are very heartbroken and also upset that despite being shown the truth, she is waiting at home for her new car and $70 million. Somehow, I feel that this is going to come out of my pocket.

anonymous writes: 

Anecdotally, I've noticed that the elderly seem very susceptible to being catfished also by Nigerians and others, even if they don't otherwise appear gullible. I guess hope and loneliness are very powerful emotions to be exploited.

Sorry to hear about the MIL and the fact you'll probably being paying for it.

anonymous writes:

Everyone should be aware of this Phishing scam. It almost snagged me and I'm not "elderly" (in actuarial terms at least).

I received a text on my cell phone that says: Alert from CHASE Bank : Your Debit-Card is temporary Locked. Please call us now at 201-754-1565. Thank you for your time

There are two clues that this is bogus. (1) The word temporary is a typo. They meant temporarily. (2) The call back number is in New Jersey. If the text had no typo and an 800 number and perhaps the last 4 digits of my debit card, then I would have called them and been phished. Instead I blocked caller ID and called the number and heard a legitimate sounding Chase autoanswer voice, which detected my caller ID blocking and hung up on me.

I've heard of scams like this during which they record you saying the word "Yes" and then use your recorded voice to purchase goods/services/transfer money. Or it could just have been an attempt at identity theft. Regardless, I forwarded the text to Abuse@Chase.Com and Chase shut down the scammer….for now at least.

It's a jungle out there. Robo callers/texting/emailing makes the marginal cost of solicitation close to zero.

Oct

11

 Ayn Rand's "Atlas Shrugged" turns 60 years old today.

I was around 12 years old when I first read it and can say that the book opened my eyes and changed my life.

I still look at people in the news and try to assign characters from the book to them.

One does not have to look very far to find a James Taggart or Wesley Mouch.

Finding a Hank Reardon or Dagny Taggart is a little tougher these days.

"Stossel: Ayn Rand–The Author People Love to Hate"

Oct

11

 "A supplement that may block the toxic effects of alcohol"

My friends in the nutritional supplement community tell me that you can enhance the metabolism of blood alcohol to acetate, carbon dioxide, and water and minimize the acetaldehyde molecular logjam by taking oral supplements. L-cysteine, vitamin C, and vitamin B1, which are purported to help.

At supplement doses, they are cheap and harmless at worst. At best: Goodbye, acetaldehyde toxicity; hello, restful sleep. About 200 mg of L-cysteine per ounce of alcohol consumed is sufficient to block a major portion of the toxic effect of acetaldehyde. But because alcohol is absorbed and metabolized rapidly, it may be necessary to take L-cysteine before and concurrently with consumption to maintain protection.

Also, an excess of vitamin C (perhaps 600 mg) can help keep the L-cysteine in its reduced state and "on the job" against acetaldehyde. Experts recommend these doses (with or without extra B1): one round before drinking, one with each additional drink, and one when finished. Some say that this regimen works very well.

Oct

10

I stumbled upon this tool on the RA website. It's by far the best one I've seen (for free). It allows you to see historical risk/reward for different asset classes over different time periods, efficient horizons, expected future returns, various blends, mixes, blah blah blah. It really is superb.

Oct

10

 The Columbo series showed a different kind of detective mystery.

Instead of starting out with uncertainty and finding the perp, it starts out with a carefully documented murder, and then the plot is "how to catch him" rather than "who did it".

For a linear difference equation there are only 9 shapes that the dynamic solution can take. Depending on the y(t) = b(y(t-1) + a how are these two paths to the solution related.

Right before I go to sleep I like to play with a good difference equation preferably second order. It's often a fibonacci.

Oct

10

They vet you in Stockholm to see if you're a fellow traveler before giving you the Nobel, and I guess this imposter passed the test.

Pitt T. Maner III writes: 

The lack of overreaction must be very puzzling.

Of possible interest–NNT has been very critical via tweets and made note in retweet feed of Swedish/Dr. Nudge affinity for a "cashless society". Perhaps risks/dangers of… With that it must be time for a Fika.

Oct

8

 Fans of confidence games will thoroughly enjoy the ESPN 30 for 30 podcast called "A Queen of Sorts" detailing the elaborate con pulled off by "Kelly" Sun and her whale, poker star Phil Ivey, to fleece multiple casinos worldwide out of tens of millions of dollars. The play is revealed in elaborate detail by a panel of experts who have reviewed the surveillance tapes to peel back the layers behind their method– edge sorting.

All elements of the classic con are represented. First they must grease the wheels. Taking advantage of casino's bias that Asian women are "stupid and superstitious", they banter with purpose, seasoning each new dealer. Next come the small requests that they need granted in order and to a T. Little by little, they sort the deck without ever touching the cards. By the time the play is set, they have a 6% edge on each hand of baccarat - at $150,000 per hand. Huge winnings ensue.

But they encounter a new problem - how do you get out the door with $10 million of a casino's money? I made the wife and kids listen during dinner one night and while they protested like a pack of wild wolves in the beginning, by the end of the meal they had every deck of cards in the house out searching for irregularities. Tremendous. Enjoy.

Jeff Watson writes:

I followed this closely. Ivey did not cheat and was brilliant, that's all. It wasn't a con, just good gambling and he beat the house fair and square. Casinos always welcome you to come try out your "system." This is an example of what will happen when your system works well. The casino will cry foul and welsh.

Oct

8

Interesting paper (Capital Structure Dynamics and Stock Returns, 2006) on debt ratio as a predictor of stock returns relating to companies issuing equity reducing debt ratio when stocks too high and against signaling theory that companies issue debt when they are sure they can pay the interest back. Calls for an update.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=685462

Oct

7

 The past summer @ Slab was the first 'indecent' period in anyone's recollection. Nobody could figure out why, so I did. The two strongest personalities in the area 1 year ago died of meth heart attacks. They were good, decent guys. One was the drug lord who I did medical & legal for. The other was the primary Slab strong arm and part-time arsonist. Each represented what the Godfather wanted to be. After they vacated, wanna-be enforcers quibbled for the alpha position and none possess the chutzpah to pull it off. Without limits, this outlaw town fueled by meth has gone haywire. The atrocities have been sad, interesting, and newsworthy.

Oct

6

 Victor Niederhoffer writes to David Hand:

I am good friend of Steve Stigler and recently read and recommended your book. I came across an interesting coincidence in our mutual field. Every day I post a colored graph of 4 possible outcomes of directions of bond and stocks previous day. 11 of the last 16 occurrences have been yellow days with stocks up bonds down. The binomial prob of that is 1 in 10 million or so. I point out that events have to happen. And this is one of many billions of starting stopping pts and outcomes. Still it seems like an anomaly as I point out, the more important question is what does it portend for future. What's your view? Random or not?

David Hands replies:

Hi Vic,

Thanks for recommending my book!

Can I first check the basis for your calculations. (I may have misunderstood what you meant.) If we take a simple model in which the probability of each of the four types of up/down pairs is equal, and the days are independent, then the probability of getting 11 out of 16 having (stocks up; bonds down) is Choose(16,11)*(0.25^11)*(0.25^5) = about 1 in 4000?

But you presumably chose (to comment on) the pattern (stocks up; bonds down) after having seen the data. So if instead we say what about the probability of any one of the four patterns coming up 11 out of the 16 times, then we have four times the probability. So, now it's 1 in 1000.

That sort of calculation would be ok if we simply had a set of 16 days to look at. But, of course, we are scanning across time. The longer we go on, the more we should expect apparently anomalous sequences to crop up. For example, we should ask not 'what is the probability of getting 11 out of 16 the same?' but 'what's the probability of getting 11 out of 16 consecutive days the same over the past 1000 (or however many) days?'

I really liked your website, which I had not seen before.

All the best

David

Professor David J. Hand Imperial College, London

Pitt T. Maner III adds:

A 1 hour lecture by Prof. David Hand on this subject (2014) is available here.

I was watching Professor Hand's lecture and thought it amusing that he found himself in a situation where a man with his same name was staying at the same hotel at the same. This reminded me that at the University of Alabama about 39 years ago I had, if my memory is right, a Professor Hand for an advanced, introductory chemistry course who was a Harvard graduate. Ironically, the chemist Dr. Hand liked to grade on a curve and on his first test the grade for a "C" was 35% instead of the normal 70%! The first question on this first test involved multiplying/dividing two large numbers and determining the number of significant digits–this took about 15 minutes of the allotted 1 hour test time to do with a calculator but was only worth 5% out of the 100% perfect test score– such a tricky fellow. Now the professors get rated online by the students!

Oct

5

 Anarchy is the absence or nonrecognition of authority. Once you pass the abandoned guardhouse into this village limit, you live outside normal laws. To be governed is to be watched over, spied on, inspected, directed, legislated over, regulated, indoctrinated, preached at, controlled, censored, and ordered about by people who have no right, nor knowledge, nor capability to do so. There is no government in Slab City.

Most of the residents are avowed anarchists. They have asked themselves in the past, why should any of us bother to get up in the morning to work our asses off to produce goods and services that only make an America we no longer agree with? The ones who have honestly answered that packed up and moved to Slab City, establishing a new home in less time than it takes to read The Anarchist's Cookbook.

There is not a single uninteresting person in Slab City, which cannot be said of anywhere else in the USA. It is a village of uncommonplace people doing odd things at all times of the day and night. The arriving children think they have slid down a slide across America into the Mars McDonald's playhouse.

They slide in, the grinning sons and daughters of the storm of their parents' lives, from traveling many miles cross country. This is the childhood moment when the door opens and the future is let in. For one family I recall as typical, the kids were a mess: two rubber tramp parents, a rust bucket car, suitcases filled with souvenirs from ten states, a bag of dumpster food, and no plans. It felt fine. They hit the Slabs running barefoot and haven't quit.

Most of their cars break down soon after arrival, or there's no money for gas, or the wheels are stolen in a whirlwind economy. The families become shipwrecked passengers in an anarchist theme park where freedom rings.

Their words of mouth pass by Facebook and online forums. Even the poorest wreck of a straggler has a phone he texts on. The lemming like nature of humans never ceases to amaze me. They get the online green light, and just start walking, thumbing, carpooling, dogging it on Greyhound, or riding westbound boxcars.

They struggle into town, up a hill of hope, and looking for a slab.

Two kinds of misfits are cast upon the slabs: The first are driven, and the second drawn. The former are more interesting, crying about how lonely it was to be drowning in a society where everyone else could swim, and so they braved into this new world. The latter who are drawn, like me, walk the lonely streets in slow motion, as observers.

There is nothing quite as sensational as a collaboration of misfits. There is an initial segregation across the slabs, as puzzle pieces are divided on a table before the final picture, of the gregarious who camp along the main stems where you can hear your neighbors climax, and the introverts who occupy the outlying campsites where they may rise each morning out of eyesight. There is a continual shifting of camps, as individuals and groups grow trusting of one another, or are squeezed out, burned out, or robbed out.

I dip daily like bobbing for apples into town to scout for green pioneers whom society has designated as outcasts, and step up to learn from them. I've discovered there's a little anarchist in everyone, which just has to be recognized.

Oct

5

Market cap to annual unit sales

GM - $6,374

Ford - $7,384

VW - $8,276

Toyota - $11,864

Tesla - $1,158,741

At a market cap of $22,000 per unit sold, Tesla needs to sell 2.7 million units per year. Ain't gonna' happen!

Markets can remain irrational longer than you can remain solvent.

Oct

3

 Toria my 4th daughter's boyfriend is a dealer in the Bellagio. He was dealing there when the shooting started. As predicted, the poker did not stop, thereby replicating the situation on the titanic where the gentleman continued their backgammon game until they sunk and the band continued playing.

Stefan Jovanovich writes: 

The White Star Line invoiced the heirs and family members of the ship's band–for the cost of the unreturned company uniforms.

anonymous writes:

The sinking of the Titanic was a harbinger of change — for some things. (Below is an excerpt from the book And the Band Played On by Christopher Ward. Ward's grandfather was the Titanic's Violinist.)

But the Titanic revealed changing social attitudes, as well as atavistic ones. Andrew Hume, for instance, did not pay the bill for his son's uniform. He forwarded it to the Amalgamated Musicians Union, which published it without comment in its newsletter. Public opinion was beginning to assert itself. More than 30,000 people lined the streets of Colne in Lancashire for the funeral of the liner's bandmaster, Wallace Hartley, who, with the rest of the band, had heroically played until the end to maintain calm.

If White Star learned nothing from the consequences of its recklessness, its employees did. A week after the sinking, 54 stokers and firemen, most of whom had lost a father, a son or a brother, walked off the White Star liner Olympic when they discovered there were insufficient lifeboats to accommodate the passengers and crew. They were arrested for mutiny, but the magistrates discharged them. They returned to the Olympic, whose departure had been delayed by a fortnight, to find 16 additional lifeboats.

The captain and crew of the Mackay-Bennett also discovered that the old order was changing. Having risked their lives sailing more than a thousand miles into ice fields, they might have expected to return to Halifax as heroes. Instead, they were the subjects of a public storm, for they had come back with only 190 corpses, having buried 116 at sea. What made the difference between a body being tipped overboard and one being brought ashore? The purser's conscientious descriptions provided the explanation: tattoos or a foreign-sounding name.

Oct

3

 1. The moon moves slowly but it crosses the town
2. By the time the fool has learned the game, the players have dispersed
3. It is the calm and silent waters that drown you
4. The fools sheep break loose twice
5. Don't test the depth of water with both feet
6. You cannot build a house with last year's summer
7. Around a flowering tree one finds many insects
8. A white dog does not bite another white dog
9. If a dead tree falls it carries with it a live one
10. There is no cure that does not cost
11. An eel that was not caught is as big as your thigh
12. Cross the river in a crowd and the crocodiles won't eat you
13. He who wishes to barter does not like his own property
14. A wealthy man will always have followers
15. If you run from the white ant you may stumble upon the stinging ant
16. When the mouse laughs at a cat, there is a hole near by
17. If you rise too early the dew will wet you
18. If you climb up a tree you must climb down the same tree
19. Events follow one another like the days of a week
20. Everything has an end
21. Darkness conceals the hippopotamus
   

All from African Proverbs compiled by Charlotte and Wolf Leslau

Jefferey Hirsch writes: 

When an old man dies, a library burns down. — African proverb

This is one of my favs. Wish I knew if it was from Kenya or Congo or Sudan or Somalia, but I don't. 

Oct

3

 I have a friend who lives in Colorado in a place called Ajax Canyon. A beautiful, inspiring place for sure. A few years ago he lay near death after being "attacked" by a rogue cow on his Montana ranch. Thankfully, his story had a happy ending. He told me that when he was being pummeled by the mad momma cow, with his wife watching in horror, his one thought was, "Is this how it ends"

I want to share a near fatal tragedy that my beautiful wife, Pam, had this week on the Yellowstone River. Maybe you can see yourself in this story or in a similar situation and it may help you or someone you know. I still haven't discussed with Pam if that were a question she had time to ask herself. Truth of the matter, there is a whole lot of gratitude in our hearts and minds today. It wasn't her time.

Life happens fast. It was an absolutely gorgeous day in a canoe on the mighty Yellowstone River. A big blue sky, fluffy clouds, slight breeze, old cottonwood trees doing what they do best this time of year, turning green to gold. The river was running a bit high for this time of year from a couple of feet of snow in the western Montana mountains days prior. Pam and a couple of girlfriends who go back a scant 30 years were enjoying a day on the river. One of her friends, Lisa, was in the kayak; Pam and her friend Laynne were in the canoe.

They were enjoying the trip, looking for good spots to hunt agates on the islands and river bank and letting the current make paddling easy for a few miles down to our beloved, Ghost Ranch. Lisa was ahead in the kayak and enjoyed a quick freefall as the kayak slipped over a submerged cottonwood limb. Pam and Laynne tried to veer and steer the canoe around the limb but the current was too swift and the canoe turned sideways briefly before ejecting them. It was such a close call. Pam was sucked down in the current under the log and thankfully there was no debris to grab her life jacket and drown her. Laynne was sucked under as well, both popped up unscathed.

The speed at which the canoe flipped and the speed at which the current suctioned both girls and the canoe down under the log were in near nanoseconds.

Thankfully all is okay. The waterproof bags protected camera gear, binoculars and some lunch. The only thing lost was a cell phone and a few credit cards; I doubt those Yellowstone catfish shop at Nordstrom or Macy's!

On the river of life the moral of this story is simple. Remain vigilant. If at all possible, steer clear of the rough spots ahead of time. Know what to look for. Don't allow complacency no matter how nice the day. For sure, get in the current to make things easy but keep your eyes open. Never stop looking for the rough spots. Many meals for a lifetime in this fall outing to remember.

I am blessed to be enjoying a beautiful October day in Dallas Texas instead of planning my bride's funeral. For her, it wasn't how it ends.

Oct

3

 It was a cool, crisp morning as I climbed into my black Toyota Tundra "Rock Warrior" pick-up. I was sporting my "Adrenaline" t-shirt and work jeans. My feet were shod in 8" Danner boots. I popped on the radio and quickly changed the station from conservative talk to country music, and took a gulp of a coffee from my thermos. I wasn't in any particular hurry, but once on the highway, I was quickly doing 80, and then 90 mph. After all, it was a beautiful day, I was riding high, and I was feeling good! And although, I have a perpetually heavy foot when driving my truck, I've never been stopped on the interstate. I believe the state troopers can relate to the blue collar working stiff, and will give them a pass, more often than not.

This is in sharp contrast to the way I comport myself when driving the family SUV. I drive much more conservatively, even if the family isn't in the vehicle. And, the same phenomenon is present when I drive one of my children's (purposefully) under-powered vehicles. I've come to realize that my mood and demeanor while driving, is affected by my proximal environment, which includes the car I drive, the music I play, the lighting conditions and even my core beliefs. In the pick-up I'm the cowboy, and in the SUV I'm the family guy. I'll probably be doing the speed limit when listening to classical music in the Lexus, but be speeding along at +90 while listening to "Highway To Hell" in the truck, except on those days when it's raining or overcast and the light is flat as pancake; this cowboy is inevitably knocked-out of his emotional saddle.

Understandably then, it's wise to be aware of, and attentive to, one's environment, mood, and personal convictions - they may underlie inaccurate perceptions of oneself and others. This is directly applicative to how we organize and frame our perception(s) of the market, because a dialectical tension between Bayesian reasoning and the need to be right is constantly there. To simplify the process traders often use schemas to organize and interpret information. In psychology and cognitive science, a schema describes a pattern of thought or behavior that organizes categories of information and the relationships among them. The problem with these heuristic shortcuts, is traders who organize new perceptions into schema(s) have a tendency to leave them unchanged, even in the face of contradictory information. This can cause them to interpret situations incorrectly.

A trader's awareness of his physical trading environment can certainly have an effect on a traders performance, but nothing like the effect of his cognitive focused awareness. An attitude and approach that utilizes the concept of mindfulness, or being aware of and attentive to the current situation and personal moods; and the skills to control intense emotions, and reduce self-destructive behaviors, is always going to be best practice. Emotional predictability and the ability to reframe schemas may be just as important a step in problem solving as analyzing the market itself. In only this way, can one identify and change core beliefs and/or behaviors that underlie inaccurate perceptions of themselves and the markets.

Oct

3

People have a propensity and desire for a story to explain the events that occur. These often reflect spurious correlations. An extreme example would be the schizophrenia where a narrative is created from real or imagined facts that to most don't make sense. A similar thing occurs when humans create patterns out of random elements, for example star constellation showing pictures, or trends in random stochastic data. News often falls prey to this when they say stocks up on x or y occurring as if it is a story with causal links.

In large complex systems it is very difficult to accurately discern the causal chain of events, and even more difficult to predict. Simplification and reducing variables can help though.

Oct

3

 I am rewarding my son for getting an after school job as a server in a popular nearby restaurant. He is making great tips and a bi-weekly check and promises me that the job will not be an excuse for a reduction in grades at school. He is in that exciting phase of life—drivers license, first car, first regular job, cash in pocket, etc. I opened a roth ira custodial account and learned that I could have done it sooner for him since he was already working around the house via chores and some other odd jobs that were not as regular as what he is doing now. My understanding was that his direct deposit regular paycheck had to be established that proved that he was employed to be able to have the ira. I also thought that funding of the account had to come from the income source. But no. Only I can fund the account, access the account (till he 18y/o), make trades for the account till he is 21y/o. There are no proof of income papers to sign, etc. So I want to harness the engine of compounding and unleash the power of the natural upward drift of the market for his time horizon.

So with the market up since 2009 –one of the longest bulls in history; how does one invest these beginning funds for the next two to three years. Obviously I would love to buy no load index funds during panics if possible. I offered my son a matching contribution from me to him for the next two years–making him understand that money put into the ira cannot be taken out till retirement to help get the fund started and some wise investing habits instilled. All ideas on funding would be appreciated.

Oct

3

 This spring Las Vegas gave 14-to-1 odds on the San Francisco Giants winning the World Championship. They gave roughly the same odds to the Houston Astros and the Washington Nationals.

Here are the 3 teams records as of the end of the season:

Houston 101 wins, 61 losses, .623, won the American League West by 21 games

Washington 97 wins, 65 losses, .599, won the National League East by 20 games

San Francisco 64 wins, 98 losses, .395, finished in last place in the National League West, 40 games behind the Los Angeles Dodgers

The Major League Baseball Giants have won more games than any other team in the history of baseball. They have the most victories of any professional sports team in American history. There are more Giants players enshrined in the Baseball Hall of Fame than any other franchise in MLB history.

The last time the Giants were this bad was in 1984-1985 when they finished last in their division both years and were a combined 68 games under .500. In 1985 they hit bottom, winning 62 games and losing 100.

Steve Ellison writes: 

Anybody thinking of taking such bets should follow the strategy outlined by Bacon to assess the probabilities implied by the odds and the resulting house edge. For example, if the Giants are at 14-1, the implied probability is 1/15 or about 7%. Now consider the odds on every other team and see what they add up to.

The last time I did this with the odds to win the Stanley Cup at a casino, the total percentages added up to 167%. That works out to about a 40% house edge! That seems an impossible level of vig for finding an overlay.
 

Oct

3

 My image of a child is where teaching begins. For this, I need only remember myself as a kid. Children come into this world exquisitely designed, strongly motivated, and very capable of educating themselves. The art of teaching is assembling guideposts on their life paths. Every day, in a hundred small ways, children ask, 'Do you hear me?' Do you see me? What am I? Do I matter?' Teaching is about opening doors for them to places that they could not imagine. This is my bucket list of what they should find.

Think - It is the mark of an educated mind to be able to entertain a thought without accepting it.

Reason – Analysis is a knife applied to experience.

Act – Act whenever there is a choice to do nothing or to act.

Master yourself – No one is free who is not master of himself 

Read – The well-read differ from the unread as much as the living from the dead.

Exercise – Exercise is to the body what reading is to the mind.

Travel – Develop perspective that is not found among friends.

Limits – Become aware of your physical and mental limitations; with those borders learn your total puzzle.

Know thyself – To know yourself completely is to know one's conscious and unconscious.

Edge – Repeated small advantages win large prizes.

Danger – The most dangerous man, in any group, is the man who is able to think for himself.

Individuality – The individual struggle to keep from being overwhelmed by the tribe is worth it.

Hard work – There are no shortcuts to any place worth going.

Pain - Pain makes you stronger, fear makes you braver, heartbreak makes you wiser.

Self-motivate – Start a fire under yourself, and create goals.

Mess up – Mistakes are stepping stones to success, and don't give up.

Habit – You are today because of yesterday's habits, that form tomorrow's patterns.

Thinking – Positive thinking is a crutch for the weak; stick to the facts.

Silence – Well done is better than well said.

Kindness ­- Help those who help themselves, but look out for #1.

Delay gratification – Little by little, through patience and repeated effort, the fruit grows sweeter.

Rehearse ­– Mentally and physically act out before leaping into it.

Comfort – The best things happen at the exit ramp of your comfort zone.

Leave it - What you cannot enforce, don't try to command.

Ask – To know the path ahead, ask those who are returning.

The road – Finding out who you are is the whole purpose of the human experience.

Goal – Finding your passion isn't about money and career, it's about supporting yourself doing something you like.

Parents – Model the kind of behavior you want your parents to exhibit.

Religion - Attempting to use religion as a nationalizing agent is bogus.

Children – Never help a child with a task he can go alone.

Now go out there and be authentic.

Teaching kids to count is fine, but teaching what counts is more important. One item a day is fast enough to empty this bucket. There are a month's worth, thirty days, 30 items.

It is easier to build strong children with this bucket than to repair broken men without it. When someone asks me about kids, I tell them two things: I was a sub-teacher with 30 children of my own, five changes a day, in all subjects at all grade levels, for seven years. And, there is a time to stop parenting; then I had a vasectomy.

I've come to the frightening conclusion that I am the decisive element in the classroom rather than the lessons. The teacher's personal approach and daily mood create the climate for learning. It is a powerful position being the weather in each of their days. I am the teacher who gives them something to take home to think about, besides homework.

Oct

3

 Rest in peace Stanley Rumbough.

One of his ex-wives, Margaretha Rumbough, is Swedish, lives in Phipps Plaza, keeps a wonderful, wild garden and is a very nice lady I have met. In the small encircled Phipps Plaza "park", Margaretha has helped to save a strangler fig tree twice that was knocked down first by Hurricane Wilma and now Hurricane Irma; a tree that I climbed as boy and fell out of and broke my arm on one of its shallow, surface roots. She takes an interest in the empty shops that have remained empty along South County Rd. and Seaview Ave. in Palm Beach that front Phipps Plaza in Palm Beach and regrets that there are no art galleries or other fun businesses in them yet.

I did not know Mr. Rumbough but I do know he was one of the few people who author Larry Leamer wrote well of in his book, "Madness Under the Royal Palms". And Mr. Rumbough was especially nice to Leamer even though Larry was a political opposite and certainly not "Old Guard".

To quote Leamer in the 2009 book: " Despite his age and the fact he lost and eye on the golf course, there is still an exuberant impish quality to the man. He loves Palm Beach with passionate loyalty and devotion. He loves the island the way he loves women, the sheer lines of Palm Beach, the nuances, the subtleties, the grace."

Oct

3

As a Las Vegas resident of the last 13 years, yesterday was devastating. The city has showed incredible resolve and fortitude. The combined efforts of first responders, police, and civil servants has been impressive. The city is also showing we are not a shallow transient town but a real community who has rallied behind the victims and each other. I ask for your thoughts and prayers.

Sep

30

 I've been watching the news observing the enthusiastic reporters. The rain is hammering them, the wind is ripping, and they are about a couple hours away from a supposed 12-foot storm surge. One reporter for instance is standing in Key Largo, which seems to be about 90 miles away from the eye of Irma. Not sure he even knows where he will go once this thing hits.

I guess they have these guys sitting on the bench waiting to get called up and sent into action. We could be witnessing a form of hazing or simply a rite of passage.

This is also apparent in some of the resorts you venture to during holidays, an analogy is the omelet station attendee. That role seems to be the very earliest of many steps towards hotel management, akin to "Hurricane Duty."

It's one thing to step up to the omelet station with that tall white hat, but putting down your savings and competing against some of the shrewdest institutions is quite the challenge.

I have learned that there are no minor leagues to trading.

Sep

30

Should an investment committee allocate more money to a manager who has been underperforming recently? Over a 20-year span, entire stock market return was earned on just five days.

See my review of Charley Ellis's "Winning the Loser's Game".

Sep

28

The NY Times and Bloomberg wrote about this new paper (August 2017) that purports to show that Tbills outperform almost all stocks over the long run–and that a tiny number of stocks account for all of the returns. I just read it. I recommend that you read it too–since it is counter intuitive.

I see several unrealistic/unspecified methodologies in this paper including (1) equal weight holdings from IPO to delisting of every stock; (2) no clear explanation for how the capital from mergers, acquisitions and spinoffs are handled; (3) where the new investor capital comes from to buy fresh IPO's and where the cash goes when a company is acquired for cash. I also didn't study his statistics carefully. Since most every company goes through a life cycle, it's intuitive that most will disappear or be acquired/acquire, so I need a better explanation for the investor's portfolio management/cash to really understand the practical. What other problems or unique insights do you see in this paper? Something just feels wrong here.

Do Stocks Outperform Treasury Bills?

Hendrik Bessembinder, Arizona State University. Revised August 2017.

Abstract:

Most common stocks do not. Slightly more than four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns, inclusive of reinvested dividends, less than those on one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the entire gain in the U.S. stock market since 1926 is attributable to the best-performing four percent of listed companies. These results highlight the important role of positive skewness in the cross-sectional distribution of stock returns. The skewness of multiperiod returns arises both from positive skewness in monthly returns and because the compounding of random returns induces skewness. The results help to explain why active strategies, which tend to be poorly diversified, most often underperform market averages.

Victor Niederhoffer writes: 

This ridiculous paper from anti stock which I haven't read and goes counter to the carefully worked and accurate work of the triumphal trio duly reported in all their yearbooks is an absurdity. Of course most stocks will underperform. That's the nature of cross sectional returns. The distribution has quite a few good winners. It's probably true of a normal distribution also. Certainly for the kind reported in the NYSE year book. Certainly for the stocks in any variant of the pareto distributions. How far will they go to undermine the value of equities. It's so absurd I can't begin to say how it would apply to most any real life distribution in any field like IQ's.

Stefan Jovanovich writes: 

Index investing works because it allows people to avoid the risks of trading; and most of us are lousy traders.

Enterprise ownership beats public investment in terms of ROI (not "Radio on Internet"); but the public markets offer the only way for entrepreneurs to cash out. We still own one of our start-ups; its annual payout as ROI has been greater than 40% annually for the last 38 years. But, we cannot not "cash out" by selling it to someone else. The actual market for private businesses that makes hundreds of thousands, not millions, does not exist. We have been able to "retire" - i.e. extend the life of the business beyond the time we directly manage it - by doing a private variation on an ESOP; our former employee now runs it as a part owner.

As for the tug of war between "capital" and labor, we have been lucky enough to escape Marxism almost entirely. The cash flow from the business is distributed using the New England whaling ship model of "shares". Keith, the captain and part owner, sails out into the unknown every month and we get our cut on what the barrels that he lands in New Bedford. What we all share - Keith, Eddy and her Mom, your pontificating correspondent, and everyone else in the crew - is a 19th century American sense of equality. We are all equal members of the enterprise in dignity and responsibility and everyone understands that what people "make" is a function of talent and timing, not innate worth.

P.S. Every business failure in my life has been a situation where the people in charge (including me) thought that talk about the business as "family" and a mission statement on the web site would do the trick. It didn't; it can't. 

Rocky Humbert writes: 

I read his paper again and was able to tease one critically important fact out of it.

Page 15 and table 2A/Panel C: 70.5 % of the stocks that are in the largest decile by market cap outperformed the Tbill with a 1 decade horizon. And 81.3% of those stocks had a positive return. It's only for the smallest market cap groups that a substantial percentage substantially underperformed Tbills. Look at that table carefully and you can look at your own portfolio and it all makes sense.

In essence — if you own the biggest companies, you have beaten the Tbill (as we know from experience), but if you own the smallest market cap stocks, you have not. This makes intuitive sense since there are only two kinds of small cap stocks — those that start small and end up big. And those who were once big and are on their way to 0. It's a rare and bizarre company that starts small and always stays small!

The press reports and paper abstract are written in a bearish sensationalistic manner. For whatever reason, he chose not to include the key point mentioned above in his abstract. Now that I found this fact, I feel like everything else is noise — except for reinforcing one lesson that I've discovered anectodally: individual price momentum on the way down matters. If you have a stock that was once a $100 billion market cap and is unfortunately now a $10 Billion market cap, you should take your tax loss and reinvest whatever is left in another stock. And not wait for it to go to zero…and definitely not keep averaging down. In contrast, if you bought a $50 Billion market cap stock and it's now a $100 Billion market cap stock, don't sell it because it went up a lot. The skew and history suggest that it will continue to do well. (Until it doesn't).

Sep

28

 Some prefer blocks, most like it crushed, and they all drank the ice melt.

I deliver ice at Slab City out of a childhood habit with mum dragging me around on a Welcome Wagon circuit. It is a decent thing to do, then and now.

I have one of the few have running vehicles, and the others who have them cannot afford gas, or do not have driver's licenses, so I dispense even to them. The delivery is every other day when the temperature exceeds 120F in the shade, which was most of the summer. The daily routine has been to rise like the milkman with the sun, hike a few miles before the sun wrings the moisture out of the air, and then pick up the best quality ice at, in order: the Gas Station, Dollar Store, Cafe, and Grocery Store. It fills the back seat, wrapped in sleeping bags, that chill longer than the best Coleman coolers.

I eat breakfast, and by mid-afternoon, when the citizens begin to stir from afternoon siestas in pools of sweat on their mattresses, I drive to their doorsteps, honk, and yell, 'Iceman!' A face presses against the trailer window like a Graham Wilson cartoon, or they simply kick the door open in request. Sometimes they crawl out, begging, 'Ice.'

My regular deliveries are to seniors, the handicapped, poor, and infirm. I take no advance orders, have no systematic route, and if someone is not home then the next person gets their ice. If there are sacks left over, I distribute them to the first walkers in the heat, that always brings smiles.

Ice on a hot day can snap a person out of a mean state quicker than a cool word. An iceman is someone who sells or delivers ice, historically, from a wagon, cart, or motor truck. The profession used to be much more common prior to the post-World War II spread of refrigerators and air conditioning. In even earlier times, hobos migrated to the northern states to cut and harvest the surface ice from ponds, streams and lakes for freight distribution throughout the country. There are still dozens of ice houses that stored this harvest sprinkled around the Slab City agricultural area. Many of the old-fashion small time routes were bought out in the 1990s by large ice corporations that produce and sell ice to me such as Glacier and Reddy Ice.

The tools of the iceman trade were wires to tie the bags, tongs, and ice picks to chip drinks. Nearly everyone offers me a cold drink after I deliver, before they touch theirs. I decline, sling a towel over my shoulder like an icemen of old a wet piece of sackcloth slung over the right shoulder to support and absorb, as I stand there waiting, dripping, for them to open, and then close, the doors.

Here are examples of the hot recipients:

· A single mom and her two infants

· An Alzheimered metaphysicist

· A penniless urchin

· The bull sperm man deserves an explanation. He takes delivery in an early 20th century 3'-diameter stainless steel bull sperm shipping container that resembles a scaled down Gemini space capsule. The double walls are filled with liquid nitrogen to hold a vat of precious sperm inside. I drop in two ten-pound bags that he says will keep it frozen for two days, and then he'll drink the ice melt with a long straw to the bottom.

· Two senior ladies on the route flash me with raised skirts, and one habitually yells 'The iceman cometh!'

This phrase was made famous by playwright Eugene O'Neil in a Broadway play by the same title about a group of dead-end alcoholics who spend every possible moment seeking oblivion in each other's company and trying to wheedle free drinks from Harry the bartender.

I don't charge anyone for the ten-pound sacks that only cost me $1.75. At the beginning of each month many residents have money, which dissipates like the night's cool air to a financial strapping in the last two weeks of the month as they have prioritized their immediate gratifications. I get a lot more out of this than just money - Some give me books, or sandwiches, ice beavers, or heartfelt IOU's that will never be paid. Every person who weathers the privation of a Slab City summer deserves a medal and psychiatrist gift certificate.

Slab City is unique because there is no one who does not suffer. So many cracked lips and so little ice. They are broken down into two group: those who deserve help and them who do not. I was called a communist for delivering ice, and responded that I only give to those who help themselves, but in the summer swelter no longer can. Suffering itself is not a value, but a person's fight against it is, and the lessons go appreciated. Giving something to the worthy becomes a fair trade to witness his virtue and listen to his stories. The golden moral is to not forget in your misery those who are more miserable and cannot help themselves. Even so, I selected to deliver to those who were suffering the most, or it would have been a full time job toward bankruptcy.

I was like the ice this summer, very important, for a while.

Sep

28

 To limit it to three major concerns, I suggest:

1. Having a significant number of blockchain apps come to market with a viable product

There are some already in production, such as OmiseGo and StatusIM. But more will need to succeed in the marketplace for this to be a fertile area of fintech development.

Some projects to watch are Augur (Ethereum-based), Golem (Ethereum), Gnosis (Ethereum), Factom (Bitcoin), Civic (Bitcoin), Air (Bitcoin)

There is a fundamental question of the viability of these projects as businesses. Undoubtedly, many will fail. Only time in market and experience can resolve these questions.

2. Beyond viability of blockchain-based business models, the more immediate barrier is scalability.

At the moment, the Ethereum network could not handle rapid-fire trading of prediction market contracts on platforms such as Augur or Gnosis.

These issues are expected to be resolved over the next two years through a series of technical upgrades. They will constitute "hard forks", which will probably resolve without any problems, but there is some risk.

Bitcoin has similar scalability issues that will need to be resolved to support apps like Civic and Air.

3. Regulatory and legal issues.

The ICO funding model holds potential for a revolution in capital formation. But most ICOs are in a legal grey area in most jurisdictions.

Favorable regulatory guidance will need to be issued to bring blockchain projects into the mainstream.

Sep

28

 I usually pay more attention to this kind of thing, but sometime last year, the last person alive in the 1800's died.

That seems weird to me and probably to many on this list as there are more than a few of us that personally knew people born in the 1800's.

Heck, I worked in a nursing home in 1985 with a women who was well over 100 years and vaguely remembers her great grandfather who was born in the 1700's (he was well over 100 when she knew him). That seems especially surreal to me…..I have talked to and touched the hand of a women who has talked to touched the hand of man who was alive during the Revolutionary War.

That means that there's a "one person bridge" between me and the time George Washington lived.

The oldest living person alive today (according to google.com) was born on August 4th 1900.

What does all this mean?

Somewhere in the next few years, we will pass a point in time where no one alive today was alive when someone born in the 1700's was still alive.

Here's an interesting article on the subject:

"Who Was the Last Person on Earth Born in the 1700s?"

What does all of this have to do with investing?

Well the market, as Vic always mentions, has a very nice long term positive drift. And it can be a fools errand to try and go against that drift.

The market is reflective of the human condition. As humans, we've drifted from caves, to huts, to wooden houses, to brick house, to buildings and to sky scrapers. The trajectory of mankind is the trajectory of the market. A nice upward positive drift.

But all that positive drift does us no good, if we're caught in one of the violent draw-downs at the wrong time.

Mankind may have gone from being ground-bound to standing on the moon in less than 66 years, but none of that mattered if you were one of the humans that got caught in violent uprising of WWl or the great flue epidemic of 1918, or WWll, or got stuck in a communist gulag, or in Pol Pot's killing fields.

The same is true for the market…the positive drift doesn't matter if you are an average American who worked hard your whole life and saved your money so you could retire and walked out the door with a gold watch on 1/1/2000, because your 401k has skyrocketed into the stratospheres. Or if you were the person who worked through the 2000, 2001, 2002 debacle and retired when your 401k recovered and reached new heights in 2007, only to be shellacked in 4Q07 - 1Q09.

To those people who got crushed in the dot com or housing bubbles, the long term positive drift of the market didn't matter to them anymore than the achievements of mankind mattered to the poor souls who died of of the flu in 1918 did.

Unlike video games, once you are out of the game, you don't get to respawn. You are just done.

And although finances are akin to life, there are some crucial differences. With finances, you can respawn…maybe.

You need the resources and the time…and you need to know how much you can lose before you cross the point of no return.

Sep

26

[A Barron's article, published in 2016, was concerned with a Tail Risk Protection product].

I'm a neophyte simpleton, but it seems to me that risk and reward have a linear relationship. How do you take less risk and get more reward in anything speculative?

Andy Aiken replies: 

He's proposing that far OTM put prices embed assumptions of solvency and central bank competence that are revealed to be untrue in a crisis. This is probably true to some extent. It's similar to betting on #19 on a roulette table month after month, at a casino where the (unlikely) policy buried deep in the published casino rules is that if the lights go out mid-spin, the player is declared the winner.

The payoff for a straight number bet at roulette is 36:1. Of course the probability of a straight bet winning is 1:37, so the expected value of the bet is 36/37.

Tail risk strategies are a bet that the probability of the lights going out mid-spin are significantly greater than 1:37.

The problem is that if a crisis is really severe, then no payoff may be possible.

Did the lights go out because the casino couldn't pay its electric bill (because it is bankrupt)? Did a 3-mile-diameter meteorite hit the casino? Did the Fed declare put contracts null and void, requiring redemption at the original purchase price? This problem is analogous to David Bernoulli's famous St. Petersburg paradox:

The game could be profitable if there were no tail risks on collecting the winnings themselves. Also, although there may be near-term anomalies/market inefficiencies enabling a "value" investment, the question is whether the strategy is profitable in the long run accounting for spreads, transaction costs, and tail risks on collecting the winnings. 

Sep

26

 It takes both rain and sunshine to make a rainbow. It follows the fascinating characters to Slab City.

The summer population is up 30%. They are anarchist splinters of the Rainbow Family of countrywide buses, Grapes of Wrath jalopies, hitchhikers under polychromatic backpacks, and hobos wearing RR and rainbow tattoos. The Rainbow Family is a leaderless, nomadic community of hundreds of thousands.

They pass the old concrete guard house and into sudden peace of mind. They feel where they belong. 'Make your mark!' someone shouts, and they park their car or plant a tent pole, and someone else contributes, 'You are now lost to the world you knew.'

They've spent years being bohemian and sleeping on floors. From day to day, nothing is stationary. They must be, or become, zany to keep on moving, to drift and dance, and keep on moving. They swing into town in a disorder of strewn clothes and dumpster vittles in place of a spare tire in the trunks of their vehicles, spilled cigarette ashes on the floor, shoes that are falling apart, and ready to howl from camp to camp under moonlight.

It is one of those queer little towns at the edge of the world that makes you feel the salt of the residents who make you feel right at home. From this point forward, you don't even know how to quit in life.

Slab City patterns are captivating. 2015 was the summer of the Dirty Kids, who rolled penniless into town, slept in the 'Walmart' dump among the trash that was their treasures, and could only get clean by letting the dirt grow out of their pores, but never wanted to. The next summer of 2016 was of the Hobos, who set makeshift camps behind the Mayor's house, where I walked in one morning, observing, 'There is nothing here I haven't seen before,' and found a way into their hearts. The Dirty Kids and hobos have come and gone, replaced this summer of 2017 by the Rainbow Family.

Their shared fantasy is realized here. They can drop out, live in a mobile home, be a hippie and drive around to festivals and marijuana trims, and have a baker's dozen of children with dreadlocks and nose rings. Hippy is an establishment word for their invisible, underground evolutionary process of dropping out of the TV comedy of American life. For every visible barefoot, bearded hippy, there are a thousand invisible members of the turned on underground. I think that next summer may break the pattern to produce a second Rainbow gathering. Never doubt that a small group of thoughtful, committed and connected individuals cannot change the world; it's the only thing that ever has.

Slab City has everything tempting a hippie utopia: Freedom, cheap living, drugs, sex, music, clean air, nudity, good food, few rules, and a Hotel California sensation that 'You can check out any time you like, but you can never leave.' They consciously or unconsciously like to get trapped here.

They are a hardscrabble group, the toughest of pilgrims to Slab in decades. Most come from having lived on the open road for so many years, before making this outlaw town their Shangri-La, that they have surprised themselves by not moving on. They have endured the summer heat of 115F for fifty straight days with physical persistence - walking back and forth three miles to town - and with mental tenacity - digging holes to live in like desert mammals – and suffering - working days at odd jobs to support their families and pot habits.

One day laborer passed out on the job with his face in the dirt. The SOP is to revive by pouring ice water on the neck, so you don't touch anyone who may start deft, or faking it, to whirl and stab you. However, he was grateful, and rose to work to pass out a few hours later, and again a few hours later with his face in the dirt. Since that day, he has not had to eat any more dirt to receive countless job offers.

Many are here on a spiritual journey. Slab is a pathway to personal fulfillment, because from the first minute of setting foot on his slab the seeker is put to the test to measure his brains and grit. Once that is proven, a few seek enlightenment via the old formula of ascetic experience, deprivation, and simplicity, all of which are plentiful in Slab City.

There is a man here who looks like one of the Monopoly brothers who is said to have 'more money than brains, and he has a lot of money', who was in enlightenment for five straight weeks at the foot of the Himalayas under Ram Dass. Personal growth and fulfillment is the most compelling argument for existence, and Slab City, at the end of the rainbow, is time accelerated toward this goal because life moves quickly by the minute, instead of by the day, as in other towns.

Nearly half of the summer newbies financed their travel as seasonal marijuana pickers. They reached Slab with a few hundred dollars and a stash of potent pot as a grubstake. A few became temp drug dealers, until their stash ran out, and then bought a nice $500 trailer to live out the summer. Most inexpert dealers, however, lost their shirts. One astute fellow took vehicle pink slips, trailer titles, and handwritten poor man's property deeds as security for dope sold. Nearly all of his clients defaulted on their debts, and he became the leading business tycoon with camps strewn with repossessed autos and trailers. Then, one by one, the clients beat him up, and stole their property back, until now he lives penniless and can't feed his dog in its first heat that is supposed to guard his camp.

The Slab economy has doubled with the immigrants. Most of them have become wired on methamphetamines and, like werewolves, vampires, and zombies, get activated at sunset with a puff. There is madness in every direction radiating from the camps and campfires. The cops dread them because they are gypsies, and it is easier to milk a cow that holds still. If they are chased for something illegal, they jump camps until the police give up. The Rainbowers just laugh, 'All I'm gonna do is just go on and do what I feel.'

My favorites are the hitchhikers and knights of the fast freights. Some have arrived with their homes on their backs and not even any food stamps, with holes in their shoes, nagged by their parents, tagged ADH by school psychologists, derided by Uncle Sam, buffeted along the open road, suffered of great privation, and they pad softly in the hot afternoon into Slab City with many smiles. They are the rattling skeletal progeny of America. Many have humbly worked their way up here from nothing to a state of extreme poverty. They have no ID, and will reveal nothing of their past except the footprints in their sox. Many do not go to town at all for fear of being recognized. I put them at ease with a Groucho Marx line, 'I never forget a face, but in your case I'll make an exception.'

Life is a long highway for many of the Rainbowers before they strike gold in Slab City. Suddenly, they slide on their American dream below sea level and hit home. After five minutes on a slab, nobody looks at the rainbow that carried them here.

Sep

25

 40 years ago when one first fooled around with the idea that there was a web of interconnections between markets like the web between producers and consumers in biomes of nature, one concluded that there was always a web between markets, what I called the ecology of markets, i.e. when stocks went up it caused bonds to go down, et al–but the problem was that the web was always changing. In looking back at that hypothesis and observation, doing many recent rests, one concluded that problematically that the observation was correct, and the main problem as far as opportunity is that that the web is always changing. Perhaps this is because of ever changing cycles, but perhaps due to homeostatic activities by the central banks and flexions.

anonymous writes:

1. Most of the money today is managed by AI methods.
2. AI data input is biased toward current decade, to substantial degree.
3. Within current decade, most intraday moves had Bonds suppressed by Equities strength.
4. Bonds are still not far off their ultimate record high valuation; and Equities are on their records.

It would make a hard sell to modern asset allocators to point that 40 years ago Stock fortunes were in lockstep with Bond fortunes. Will ancient history make abrupt comeback? This would make for utter disruption.

anonymous writes: 

How many markets or asset categories make up the web? Just trying to keep it simple here is what I came up with:

1. Equities
2. Fixed Income (Bonds)
3. Commodities
4. Currencies
5. Real Estate
6. Arts & Collectibles

Did I leave anything out? 

Stef Estebiza writes: 

American markets steadily, slowly, go upwards…the markets are opportunistic pathogens…until a bad note of any nature happens, they continue to do what they were doing, in this case they are going up, using the most illicit systems to do so exp-multiple. Panic has been abolished by law…what is it that still has to happen to cause a change? A random nuclear explosion? When you have liquidity and infinite ability to handle any "indicator" as you like (even the debt) what can you expect? The only one would be a collapse of consumption…one of those non-controllable costers from central banks. For now the sun shines, navigates upwards…waiting for Trump…and in the meantime, all the MINCHIATE on artificial intelligence, bitcoin etc…can also stay. 

Russ Sears writes: 

"panic has been abolished by law". Please define "panic" and put some numbers to this. It would seem to me that "panic" implies some over-reaction During the election when it was clear that HC would not win..There was panic…S&P futures down 100… then a reversal by end of day. It would be hard for me to put a market impact number on a nuclear attack, because it would be huge, and probably would be some "panic" at some point. But lack of big down days implies that the market believes it essentially has got it (the future) right. Not conclude that it is being manipulated. It's much easier to get people to believe a malicious falsehood about someone/thing than it is to get people to believe in benevolent falsehoods. 

Sep

22

David Hand's The Improbabiity Principle should go along with a book on multiple comparisons and a simulation program should be on all speculators desks.

Sep

22

 This summer in Slab City fired a heated rivalry between two Rainbow factions: the Nic@Nites and the Fat Kids.

A yearly Gathering of 10’s of 1000’s of peace loving hippies in a National Forest jolts the adjacent communities somewhere in the US. It may be the greatest reminder of alternative lifestyle since Ken Kesey’s bus Further carried his Merry Band of Pranksters cross-country that featured prominently in Tom Wolfe’s book The Kool-Aid Acid Test. The famous bus has spawned mitotically more buses, and many of them have pulled into Slab City.

Rainbow Gatherings are itinerant loosely knit communities of people who congregate in remote forests around the world starting every July 4 and continuing for about two weeks. The Rainbowers on whole supposedly share an ideology of peace, harmony, freedom, respect, and a dash of anarchy for spice. Their goal is to create a more satisfying culture than the one they find themselves surrounded in, and serve as a model for reformers in mainstream society. Everyone is friendly!

The Rainbow camps and kitchens are the basic community units. They may be based on topic, regional, spiritual, habitual, or even dietary preferences. For example, the Kid Village attracts attendees with children, Tea Time specializes in serving herbal tea, Jesus camp offers a religious foundation, and I used to stay at the Hobo camps during four national gatherings because that’s how I got there.

After the national gatherings, the various dozens of buses that form the nuclei for the category kitchens peel off in scattered directions for seasonal locations across the USA. This summer found a half-dozen of them parked in Slab City. The heat was ferocious, with ground temperatures above 150F, but most of the camps endured.

Nic@Nites is a camp that focuses on the sharing of tobacco and tobacco related products. The Nic@Nites hand out cigarettes at Slab City and will drive you crazy proselytizing tobacco wherever they go. Their goal nationwide is to have populated the nation’s alleys with so many addicts that no one will want. Their motto is, ‘If you need a cigarette, we got one; if you got a cigarette, we need one.’

The Fat Kids are another camp who serve fatty foods. They are composed of primarily overweight trust fund babies who eat well, and share their meat and greasy dishes. They’re national goal is a flavor of Herbert Hoover’s, ‘A lamb chop in every pot.’

The Nic@Nites claim the Fat Kids are killing people with fatty foods; while Fat Kids say the Nic@Nites are killing people with coffin nails.

The locals are enjoying the sport in Slab City, and fuel the flames of the butts and steaks by setting each group up to skirmish. They furtively commit arsons and burglaries, and tell one group a member of the rival one did it.

The showdown persists as both groups endeavor to attract newcomers wherever they go to help at their kitchens by giving away nicotine and fat foods, which was not covered in Vance Packard’s classic The Hidden Persuaders. The Fat Kids waddle offering you waffles, as the Nic@Nites wheeze offers of cigarettes.

All I can say is, sometimes laboratory animals, sales customers, and youth don’t know what they want until you show them. If the Rainbowers on whole would band together instead of bicker and advertise, they would quickly by sheer united numbers seize control of the Slab City economy, politics, transportation, and strong arms.

It isn’t so far-fetched. In astronomy, a binary system occurs when the orbits of two stars we see twinkling above are linked because of their gravitational interaction. There have been analogous relationships in history when an era is shaped by a rivalry and then combination of the two superstars. For example, Thomas Jefferson and Alexander Hamilton in early American government. The result of the showdown could be a binary win-win for a better Slab City.

Sep

22

 There are two ways to acquire the necessities of life:

· To produce them, or

· To plunder them

When plunder becomes a way of life for an outlaw town or group of men living together, they create for themselves a legal system that authorizes it and a moral code that glorifies it. The end result will be an escalation of theft until everyone steals each other silly. The only explanation I have for this condition in Slab City is that though stealing from each other is a silly game, it keeps the residents occupied. It's like a party university.

The heads of class look at stealing as a profession. It is a job where they devote time to refine the skill needed to maintain a constant level of success for a steady income. They normally do not spend a long time in one place, but are always scouting new locations, until landing in an outlaw town where there is a large turnover of marks.

The summa cum laude thieves and burglars are precise and logical in their actions. They have openings, middle, and end games like board contests. The winners do not hold their criminal acts in such high esteem, except they take pride in their work, and look down their noses at the amateurs who will not likely populate the town long before going to jail.

There is an evolution toward perfection of criminal activity, that requires constant attention and tinkering to stay on top of their game of robbing each other. Newly invented methods are as closely guarded as professional sports plays.

The most closely guarded news is a recently abandoned or deceased owner's homesteads that draws a land rush as soon as the owner is gone, or killed. The most popular things to look there are money jars, guns, drugs, and jewelry. I don't know anyone who has a bank account, or safety deposit box other than the inside of their walls or a hollowed out book, because banks require an ID which are sparse here. It costs nothing to open a jar and bury your stash, the common practice, which I follow. Whenever someone expires unexpectedly, his trailer insides are shredded looking for treasures in the walls, or beneath them.

Advance news is everything, or creating it.

One tricky thief who forever covets his neighbors' belongings uses a peculiar strategy to drive them out, or kill them, and then help himself to their camps, as follows.

The most common rattlesnake in these parts is the Coontail, distinguished by its alternating black-and-white tail bands just above the rattles. This is a flip-flop species of the also common Red Racer with alternating black-and-white head bands that eat rattlers.

One snake handler gifted a neighbor into his stone hut a snake with black-and-white bands, with no rattles. He proclaimed it was a Red Racer that would eat any Coontail Western Diamondback Rattlesnakes within a 50-foot radius, much as one puts a cat in a mouse house. The grifter carefully eyed the expensive battery bank inside the hut as he did so, and went on his merry way with the heartfelt thanks of his neighbor.

Each day, the target saw the snake daily in his hut, stepping around and over it. Each day, the handler reappeared, and seemed surprised to see him still standing there. Finally, the mark grew suspicious and called me over for an identification.

Here are five lessons the Slab City thief can teach you to check your loses:

· Fearless – A criminal will go to great lengths to achieve his goal, even handling venomous snakes.
· Discreet - A thief stays mute about his schemes and acquisitions, and I never would have found out about the Coontail thief had not a victim told me.
· Details – The smallest detail is of the greatest importance to a thief; in this case, he covered his tracks by broadcasting it was a harmless Red Racer that he had let go.
· Patience – Grand larceny can take a month in the planning. The thief knew his neighbor would accept the Trojan, and the end result would be declared an accident.
· Always try again – The thief kept returning to see if his mark had been driven off, or bitten.

The tail end of this story is brief. I went to the stone hut and found the snake coiled under a stuffed chair. It was trying to buzz shaking a noiseless black-white banded tail. The Coontail thief had removed the rattles, so the snake couldn't announce its identity!

I was laughing so hard that I could hardly keep my hands still on the broomstick to gently lift the accomplice and carry it out to a wash.

Sep

20

An old time book well worth reading is A Century of Prices by Theodore Burton and G.C Selden.

It suggests that high commodity prices are bearish for interest rates
because it requires more capital for all inventory and investments with
high prices. I wonder if this could be tested.

The book is very suggestive of many hypotheses. From 1919.

Sep

20

 One key to smooth international travel is to travel with only one carry-on bag. Don't check in any bags. They're a hassle during long-term travel, and will not arrive in third world countries on connecting flights. They will be stolen if checked into bus compartments, or from hostel rooms. And, are a hassle going to and from while traveling within a country. I've seen a swimming pool of crocodile tears over time in traveling to 100+ countries by travelers who don't observe the 'one-bag-on-back' rule. Everything one needs for one full year of travel around the globe can fit into one medium knapsack that fits into the carry-on compartment of airplanes. People who travel this way are called Travelers; while those who carry luggage are called Tourists. They are just different species.

Sep

20

 The Senate race in Alabama is becoming more and more interesting. The establishment candidate - Luther Strange - who was just endorsed by the Realtors national lobby - is still running behind in the polls.

The underfunded odd-ball outsider Roy Moore is being attacked in television ads paid for by Mitch McConnell's Senate Leadership PAC. The PAC is spending what is a large amount of money even for an Alabama general election. For a Republican primary, it is an enormous expenditure. Ballotpedia says they have committed to spending over $8M - which would be nearly 90% of the money that is likely to be spent on the race.

The President has endorsed McConnell's candidate - Luther Strange - and is planning to appear at a rally for him at the end of this week. The rally had been scheduled for Saturday at the local football stadium; it has since been moved to Friday and the local civic center. One could legitimately explain this change of venue on the prospect of bad weather, except for the fact that Friday is expected to be a mild (by Alabama standards) day with plenty of sunshine and little chance of rain - perfect stadium weather.

It is a measure of the near desperation of the Strange campaign that Vice President Pence is scheduled to make an appearance on Monday, the day before the election.

The delicious irony of all this is that Moore is the candidate who supports Trump's "extreme" positions; he has pledged to do away with the filibuster, and he opposes any amnesty. So far, the President's support for his opponent has not hurt Moore; the likely voter surveys show the Trump endorsement as having no significant effect. The Republican potential voters support the President overwhelmingly, but a majority of them still support Moore.

The candidates have their one debate scheduled for tomorrow evening.


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