Apr

25

There has been a run of exactly 5 up opens (i.e. a rise from yesterday's close to today open) in the S&P [see price sheet below]. This has been bestowed upon us 15 times in the last 4 years. Strangely this is not unduly bearish at all for subsequent periods (exactly 6 up opens in a row occurred 9 times). The number of runs is consistent with randomness. Does this have anything to do with the news that central banks all over the world are increasing their stock to bond ratios on their balance sheets (i.e. they're buying stocks as well as bonds with the money they print?). What is the long term outlook for such a shift?

John de Regt writes: 

Hard to say, but the bond and stock purchases might one day be unwound, which would cause markets to fall. That said, the Fed might very well hold their debt securities to maturity, and never sell off.

Jan

17

The bond market is pricing in inflation of 1 or 2% a year for the next 10 or 30 years. Yet every repub and every free market person predicts a catastrophic rise in inflation and interest rates. Who knows better? Paul Derose, Bill Gross, and Zachar and the thousands that at the margin adjust prices every day based on the expected future events, and their desire and past ability to make a profit, or the free market groups. What a waste of energy it is to concentrate on this red herring rather than the slavery.

John de Regt comments:

The way I see it, either this massive govt intervention is the new new, or supply and demand will kick in, and interest rates will go up. All the western governments have discovered the magic elixir of QE, and either it will end, or it won't…

Jan

17

The bond market is pricing in inflation of 1 or 2% a year for the next 10 or 30 years. Yet every repub and every free market person predicts a catastrophic rise in inflation and interest rates. Who knows better? Paul Derose, Bill Gross, and Zachar and the thousands that at the margin adjust prices every day based on the expected future events, and their desire and past ability to make a profit, or the free market groups. What a waste of energy it is to concentrate on this red herring rather than the slavery.

John de Regt comments:

The way I see it, either this massive govt intervention is the new new, or supply and demand will kick in, and interest rates will go up. All the western governments have discovered the magic elixir of QE, and either it will end, or it won't…

Oct

20

To everyone who has apparently joined OWS and is complaining about HFT, please just write your congressmen asking for a transaction tax so that we can more effectively make the list poorer or be forced to become trend-followers. Sorry for the rudeness.. one is agitated.

Anatoly Veltman comments: 

Deeper than just HFT: combination of flexionism and HFT.

Economy needs capital market participation: momentum speculators and long-term value seekers. Participants became disenchanted due to above combination, feeling markets are rigged. We're in catch-22 now, where stock market only advances on money printing; then panics on realization.

The speculators of this List have always sought to compete in rich diverse environment, where they could do their work and outsmart crowds of amateurs or pseudo-professionals - within near-perfect zero-sum! Alas, the crowds have so totally dispersed. To be more precise: speculative money has left the traditional, "regulated" U.S. arenas. It currently resides elsewhere -where we are outsiders

John de Regt writes:

I've always been happy to play the game of buying low and selling high, having perhaps seen potential value not generally recognized.

My earlier reference to the big casino derives from my view that the proportion of fundamental investors to buyers and sellers with no interest in fundamental investing has changed. A great deal, perhaps too much (depending on your perspective…), of the buying and selling these days, hence market moves, has nothing to do with investment.

Sep

28

 Boeing 767 - introduced September 8, 1982 with United Airlines

Boeing 787 - introduced September 27, 2011 with ANA

Compared to the current class of mid-sized airliners, the 787 has:

10 percent lower operating costs
20 percent more fuel efficient
20 percent fewer emissions
30 percent lower airframe maintenance costs
40 percent greater range
60 percent smaller noise footprint

This 50% composite airframe will be a change comparable to the one that occurred with the replacement of steam locomotives by diesel electrics.

John de Regt Writes:

Stefan makes a great point. The 787 is as big a step forward as was the DC-3, which moved airframe construction from wood, canvas, and glue, to aluminum.

Stefan Jovanovich replies: 

 Thanks, John. The DC-1 — the first aluminum model — was introduced by Donald Douglas on June 22, 1933.

A Donald Douglas story:

In May 1939, after a year of final testing, Douglas delivered the prototype of the DC-4 to United Airlines. It met some but not all the specifications that the airlines had set for Douglas (the project was jointly funded, in part, by the 5 major US airlines at the time: UAL, EAL, TWA, PAA, and AA. Arthur Raymond (the designer for the DC-1 and DC-3) recalled, “We designed the first DC-4 by committee. Before this, we worked with one airline, like American or TWA. Five airlines were in on the DC-4 design, and everyone wanted something special on their version. The crowning blow came when they all said it had to fit in the DC-3 hangar. This meant we had to put five tails on it. We had to take the control surface area under engine out conditions, and spread it over the five tails (three above and two below) to squeeze it in the DC-3 hangar. That was its downfall. We had a terrible time working out the stability and getting it licensed. When we got it to the point of flying, it had gained so much weight (65,000 pounds) and was so ungainly that Doug junked the whole thing. He knew it was a lemon. Then we redesigned it the way we wanted it, with a single tail, not so heavy, and it was a success. We sold the original DC-4 prototype to Japan and it later crashed with some high ranking military officers aboard into Tokyo Bay. We like to think that helped hasten the conclusion of the war. We then called it the DC-4E for ‘Extinct.’”

 

Nov

12

T o t U SThe Tomb of the Unknown Soldier covered in red was quite a site to see, almost completely buried in the little red poppy pins that everyone wears leading up to Remembrance Day in Canada every year. Legionnaires and veterans organizations distribute them to fundraise for Veterans. In the bright sunshine of a crisp and beautiful November 11th morning, they truly looked like the real thing. Why November 11th? Armistice Day in 1918, the 11th hour of the 11th day of the 11th month, when World War I finally ended. It is at this moment every year that we all stand for one minute of silence to remember those that gave their lives. And the poppy is now the powerful and widely recognized symbol of Remembrance immortalized by John McCrea’s beautiful poem “In Flanders Fields”

In Flanders fields the poppies blow

Between the crosses, row on row,

That mark our place; and in the sky

The larks, still bravely singing, fly

Scarce heard amid the guns below.

We are the Dead. Short days ago

We lived, felt dawn, saw sunset glow,

Loved and were loved, and now we lie

In Flanders fields.

Take up our quarrel with the foe:

To you from failing hands we throw

The torch; be yours to hold it high.

If ye break faith with us who die

We shall not sleep, though poppies grow

In Flanders fields.

Our poppies were on that tomb. Shortly after the final wreath was laid, and before the general public was allowed back onto Confederation Square, each of us of the 63rd Ottawa Scout Troop stepped up, one at a time, laid our poppy on the tomb and saluted, as had the military personnel before us. The kids looked great doing it too, each having their own special moment at ground zero of the Remembrance Day ceremony. When we laid down our poppies, there was just a smattering of them, like the first fall leaves. After the public was done, the Unknown Soldier was warmly shrouded in both poppies and love.

Before that we started the morning by meeting at our agreed staging point, where, in short order, we invested 3 Scouts, Nicholas M, Dylan, and William, who had missed investiture night the week before. (H1N1 is going around the city and many were off sick.) I told them it was a “field promotion”, and had them recite the law, promise, and motto directly under the statue of a large bear on the Sparks Street mall. As official Scouts, they then eagerly jumped in with the others to distribute programs to the crowd. This is part of our role in the ceremonies every year.

After exhausting our supply of programs, we crossed the security cordon for the last time and took our place on Confederation Square, about 30 feet from where the Prime Minister, the Governor-General, and Prince Charles, currently visiting Ottawa, would take their place before the Tomb of the Unknown Soldier during the formal part of the ceremony. After the minute of silence, the 21-gun salute, anthems, a couple of commemoration speeches including a beautiful one by a local rabbi, came the laying of the wreaths.

When I had arrived at 9:30 AM two of my more enterprising Scouts, Alexander and James, were already across the street in the square, and had somehow arranged themselves to be involved in the wreath-laying, despite not actually being in the plan. So throughout the ceremonies they stayed in a separate area from the rest of us amongst all sorts of dignitaries, with the officially-selected Scouts. As it turns out, it worked out. Although two other Scouts laid the wreath for Scouts Canada, Alexander somehow ended up laying the wreath for the Jewish National Congress, and James a left-over wreath from an organization whose representative failed to show. Now these two are always scheming something, and to their credit, I don’t know how they did it, but they ended up hob-nobbing with the Mayor of Ottawa Larry O’Brian, the leader of the New Democratic Party Jack Layton, and a number of foreign ambassadors. Alexander even got a wink from the Prince of Wales. It so reminded me of the Woody Allen movie Zelig, where the main character keeps turning up fortuitously in the middle of major historic events. (This device was also later used in Forrest Gump.) At our luncheon afterwards at Eggspectations (all eggs, all the time) I turned to Alexander and James and dubbed them Zelig 1 and Zelig 2.

Others in our party who attended were Scouter Steve, his friend Brian, his ex-boss Scouter Cal with daughter Erin, Scouts Tyler, Brandon, and Nicholas P (my son) and Venturer Thomas P (also my son). It was a very memorable Remembrance Day on many levels.

John de Regt comments:

I was in Montreal today. There were very many poppies in lapels, and this in a country not at war for its existence for more than 200 years. We all need to wake up and recognize the good fight and the very real enemies around us.

Jul

17

 There is a new scientific study reported on a recent ABC newscast that suggests that excessive discussion of problems by teenage girls does more harm than good. One particular malady that can manifest itself is low self esteem and depression. When one realizes that women tend to talk approximately three times more than men, one soon realizes that there is a lot of discussion of problems that teenage girls are focusing on.

Personally speaking, when I visit my sister in Jacksonville I notice that my niece spends an inordinate amount of time on her my space account or even with various I.M. services such as A.O.L. instant messenger. It soon becomes obvious that girls have a lot to talk about and use up a lot of time to do their talking either verbally or virtually. The question becomes who do they end up talking to and ultimately what is it that they are talking about.

This got me to thinking that raising a child in today's world is light years from when I raised my first over 15 years ago. The challenges are great and the risks are far greater to youth than they were a decade and a half ago. The advance of technology and the proliferation of the internet and websites, chat rooms and other sites can become a great challenge to the youth of today not to become seduced by this and in fact in some cases to become a victim of the predators who lurk in a dark netherworld ready to attack the unsuspecting and the vulnerable. Shouldn't we as parents be more aware of this and prepare and protect our children from harmful and dangerous solicitations.

Also, another thought that comes to mind is what do we as parents do to help our child through this veritable minefield of new and shifting challenges that they face. Are we doing as much as we can or as much as we should and when and where do we do our work to prepare our children for an extremely complex and everchanging world. Where will they receive proper advice and develop true values if they do not receive it in the home.

How much actual quality time does the parent of today spend with their children as opposed to the parent of 30 or even 10 years ago. Where are the opportunities to form the bonds that arise from social interaction with a child. If a child has questions or issues that they face if they can not find it in their parents where will they turn. Once again, from the cheap seats, look at what is available to the teen of today and even the parent of today.

Computers and unrestricted use of the internet Video games, dvd's and rental programs such as Netflix and Blockbuster, hundreds and hundreds of cable channels, cd's with graphic lyrics, movies on demand, music on demand, Ipod's, Iphones, cell phones, text messaging, mega movie theaters with 16 and 24 movies, the list continues …

James Lackey comments: 

It has never been easier to be a parent. Kids today are the best and brightest due to specialization. Besides riding a bicycle on the street, I believe it's generally safer today than when I was a kid. All the new technology makes it so easy for kids to learn and parents to monitor their progress and safety.

It’s never been harder to be a petty criminal. I can’t imagine even getting away with even a fist fight now a days. There are security cameras, and cell phones with 911 and picture cams, everywhere.

Not to mention the illnesses, like flu or pneumonia, that killed kids even 30 years ago. A hundred years ago many kids died before they were teens. How about the ability for kids to take extreme risks on the fields of play? There is much less worry about debilitating injuries from sports. I have had several fractures from racing that took me out for three to six months, that 30 years ago would have affected me for life. Today kids have outpatient procedures and are back in six weeks. Not to mention all the knee injuries that 20 years ago ended careers, ACl type injuries today are fixable.

Finally, there have been times over the last 100 years where segments of society were not certain about, diet, exercise, training and drugs. Just 30-40 years ago too many people smoked, ate too much bad food, didn't exercise, and so called 'experimented' with drugs and alcohol.

It is without a doubt that a higher than usual percentage of people that experiment with any drugs, destroy their lives. If you eat too much you will eventually be sick and unhappy. If you smoke, you are now a social outcast, and there is a very high chance you will be very sick in 20-50 years.

It must have been much tougher to be a parent in and after the depression. Your kid could get sick and die. Your kid could, not knowing any better, find an opium den, get sick and die. Kids could get sick and die from a shortage of food. During WW2 a huge percentage of young kids were forced into war with a high risk of death.

Yet usually, in the agrarian society of 100-200 years ago, they simply worked our kids to death.

George Zachar adds:

Parenting seems daunting now because of all the choices we have to make. It's no longer one neighborhood school, one community newspaper, the local church, three TV channels, etc.

The range of educational/recreational/informational choices means parents have to process a lot more material to exercise their role. This is on top of a stressful work life for most.

Raising kids in the same town I grew up in, I can't say the risks are appreciably higher. Sex 'n drugs 'n rock 'n roll were ubiquitous when I was teen too.

I am in Lack's camp. The upsides are vastly greater now than for prior generations.

John de Regt writes:

There are new opportunities and new risks, and some of the old risks are less. While the threats of wars and sports/play injuries may be fewer, the traps of drugs, video games/Internet, sexual predators, AIDS, and drunken drivers justifiably keep us up at night.

Parenting is a lifelong activity, in any era, and we as parents always need to be aware of possible threats and risks to our kids. 

Alex Forshaw suggests:

The "big bad culture that's out to eat our children" idea is silly and exaggerated. Sheltered kids will have a marginally higher "survival" (i.e. reaching all the socioeconomic checkpoints their parents set out for them) rate until they get into a good college, at which point they will go nuts. If they don't go nuts.

Humans are a lot more adaptive than our feel-sorry-for-everything culture gives them credit for, and social mechanisms (feeling copiously sorry for someone who is down, granting all kinds of exceptions to people who are depressed, etc.) are responsible for as much harm as real dangers from the wider world.

Given the human memory's selection bias of preserving good memories and killing bad ones, better awareness of current problems (which are biased towards negativity) gives older generations absurdly rose-tinted hindsight.

J.T. Holley adds:

I'll second Alex's points. Having eight, six and four year olds I can assure you that I spend more time with my children than my parents ever dreamed of — and I mean quality time.

Now to think that there is the "mean cruel world" out there that wants to tear into, tear apart, corrupt, and diminish the lives of our children is just plain foolish. It's protectionism on a family level.

Kids today have lead-paint-free cribs, childproof lids, moms who don't smoke and drink during pregnancy, bike helmets and bottled water. Are they really worse off than we were? Can you think of one technological advance that doesn't make you and your children better?

And why do people think that there is a greater percentage of pervs, pedophiles, sex offenders or others who prey on children than back in the 50s - 80s? The population has grown, but the distribution of them in society is the same, and our police forces have better technology to combat them.

As far as schooling, the level of public education is not as bad as everyone makes it out to be, although there are isolated problems in specific geographic areas. Plus, to pay $35,000 to have my child learn to finger paint seems a little foolish.

Mark Goulston offers:

In my article Potential is a Terrible Thing to Waste I make the connection between coaching and parenting.

Russell Sears writes:

In one sense child rearing is much more demanding today. Freedom, and how to use it responsibly, is almost always demanding. Many parents find it easiest simply to let the media, in all its many forms, be the parent. But this leads to absent parent syndrome.

Peer pressure is on the parent. Most children fantasize no parental authority. Indeed, authors of "Nanny Diaries" said they never saw the father of kids in their care. It’s not just the poor ghetto parent who use TV for babysitting. Parents go to tragic lengths not be parents, just to top their friends as "free spirits". Absentee parent put children at risk for drug dealers and pedophiles.

I limit my children’s access to TV, movies, and Internet. My kids go to public school; nobody would call them sheltered. Why? Because they have spent time with a five-year-old who was given narcotics by his parents, and other children raised in abusive homes.

Sheltered kids only see a romanticized version of life, not the consequences of mistakes. 

Apr

25

 As a hunter, I know first-hand what animals are capable of.

On any piece of land, there is a carrying capacity. That is the number of animals (let's say white-tailed deer) that the land can support before they start to hurt the land.

The optimal number of deer on a piece of property is half the carrying capacity, because if the land is at or near carrying capacity, and there's a drought or some other calamity, then the land has less food, cover, and water, and the animals have to "eat the seed corn."

For instance, if you go into a patch of woods and notice that all the vegetation from five feet down is gone, then that land is almost certainly holding more deer than it should.

What then occurs is similar to what happens when a retiree is drawing income from a portfolio: he has to go into their principal (seed corn). Once you start tapping into principal (the food supply of the land) to draw income (the food source of the land), it becomes more and more likely that you will have a die off (or kill off).

Once the animals start tapping into their seed corn/principal the land/portfolio can't recover. There is now less food/principal and then it becomes harder to access, too. In the wild the deer eat all the low-hanging fruit, off the ground, up to eye level, until they have to stand on their hind legs to access the food higher up.

And the higher up food is less nutritious, desirable and palatable –like a portfolio's tanking and a retiree's having to sell off stock from the portion of his portfolio he had viewed as his longer term holds.

This is why it is so important for deer, and humans, to follow the simple axiom, "live below your means."

Many retirees had to go back to work because they "stressed" their portfolios too much during the downturn of 2000-2002. And yes, the market has recovered since then, but they haven't and likely won't. They ate their seed corn, hoping that we would return to the glory days of the 1990s.

John de Regt adds:

This makes great sense. That's the problem I have with annuities to fund retirement. To the degree that an annuity payment draws on principal, a person is getting older, poorer, and less capable of generating income, all at the same time. Not good.

I have as a savings and investment principle that in retirement I will live on a portion of the income from my capital, and will set my standard of living to whatever that income permits. I won't eat my seed corn, and to the extent that a portion of the income is reinvested, will be hedged from inflation.

Archives

Resources & Links

Search