Nov

30

 This article predicts the impeachment odds near 50% for next 2 years

What are the obvious stocks/commodities/currencies that would directly benefit from an impeachment, if any? Which would decline?

The private prison stocks used to trade somewhat as an impeachment proxy but with the ousting of sessions and change in tone re: reform, no longer intuitive.

My thought would be putting on an appealing spread trade to hedge the odds market which feels very aggressive

Ralph Vince writes:

First things first.

I don't see Trump and Xi bypassing an opportunity to goose their markets. Expect a statement from both of them, jointly, to the effect of "we're working on a deal, we're getting close, it's complicated, there are lots of issues, but it's coming."

Nov

30

 I've been sucking wind on these commodity etfs for it seems like years.

I'm starting to wonder if they are like an outdated unchanging index. When a commodity gets expensive, technology just figures a way to use something else and bypasses a hard to get resource. That's why we haven't run out of stuff and Malthus was plain wrong. Peak oil was wrong. I think I'm wrong.

My friends and family are getting teslas. Oil is headed to zero. Better to invest in tech not commodities.

Nov

30

 Pheasant season just opened in Slab City and right on the tick of 5:51 AM of the shooter's time table a salute of fifty shotgun blasts startled me from sleep in the weeds. The shooting continued for the next thirty minutes until I decided to risk rising, and on peeking out the bushes discovered hunters stationed every quarter mile for as far as the eye can see. Every few minutes a hawk sound screamed through the air and dozens of bats flicked off the branches. The hunters were using hawk callers to uproost the pheasants, but hawks also hunt bats. It was a wonder the hunters didn't shoot each other, but as they didn't I felt safe in rising and walking out the battlefield. The scene put me in mind of the sheriffs chasing fugitives through Slab City. There are so many citizens on the run, that the sheriffs 'shake the bushes' out their loudspeakers, 'We know you're in there, come out with your hands up!.' The sheriffs are nearly as successful as the bat hawks who capture prey on 40% of their attempts. They don't necessarily catch the fugitive their looking for, but they get one.

Nov

29

Slab City is crawling with spies for the military, feds, police, and for Slabbers. The local town dick may be identified by her large breasts. All the undercover people look, dress, and party harder than the true citizens, and are hard to pick out. The only real cues are their hard pistol callous on the heel of hand, and they cannot hide an extremely high innate intelligence, which unfortunately is also prevalent among the residents.

Most of the spies are inserted long term here, but have arrived in the past two years in conjunction with thefts from the military base and macabre murders in the Slabs. You'll see tattoos appear and disappear overnight as part of their disguises. In regard to the recent decapitation of the knife sharpener, someone else found a head with a mop of curls on the ground not far from my camp. A neighbor approached it, was freaked out, and went for a stick to probe it. His companion kicked it and screamed in pain, for it was a stone with a wig on top. They called me to investigate and the wig looked exactly like my hair that had been cut two days earlier down the road. I didn't want to touch it either, but returned the next day, and on examining the wig it was not my hair but the ugliest piece I've ever seen. I took it to camp and washed it, and bought a balloon to stick it on in a window when I'm absent. I wear a different wig when I leave town so I won't be recognized and my place robbed.

Nov

28

The Prez was right with all his comments about Powell being hawkish and "not a little bit satisfied with Powell" and the markets all over the world gave everyone wealth. But now we shall have to hear about "succumbing" and "interference" and the inviolable "independence of the Fed being violated".

Pete Earle writes: 

Here is something I wrote a month or two back regarding the media assertion that the current President is conducting himself in manners vastly outside historical norms.

Nov

28

A person on twitter said it best: "the agrarians hate prosperity".

Kim Zussman writes: 

A note from a notable reform school:

"Raise Rates Today to Fight a Recession Tomorrow. A downturn is inevitable as asset prices fall. The Fed can prepare by continuing to raise rates now"

By Martin Feldstein Nov. 26, 2018 7:00 p.m. ET

Nov

28

Ralph or anyone else. I need help with Ralph Vince's optimal f.

Take any one of Kora's excellent sample trade systems in SP with for example N0 Classical expectation is 60% winners, T=2.2, max historical drawdown 50pts, avg gain 4 pts avg loss 4 pts, with a million dollar stake; max acceptable drawdown 2%, a one year horizon rather than normal asymptotal assumption. R=risk free rate. Time horizon is close to close one day.

Traditionally one would use 8 contracts to limit loss to 2% on the max loss, or a fraction of .4 of stake.

What is the Optimum f use to achieve max TWR? Also what is appropriate n to compute optimal f: the 3 expected trades in the year, or the 30 over the history of the trade? Assume the current historical volatility in SP of 18. How does f change if vol is 9? Also how does the Vince bounded expectation differs from the classical unbounded expectation over a one year with 3 one day event horizon?

The solution in Vince, Risk Opportunity Analysis, p 171 is a 3 dimensional copula. (Escaping Flatland!). Is there a simple R routine or spreadsheet to compute this? The late Seattle Phil uses max drawdown as the main factor In his allocation formula. I think risk management is the most important aspect of investing.

Ralph Vince replies: 

Zubin,

So your criteria, from what you describe, is to maximize your gain over this period of time, all else be damned, withing a given (but unidentified) risk constraint. So you are talking about being at the peak of the curve (there are other points, or paths through the space, for different criteria), and you;re talking about a portfolio of one item.

But you do not know what this one-year future time window has in store for you, and I've found the best approximation for where the peak is to divide the percent of profitable compounding periods (in this case, since you have only one component, a compounding period we can say is the same as a trade) by 2. I won;t go into the math for why this is hte best guess aside from saying it will minimize the price you pay, worst-case, between this best-guess point and where, after the year, the actual point turns out to be. So in this example, it starts out at 60% winners, so

.6 / 2 = .3 ad therefore, the best guess point to use as the peak is .3, asymptotically. But you;re talking about only 3 trades over the course of the year, and since the expectation, if you make one play, is to be positive, then if you were to quit at 1 trade, your f would be 1.0, at two trades, the best guess is (f one play less-the asymptotic f) / 2 + the asymptotic or (1-.3)/2 + .3= .7/2+.3=.35+.3 = .65 and for three trades (.65 - .3 ) /2 + .3 = .175 + .3 = .475

So that;s an approximation, that .475, and that;s how I would arrive at it, absent knowledge of the future. It is a good, robust approximation and mathematically sound. I prefer robust approximations as opposed to the exact mathematical answers based solely on past data

Software for this can be found at Josh Ulrich's R implementation for it. I do not have the link offhand. The paper you cit gives the exact formula for determining the landscape and optimal fractions therein, but that is on past data. In the foxhole looking at tomorrow, or next year, I prefer robust approximations that will mimic what the actual formula might provide.

Next, you need to determine a worst-case loss situation. Perhaps you are going long, and you could use the value of 0 for your worst case. or maybe you have a stop in there, and you can use that plus some ridiculous amount of slippage for worst case or perhaps you are using options, etc. But you really need a worst case situation. Dividing the worst-case dollar amount by .475 will tell you how many units (the same quantity you determined the worst case dollar amount on, say, 1 contract 100 shares, whatever) to have on.

Understand, however, that when this worst-case is hit, you will be hit for 47.5% of your stake! So my point is, I think you need to rethink your criteria as it is unlikely what I paraphrase it to be in my first paragraph here. Perhaps you want to allocate a smaller percentage of your capital to this endeavor such that 47.5% is akin to 2% or your total capital. Maybe your criteria actually has you traversing a path in the landscape this curve in 2D space.

Orson Terrill writes:

Is Ulrich, or anyone, still maintaining quantmod? I still have some code that runs on parts of it, that I'll refactor to save time, but hadn't seen much activity around it.

Ralph Vince writes: 

I'm certain there is a robust community around it.

Nov

28

 Exploring the data:

Rolling 10-yr % increase in GDP (in nominal dollars, hence the peak value occurs in Q2 1981)

Nov

28

"The stock market usually bounces from Thanksgiving to Christmas":

The Dow has averaged a gain of 1.93 percent in that time period since 1990, while the S&P 500 and Nasdaq gain 1.77 and 1.66 percent, respectively.

The S&P 500 was positive between Thanksgiving and Christmas 78 percent of the time since 1990, according to Kensho.

Kora Reddy writes:

This is very easy… from the engine we created, from the close of mon after thx giving till close of the last trading before x-max, since Y2K :

 
 
 
 
 
 
 
Let me do this for all SP500 tickers and send it across.

Nov

28

A movie of the second best western ever: The Good Old Boys (1995)

Nov

28

 Victor Niederhoffer writes to Bo Keely:

Can we have your reaction to the Smithsonian article on Slab City.

Bo Keely responds: 

Slab City is an anarchist psych ward in a sand box that used to be General Patton's desert headquarters. Hence we citizens have immunity from pretty much everything. I held my neighbor's skull (minus the body) in my hands a couple weeks ago, a knife sharpener who made the mistake of robbing the wrong person. Yet, the population has doubled since last year, and shows signs of continued growth. People read about it online and arrive for the freedom, free land, and independence, but find it's also an outlaw town. I've been doing a study of the peculiar, and cannot point to one citizen who is not. Therefore there is a lot to be learned about human nature and consciousness.

My motorcycle broke down two months ago, stranding me here, walking, hitching, and tracking bad guys. Because of that, I've met most of the newcomers. The population is high IQ and stoned across the board. My new neighbors, two lesbian ex-military, are the only two besides me who don't indulge in drugs. Our introduction was a couple days ago as they chased me across my own property with four snapping dogs, horn honking, and gun under the seat. The other arrivals are young roadies, freight hoppers, anarchists, divorcees, retirees, many musicians and artists, and a few unemployed professors and executives.

All hail Slab City as the last free place, but most succumb to meth to make it a hotbed of any abnormal activity you can think of. It's paradise to a behaviorist like me.

Nov

28

 One thing to remember about buying art is that the vig is very high. It costs 15% buyers fee and 10% sellers fee. Plus the markets are generally wholesale markets so that what you pay for retail is likely twice the wholesale price. So you start out about with a 50% to 70% loss, it's greater for items that are 8 or less. You should think of waiting at least 10 years to get even.

Jeff Rollert writes: 

I find art (along with vintage cars) is best acquired from someone's near bankruptcy, as time pressures reduce shopping/selling opportunities. BK goes through the courts which permit other games. Of course, documentation must be present.

Also, if they are still alive, buy directly from the artist. 

Nov

24

It's amazing to me how many people who think all of life—or at least the mainstream media's presentation thereof—is a con job are actually just being conned, but then of course they know that I only think that because in fact the mainstream mind alteration is so successful.

"Anatomy of a Conspiracy Theory" (about the Las Vegas shooting)

Nov

24

 I am thankful for the blessing of healthy children who are driven, intelligent and ambitious.

The ability to make money and create the world I want for myself, my family, my clients and my employees.

Good parents who raised me well, even in bad circumstances. Parents who gave me a work ethic and a drive to succeed and build on their legacy of hard work.

The lessons, friendships and business relationships I've made being a part of this group!

These are a few that come to mind.

How about the rest of you?

Russ Sears writes: 

Health.

A family that loves me and is healthy.

Friends and family that are motivated and cheer me on when I succeed and pull me back together when I fail.

Love is miraculous when you're healthy and see the miracle of life in your children.

Life and the energy to enjoy it. Almost every morning I run 7 miles at 56 years old. Each morning I am grateful and amazed what the human body can do.

The wealth of the time and place I am living. The technology, knowledge and wisdom that has come before me, and I have had the chance to see marvels upon marvels developed during my life.

I propose a thankfulness hypothesis and leave it as an exercise to the reader to prove or disprove on an individual basis. Billy Graham believed that worry was usually due to a lack of gratitude. Or failure to see the reality of how blessed we are, only seeing the problems at hand. Hence I suspect that the Santa rally comes from the thankful spirit of these holiday season. The individual test for a trader therefore is when you're most worried, take a few moments like this to be thankful and see if that will clear your head and help you trade better.

I am thankful I'm a part of this site!

Nov

24

  In the great tradition of all failed prognosticators, I hereby declare that it is not my model that was in error but reality. A week before the election Paul Ryan declared that President Trump was hurting the Republican's chances by talking about immigration. Gallup has just released a poll that strongly confirms the election results. The candidates who wrapped themselves in the America First flag outperformed the average for Presidential mid-term for the party in the White House; those who waffled lost the Independents and failed to win enough votes to survive the last minute ballot discoveries that are the Democrats' most enduring tradition.

Nov

22

November 22, 2018 (our annual article about Thanksgiving)

Thanksgiving is about sharing prosperity, and it's a good time to think about where
prosperity comes from. The Pilgrims figured it out in 1623. We'll retell
that story as we celebrate the way it lives on in countless U.S.
families and companies today. And in particular at one company,
McDonald's, that in its humdrum way beautifully
demonstrates the source of prosperity and the American way of life.

The Pilgrims started with so little. They had to hide in England
because the authorities considered them dangerous. They fled to Holland
but found themselves compelled to take menial jobs. On the way to
America, many of the company died. They lost their way to Virginia and
landed in Massachusetts just as winter set in. The Virginia Co., their
backers in London, went bankrupt and couldn't send relief supplies.

To cope with want, the Pilgrims made the same mistake that so many
countries do even today: They divided all their land, efforts, supplies
and produce in common, to each according to his need.

As always in such systems, need surpassed supply.

The Pilgrims spent their first three years in America suffering from
hunger, illness, cold and infighting. People stole from the common
stores "despite being well whipped," according to William Bradford's "Of
Plymouth Plantation."

Bradford, governor of Plymouth Colony, records what happened next:
"They began to think how they might raise as much corn as they could,
that they might not continue to languish in misery. After much debate,
the Governor decided that each settler should plant corn for
themselves."

Under the Land Division of 1623, each family received one acre per
family member to farm. That year, three times as many acres were planted
as the year before. Prosperity was not long in coming.

The Pilgrims turned from their Old World system of common ownership
to incentives. They didn't go that way out of ideological conviction,
but because they didn't have the luxury of waiting for support to come
to them.

How many families in America tell the same tale? "When we came here, we worked hard and our lives were better."

But that wasn't the end of the story. Before the switch to
incentives, the hungry settlers were at each other's throats. Hard
workers resented receiving the same portions of food as those who were
not able to do even a quarter of the work they did. Young men resented
having to work without compensation to feed other men's wives and
children. Mature men resented receiving the same allotments as did the
younger and meaner sort. Women resented being forced to do laundry and
other chores for men other than their husbands. Many people felt too
sick to work.

But when they were allowed to farm their own plots, the most amazing
thing happened. Everybody — the sick, the women and even the children —
went out willingly into the fields to work. People started to respect
and like one another again. It wasn't that they were bad people,
Bradford explained; it's just human nature. Adam Smith came to the same
conclusion later, and Friedrich Hayek updated Smith's ideas for the 20th
century. But we don't need to go back to New England for understanding.
Similar outcomes can be seen at McDonald's every day.

For centuries, people on the lower rungs of the social ladder weren't
able to eat meat. They ate grains and beans. But people like beef. And
chicken.

When McDonald's started popping up in every neighborhood, all of a
sudden there was an affordable place for families to eat. Previously,
one of the main differences between the upper and lower classes was that
the rich could eat out. Even if the poor could afford the tab, they
couldn't hire baby sitters, and they couldn't bring their kids to the
elegant establishments designed for the rich because they would have
disturbed the other diners.

Most kids don't like fancy restaurants anyway. They want fries, not
polenta with wild mushrooms. They want fried codfish, not turbot. They
want burgers, not lamb chops.

How many people has McDonald's made happy? How many families has it
brought together? How many Happy Meals have been eaten there? How many
kids have enjoyed the playgrounds? How many tired workers have been able
to catch a quick meal? How many women are able to pursue careers and
other productive activities and dreams because McDonald's has freed them
from the task of having to cook every night?

The Pilgrims might have served 200 or 300 American Indians at their
Thanksgiving feast. McDonald's serves 26 million customers a day at
13,700 U.S. restaurants.

For the traveler, McDonald's is a home away from home, offering so
much for so little. The restrooms are clean. And McDonald's serves hot
strong organic coffee in smooth cups of some wonderful material that
keeps liquids hot without burning the hand, shaped to fit into the cup
holders that just happen to be in your car, with carefully designed tops
that permit just the right amount to be sipped.

No regulator, no fascist dictator, no socialist planner decreed sip
tops or cup holders. But how many late-night drivers have died for the
lack of a good cup of coffee? What could be more munificent than saving
lives?

And the story doesn't end there. Consider the employees of
McDonald's. How many people have worked there and learned the most
important lesson in America: The customer is always right?

The anti-this-and-that people who demonstrate against profit
incentives and free markets like to single out McDonald's as a symbol of
modern capitalism. (They don't mean that in a nice way.) As the McLibel
Support Campaign puts it: "(McDonald's) has pioneered many business
practices that have been taken up by others, and have come to represent a
symbol of the way that society is going –'McDonaldization.'" But when
have you ever seen an unhappy customer at McDonald's? There couldn't be
too many of them, because about 10% of America eats there each day.
Given the choice of cooking at home or going to other restaurants — and
competition ensures that there are other restaurants — people go to
McDonald's because they trust they'll find good food, quick service and
value for money. What could be more munificent, more representative of
sharing the fruits of hard work than McDonald's?

McDonald's and the Pilgrims are the essence of America. The people
work hard, motivated by the chance for profits. They provide a welcome
to others, whether to Indians joining in harvest celebrations, or to
customers looking to satisfy their hunger. Their work results in high
quality, low costs and family togetherness.

Those humdrum, everyday attributes are what makes America great.
That's what we should be celebrating. It's the source of all our
munificence, from the first Thanksgiving to today.

Nov

20

 "Will This Be the Season of the Super Cyclone?"

A big typhoon on the other side of the Pacific would make it worth a trip for this Florida boy to go to California to catch some epic South swell. The most rideable waves from those gigantic typhoon swells come right after the peak, when the wave form is changing.

The ocean gives the experienced waterman many clues as to when the form is changing, be it a swell, a hurricane, tuna run, whatever. The markets do the same. There's more than a few market lessons in hurricanes and waves. A difference between surfing and the market is that the very biggest waves on the planet will max out under 1000', nobody knows how high a market can go.

Nov

18

Despite Tel Aviv being up today (this has been a very strong market this year) the spread between the broad Market ETFs and in particular svxy and their net asset values is just too wide in favor of the ETFs, but usually signals a pullback of one to three days, indicative of just a little too much short-term optimism at the moment.

Nov

18

 Gotham and New York: the Novel make a fine pair of telling the history of a great metropolis with many financial insights contained within. Both books are very informative and tell you everything you should know about the hi-ways and byways that led to current times. However, both books spend an inordinate amount of time on the plight of the 1% who did not prosper with the rising tide.

Henry Gifford writes: 

To the list of New York City books I recommend The Island at the Center of the World by Russell Shorto.

Basically, in the 1970s, some government employees were throwing out boxes of junk from the basement of the NY State capital building in Albany, NY, and someone looked to see what was in the boxes and found old documents written in a language nobody could understand. Turns out the documents were written in old Dutch, which very few people can understand, but someone found a translator and a non-government-employee wrote some checks to get the translation done.

The documents were basically the history of NY City when it was a Dutch trading post.

As a trading post it wasn't a country or a colony, but something that perhaps doesn't have a well-matching modern equivalent. New Amsterdam, as it was called then, was run by a governor, but many people from all over passed through or lived there. One description from the time said something like:

"Mine eyes hath never seen such a place so full of people from all over - Africans, Europeans, Natives, Christians, Jews, Mohammedans, etc., each of which has a place where they worship and at least one place where they eat (and I think drink) - all living in harmony. Such happiness and prosperity I have never seen anywhere else."

Maybe still a decently fitting description.

Not many people liked the governor, who was a bit of a jerk, and who broke the law requiring doing what can be done to avoid war with the natives - the law required fair trade, whatever that meant. But, he was appointed by the powers that be in Holland, so there wasn't much anyone could do.

But a Dutch lawyer by the name of Adrien van der Donk, who was living in New Amsterdam, formed an advisory council, elected I think, who advised the governor. They had no official power, and the governor had no obligation to listen to them, but he didn't get to be governor by not being an astute politician.

I won't spoil the rest of the story for anyone, but the book makes a good case that democracy started in New York City, while the pilgrims who landed in Massachusetts were interested in anything but freedom.

anonymous adds: 

The Plymouth Pilgrims were very much interested in liberty. They were superceded by the Massachusetts Bay Colony that had the Royal Charter and, therefore, the sole legal authority; but they never surrendered fully to the Puritans belief in witch hunting and one almighty pulpit. The Mayflower Compact is the foundation of the American notion that the People, as individuals and not merely as a class or estate, are Sovereign. The Pilgrims and the Hugeunots and the Jews - refugees all - brought their ideas of freedom to Holland. They and the native Dutch created the amalgam of open outcry trade and commercial credit by contract whose rewards we all live by and exported it to the New and Old Worlds.

As Shorto's book and others demonstrate, New York became the center of Amercan commerce rather than Boston because, as Harvard daily reminds us, the Bay Colony was more interested in theocracy than free enterprise. The Anglicans in the Duke of York's Crown charter wanted the same monopoly for New York that the Congregationalists had established in Boston, but they always had to struggle against the melting pot that the adventurers from Holland had already set to a rolling boil. To the extent that the Royal authority did take hold in NY, the city lost out to Philadelphia (Franklin, with his eye for the main chance, chose Philly, not NY, when he left Boston). How Gotham became #1 again is the story of how the Dutch and others took hold once again after the British Crown was evicted.

Nov

18

 I'm starting to see multiple points popping up along the constant mat treasury curve. When this has happened, historically, the existing trend exacerbates.

Given that the curve is entirely of bull-market shape (i.e. a positive-but-slowly-flattening curve) I have to take this to be a very bullish omen for the next few weeks to months.

Jim Sogi writes:

Read some of Ralph's books for some "secret sauce". They are quite mind boggling.

I've gotten a glimmer of the concepts. For example, his idea of using discrete math and decision trees rather than the normal continuous calculus curves for making decisions. The market is discrete prices with discrete beginnings and ending points giving the decision tree methodology a good practical basis for making decisions in real time.

The yield "curve" also has discrete points and beginning and endings for the bonds each with a discrete term and rates.

I've only heard brief mention of this idea elsewhere.

Nov

18

After the Thousand Oaks bar shooting, the rules for successful massacres continue to apply:

1. The people being attacked have been forcibly unarmed; even licensed Concealed Carry permit holders are excluded
2. The "security" plan focuses on organizing and controlling the crowd, not spotting the troublemakers
3. The shooter(s) are already well known by schools, military and the legal system to be certifiably nuts

Nov

18

Some folks here might enjoy this video of a talk I gave last month to philosophy undergraduates at the University of Colorado Boulder:

talk (40 minutes)

Q&A (20 minutes)

Nov

18

 A few follow up tidbits after returning from Antarctica via Argentina. I hear interest on Bak accounts is 50%! And interest on credit cards is 100%.

However commerce seems to running along ok. People seem to be okay and happy, and there is no strife.

As elsewhere around the world it's a cashless society and a credit card worked everywhere except taxis. Paypal didn't work in Uber but a credit card did.

Nov

18

 Enlightenment Now by Steven Pinker, I reckon, may become one of Chair's favorite books.

Pinker describes the fantastic improvements in health, life spans, and happiness since the Enlightenment of the 1800s.

Despite widespread denial by many the world has seen an explosive increase in health, lifespan, wealth, productivity, reduction in crime, poverty, disease and he cites the statistics.

Truly a record to inspire optimism.

It's a quirk of human nature not to be able to recognize the improvements.

A must read!

Nov

11

 Charlie Cook got it right. Here is his firm's analysis of what the election says about the future:

"Democrats wanted this election to be about more than just winning the House or the Senate. They wanted 2018 to be a total rebuke of Trump. A wipe out of epic proportions all across the country. That didn't happen. What we saw instead was more of a retrenchment. Red areas stayed red; blue areas stayed blue. The only real movement was in districts that were purple — districts that had voted for Hillary Clinton, Barack Obama or had narrowly supported Trump- tipped overwhelmingly to Democrats. As my colleague David Wasserman pointed out, Democrats didn't flip any district that Trump had carried by 55 percent or more."

anonymous writes: 

It would appear it is going to be a long, hard slog for the D's in that regard. The economy, though hotter than a hotel Coke, and acknowledged by the media is not yet being felt and celebrated on Main St to the extent it seems it should have been.

Half of America, and the other 96% of humanity outside of America, still believes we are in the darkest of times. Of the un-retired, everyone in the private sector, is still shuffling about in a glossy-eyed PTSD-like state from the protracted period of essentially no economic growth, despite substantial population growth in that period. Women in their late 40s to early 60s and older probably in the worst shape from it if they are single.

Millennials, in the main, still hunkered by the tens of millions in their parents basements with their incredible dildo collections.

We have not emerged culturally from the past depression. This is going to take a while, this will not be like the 1980s or it's brother, the 90s, and the reason I believe that not only do the D's have an uphill battle, needing to find a new voice, a new platform–a new direction, but the distance between where we are in terms of economic optimism and where we have been in times past (where the backdrop, sans anything going on policy-wise, has been nowhere near as rosy as now) in terms of euphoria, is a gaping chasm still. More reason why I believe this thing will run longer and go farther than any of us think it will.

Nov

6

Peter Schiff was the first one where I realized there is an actual gloom-and-doom industry full of people who consistently predict disaster, and then every X years there is a big market downturn, and they can claim to have been right all along, and the cycle starts again.

Nov

5

 The choice for Japan was whether they would follow a European or American model of Empire. Would their Korean colony have the promise of Independence, like the Philippines, or would it be like French Indo-China and the Dutch East Indies and British Malaya? For Hara Kei the American model made sense; European colonies rewarded permanent bureaucracy–the very political economic disease that Japan itself had suffered under.

On this day in 1921 the first commoner prime minister was stabbed to death in the name of Imperial glory.

Nov

5

 The chair wrote about Macintyre's new book about A. Gordievsky. That book references the autobiography of Victor Cherkashin, the KGB Spy master on the other side (co-written by Gregory Feifer Spy Handler, 2005).

I can recommend that book–at a minimum for it's epilogue, "Lessons of Cold War Espionage":

"With Russian and American intelligence agencies again gearing up after the brief if partial truce following the Soviet collapse, what lessons can be learned from the Cold War espionage game?

Anyone who has read this far knows my conviction that intelligence work is less politically important than it may seem. During the Year of the Spy, CIA and KGB operations represented little more than intelligence games. Their connection to real issues of national security, such as stealing military/technological secrets—let alone to the larger national interest as a whole—was often peripheral. Mostly they tried to ferret out moles and recruit enemy intelligence officers."

The Gordievsky episode seems to confirm this.

The other thing about Macintyre's book is I noticed that Gordievsky accused his 1985 KGB interrogators of Stalinist Terror tactics, while interviewing him, under drugs. That angered and confused his ex-comrades and finally helped saving Gordievsky's life.

Maybe there is a trading lesson here. Make your opponent emotional.

Nov

4

 How many of the activities of spying with their misinformation, dangles, floaters and honeytraps, emphasis on the false, and hiding of the true, in general, have counterparts in markets?

I was led to consider this by a reading of the excellent book The Spy and the Traitor. Perhaps most resonant to me was the warning against seeking confirmation from a third party of something you already believe. The false confirmation that the D-Day bombing would be at Calais and the false belief that there were weapons of mass destruction in Iraq and the belief that an imminent nuclear attack on Russia were 3 examples cited by Macintyre in the book. The idea of searching for regularities among market moves that you know will confirm the regularity is horse from same garage.

Jim Sogi adds: 

Spycraft, a meticulous attention to details of deception, is important to spies and traders.

Never brag of success. Don't trust those who do.

Place orders in hidden unexpected places and disguise them and the size.

Use the element of surprise when entering a market.

Test the waters or market before committing all the way like the Commodore in Lefevre.

Never listen to the disinformation laid like traps.

Be prepared for pain under torture.

Understand the triple cross and the double cross always at play and how to use it against your counterparty.

Yeah, I read lots of spy books.
 

Peter Ringel writes: 

Great one-liners. The double/triple cross reminds me of myself searching for a bottom.
 

Nov

4

I missed this book Factory Girls: From Village to City in a Changing City back in 2008, but can now recommend it to dailyspec readers. There were 130 million Chinese migrant workers at that time, and this is the story of two. Sex differences, family trade-offs, freedom, outsourcing–all the meat of life and capitalism is there. Cheers.

Nov

2

Under various combinations, for your mid term election campaigning purposes!

Nov

1

Mark Twain's Roughing It has a 200 page description of a silver boom in 1867 that contains all the hopes and agonies and easy money of many booms and busts since then and is a better description of great rises like Nasdaq in 1999 and bitcoin in 2017 than any other work. It is strongly recommended.

Nov

1

 I am always impressed with how speculation is crowd oriented. This is particularly true when one company in an industry is targeted for acquisition and its industry mates rise in sympathy.

OK, that's a given. However at this particular time there are a number of companies in the "footcare retailing" business giving similar signals. What happened? Did Americans wake up and realize that they were shoeless?

Nov

1

There is a good chance of more tariffs in the near future.

Nov

1

I'm in Argentina on the way back to Antarctica on a ski expedition. The dollar is 36 pesos which is a 450% increase from the official rate two years ago and 250% increase from the black market rate. Things are quite cheap in dollars: a cappuccino is $1.50 and a beer is $2!

I wonder what the effect is. Cash has depreciated. Imported goods inflated. What about real estate? Goods and assets held and debt is better than cash. Prices for food don't seem to have increased much so the core inflation doesn't seem to have jumped. Hotel was very cheap.

There are a lot of tourists, including the ubiquitous Chinese in buses. Formerly stalled building projects are completed. The government floated the peso which got rid of the black market and presumably enabled building loans to go forward.

I've never experienced an exchange rate change this extreme. It's an interesting study for a student of currencies. Our site has a currency martial arts expert and am curious on his take.

anonymous writes: 

Scott Grannis posted an optimistic & compact article on Argentina last month: "If Macri and his new central bank leadership team can stay the course, the upside potential of this struggling emerging market economy is HUGE."

Not in the article:

- I think Argentina has the most usable shale oil of all South American states- Argentina was once the leading country in South America
- (if they can shake the socialism)

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