PebbleI'd love to know whether Joe Lewis played golf with Jimmy Cayne prior to taking his billion dollar stake in BSC. I think that with a shared interest like this the defences go down. Is it right to trust people that we instinctively like? Or is this the time for caution, certainly with regard to business matters?

Bill Humbert replies:

GM Davies asks a good question. I wonder if this has to do with the departure of happy times. The rising tide lifted all boats, but now those who cannot do are left with no support except their ability to deceive. I have encountered more smiling, pleasant backstabbers, liars, and hoodoos in the last three years than in all the rest of my life added together. I have successfully used the cockroach theorem for years with individuals, but find it highly predictive with regard to organizations as well, nowadays. Noticing one little oddity almost ensures worse, and soon. Get the facts. Follow the money and power flows to see what they are distorting in order to ensure gain for themselves or avoid threats to their pleasant and undeserved situation. Been pulling out books like "The Prince" and "The 48 Laws of Power." They read like a checklist some days.

Kim Zussman extends:

RoachSpeaking of cockroach effects:

1. Are there more big problems to come at financials?
1a. Is illiquidity of the banking system the only fear?
2. Are we in/headed into recession, and if this is all, wasn't it quick and painless?
3. How long/far will real estate decline?
4. Will central bank actions ameliorate or postpone?
5. Isn't a long-term bottom when no one even wants to discuss the stock market?
5a. And a negative wealth effect because investable capital is needed for consumption?
6. Is there a put in SP500 at -20% from October's high (cash 1250)?
7. Can bear rallies be distinguished from a major turning point?
7a. Can bear rallies be timed and bought without an irregularly declining P&L?
8. Are some markets not tradeable and how do you recognize them ex-ante?


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