Archive for August 2007
Isn’t That the Whole Damn Truth?
I haven't -- and won't -- watch or listen to a single second of "Hurricane Dean coverage," principally because over the preceding months I've cut my "news" intake to nearly nil and am still working on getting it lower. I'm interested in the signal, so I've got to ignore the noise. More on that, below. I'm still somewhat addicted to some of the news commentary on a handful of blogs, but I'm pretty choosy. Most blogs I read have the sort of commentary on news and events that's simply unavailable from any mainstream source. I didn't need to hear or see a single news item to know this has got to be the truth. For days the media have screamed about the "Hellstorm Dean," the "Killer Hurricane" bearing down on Jamaica, and sure to wreack havoc and mass death, film at 11 (actually, film continuously). This morning, they were visibly disappointed that thousands hadn't died on Jamaica, but they were still holding out hope that there would be massive destruction in Belize or Mexico. Of course, politicians love hurricanes too. In Jamaica they were busy suspending elections, declaring states of emergency, and warning against free-market prices If you don't get...
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Fooled Again?
From Bernie Scaeffer's Monday Morning Outlook (free subscription) that just hit my inbox. In other news from the sentiment front, mutual-fund investors have been feverishly withdrawing assets out of U.S. mutual funds. According to recent TrimTabs data, the year-to-date outflow from domestic funds ($8 billion) is on pace to hit its greatest level since 2002. Note that the 2002 fund outflows occurred as the U.S. market was carving out a bottom after a prolonged bear market that began in early 2000. Given the record inflows into U.S. equity funds in 1999-2000, one certainly has to question the timing of this crowd. Yep. They bought at the top in 1999 - 2000, and sold at the bottom in 2002. Billions and billions worth. Millions of retail investors, IRA and 401K account holders. And right on queue, the "little guy" is doing the same thing, right on schedule (and who's buying the shares that the funds are having to liquidate in the face of fleeing capital?). But there's no doubt it's hard to hold an asset that's losing value right in front of your face. Say you have $200k in your 401K, which, if you've been plugging the $10k - $13k per...
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The “Bright Side” of Doomsday
I often observe human beings who are barely able to contain their pleasure at any sign of trouble that signals they may turn out to be right. Here's an example many will recognize: the thinly and poorly veiled glee felt and expressed by many on the left with each new report of things going south in Iraq. Now, I certainly think we should get our asses out of there, immediately, but if that's not going to happen, then I certainly wish for a success -- however that may generally be measured. Many libertarians aren't immune from such base emotions, it seems. And if I'm honest, I'd have to admit that I've fallen for the "serves 'em right" and "that'll teach 'em" immaturity, at times. The sad reality is that things are in motion, politically, that could ignite civil wars and worse; and regardless the eventual outcome, it's nothing to cheer. And neither is economic collapse, simply because you don't like the Fed, its credit bubble, and resulting inflation. Here's what I mean. These are all from the LewRockwell Blog over the last few days. Lew Rockwell (Recession...or Worse?) - As the Greenspan-Bernanke-Bush disaster unfolds, follow the trainwreck with Mises.org's charts....
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Slippery Slopes
I've cut way back on the amount of technical / philosophical material I post here. The reasons are multiple. For one, there are so many much better at it than I. Second, I have other interests and some of those are in the forefront of my thinking most of the time. Third, I have this nagging sense that much of what I read in the philosophical arena is mostly back fill; that is, it attempts to make sense of what has already happened, with tenuous connections and assertions to what will or is likely to happen. I think the future is molded by huge and unpredictable things: the invention of the stirrup, which permitted heavily armored horsemen to project power over exponentially greater territory; gunpowder; industrial revolution; advanced weapons; nuclear weapons; telegraph; railroad; shipping; aviation; telephone; radio; TV; vaccines; computers; networks; the Internet; ...blogs? These things are my focus, primarily. Because... they happen from out of the blue; and when they happen, I think civilization changes and it does so with little conscious regard to philosophy. That comes later, in an attempt to explain what happened, and in many cases, how the unimaginable (Holocaust?) could possibly have happened given our...
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Randomness Watch
First an email just out, which, I hadn't written with the intent of publishing, but then right on the heels of that I saw something that just made me shake my head and follows right along from what I'm talking about. The email was to Billy Beck, following up on this entry. Two things that come to mind. I've copied Kyle for shits & giggles. First, this reminds me of a local radio talk show host, Ronn Owens, here in the SF area. He's a "moderate" lefty, and by that I simply mean that he'll usually come down on what would be the lefty side of some issue, but not really by means of a principled lefty ideology (collectivism). He just weighs it on whatever (to me) arbitrary standard or value and has his position. Then, the next thing that comes along, "right on schedule," he'll go the other way (can't "go too far," or whatever). Nothing new there, but I bring it up because in the 15 years I've tuned him in, on & off, he always explicitly rejects slippery slope arguments on the explicit basis of pragmatism, which is -- I think -- where you seem to be...
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Trading Psychology
Here's something to think about that I think has implications beyond trading. It's an obvious fact that to make money in trading -- or anything, for that matter -- one must be right. Or, at least, mostly right; more right than wrong with the difference being a gross margin of sorts. From there, I think many people make what I believe is an erroneous leap: that to be enormously successful one must be right most of the time. But if you've developed a trading system where the great majority of your trades are winners, or an entrepreneurial approach where most or all of your business ventures succeed, it can likely only be because you are making high-probability decisions. High probability equates to low risk, which equates to small returns. That's success, but it's usually not enormous success. Try it out. Go deposit your money in the local bank and you are virtually guaranteed to earn a return greater than zero 100% of the time. You can open a savings account or CD with virtual certainty of being right about earning a profit. You just won't make any real money unless you're into the seven figures already and just want to...
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In the Midst of Panic
Probably not what everyone is thinking, right now, but if I'm going to keep my head about me and keep a market perspective on the market, then I have to consider that when some people sell out of fear, panic, to preserve diminishing profits, or to stop losses, there's always someone on the other side of that trade. So the question arises -- and one should always, always try to discern the motivations behind each side of a transaction -- why are an equal number of people buying, right now, what so many are selling, right now? Could it be because others are selling at cheaper and cheaper prices and those buying are seeing bargain-basement prices? If you had to guess, who would you suspect is likely getting the advantage? For some reason, people don't tend to think of the stock market like they do most other things. In other areas, it's called a sale. There's always someone, somewhere, wanting to get out of an asset -- for whatever reason -- and depending on their motivation, they'll take less and less for it. Others lie in wait for such opportunities in order to accumulate assets at relatively low prices. Everyone...
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Why…
...is this? We had just hauled this young woman off in handcuffs, mostly for helping her boyfriend. She was going to lose her kids, her house, her future. And it hit me--all of this is for what? What are we doing here? We arrest one drug dealer, and two take his place. I watched while we ransacked parents' homes because their kids were dealing. I saw the looks on their faces, knowing that their kid's future was over, and they were probably going to lose their home. This thing [the drug war] was ripping apart the fabric of our communities. That's former LAPD narcotics officer David Doddridge answering Radley Balko's question as to when in his career he determined the drug war wasn't working (I'd have worded the question differently: this isn't a matter of efficacy.). As to my question, above, he answers it later. One thing you have to understand: Cops love action. They crave action. You have thousands of these SWAT teams across the country, now. You've got these guys in some small town in Idaho with nothing better to do just looking at each other. "What do we do with this warrant? Well, might as well give...
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Societal Evolution
Ha! Billy comes up with a damn fine analogy to illustrate the nature of the political wrangling that transpires whenever someone proposes a new tax or a tax increase. Proposed victims frantically nominate others at the edge of the herd. I won't soon forget it. And I'll probably be compelled to remember it from here on, each time I watch one of those nature shows with predictors stalking herds of whatever. A quick thought: wouldn't it be nice?
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A Warm Note in Passing
This story has been around for a few days, but I've yet to see it in anything major. Perhaps not enough time has passed necessary to concoct the standard set of talking points, "explanations," equivocations, euphemisms, qualifications and so on that go hand-in-hand with maintaining propping up beliefs in illusions. But let me ask you this, in light of all that you see, read, and hear surrounding global warming. What if you were suddenly told from a reliable scientific source (one you trust) that the hottest year on record in the U.S. was 1934? As in: nowhere near the time of your personal experience, where, now, every personal case of the prickly heat is confirmation of "global warming." Shit, even last weekend while standing on a hang-gliding launch north of Mt. Lassen, I was told that "global warming" was making for excellent flying this year. No, I didn't bother. Maybe you're being fooled by randomness (see sidebar). I still say this is all part of a gigantic topping pattern, but we'll probably see some years of a "blowoff rally," where everyone goes even nuttier than they already are about this fantasy. They'll harbor all their silly illusions about how they...
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Awful News
I hated to see this upon returning from my morning walk. Looking back, Geoff Loyns was my favorite mentor when I was learning to fly hang-gliders. World record holder and holder of many site records and many hang-gliding flights in excess of 100 miles -- he flew 193 miles out and return back in 1998 in the Owens Valley, a world record that stood for years. He also tumbled there once, sometime after, and had to ride his emergency chute down. He used to tell me that it's not safe to fly a tailless aircraft in the Owens during summer conditions (especially on the Sierras side). I don't think I ever knew anyone who loved flying as much as Geoff. I remember, in particular, a day at our local training site, Ed Levin Park -- a typical day where it wasn't really soarable (sufficient lift to stay aloft or gain altitude) for most people. So, most of us went up, set up, and took a 5-10 minute sled ride for the 1,700 foot vertical, depending on how much lift you could scratch up here and there. But there was Geoff; soaring like a hawk, sometimes just mere feet above various...
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Economic Woes
George Reisman has up an excellent primer on the recent hubbub all over the news concerning the housing bubble, sub-prime meltdown, credit expansion and how they are all related. Required reading. That said, from the standpoint of an investor (in both R/E and the stock market) and trader (options), as well as business owner, it's always a good idea to distinguish between the is and the ought, and never to assume that when things are not as they ought to be that it's necessarily going to spell disaster. It doesn't have to. There is natural justice and judgment in the world, and ignoring the implications of doing wrong can bring on such implications in full force. The "problem" in this case is that all this bad news is well known by all the players. It's being managed and flushed out of the system (well: "patched up," I should say) in a pretty competent, deliberate, and (so far) effective way. Sure, I'd love it to be done in a way that results in finally having real money, but I know that's not going to happen. I could be wrong (so could you) and the market could open a thousand down tomorrow...
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On the Record
I'll be perfectly happy to be declared wrong; and indeed, I claim no special certainty in the matter (nobody does), but for my money (and it's exactly where my mouth is), all this fear being stoked up about the markets, credit bubble, sub-prime meltdown, and so on, presents what I think is an enormous buying opportunity. Perhaps not a summer of '98 buying opportunity (you'll recall the scary 10% plunge that scared all the weak hands out of the market -- their shares being sold off to the "smart money" -- if indeed there is such a thing), but it could be even more. I'll set aside, for now, judgments regarding the propriety of printing our way to illusory stability, but I tend to regard credit with a different perspective than most people. In the most fundamental sense, credit is the selling (at a discount) of future labor, creativity, productivity, and so on. So, in that light, I can never really tell if firing up the printing presses is really going to be bad for anyone on a practical financial level because I can't predict the future. Moreover, I think we tend to always underestimate future productivity because we discount...
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Home Runs: Like a lot of things people don’t really understand
Lots of what I easily consider Bullshit surrounding Bonds' fabulous achievement. If Bonds did use steroids, which appears pretty likely, I doubt it helped him hit home runs (perhaps other areas). I'd sooner be tempted to guess that it hurt, just as I'd guess they would degrade Tiger Woods' huge drives off the tee. Art De Vany is right. He's right here. And he's right here. As well this exhaustive, mathematically and statistically rigorous 45-pg essay: (PDF) Steroids, Home Runs and the Law of Genius. If your browser has trouble with that, as mine did, you can reference it from this page and/or just save link or target and then open it straight to your PDF reader. I don't think anyone know nobody knows how Bonds did it. He's simply a Black Swan in baseball and he won't be the last. You won't see the next Black Swan come along (in any area) and after it happens, your pat list of "causes" will be as laughable and insufficient as pegging Bonds' home run record on something as simple as taking a drug. Oh, and I don't give a shit about steroids, or any drugs for that matter. Why should I?
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Contributing to the Social Injustice
At the age of 46, I find myself for the first time in my life in need of corrective lenses. And it's not even that bad. I just began to notice eye strain while looking at a monitor all day, and reading. In fact, from about a foot out, vision is still 20/20 and curiously, it seems to have improved over the years. I can read the smallest stuff way far away with no problem. Anyway, the prescription thing is going to handle the problem a lot better than just the magnifying reading glasses (which are useless, I find, for the computer screen), I'm told by optometrist. So, yesterday, prescription in hand, I go to the local Lens Crafters and am just shocked by the prices. All this designer stuff (I'll be sitting at my desk...), and anyway, I want something just a bit geeky and durable. No choices. I'd say the average is going to be about $250. Then I hear about Wal-Mart. $108; less than half. But that's not all. That's for two pairs -- one for my desk, and one for my laptop bag. And it's quite convenient, too. All the employees are right there chained to...
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Lunch at the Googleplex
Bea & I picked up two of my teenage nephews from the airport yesterday for an annual trip out to the west coast from Kentucky, or someplace thereabouts. Then we proceeded up to the Google complex right near the Shoreline Amphitheater where we met Bea's niece, a Stanford grad and now very happy employee of Google. I think the experience was a bit lost on the boys. Google is something that gives them search results, but they had no clue as to the disruption it has caused and is causing in the general webosphere; nor what some of its plans are, such as it's book project and 4th generation wireless, i.e., wide-area high-speed networks open to all appliances and applications. YouTube. The list goes on. Google has really become somewhat of an ubiquitous value for many. They're behind so many things, now, that you don't notice them so much anymore. But if they were suddenly gone? Anyway, it was a thoroughly amazing experience. All the stories are true: bicycles -- all identical -- in droves, just sitting there so employees can easily and quickly get themselves from one part of the campus to another. Valet parking; on site haircuts and...
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