Earlier posts · Page 27
New Stockpile Gift Cards, from Jeff Watson
There's a new game in town. It's called Stockpile, an app/brokerage that allows one to buy fractional shares of stocks in price increments online. They also offer gift cards at places like Target where one can buy fractional shares of every stock on the S&P 500 and many ETF's etc. One can buy the gift card, open the account, and redeem it for a partial share. It was very disconcerting on so many levels to see a rack of gift cards of partial shares…at a Target. At $0.99 per trade, it's very expensive considering it's almost a buck for a partial share. Still, the millennials will love it. Stockpile's website is here. Here's a very good Youtube of Jim Cramer discussing Stockpile with the founder. Here's what the rack of gift cards looked like.
Dimson Valuation Discussion, from Tim Melvin
Pardon my links but this is pretty interesting conversation between Elroy Dimson and Meb Faber.
50 Day MA Crossing the 100 Day, from Stef Estebiza
We are at a point where MA 50 day is crossing down the 100 MA…
Sure, we are in a low, and maybe we will see a bounce to retest higher values, but the point is, use this rebound to lighten up, thanking God for giving us new highs from which to sell, or are you really aiming for new highs ?
What should push the markets to new highs in your point of view? Better express it now than later…
Adam Grimes writes:
Is there any statistical edge to the 50 day MA crossing the 100 day? This is something that is easily testable, and if you have tested it and found no edge (beyond the baseline drift, of course)… then the only reason to be talking about it now is that we must be convinced "this time is different" and it matters this time, right?
If so, why?
Unless there are good answer to those questions, isn't all discussion of moving average crosses just noise?
Dimson Interview, from anonymous
Nice interview with Dimson:
Episode #100: Elroy Dimson, "High Valuations Don't Necessarily Mean That We're Going To See Asset Prices Collapse"
Brief Update, from Bo Keely
I've been busy at Slab City. The three year era of rental cars expired when I pulled my old Ford Contour out of mothballs and it promptly blew a head-gasket. So I'm riding a Honda 185 motorcycle that is fun. I put a sidecar on it that fell off, so I'm looking at the world again between the grips of the Honda. I've been sleeping in a shipping container on the rim of the Walmart wash where a couple people were found in a public display like the Tarot Hanging Man card. Slab City has changed dramatically in the past two years since DailySpeculations began printing some of the Slab series that are accumulating into a book. The surprise is the power of the press that has catalyzed the shift. There has been a tremendous influx of travelers, weirdos, and anarchists who used digital devices to research 'Free places in USA' for which there is a preponderance on this town. They are marijuana smokers down to the last man and woman, supplanting the methamphetamine population. The cultural impact is vivid: Marijuana, just legalized in California, is basically a sedative, whereas methamphetamine is a stimulant. The town has become safe and boring to and because of this author. I'm going to get on the motorcycle and drive south to San Felipe, Baja to finish the book, and then look toward new horizons.
Comments
Pete M on April 8, 2018 2:44 am
Thanks for the update Bo, love the Slab City tales. Looking forward to the new book.
Bob Donohue. on April 11, 2018 9:47 am
Bo: Interesting that the legalization of grass has had such an impact on the Slab. Looking forward to your book.
History Lesson, from Alston Mabry
I have a cold and so not much energy for anything other than watching tv. I'm catching up on Michael Woods' show about China, and in episode three there is an incredible story about the siege of Kaifeng and the destruction of one of the dynasties in the early 1100s by northern invaders (vid cued up to that point). If you watch it, be sure to get to the poem that is read, "On the Defeat of the Nation" by Li Qingzhao.
I can't find an online version of that specific poem by Li Qingzhao, but I did find this group of translations of some of her other poetry, and there is some really striking stuff with such a clear voice from nine centuries ago:
A sample:
Last night, dead drunk, I dawdled
While undoing my coiffure,
And fell asleep with a sprig of
Faded plum blossom in my hair.
The fumes of wine gone,
I was woken out of my spring sleep
By the pungent smell of the petals,
And my sweet dream of far-off love
Was broken beyond recall.
Now all voices are hushed.
The moon lingers and softly spreads her beams
Over the unfurled kingfisher-green curtain.
Still, I twist the fallen petals,
I crumple them for their lingering fragrance,
I try to recapture a delicious moment.
Leo Jia writes:
In Turkey today, it is illegal trying to inquire about one's ethnicity. The country stands by a slogan that it is one country, one race, and one religion. I bet they learned the tactics from China just about 2000 years ago when all the country men were termed the Han.
Speaking about Chinese poems, I always wondered in what dialects they were chanted. Obviously not in the mandarin as we know it today, because it's been only widely spoken for less than a century even though it was used mostly in the royal courts as early as the Qing Dynasty some 300 years ago.
But anyhow, due to the nature of the Chinese language being based predominantly more on writing than speaking, it's very hard for a listener to fully understand the chant of a poem, mostly tersely phrased. One just can not easily guess which actual character (which defines the meaning) of a particular sound (which can mean many things) is used.
Evolution of Everything, from Victor Niederhoffer
There are numerous eye opening facts in the book in the field of the economy, government, religion, science and the arts.
The market is shown to be Darwinian, and Smithism and Darwinism are shown to be complimentary forces in every field you can think of.
Trading the Trade War, from Sushil Kedia
Is the S&P 500 falling because the Chinese wont let American companies profit as much? If this is the reason, why are the US Treasuries not falling? Can America become a safer and better economy (which is what rising Treasuries should mean) while American corporations are going to lose money or make less money?
Or are we being fooled by the tape to imagine that as the Chinese make more money they will buy even more of the US Treasuries? Aah so Ms. Market is trying telling us the Chinese are such fools they will buy more of safe assets in America while negatively impacting America's riskier assets with a long term drift due to the power of compounding the re-investment in growth?
A risk off kind of emotional feeling more than any rationale? Ok so in emotions everything seems as valid. Hmm.
Trade Wars, from Leo Jia
It appears many American media are worried that the US will lose the trade war against China. That sounds very cowardly. The trade war will hurt parts of the American economy, but how can it lose? For every $1 America sells to China, it buys $4 from China. So China's loss will be at least 4:1 vs America's if the trade war goes into full motion. Plus, a few of the big imports by China, like soybean and Boeing, are irreplaceable. Other things like the semiconductors are critically needed by Chinese economy. So China doesn't really have a lot of weapons.
Any other opinions?
Stefan Jovanovich writes:
Trade wars helped build the United States. So it should hardly be surprising that the people most dedicated to tearing the country down are hysterical at the prospect that county may be having another one.
Stef Estebiza writes:
America has already lost.
You have decided to invest in China/Asia rather than in your population. I would not see it only at the "trade war" level. Globalization has allowed you to ignore internal problems, your population, to focus on foreign profits. The structural problems are the same worsening. Either you decide to reduce your earnings by investing in your own home but by recovering structural problems, your population…or you will have to keep it.
Unbelievable watching the children, the students who survived the massacre in the streets demonstrate against the weapons without the support of the American political parties. It speaks volumes about the real situation of America.
If there's one thing you really have to worry about losing, it's your population…that you've already lost for the interest of a few.
Here in Italy we rejected right and left, the major political parties. There are two major parties in the government, both as out of the popular discontent. If Americans wake up and form a third party (your constitution permitting) you can put Republicans and Democrats in mothballs.
Then either raise your population from poverty, put back a little balance in the system, or they will show you the green mice.
Stefan Jovanovich writes:
"America" has not invested in China/Asia. Even our war spending kept most of the money here on-shore. (I can remember lobbying to abolish the draft in 1971 after I got out of the Navy and running up against all the Congressmen whose districts were prospering from the war orders.)
When I wrote that trade wars helped build America, I was not being facetious. The times when the United States has been a taker in foreign exchange have been the times when the country's population and wealth have grown. Whenever the U.S. has been "protectionist" - i.e. let people and money come here freely but charged goods and services an admission fee, the place has boomed. Whenever "prudence" - i.e. worries about paying off the debt - and "internationalism" - i.e. let's become allies with the French, British, etc., etc. - has guided Congress, we have "lost", as Stef puts it.
We certainly lose whenever "policy" takes hold and questions of "structural" reform become more important than the common sense that even Congress accepted before our best and brightest all went to graduate school - don't let people come to the country with diseases or criminal connections and choose: (a) free trade for goods and services and no immigration OR (b) open immigration and tariffs. Most of the time the political majority chose (b). They are doing so again right now.
Finding the Final Zero of Markets, Trying at Least…from Sushil Kedia
The moment a tick changes, at that moment parties that transacted on the prior tick "experience" a zero sum game. If the same parties only continue to transact with each other with every further change of tick it remains a zero sum game.
However, soon as the "pool" of competing players changes in the pit, either by someone closing out all outstanding positions for whatever reasons and stepping aside or any new players entering the pit, the game changes. It creates a very interesting web of potential ways to lay out the game in a mathematical sense. This remains true for any further longer / larger time frames. Lets focus on this part.
The gains or losses made, lets call it impact for ease of language, by existing players is shared now with the new ones. But not only MTM impact that can be measured only at the present moment, this ultra sophisticated "game" must account for Opportunity gains / Opportunity losses or the Opportunity impact also.
The zero sum game can still be visualized as zero sum where the sum of all MTM Impact + Opportunity Impact = 0.
MTM or the present moment impact is simple and lets leave it aside. The real juice is this Opportunity Impact construct. Before we enter this labyrinth let us first choose to do a post mortem of those who left the game. Lets use the term "Out" for those who are out of the game. Lets use the word "In" for those who remain in the game up to any point of time.
The Out have taken an MTM Impact and gone! Right? No Opportunity Impact taken by them? Well if I sold out a position at 100 and became an Out, and the price becomes 125 in a year have I incurred an Opportunity Impact of 25? I have, since if i came back into the game a year down the line I would be shelling out 25 dollars more. Same way if price went down to 75 in a year I have an Opportunity gain impact of 25.
This is what makes the market appear like a variable sum game.
Things get a little more interesting and more realistic when we introduce one more final variable, Those Not yet In the game whom lets call for this note, whom we can say name as the Virgins. so for any stock, any contract, any investible or tradeable entity this world produces three types of Players: Ins, Outs, Virgins.
For an easier visualization lets assume we are only evaluating the game of playing the long term drift.
So the MTM Impact of Ins = -(Opportunity Impact of Outs + Opportunity Impact of Virgins)
This equation above is an over simplification and displays only a long only deliverables only contract. If we add the derivatives layer the left side of the equation will have instead:
MTM Impact of Long Ins - MTM impact of short Ins = = - (Opportunity Impact of Outs + Opportunity Impact of Virgins)
Finally if we will allow minds to now wander along a constantly fluctuating market that has the drift or some markets that are bereft of it, different time horizons, different risk-return optimal curve seeking individuals, different tax & liquidity constraints apart from the decisively different placements within the food chain causing differences in information seeking, processing and actionability skills the market can still be described as a zero sum game in terms of the net value of all actions taken, not taken, exposures taken, not taken, different skills, abilities, compulsions to be zero.
Obviously then such a zero is a philosophically provable construct that:
a) Skill pays in markets,
b) As much as luck might pay
c) No one is in a real sense out of the markets. Those without an exposure have a notionally negative exposure to markets! They are the one's who will get lured at some point.
d) Apart from maximising the number of hands feeling that they have a bad game, the tape is likely moving in ways to minimize the number of Virgins of markets left in this world, I surmise.
d) MTM is a game of money management (LHS) which derives its value from the Inability of all those who are not managing their emotions well (RHS)
e) Whether the universal prevalence of deception as an evolutionary tool pervading the markets or the flexions or the skilled they all are part of the grand design of the market mistress who indeed plays a zero sum game on N dimensions, not on a unidimensional game of just MTM.
f) As much as this is true in life that no one wants to die a virgin, the markets have achieved a constructal to fulfill this idea in the context. This is where the deception, the flexionic matrix works most silently.
anonymous adds:
It is not a zero sum game. True value and wealth are being created in large part due to the liquidity and capital created in the capital markets. As the the prices rise, wealth is created out of thin air, out of confidence, out of technological advances, out of new ideas, out of new people, out of new people participating in the global economy.
Comments
Nikolas on April 14, 2018 3:38 pm
Great article
Cant Find the Cane Suddenly…from anonymous
So hobbling down on all fours motivated by the waves and the counts that I am used to looking at from the old university of mumbo jumbo.
Wondering what the erudite quants are seeing at this hour….
A cane it out moment? At some points surely all religions are unanimous. Is this that moment?
Book Pick, from Bo Keely
I ordered fifty books of Narrative Press from Amazon that arrived last week.
The postmaster remarked it was fortunate that I brought a big bag, and I rode the motorcycle lopsided to my camp.
The first book The Oregon Trail: Adventures on the Prairie in the 1840s by Francis Parkman is easily the best account of pioneers of the hundred I've read.
It's a cliche to say Parkman put me there, but he did, ready to trade in my motorcycle.
A One Line Tribute, from Kim Zussman
First first of month decline of over 2% in 30 months (SPY)
Date 1OM
4/2/2018 -0.021
3/1/2018 -0.015
2/1/2018 -0.001
1/2/2018 0.007
12/1/2017 -0.002
11/1/2017 0.001
10/2/2017 0.004
9/1/2017 0.001
8/1/2017 0.002
7/3/2017 0.002
6/1/2017 0.008
5/1/2017 0.003
4/3/2017 -0.002
3/1/2017 0.014
2/1/2017 0.000
1/3/2017 0.008
12/1/2016 -0.004
11/1/2016 -0.007
10/3/2016 -0.002
9/1/2016 0.000
8/1/2016 -0.001
7/1/2016 0.002
6/1/2016 0.002
5/2/2016 0.008
4/1/2016 0.007
3/1/2016 0.024
2/1/2016 0.000
1/4/2016 -0.014
12/1/2015 0.010
11/2/2015 0.012
10/1/2015 0.003
9/1/2015 -0.029
The Ultimate Trading Guide, from Jeff Watson
Here's a pdf copy of "The Ultimate Trading Guide" by John Hill, George Pruitt and Lundy Hill. The Senator writes glowingly about this guide in the recommendations. This is a very recent book (not 100 years old) so I haven't had a chance to read it yet. I thought that sharing this would be of benefit to some.
Comments
Andre on March 28, 2018 1:53 pm
First half is good so far John Hill worked with crabel and some similarities between this and cradle’s book.
The Death of Stalin, from Victor Niederhoffer
"The Death of Stalin" is a poignant sensitive movie that is well worth seeing.
Here is a good review.
Mr. Jefferson, from Victor Niederhoffer
I have just read Nock's Mr. Jefferson and never was there a more gifted and dedicated man of politics, he died bankrupt and went around all of Europe while he was ambassador to Paris trying out and improving every mechanical invention of the day. Much insight concerning the egotistical Federalist Hamilton is given.
Comments
Jeff Watson on March 28, 2018 1:19 pm
Nock’s “Jefferson” is available as a free pdf. Here’s a copy. https://tinyurl.com/ybzg874n
One of the Oldest Books on Speculation, from Jeff Watson
Joseph de la Vega was a very successful Jewish merchant, speculator, philanthropist, and poet. In 1688, he wrote "Confusion of Confusions," which is one of the very first books on the subject of speculation. A great takeaway from the book was his 4 fundamental rules of speculating in shares.
His rules:
(from Wikipedia)
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The first rule in speculation is: Never advise anyone to buy or sell shares. Where guessing correctly is a form of witchcraft, counsel cannot be put on airs.
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The second rule: Accept both your profits and regrets. It is best to seize what comes to hand when it comes, and not expect that your good fortune and the favorable circumstances will last.
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The third rule: Profit in the share market is goblin treasure: at one moment, it is carbuncles, the next it is coal; one moment diamonds, and the next pebbles. Sometimes, they are the tears that Aurora leaves on the sweet morning's grass, at other times, they are just tears.
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The fourth rule: He who wishes to become rich from this game must have both money and patience.
This is a great add to your collection.
Here's the book.
Comments
none on April 3, 2018 12:46 pm
Subject: Cave in number on DXY 88.253 04032018
The DXY inflection point has move to 88.253 this is a ‘cave in’ number for the market, suggesting a yearly move lower of 17% +/-.
This would be about nearing the 75-76 level DXY.
This recent break of a pass 3 year low point points towards a 4 year lower trend from the 2017 time frame high print.
Rise and Fall of the American Farmer, from Garrett Baldwin
Sobering article: "The Rise and Fall of the American Farmer"
Stefan Jovanovich writes:
As Tennessee Williams' best line from Camino Real puts it, "you can file this under C - for crap".
"As early as the 1830s, American cash crops had arrived as a powerful force in international markets."
American grain exports had a brief honeymoon during the Crimean War. As soon as that ended, imports from Russian resumed; and the U.S. exports collapsed. Before the Civil War any surplus produced by the U.S. "farmer" (sic) went to the internal market; and that was slow to develop. Chicago did not develop its first trading exchange for grain until 1848; the second active market - in New York - only developed because of the demand from the Union armies and it waited until the second year of the war to open. The international trade in grain came after the war; Kansas City opened its exchange in 1869, Duluth in 1870 and then Minneapolis in 1881.
"By the time the Civil War began, US imports were so pivotal to European economic stability that Britain and France considered the possibility of sacrificing decades of moralistic opposition to slavery and openly intervening on behalf of the slaveholding confederacy. King Cotton was responsible for the existence of millions of European jobs at the time, especially in the industrial sector."
There were no "decades of moralistic" opposition to slavery in France; the French looked to the Confederacy to join them in turning Mexico into a latifundia. Britain's policy towards the U.S. was determined entirely by their calculations of how much of a threat the Union armies would be to Canada. If the Confederacy had a chance to win quickly, then support for them would - theoretically - help protect Canada. (Some wiser heads suggested that it might, in fact, do the opposite; that, having lost the South, the North would do its best to compensate by swallowing Ontario and Quebec and the plains provinces.
Cotton had been King, but the Confederates had terrible timing. The textile business in the Midlands suffered a collapse in 1861/2; merchants there were selling their raw cotton inventories to the New England mills, which were busy handling war orders - not just for uniforms but for gun cotton. Grant, who understood these things, was furious with his father and the Jews who had the monopoly on cotton broking in the South because they were selling the contraband to American buyers, not European ones. By the time textile manufacturing revived in Britain (and France and Germany) the American blockade had taken hold; and the Europeans had found other sources for their fiber - in Egypt and India.
Avalanche Calendar, from anonymous
I've been doing a lot of back country skiing and ski mountaineering these past few years. Each day the avalanche forecasters put out an advisory with colors: green for low, yellow for moderate, red for high. This is kind of like the DS calendar in a way. But when you get into the field there are several different areas of focus for decision making a route finding. There are the big mountains, their aspect and shape. Typically we climb up a ridge because nothing can fall down on you as you are at the high point of the local terrain. But within the bigger picture there is what mountaineers call micro terrain. Even on a safe day, a small cliff can kill you or cause severe injury. People fall into tree wells and die. We always look for the safe route up and down. Always look for an exit strategy, a 'zone of safety'. We nibble into big terrain bit by bit, never committing all the way. We test, both the big picture, and the little using techniques such as avalanche pits to test snow, ski pole pokes, ski cuts. Always gathering information during the day, ready to pull back if the micro terrain does not look good. We are always ready to, and often do, turn around.
I've been pondering this for years in markets. Even in a bull market, a micro down draft can cause havoc with a trade. Within an up day, there are down legs. These, both in markets, and in skiing are some of the hardest to see, understand and get a handle on and can be the difference between a great day and some severe problems.
The main key is to survive. Make every trip a round trip. Returning home is not optional.
Comments
Nikolas on March 21, 2018 6:43 pm
Wondering what is most important. Magnitude or color?
Example, week: 3 blue very low magnitude for bunds / 2 yellow with big magnitude for bunds falling. Do we have prophecies in this case for next week?
Also Im working under the premise that the best scenario for a bull is a previous week with 5 blue days. Reverse to the mean short term equities price effect and thermodynamics principle supporting bull with bunds rally.
The story remembered Schumacher f1 champ.. sad end
Andre on March 21, 2018 7:59 pm
Nice parallel! It’s a delicate balance the microstructure vs larger structure easy to get over focused on either to the detriment of the other. Have found testing half hourly tendencies of up days vs down days to give some help albeit small and not at all regular to predict much besides a tendency that some half hours are more bullish than others and vice versa. kind of run on there but you get what i mean
35 Years Upward Drift in the US 10 Year Treasury, from Sushil Kedia
We sit very close to an uptrend line of 35 years in the prices of the US 10 year Year Treasury (TY).
What does it signify?
a) A new world order is coming, with a breakdown below this line, keeping aside for a moment whatever the word trend is not supposed to be and thus its line?
b) Why has this drift persisted so long on the TY? What is not changed for this persistence to continue?
c) What can change to break down this persistence. Yes, let's not call it a trend line, but just a persistence.
An easy monthly chart shows it here.
Anatoly Veltman writes:
Btw, your chart data (which may be all that Chicago futures ever traded) doesn't go back far enough in actual 10y treasury's history, and thus it misses the actual chart's record low. Proper historical data will show your trendline already "broken". Not that such "break" vs "not break" makes any difference in my book.
35y was way too long to go one way. Some listers, incl. Jeff, Rocky, and possibly more, were not in agreement with me when yields were dancing around their terminal lows. I guess your concept of "drift" was appealing to them. Never to me. Again, 35y is plenty enough. I see no reason to keep pushing it, counting on "drift".
Steven Ellison writes:
A plausible reason for the trend of the last 35 years was the aging of the population in the US and other advanced economies. The demographic trend may level off at some point, but it shows no signs at all of reversing in the foreseeable future.
anonymous writes:
A naive reading is that yields dropped because bogey-man inflation dissipated as major governments wanted it gone. Lately (2008-) there is worry about deflation. Now inflation again.
Whatever. If you have 50 years to live, maybe diversify between material goods and risk assets. Better yet, perpetuate your genes, bolster your family, and try to understand love.
In any case the financial literature's dependency on risk-free rate of returns looks like an ivory tower artifact.
Comments
Nikolas on March 21, 2018 6:50 pm
CAn the advent of internet has some effect on lower inflation? After all we buy from the cheapest source a computer for example. 20 years ago we drove a car to 2 or 3 stores and thats was it.
But we also have internet in egypt, turkey… so dont know
I Was Just Diagnosed with Apophenia, from Larry Williams
Luke’s “randomania”, on the other hand, is the flip side of the coin. It is the tendency to attribute chance probability or randomness to what is actually patterned data. It is the bias of thinking there is nothing to be seen or discovered, when there really is. It’s rather rare to catch ourselves doing this, because once we think that something is just “noise” we tend to ignore it and walk on by, never to return.
anonymous writes:
An interesting thing about markets is at one level of focus one has noise, but in the same time period, in a higher level of granularity, there are regularities.
In an apparent anomaly, the physical laws may be different at sub atomic levels, than at larger levels.
Comments
Sir John Law on April 2, 2018 12:45 pm
Machine learning offers insight. Called Bias variance dilemma.
In machine learning, a computer is fed training sets of data and, using a model, attempts to generate generalizations that will hold true for other data sets. Ideally, a programmer wants to choose a model that both accurately captures the specifics of the training set but also generalizes well to unseen data. Unfortunately, it is impossible to do both at the same time and thus any chosen model will suffer from either bias or variance error. Models that suffer from bias error mare erroneous simplifying assumptions which cause their generalizations to to distort of miss important trends in the data. (too broad or simplified) Models that suffer from variance error are too sensitive to the particularities of their training set and make generalizations that don’t hold well for other data sets (too specific or parochial). In computer science, coders use a method called ensembling in which a myriad of models, both bias and variance oriented, essentially “vote” to analyze the training set in order to form a consensus generalization.
Conclusion: Any process of generalization is going to be flawed. The generalization is either going to be too broad or too specific. However, any generalization can benefit from ensembling. Having many models, both bias and variance oriented, form generalizations and having those generalizations considered in some sort of weighed voting mechanism should produce superior results than simply using one model.
(https://en.wikipedia.org/wiki/Bias%E2%80%93variance_tradeoff)
Trees, from Jim Sogi
I have been back country skiing in British Columbia and Japan recently. Skiing in trees is a good strategy because there is less wind and the snow is soft. The trick is to find well spaced trees. A young friend commented that you don't ski "trees" you ski the spaces between the trees.
On the long hike up the hills I have lots of time to think about things like this. Applied to trading, the spaces would be the time between volatility events. Survivorship analysis gives some good info especially when we press into historical record territory as we did a bit ago. Another idea of spaces is the gaps that appear in overnight trading, or even things like the "Cohn" gap. I think trading abhors a vacuum and low volume areas like to be revisited.
Larry Williams writes:
And trees can be dangerous. My friend and excellent skier did not miss one.
His memory lives on with this trail. Also former Miami Dolphin great Doug Betters did the same thing and today lives in a wheelchair.
Never confuse boldness with recklessness.
Theranos, from Garrett Baldwin
This IBD article proves how easy it is to manipulate the press with hyperbole and misdirection.
"Theranos Founder Known as Next Steve Jobs' Pays $500,000 to Settle 'Massive Fraud Charges'"
"The next Steve Jobs"
Uh huh.
One should be less biblical in their retorts when another person questions the next tech craze or the sanity of capital pouring into an idea that is too good to be true on the surface, and transparency issues around data make it impossible to reach a solid conclusion.
I find this one especially close to another big name in the tech space whose promises continue to under deliver… yet his moonshot ideas allow him to burn through other peoples money…
Thanks, CNBC.
Henry Gifford writes:
I don't think Theranos is a scam.
As soon as I heard about the company's plans to sell blood tests that are much less expensive, and easier to do, and maybe better in other ways, I thought about all the companies that would be hurt by them, and how heavily regulated those companies are, and how hard those companies will fight back, presumably using regulations as part of their defense.
Then I looked and saw the founder has three strikes against her: she's female, she's good looking, she's young. This shouldn't make any difference, but when combined with being an industry outsider, the jealousy factor can be expected to go up, and the ease with which entrenched companies can create doubt and negative publicity is I think greatly increased.
An early battle the company lost was when the regulators declared that the small container they collect blood samples in is a "medical device," and therefore subject to all sorts of regulations, thus they are not allowed to use it. Sure smells to me like regulators looking for something to start a fight about – how many years could the regulators cut off the company's cash flow while they consider the regulatory merits of a small plastic container which will not contact the body? I didn't hear anything about blood collection containers having previously been regulated, so this is extra perfect – it will take a few years to write the regulations….
When the gloves came off and the regulators cut the company down to being allowed to sell one test only – for herpes – I thought that was perfect – the company from Stanford and Palo Alto with the young founder is now associated with a sexually transmitted disease, but barred from testing for glucose, etc.
Looking at the recent press gives me many reasons to be skeptical that the recent reports of fraud are accurate, or have any merit at all.
One article entitled something like "Patients get different test results with Theranos vs. hospital labs" quoted one patient as claiming a potassium test was about 11.3 with Theranos and 9.6 (or so, as far as I remember) with a hospital lab (implied as being the gold standard). Nothing about what they normal variation is, which I understand is significant, or what period of time elapsed between tests, or what the results might have been with 10 or 100 tests done with each technology. The other patient quoted said she got a glucose reading of 103 in a hospital, and 96 (or 99?) from Theranos. Glucose levels in blood can be expected to change by at least that much after a patent walks across a parking lot, even if every test was going to give the same result every time. No article I saw had any other "bad" numbers quoted, but they still made this sound horrible.
The actions of the regulators were described in one article as "State and federal authorities started investigations into the accuracy of the company's blood testing work. In 2016 the Centers for Medicare and Medicaid Services, which oversees blood testing labs in the U.S., banned Holmes from operating a lab and revoked Theranos' blood testing licence." The first sentence describes the beginning of the process, and the second sentence described the end of the process. There was no mention of anything in the middle – did they find anything? If so, what did they find? Was the suspension of the blood testing license related to anything they found other than non-compliance with the declaration that the sample container was a medical device that should be regulated? If they found anything wrong, why was this not mentioned in this article or any other I've seen?
The company, in their defense, claimed to have offered to demonstrate the machine in the offices of The Wall Street Journal, and provided or offered to provide thousands of test results and etc. evidence that their technology worked, but reportedly got no response.
Most recent articles quoted several people as not having been able to find out anything about how their new machine works. Neither journalists at The Wall Street Journal nor anyplace else could find out anything, or find anyone who knew anything. This is consistent with the box the company came up with being a hollow cardboard box, or some other fraud. But, I know how to find out what is inside the box, and what is inside the company's labs. With a quick search I found about 190 patents assigned to Theranos, all for technologies related to what they claim they are doing. I know a thing or two about patents, and a couple of years ago I read some of the patents assigned to Theranos, including some whose inventor was the company founder (there are many of those). The patents are complex but I think mostly well written – this I think says a lot in a field where I think most patents are so poorly written they are worthless. Theranos hired an expensive law firm that specializes in bio patents – a good sign. The US Patent and Trademark Office makes about as many mistakes as any other large organization, but probably not more, and is not quick to grant patents that do not meet the standards, including not being anticipated by prior art – someone else's idea that came first. Getting patents means they probably came up with something. The patents are mostly different enough from each other to not be minor variations on the same theme. Getting about 190 patents, a huge number, means they are apparently working hard and really coming up with things. Many things, probably very valuable. But, most importantly, anyone who works in bio or writes regularly about bio and claims they have no idea what Theranos is doing, and has no way of finding out what Theranos is doing, is not making any mistake – they are lying. They are surely lying because bio is a field that is very dependent on patents. All the articles I've read are consistent with 100% of the people quoted knowing the company has many patents in their core area, but playing dumb and lying by claiming to have no idea what is going on. The existence of the patents means that if they are good patents, which I expect they are, Theranos really has a lock on much better blood tests for years to come. I think it is quite possible that Theranos came up with much, much better blood tests, so much better that they could dominate the field for decades to come (as old patents expire then-current and evolving technologies are covered by newer patents). All evidence I have seen points to this being possible, and not unlikely. If this is the case, then the real story is as follows:
Young dropout comes up with much better blood testing methods, gets strong patents, raises money and actually brings the technology to market fairly quickly – patents, company, and sales, the unusual dream come true, actually done at lightning speed in an industry where patents are almost expired when products come to market (drugs, frequently). Founder stacks the board with powerful people that are not industry insiders, to help defend against the inevitable attacks from the entrenched competitors. Regulators and competitors in one of the most regulated industries can't find any real problem, so they invent a technicality related to exactly what makes the company special – the small collection container. Then they allow the company to test only for a sexually transmitted disease. Fill in the details after this.
Then they find the founder guilty of fraud – but no news reports explain the nature of the fraud, or mention any law or regulation that was broken. Perhaps the fraud was using the small sample container without approval before the approval was required?
I don't know the real story, but none of the stores I've read ring true.
I suspect the real fraud is what the regulators have done, and what the competitors continue to sell while better technologies exist.
anonymous writes:
I always love a good contrarian position, so thanks for posting yours. Here is what I don't get:
She wasn't doing this on a shoestring budget. She has hundreds of millions.
If the thing works, couldn't she just show the world?
If the thing works, wouldn't Walgreens be out there saying "no wait, this thing works everybody, we of course tested it before we entered into an agreement with Theranos"?
David Lillienfeld writes:
I'll go beyond that: Not everyone in the valley was pushing to get into the company. There were many who weren't. That's in contrast to, say, 23andme a decade ago or Gilead a couple of decades ago.
The first BoD was stocked with major names in American politics–with absolutely little if any healthcare expertise. Maybe that makes sense to some, it doesn't to me. George Schultz may have been a great SecState, but I fail to see the value add for healthcare. Maybe because it's simply not there. It's not always a matter of hearing the right answer as even knowing what are the right questions to ask.
As for shoestring budget, the office bldg. (I pass it every day) sits on a commanding bluff on Page Mill and Porter. It's hardly low-cost. The company may not have spent like drunken sailors, but low budget doesn't seem to have been its thing either. Not Brooks Brothers, not Jos A Banks, maybe Paul Stuart. I guess the finance people could be grateful it wasn't Savile Row.
Now, let's look at the founder. She has little knowledge of the deeply regulated environment that is healthcare in the US. Rage against those regulations all you want, they define much of the marketplace. Her age means she hasn't lived through the inevitable crises in the healthcare world, for which knowledge of FDA, EMA, ECs, IRBs, etc is invaluable. Think it's an accident that there are very few young CEOs in the biotech world–start-ups or otherwise?
Think surgeons. Do you want the surgeon who just finished her training to do your Whipple procedure, or the chief of surgery? I'll take the latter, just as I'd prefer the former for my appendectomy. Theranos was a Whipple–high risk, big potential reward. Age wasn't in her favor. Enough said.
I'll leave aside the scientific basis for Theranos's products–it simply wasn't there.
As I put it to someone else on the list who asked me for an evaluation of Theranos a few years back when this person had been approached about making an investment in the company, if something looks too good to be true, it probably is.
On Human Nature, from Stef Estebiza
"We've survived 200,000 years as humans," "Don't you think there's a reason why we survived? We're good at risk management. And what's our risk management? Paranoia. Optimism is not a good thing."
-Nassim Nicholas Taleb
Kora Reddy writes:
Looking at Taleb's twitter timeline and his recent musings, am not a doctor btw, but am certain he suffers from advanced paranoid personality mental disorder!
Russ Sears writes:
As individuals we all die. Yes we try to maximize our own lives and that entails confronting the harsh realities of life and death. And this means some optimizing our own survival through some pessimism. But this should be tempered with the amazement of life. Why would a pessimist optimize what he dislikes. However, as individuals we also realize that we are strong and will survive through others. While we will lose some battles, hope and mutual cooperation cannot be killed. Hope wins.
anonymous writes:
Show me one single great human advancement, one invention, one cure of a disease, a great work of art or literature that was done by a pessimist. You will be hard pressed to find one. Usually the pessimists are too busy wringing their hands while waiting for an imaginary boogeyman to strike. Pessimists falsely consider themselves to be realists, but their picture is as blurred as a fogged lens.
Comments
Anonymous on March 15, 2018 5:30 pm
Taleb’s paranoia is concerned with tail risk, and avoiding convex risk ie. risk of blowing up.
Anonymous on March 15, 2018 5:35 pm
Correction: concave risk
russell thomas on March 16, 2018 4:51 pm
There has been many a great who experienced depression over time .
Barry C on April 15, 2018 3:25 pm
Some utterly ridiculous comments posted here. I am sure Dostoevsky was a smiley happy face optimist.
“Positive thinking” is purely a modern post WW2 phenomenon, which has no historical, philosophical or religious basis. (Read ‘Smile of Die’ by Barbara Ehrenreich for a more detailed explanation.)
Taleb said: “You want your stewardess to be an optimist, but your pilot to be a pessimist”
Meaning a pessimistic pilot would be more likely to prepare himself for a negative event.
Find any successful trader or investor who does not have a sardonic disposition. (There is a difference between sardonic and cynical)
Go to any Wealth Investor Forum(actually don’t) and you will see all the posters and quotes from guys like Stallone espousing positive thinking. Investing involves analytical thinking and subtlety of thought and the ability to critically judge everyone and everything. Go tell your six year old daughter all people are fundamentally good.
Positive thinkers are the same people who utter the most moronic existential statement in the history of humankind: “Everything happens for a reason”. Really, if you ever uttered that statement, a frontal lobotomy would not affect your thinking.
Barry C on April 15, 2018 3:28 pm
Sorry, in my last post, Barbara Ehrenreich’s book is “Smile or Die : How Positive Thinking Fooled America & The World”
Re: Xi Life-Long Chairman, from anonymous
Re: Xi life-long chairman
I think this is a significant event.
The rule of law within China is in question more than before.
Because of this development, I expect the money-flows out of mainland china to continue or to accelerate.
People will publicly laud Xi, but will privately move money out.
The prime final receiver will be US assets (equities, bonds & real estate). Intermediate receivers are Australia, New Zealand, Mexico, some Europe and maybe Africa (re-branded as investment).
Since major private outflows are banned by the Chinese Gov.– creativity is applied.
I assume, some on this list have better knowledge about the tools applied. Maybe crypto currencies are used as an intermediate tool.
Some data, that supports above: The "outflows" of millionaires out of mainland China into the rest of the world.
Comments
Nikolas on March 14, 2018 9:49 pm
Thermodynamics conservative law in action?
I wonder if that is already precified, china has a P/B now of 1.1.
Wouldnt game theory also deceive more people if the opposite happens? China to the moon under dictatorship?
An Interesting Article, from Victor Niederhoffer
Interesting article on the cost of a loaf of bread in 19th century inspired by reading of David Copperfield where he bought a loaf of bread at 9 years old for a pence to stave off hunger.
Bill Rafter writes:
Let me assume that the costs of making bread by hand in 2018 is somewhat equivalent to making bread commercially 200 years ago. Since the bread of Victorian times was "wheaten", I will compare it with today's whole wheat.
I know these things because I make virtually all the bread we eat because it tastes better, looks better and is undoubtedly healthier.
When you make bread by hand (no electric mixers) you always make two loaves because it is more efficient. If the second loaf is more than you need, you will have no trouble giving it away and make a friend by doing so.
You start with 1000 grams (2.2 lbs.) of flour. If that is the supermarket brand it might cost you $1.25. To that you will add say 750 grams of water (free), 22 grams of salt (nominal) and ¾ teaspoons of yeast (~10 cents). You don't need to buy yeast, as you can make your own (that's what they call sourdough), but the latter is only efficient if you make bread daily. So all-in, your raw material cost for two loaves is less than $1.40, or 70 cents per loaf. To that add the cost of the oven, 475 degrees for an hour and you are probably looking at a dollar per loaf.
The result will be great-tasting with a nice crust, a fantastic peasant-type bread that is highly nutritious. The two loaves will weigh about 1040 grams, or 570 grams per loaf. You would think more, but all that water steams off. So for comparison to Victorian times, the two loaves will weigh about ¾ of the mentioned quartern loaf meaning that the quartern loaf today would cost you $3. BTW, The largest loaf I have made myself was 3 kilos (6.5 pounds) and a real pain (pardon the pun) to handle.
I have not included the cost of labor. although making bread requires skill, it is easily mastered. After all, everyone in the third world knows how to make great bread, and there's a company here that uses prisoners to make great bread. In Dickensian times the baker's assistant was probably not paid, but given bread as wages, which is contrary to the article. Note that a lot of the time involved in creating bread is in waiting, during which the breadmaker can be doing other things. For example, I can easily bake bread while trading the markets. Thus the cost of labor is somewhat hard to quantify.
Aside 1:
The above is the basic plan for great homemade bread. But limits can be pushed. For example, my personal favorite is adding 450 grams of Kalamata olives to the kilo of flour and substituting beer for water. My family's favorite adds 400 grams of chocolate bits, 200 grams of walnuts and uses pear cider instead of water. It's not too hard to imagine a loaf of homemade bread costing in the vicinity of $10. But of course, the taste is incomparable.
Aside 2:
The article mentioned "wheaten". In Victorian times the bread in England most likely included a fair amount of barley flour, which was more common and cheaper. Today, barley flour is not as common and more expensive. I like the addition of barley as it gives a sweeter flavor.
Technology Redundancy, from Doug Martin
I missed out on a couple good trades this week during a power outage/internet outage.
Now I am thinking redundancy at an affordable level. The way I trade does not demand intense computer power and latency. Just general connectivity works fine. Losing power/internet is not devastating to me either. It's just painful when I miss opportunities that proved successful.
Curious if anyone has any input or recommendations. Thanks.
Current set up with zero redundancy:
Primary Computer (Laptop) - Connected to Broadband Internet Access and general commercial power
No Secondary Computer
Remote Access to Computer - TeamViewer
Potential future set up:
Primary Computer (Laptop) - Connected to Broadband and commercial power with Battery Backup/Surge Protector
Secondary Computer (Laptop) - Connected to Broadband with Battery Backup/Surge Protector
- 4G Connection
Remote Access to Computer(s) - TeamViewer
Generator
Larry Williams writes:
Cloud computer you can access via phone works here in Hurricane land.
Comments
russell thomas on March 11, 2018 7:19 pm
I am a telecom/ broadband engineer in uk. Im often suprised by companies that do not have redundancy. Primary is your provider of choice. Second is another provider that does not use the same infrastrucure especially from local exchange to your property. Wireless has come on along way these days as a simple secondary back up compared to fixed lines.
Bill Posters on March 13, 2018 7:20 pm
Get yourself a trustworthy human broker there are still a few about. All you then need is a phone. You then might be able to trade when nobody can get an internet quote.
Presidential Odds 2020, from Jeff Watson
Check out this chart with the odds offered by various UK and Irish books for the 2020 US presidential election. None of these prices near the top surprise me. Any overlays?
Our Resident Robot Pundit, from M.C Rove
Robots were going to strike terror into the hearts of all workers and devastate incomes and the economy. They were cited as a reason to sell stocks back in 2009-11 by our resident robot pundit, actually one of the best times ever to buy stocks.
Where they at, though?!
Did they go the way of "peak oil?"
Stefanie Harvey writes:
One of the issues with robotics and automation is that designers frequently anthropomorphize their construction and use cases.
This is silly (with the exception of "companion" robots.)
Effective robotics enhance or extend human competency. Lift more, survive harsh environments, no need for down time.
The technology needs a bit of improvement but one driving factor is that human life is cheap. As we near 8 billion people we are the ultimate commodity; there is no cost driver for widespread adoption. Yet.
Stefan Jovanovich writes:
Stefanie is letting the mad Rover down easy. No one whose enterprise must do things better, faster and lower price has paid any attention to the Department of Labor statistics since public employees became unionized. No one who cares at all about people having better lives thinks "robots" (sic) threaten anything. If applying the labor theory of value really worked to produce wealth, ditches would be dug with teaspoons instead of mini-backhoes.
anonymous writes:
Based on capital investment, it appears businesses are not even bothering to build the robots. Check out this tweet with chart from Adam Tooze:
"Historically, tighter labour markets in US drive wages and capital substitution —> higher investment. Since 2014 that pattern has uncoupled. @CapEconUS @SoberLook"
A Late Report on CES, from anonymous
Dear Specs,
I am very late in writing about the Consumer Electronics Show in Las Vegas. It was held in January and I attended to staff the booth for a few hours and go to two conferences: digital health and smart retail.
Will recount my experience bullet style; please contact me privately if you'd like more info.
- Nothing new in hardware
- Buzzwords were AI, Blockchain, and to a lesser extent robotics
- The "smart home" exhibit was HUGE. Many different players, still too fragmented and not yet plug and play.
- IoT is here but the margins are non existent for consumer
- The start-up area was wholly uninspiring
- Digital health will be dominated by big players: medical device companies, telecommunication companies, and insurance companies. They will buy out or simply push out anyone smaller.
- Smart retail is creepy; many cameras, geo-location indoors, brick and mortar is transforming into more of a display (and possibly Virtual Reality (VR)) play.
Places where there is good money to be made in the short term, for industrial, health, and consumer: augmented reality (part of VR).
Beans for Thought, from Jeff Watson
I was just reminded that the states of Illinois and Iowa each individually grow more soybeans than China does. Illinois and Iowa produce about 15 weeks of China’s demand while China only produces 6-7 weeks of their needs. That’s why looking at the export figures, tenders, etc. in the bean market is so important.
Comments
Kevin Kilgore on March 8, 2018 8:29 pm
So perhaps the looming trade wars courtesy of our President, if you believe all the hyperbole, might mean US soy production could actually be more than just a ‘hill of beans.’
The Calendar on DailySpec, from Bill Rafter
If you look at the Daily Spec site you first see a calendar. Most people probably just breeze on by. But of interest this month is the correlation between stocks and bonds. In February those markets, which usually oppose one another, have been moving together. That is evidenced on the calendar by either Green days (both moving up) or Red days (both down). This month only 2 days have not been either red or green. Of the many market statistics we watch, the moving correlation of stocks and bonds is our oldest (i.e. time-tested) and a very important input to our basic market algorithm. It is valuable information.
Comments
Charalampos Sachpazidis on March 5, 2018 4:16 pm
The main question how you use this information ,, for someone like me that use charts , it shows nothing as I call what I do visually probabilities , and pays me from time to time ,but I am always willing to learn and I know that this place is not for chartist and hope you can share some of the knoledge you have about this data ? Thanks , from Cyprus with love
JH on March 7, 2018 4:28 am
Which ticker is USB exactly pls?
Like Charalampos, I would really appreciate hearing from you old hands how it feeds into your decision making process.
Not too sure what to make of green days, but would think that red days, especially in succession, would go in hand with volatility expansion.
Ed.: USB is the ticker better known as ZB, the 30 Year Tbond future.
JH on March 9, 2018 12:08 am
Thank you. Still hoping for some enlightened assistance on how to apply it!
Quote of the Day, from Jeff Watson
"The notes I handle no better than many pianists. But the pauses between the notes– ah, that is where the art resides!"
-Artur Schnabe
Fake Doc Alan Greenspan, from Victor Niederhoffer
Fake doc Alan Greenspan's tenure at Fed began August 11th, 1987, with S&P at 330. On December 30th, 1987, market was 240. Paul Vollker's tenure began August 6th, 1979, with S&P at 1014. It closed the year at 1010. Janet Yellen saw a rise in S&P when her tenure began in Feb 2014. It seems that there is a tendency to test the new Fed chair as he begins his tenure.
Chair Bernanke's term which began on February 1st, 2006, the market only dropped 3% during the next few months. The point being that the market likes to test the new Fed chair to see if he will be bullish.
Learning From Others, from Nigel Davies
One of the most interesting lessons I learned from Vic, and then during my time on the Spec-List, is how one can learn from people. Something that has been a particular surprise has been that we can often learn most from those whose values and ideas about things are most different to our own. The process of learning deeply from someone is an interesting one; it involves the withdrawal of one's own ego and a cessation of posturing to just listen and 'channel their thoughts'.
In my early days on the list I found 'Mr. E' quite fascinating. He seemed to go out of his way to offend people but at the same time was challenging their preconceptions. Our 'discussions' (for want of a better term) led to me channeling him on certain matters and causing widespread offense among left leaning associates. But thanks to E I developed a healthy skepticism about many commonly held views. And I remember him with affection and respect.
There have been other occasions where people were less thick skinned than E, without my realising or epecting it. I think I offended Larry Williams one time with an ill considered remark, and I'm not sure he knew I had read a number of his books and was trying to understand him. I hope he has forgiven me and will understand that I don't take an interest in just anybody.
Outside the list this learning attitude has also proven to be invaluable. I have become a much better chess teacher through an approach of 'deep listening' and learned tai chi by finding an outstanding practitioner and going through a similar process. I don't think he liked me at first and was unsure about whether to even take me as a student. But now, some ten years on, we are like family.
Disregard, Disrespect, Defenestrate, from Bill Rafter
Well, as long as you are here, let's see what the entrails say:
Fundamentally, there is no recession in sight. Here's a look at one of our best indicators on that front, the comparison of Total Loans and Leases against Initial Claims. There were some fundamental data that foretold a problem, but they have dissipated with the recent selloff.
However, the current growth of Payroll Taxes is disappointing, meaning that the stock market should not get a boost from the next Non-Farm Payrolls (i.e. Jobs) Report. Many of the changes enacted by the new Administration have not yet taken effect. You will know that is underway when you see the Payroll Taxes accelerate. It will happen; just not yet. Use any weakness as an opportunity to get long and longer.
N.B. The effective date of the Non-Farm Payroll Report this month is February 16, but this chart follows through another week. We have several ways of showing the Payroll Tax data. The view here is the one we usually display, and it is illustrated for consistency. However other views are considerably more pessimistic. Rather than be alarmed, look at this as opportunity.
What you must watch out for is sentiment, or its partner "exuberance", which had a monumental effect recently. Here's an update on the "Smarts vs. Amateurs" which we had posted before.
As always, please feel free to contact us with questions.
Comments
Anonymous on February 28, 2018 6:07 pm
links don't work
Ed.: Thanks. I believe I fixed it.
2018 in the Vineyard, from anonymous
We are in Ventura county, CA. As you have read, there were two major disasters in Ventura and Santa Barbara county beginning in Dec 2017. The Thomas fire in December, and the Montecito mudslides subsequent to a January downpour. Neither of these affected us directly, though we could see the fires clearly from our hill (the Mrs cried), and the mudslides destroyed the beautiful place we were married.
Since that downpour there has been no rain here, and it seems we're on track for one of the lowest rainfall seasons on record. This sounds horrible, but our drip irrigation is enough to keep the vines happy and create a good crop. You may also have read that 2017 was record high rainfall for many parts of California. Here it was about 50% over the average, and the vines showed it. Vigor was so high we wound up hedging the vines (with a lithium battery electric hedge trimmer), and dropping quite a bit of fruit to try to equalize ripening rates. Still, there was a large crop and I'm not sure what we're going to do with all the good wine we made.
Tonight's work on trellis repair is what led me to write this. A few years ago I read that Western Bluebirds were beneficial for vineyards because they are insectivores. In this area there is epidemic Pierces' disease - a bacterial grapevine infection that is always fatal, very contagious, and spread by the locally ubiquitous glassy-winged sharpshooter. We do try to control it by various means. I hung lacewing-egg cards in the vineyard 3 years ago because a lacewing instar is known to eat sharpshooter eggs. We also spray imidacloprid and use systemic granules. (A natural approach guy nearby lost his entire vineyard to PD two years ago. I am all in favor of organic/sustainable…..but this is war).
Back to Bluebirds. About 2 years ago I bought nesting boxes and mounted two at either end of the vineyard. The males are colorful and showy and the females are drab. The literature says the boxes should be a fair distance from each other because competing families will fight. Last year the box at the end of the Syrah block was never used, but the one at the end of Grenache hosted a nesting pair. Mom and pop were cute and I enjoyed them. When I was in the vineyard they both would sentinel on various nearby vine posts, and were alert but peaceful when I checked their nest. I'm not sure if they hung around because they were worried about me or if I scared up insects they could eat. I any case we got to know each other. I talk to them. "Get to work!' "Why aren't you hunting?". These birds went wild when there was a bloom of mayflies in various stages of dying. Protein paradise (I hope they see the sharpshooters but who knows).
This couple nested and produced young which I think fledged. Later in the summer I noticed the same or another pair again nesting in the same box. Only this time the babies were killed by the horrible heat of Aug/Sept 2017.
I cleaned the apartment and it is ready for new tenants.
Tonight there were at least 3 pairs of bluebirds flitting around and watching me. At first there appeared to be a particular male corresponding with a particular female, but I couldn't be sure. And it seemed early for nesting. But after a while there was a possible clue. Usually they fly and land in pairs - a male with his female. But tonight there wasn't as much pairing. In fact I saw two males perched on adjacent vine posts, chirping at me gregariously, for quite a long time. I also noticed that in spite of the sparse vegetation (and subsequent insect) growth, they were both pretty fat. How could this be, so early in the season, with record drought and slim insect pickings? Then I looked further and noticed both males were puffing their chest feathers to make themselves look bigger.
Shit! I did this same thing in high school.
So it looks like the pairings are still in process. I plan to still encourage them. And I plan to irrigate as much as it takes to make the vines grow, and hope this year's drought will still be kind to our little blue friends.
Article of the Day, from Kim Zussman
The Book Gotham, from Victor Niederhoffer
The book Gotham by Burrows and M. Wallace details the changes in the fortunes of the American economy and New York from 1600 to 1900. As it moved from Dutch rule to English rule and from whig control to republican Jeffersonian control. It is amazing how many panics and complete major depression in the economy came almost every several years. All the depressions were recovered in the next year or two.
A recent visit to Muir woods shows the same dynamics to the growth of trees after fires although the fires were not as frequent. Indeed there hasn't been a major fire there in 150 years. Apparently the trees have developed resistance to fires.
Term Structure Vix, from anonymous
The current VIX is priced above both the first (F1) and second month Vix futures (F2). I looked at times when Vix>F2 and the subsequent moves of SP500 holding until Vix<F2, since 2012, non-overlapping.
Nbr of trades : 40
Total points : 475.00
Avg points : 11.88
Stdev : 26.92
Z : 2.79
Pct Win : 0.73
Max Trade P&L : 81.00
Min Trade P&L : -81.25
Avg PL Win Trades : 24.09
Avg PL Lose Trades : -20.32
The average length of the trade is 3 days. The current trade was entered on 1/31, 9 days ago and down -160 points and not included above because it is still open. After this long it is another 11 days on average before the term structure flips back to contango and this trade would be exited.
Smart Money vs. Amateurs, from Bill Rafter
There has been some comment on the timing of the so-called "smart money". Just how good are our betters at trading these exciting markets?
While we have no specific knowledge of who bought when, we have an algorithm that identifies when the average "smart money" goes from bullish to bearish, and vice-versa, while at the same time the amateur money is betting in the opposite direction. This link will give you its recent history.
This is a sentiment indicator and it has its theoretical roots in the Efficient Market Hypothesis. It plots the best fit over successive N days, where N varies from very short term to say more than a year. The best of the best fits are the smarties, and the worst of the best fits are the amateurs. The smarts are attentive and the amateurs tend to be complacent. This model is not perfect but it tells some interesting tales. At the most recent peak, the smart money turned bearish as of the close on January 30th. They have not yet turned bullish as of February 12th.
Comments
William Renie on May 20, 2018 8:13 pm
Dear Mr. Rafter:
Can you tell us how you calculate this sentiment indicator?
Thanks, William Renie
Do SS and Yourself a Favor and Don’t Retire, from Kim Zussman
Researchers think the reason is linked to Social Security and retirement
About one-third of Americans immediately claim Social Security at 62 and 10% of men retire in the month they turn 62, according to researchers.
Stefanie Harvey writes:
Locally, this was called "Lockheed" syndrome because so many men who retired from Lockheed in Northern California (usually at 65) died within a few months.
Perhaps there is utility in the gig economy (/sarcasm).
anonymous writes:
I think in order to get a more robust picture of what's really happening here, the researchers need to dig deeper into the demographics of the people involved.
They hinted at that with the comment about laborers retiring young.
I've done a lot of work with laborers of the country in my 31 years in this business. One recurring theme I've noticed about those laborers (blue collar types) is that their bodies are broken down and stop working around 60. Really, to be fair, their bodies are broken down in their late 30's and early 40's. If you've ever seen a bunch of union laborers, one thing you notice is that by the time they're around 35 - 40, they look 10 years older than white collar workers of the same age group.
These blue collar workers live a hard life, they party hard (smoke, drink, get DUI's), and eat in a less healthy manner…and die sooner.
anonymous writes:
This phenomenon was also observed, anecdotally, by certain friends of mine and I with respect to the retirement of senior NCOs - Sergeants Major (SGM) and Command Sergeants Major (CSM). They seemed to, despite their fitness and stoic outlook on life die uncommonly young (late 50s and early 60s). Virtually all of them had, in the latter 75% of their career, virtually abandoned the alcohol consumption that so often characterizes pre-E-5/E-6 time, and none were smokers.
Larry Williams writes:
My psychiatrist son adds: "Don't forget, studies also show delaying retirement also delays onset of alzheimer disease."
Pete Earle writes:
You are going to die either way.
The idea would be to make enough the SS was a rounding error and you can do whatever the hell you want for as long as you want.
Anatomy of a Wipeout, from Jim Sogi
I've been surfing for many decades and once was the Grandmaster Champion of my island. We had some big waves a week ago, and it was one of those magic sessions where the wave comes right to where you are sitting in the ocean, you turn take a couple of strokes and drop in and ride to the end. I got three big waves without even getting my hair wet. A perfect session. As traders, you all know the feeling.
But things don't always go so well. Positioning and timing are the key elements in surfing and catching a wave. If you are not perfect, you can be off balance. You are less able to compensate for wind chop, or warbles in the waves. If you are too late, you might get thrown 20 or 30 feet through the air. Or if you are too far inside the outside set can catch you and you get "caught inside". Or you can just get thrown off balance on the drop in by a small chop. The initial place where the wave breaks is usually the most violent with the most energy. The energy from huge hurricanes in the mid Pacific have traveled thousands of miles and focus on you.
As you fly through the air upside down you have time to think about the vicious thrashing in store and have to brace for the impact with the water and the hundreds of tons of water flying through the air with the consistency of cement about to snap your neck and arms off. People have broken bones in wipeouts and worse. You also try to get a breath of air to survive the hold down. Upon impact with the water, often as not, your breath can get knocked out, as you are driven down up to 30 feet deep. The water throws you around like rag doll inside a washing machine. Everything is dark. You have no idea which way is up or down. The key here is to relax and conserve oxygen. Though the biggest waves are only 20 seconds apart, if you don't catch a breath at the end of the first wave, drowning becomes ar real possibility. Your board is attached to your leg by an elastic cord and will drag you backwards at high speed. Better, the board will float towards the surface and pull you up from the depths towards the surface. At the surface, the foam can be a foot or two thick making it hard to catch a breath. The air in the water does not float your body as you struggle to catch a breath. As you break the surface, the worst thing to see is another 20 foot wave looming directly overhead ready to smash you down again. You know you are in trouble as your head starts spinning from lack of oxygen. You feel like vomiting. You fight panic and fear. Eventually within 20 to 40 seconds, as you know it will, the waves pass and you catch a wave.
At that point you are utterly exhausted. Your life force is near zero. However, its not over yet. By this time, the currents and waves have pushed you near the rocks and you have summon your last strength to paddle as hard as you can to avoid being smashed to death on the rocks. After catching your breath, you paddle out to rinse and repeat. I love surfing. As traders, you all know this feeling of the wipeout as well.
Comments
Andre on February 14, 2018 2:01 pm
noticed during the recent market decline that vic kept quiet on twitter while everyone else was tweeting with excitement. reminds me of the conserving of oxygen that you mention while most burned themselves out with nervous energy. at least thats what i think happened.
5% Decline in a Week, from Steve Ellison
Since 2006, I find 13 non-overlapping instances in which the S&P 500 was down 5% or more since 5 trading days ago. The average net change during the next 5 days was 2.5% with a standard deviation of 3.7% and a drift-adjusted t score of 2.32.
Date 5-day change Next 5 day change
1/22/2008 -7.8% 4.0%
10/7/2008 -14.0% -0.3%
11/11/2008 -11.0% -3.0%
2/17/2009 -9.2% -2.1%
3/3/2009 -10.3% 3.8%
5/24/2010 -5.6% -0.1%
6/29/2010 -5.1% 2.3%
8/8/2011 -13.2% 7.8%
8/22/2011 -6.3% 7.5%
11/22/2011 -5.7% 5.3%
10/15/2014 -5.9% 4.2%
8/24/2015 -10.9% 5.2%
1/8/2016 -6.1% -1.9%
Average 2.5%
Std deviation 3.7%
N 13
t 2.32
Drift 0.2%
Comments
Brad Sullivan on February 13, 2018 8:47 pm
Hi Steve -
I appreciate your study - I would ask this…Do you think the study is viable given the variance of market conditions for most of the observations?
In other words - excellent previous year, bull market etc . I wonder if observations from the 90’s bull might have more benefit.
Just a thought.
Regards
Brad
B on February 16, 2018 2:31 pm
Can you explain what the "Drift" is?
Ed.: It is the long run tendency for positive stock market returns, as documented By Dimson, Marsh and Staunton in their book Triumph of the Optimists and in other work.
glenn baker on February 23, 2018 3:06 pm
can you tell me where you are getting your data from ,thanks. glenn baker
B on February 24, 2018 4:16 pm
How is the drift adjusted score calculated?
Everyone is on the Inflation Bandwagon, from Anatoly Veltman
“Inflation is About to Appear ‘With a Vengeance’ Paul Tudor Jones Says”
Larry Williams writes:
I’d defer to Hoisington Capital over PTJ on inflation.
anonymous writes:
Hoisington has an interesting comment about the low savings rate now vs the normal 8%. Ancedotally I’m seeing lots of consumer spending and travel due to the “bull market” euphoria.
An Interesting Metric, from Jim Sogi
An interesting metric to be tested from a Bloomberg article in a vein similar to Bill's metrics.
"This Unusual Link Between Stocks and Volatility Says the Turbulent Times Aren't Over"
The entire VIX futures curve is in backwardation, a signal that investors expect more volatility in the near-term. That's seen in the contract pricing, where front-month contracts are more expensive than second-month. The inverse is normally true.
"The M1-M2 VIX futures spread can be used as another temperature gauge for the market, just like spot VIX," said Dave Roberts, an independent trader of volatility derivatives and associated products. "That graph works really well in tight time frames when the curve is in extreme backwardation (like now) because the M1-M2 spread is currently very sensitive to the S&P 500's movements (both up and down)."
Comments
Adam Collins on February 10, 2018 3:20 pm
Long-time reader, first time commenter.
I’ve tested this. Criteria: exit SPY on Monday’s close if m1/m2 VIX futures are in backwardation as of last Friday’s close, otherwise be long. Historically, a mixed record. Image of tested scenario: http://oi63.tinypic.com/dhbqs0.jpg
The Idea That Has the World in Its Grip on Steroids or Crack Cocaine, from Jeff Watson
A graduate of Evergreen, the school that treated Eric Weinstein’s brother Brett so badly, has set up a Feminist Business School. Instead of profit seeking, students are taught to “adopt more feminine traits such as gratitude, intimacy, and connecting with nature.” An article further describes this folly as “shunning the profit seeking motive of traditional commerce.”
One postulates that their graduates will not be recruited very heavily by the Fortune 500 companies. They cobbled together an addled brain mission statement that includes:
“We endeavor to topple the patriarchy, internally and externally. We see business as a site of personal power, radical creativity, and meaningful social change. We know that we can survive and thrive in business without compromising our values. We believe work can be fun. We hold fast to our declaration that……..
A BUSINESS CAN BE A MODEL FOR A NEW SOCIAL AND ECONOMIC ORDER.”
Here are two delightful testimonials from their website and course description.
This was a life changing experience. I learned so much about the economy, business, feminism. But most importantly, I learned about myself. If you feel out of place in the capitalist economy, you’ll likely feel at home here. — Tina C Jenn
[the school] helps us gather tools OUTSIDE the patriarchy, so we can tear it down with some efficacy. These tools are already within us, they are us. We have been so disembodied that we have picked up the tools of the patriarchy to survive, this is about rediscovering our resilience, our natural resources, ourselves; and in doing so, we find the strength to create a new way of being in the world and in business. — Caitlin M Maybe
The mere existence of a “school” like this is part of the downside of legalizing weed.
Comments
barman on February 7, 2018 10:34 am
You just need to speak your truth, i.e. whatever dumb idea that popped into your brain in the last 5 minutes.
Igor on February 7, 2018 12:00 pm
“Socialism works untill you run-out of OPM”
Arch Stanton on February 22, 2018 5:22 pm
Evergreen is an off-the-run school no one would ordinarily care about. They’re finding their 15 minutes of fame via SJW posturing. It’s unfortunate Jeff is aiding in their attention-seeking. Ignore ‘em.
Ylona on April 20, 2018 3:34 pm
Excuse me who is the guy on the picture ?
Advice for a Young Person Who Wants a Possible Career in Markets, from anonymous
A 20 year old chess associate of mine has asked me about a possible career in markets. He's International Master strength at chess (close to getting the title), a second year maths undergraduate, has an interest in poker and was in the Bolton Wanderers soccer academy until he was 16.
I've suggested he reads up on the field and sent him links to the Daily Speculations book list. What other steps should he take?
Peter Pinkhasov writes:
Not that I know anything, but I lost my roll a few times with all the money I've saved up from folding towels at the jewish community center from grade 7 trying to lever it up my last year in college. I think $ is a product of work for which discovering that one doesn't have the emotional capacity to do could be costly in terms of time value. I wasn't blessed with having a mentor when I started but it would have saved me a lot of time and efforts if I had read Education of a Speculator many years earlier. I think trying it yourself with self capital is good start.
anonymous writes:
Take up some sports. It teaches you how to lose regularly and hopefully with grace and dignity. I suppose chess does that, but the physicality of sports, and trading, makes it helpful.
Comments
JJ Biggs on February 7, 2018 4:19 am
OPEN A FUTURES TRADING ACCOUNT AND START TRADING THE SP500, SIMPLE AS THAT.
Jim Davis on February 8, 2018 2:39 am
Learn how to play the horses well.
If you can do that, you can do most anything.
Bill Posters on February 8, 2018 3:48 pm
My advice for what its worth get the boy away from the screens and keyboards.
I cannot recommend my own field of outdoor display advertising as its in long term decline.
For a trade I would recommend the Part P electrical quailfication. Or plumbing, qualify as a Gas safe engineer. He will never be short of work.
If he is still keen on the books study medicine or fundamental life science. There can be no greater achievement than to save a life.
One of the surprising things I have learnt from a number of years reading this blog is that very rich people can be very unhappy.
Andre on February 9, 2018 5:39 pm
The recent market required a trader to abandon tests and relly on his faculties and experiences from a decade ago. Like if a jet liner is having multiple failures the seasoned pilot will have better odds of saving the plane when all systems fail. So even if you have it all “figured out” nothing beats experience.
Sumo, from Jim Sogi
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I am in Hokkaido, Japan, skiing. There is a Sumo Championship going on. It's interesting to watch the wrestlers. 77% of the bouts are won on the initial charge when one of the sumotori is pushed out of the ring or to the ground. In each bout there is a tipping point at which one of the sumo fighters gets the other off balance and wins the fight after gaining the advantage.
In markets there is a tipping point when the momentum or balance shifts. It's also interesting to identify that tipping point when it happens. It's been a bull market for years now. I wonder when and where the tipping point will be.
In sumo TV coverage there are always replays so one can see if you identified the tipping point in real time.
Trees and Hurricanes, from Larry Williams
I certainly do recognize that trees can only grow so tall, also the base is much larger than the top while the root structure is equal to the width of the branches above ground and most trees.
So there is a lesson there… all things end.
Just like hurricanes… After living through two of them here I understand them a little better. The take away points are that they are predictable in a general sense but exactly where there will land no one seems to know.
All the hotshot weather forecast systems did give us ample warning to prepare but nobody got it right as to exactly where they demolished these islands.
Even at that several friends had their homes totally destroyed while there neighbor's house, just a few yards away, was not touched. As they say in real estate: location, location, location.
What my hernia doctor said was, "hurricanes are great for my business" and that explains some of my lack of recent posts. Not only that (the recovery has gone quite well, everything is fine) but I also have have been very confused by the stock market.
I know we are in a bull market and prices will go higher but I did not participate in the last part of the rally. That frustrates me.
Now however another buy point is being set up hopefully I'll figure that one out. I think we have seen the top of the trees for a while but there is a base in here for much more growth.
It ain't over yet no fat ladies have sung.
Happy trails to all.
Comments
Howard Bernstein on February 13, 2018 10:26 am
Has the fat lady sung now? or more upside?
Bubble, Bubble, Toil and Trouble, from Bill Rafter
Markets can experience contagion. I remember from trading futures (nee commodities) that a crash in one market tended to bleed through to others. We would always remember it as though someone who had a great position in beans would sell it out to meet a margin call in silver that should have been dumped. That is, cutting your profits to let your losses run.
In that vein I wonder how much the recent hit in Bitcoin contributed to the equities decline.
Jim Lackey comments:
Ben K Green Horse Trading.
Bitcoin the gypsy trade
Currency Rebel Commander
Nazz Maniac Mule
Comments
anand on February 5, 2018 4:05 pm
None at all …
1) The Bitcoin market is tiny at $200bn market cap (realise you have competing coins as well). This is equivalent to a couple of large nasdaq stocks.
2) The market is thin with many just sitting on positions
3) Many though not all ‘investors’ in bitcoin are in that market precisely because they are financially illiterate and aren’t familiar with trading in conventional markets. They aren’t going to switch from bitcoin to equity.
An Interesting Question Arises, from Victor Niederhoffer
An interesting question arises now. The market has declined 115 points in last 5 days. That's incredibly bullish up 2.5% next two days, but on the Fridays it happened one of them was down 101 points the next days on 8/21/2015. How to combine?
Alston Mabry writes:
Here is a take, using the SPY daily data, calculating the 5-day move into the close as a %, and then the 2-day forward move, and then sorting all the days by 5-day moves and getting means for the deciles.
Above 200 day MA in February, from Kora Reddy
For all the 200dMA lovers:
Big Brother is Watching You, from anonymous
"Are Longboat Key Cameras an Invasion of Privacy?"
A scary advance of the state surveillance apparatus. Don't let this fool you, these cameras are a printing press of revenue. Don't drive in this town if you ever even jaywalked, they will use anything as a pretext to detain you and search you and your car. There is a bright side, just think how safe you will be.
Healthy Protectionism, from Stefan Jovanovich
My 1-syllable half-namesake ("Stef") has offered up this phrase as part of his latest Gini-inspired solution to the nation and the world's problems. If only.
Tariffs, like all other taxes, are fundamentally unhealthy. John Locke would not have made such a fuss about the social contract if the idea of a deal were not the necessary Big Lie on which the revenue depends. Taxes are the only payment transactions that are not contracts; they are always and everywhere legalized extortions.
The W,M & F cabal knew this when they wrote the Constitution and accepted the Bill of Rights as part of the necessary whip count to get the votes of the amateur Virginia bar. They also knew that relying on the States to pay the Army and Navy would never work. The local extortionists - the State governments and their voters' interests - would always keep the money at home, even when it was used to pay the militia and reward privateers. Tariffs were the only form of taxation that could be made national precisely because they were the one tax that foreigners could be made to pay without instituting the very oppressions that had led to the Revolution in the first place.
What W,M & F and their wisest successor - the 2-term drunken butcher - could not have imagined is an America with an IRS and compulsory indoctrination camps. Such a poverty of liberty was simply beyond their conception.
Comments
Hey victor on January 31, 2018 11:22 pm
hows it going? i am an automated trader. glad you are still in the business.
I Noted, from Victor Niederhoffer
I noted that the 2 day S&P has been up 20 days in a row and this is a record. Whether it is predictive is another question. Such forays into immunity or increased hazards are interesting to keep in mind.
My Ayn Rand and Revolutionary New York Walking Tours, from Fred Cookinham
Dear Universe,
I have just posted my 2018 walking tour schedule on my website www.indepthwalkingtours.com.
Also, I am nearing completion of a memoir called BOND, SPOCK, GALT AND ME: GROWING UP NERD IN THE SIXTIES. Should be fun to read for those who remember those times.
See you on the streets!
Fred
I Put a Spell On You, from anonymous
Not sure how to count it, but it sure seems that the remarkable magnitude of weekly gains in SPX are correlated with the number of slanderous articles about Trump in the gossip media (BBG, NYT, CNN).
One fears the day they cut him 1mm of slack, in their pink hats.
Article of the Day, from Larry Williams
If Soros says yes, then the world should bet no
The takeaway? Soros doesn't exactly have a recent history of picking political winners.
He lost $27 million trying to defeat Bush.
He lost $25 million trying to help Clinton and her fellow Dems win in 2016.
And now he's predicting Trump will soon be tossed from office — maybe even sooner than 2020, which is an offhand jab at impeachment?
Bloomberg notes: "Soros's predictions at last year's conference in Davos were also gloomy and bearish on Trump, and have yet to pan out. He said that the stock market rally would soon come to an end. Since then, the Standard & Poor's 500 Index has rallied almost 30 percent."
Another Soros prediction, another Soros error. The phrase grain of salt is what comes to mind. It's almost to the point of becoming this: If Soros says yes, then the world should bet no. If Soros goes right, then the world should go left. If Soros predicts a rise of Democrats in 2018 — then conservatives in America might as well start congratulating their Republican Party friends for the upcoming wins right now.
Cheryl Chumley can be reached at cchumley@washingtontimes.com or on Twitter, @ckchumley.
anonymous writes:
A few years ago there were some brain scans done at "Oxbridge" of people who self-identified as either liberal or conservative. The scans showed the respective organs were wired differently. While we all inherently know which are wired correctly and which not, the point is that the wiring is all-encompassing.
Soros is wired a certain way and no amount of logic or conversation will change his mind. His problem (and ours because he has money to proselytize) is that he is betting his own wishes. That is tantamount to betting on a sports event based on who you like or (in my wife's case) their uniforms.
Dylan Distasio writes:
He should form a new fund with Dennis Gartman, and the Greedometer guy.
That would make for quite the Third triumvirate.
Stef Estebiza writes:
Soros was wrong but he is not wrong in how he thinks. In a normal situation everything would have already exploded, but as long as you can inject money into the system indefinitely with a trillion stroke at a time, not even Buffett's rule makes sense: "Only when the tide goes out do you discover who's been swimming naked."
Here, the son of a man who sold his business to an US multinational for $ 225 million told me clearly that the world…is gone.
Larry Williams writes:
Oh Stef,
I feel for you. Soros' socialist/elitist thinking is wrong for us poor working stiffs. The world is not gone. I would bet that it never will be. The trend of human progress is up, always has been and will be. Make no mistake about that.
We are no longer on the gold system so it's a brave new world and you have to trade/treat it that way.
I rejoiced the day I had that realization.
Comments
j on January 29, 2018 5:58 am
His bet on exotic Barack Obama succeeded, and he almost got a permanent grip on the Democratic Party. Not bad. I feel sorry for him, he is still Gyurika fighting the Nyilas gangs of Budapest 1944.
Bill Posters on February 1, 2018 7:29 pm
A question for Soros with the S&P 500 above 2800.
Sir is your back hurting?
Higgs on February 12, 2018 12:58 pm
The sooner people realize this guy made his fortune via inside trading, the sooner people will stop giving a hoot what he has to say…..
A Measure of Exuberance, from Bill Rafter
As an observer/researcher I see that lately there has been an increase in unhedged options transactions. I believe the language would go something like, "Why hedge, the outcome is not in doubt."
I will see if I can put together a graphic over the weekend.
P.S. one bugaboo potentially is North Korea immediately after the Olympics.
Quote of the Day, from Larry Williams
Gross was grossly wrong. And with stocks, as long as they are pricing in President Donald Trump's goal of 3 percent economic growth, investors should reduce their holdings, he added. "It becomes a question of reducing risk and reducing return expectations as opposed to anything else." In Gross' latest investment outlook he warned that a global slowdown in productivity as a result of the financial crisis will make it impossible for Trump to get economic growth back above 3 percent and will reveal financial markets are overvalued.
Comments
Kitty13 on January 23, 2018 7:36 pm
Seems like flagellating bears is du jour.
Concave Up // Concave Down, from Kim Zussman
Women often do their eyebrows in a pattern I find somewhat provocative. Notwithstanding calculus, I recall that eye signals are very significant, and it follows that eye make-up is there for a reason.
And you are the reason.
Accentuated lashes are meant to accentuate pupillary coyness. Or deadly serious entrainment.
I was reminded of this looking at a video today of Russian lawyer Veselnitskaya's interview. She's not looking to exonerate Trump's team. Or brandishing Putin's position. She's looking for an oligarch.
Stefanie Harvey comments:
Eyebrows–and eye makeup–go through style cycles.
Right now the emphasis is on huge brows (for us old folks, think Brook Shields). Check out Benefit cosmetics Instagram feed.
This is an emphasis on youth. Many women lose brow thickness with menopause (especially the outer edges near the side of the face.)
I assume much of it is about generation Z now getting buying power. How do specs adjust for that? Thoughts?
When I attended CES I was struck by how much of AI/machine learning is already adopted by "smart retail."
If people are interested I can write a short summary of the smart retail seminar.
Dow Jones & 200 Week Moving Average, from Cagdas Tuna
Peter Pinkhasov replies:
“Mr. Partridge, I have just sold my Climax Motors”
Comments
Andre on January 19, 2018 8:45 pm
Nice chart mr pinkhasov.
20 Longest Stretches of DJIA Without 5% Corrections, from anonymous
For educational and history purposes
Assuming DJIA closes where it is today on the coming tue
Here are the longest stretches of DJIA without 5% corrections from all time high closes in terms of calendar days
rank by longest stretch since 1900
Date first date of 5% correction
DJIA value at the time of first 5% correction from all time high close
Date , first date when DJIA came out from 5% correction zone ( i.e previous day DJIA close was below 5% from ATH close , while on this day its above (ATH close -5%)
days , self explanatory
returns self explanatory
Rocky Asked About Consensus Misunderstanding, from Orson Terrill
I would note that the short, intermediate, and long-term consensus for inflation are all 2.0% +/- 0.5% — as found in the TIPS breakeven market — and this range has been in place for much of the past decade.
One of the larger risks is the growing interest, and calls for, a higher inflation rate (long time developing). They want roughly 4% (implicitly emanating through price level targets), the market thinks 2% inflation is some sort of magical target (it's not, so to that extent they are exposed to being blindsided) - Maybe 3% - 3.5% will be something that can be done.
Follow John Williams et al at the Fed. They have been, and may continue to be, influencing the future of monetary policy. If you're a bond trader, a decision tree may be useful: One branch is that the monetarists' ideas belonging to Williams et al, and what a shift inflation expectations means (the methods are open?), and other branch is that the current regime continues to "win" (quotes for it is apparent that the forces of technology, and some demographics, are deflationary and have wrestled control of inflation from the Fed).
Documentary Recommendation, from Alston Mabry
This was an excellent documentary on Teddy Roosevelt in the amazon in 1914.
Into the Amazon tells the remarkable story of the journey taken by President Theodore Roosevelt and legendary Brazilian explorer Cândido Rondon into the heart of the South American rainforest to chart an unexplored tributary of the Amazon. Two of the most celebrated men from their respective nations, Roosevelt and Rondon set out with twenty other adventurers in 1914. Over eight eventful weeks in one of the most remote places on earth, the ill-equipped expedition navigated deadly rapids in crude dugout canoes. Hunger and exhaustion were compounded by the rainforest's unforgiving topography, which forced the men to carry heavy canoes long distances. What was anticipated to be a relatively tranquil journey turned out to be a brutal test of courage and character. Before it was all over, one member of the expedition had drowned and another had committed murder. Roosevelt would badly injure his leg and beg to be left behind to die. More than a dramatic adventure story, Into the Amazon shines a light on two of the western hemisphere's most formidable men, and the culture and politics of their two formidable nations.
Nobody Asked Me, But…from Victor Niederhoffer
1. The changes in the lead in the last minutes in the Vikings Saints game as well as the Knicks game prompts one to see if there is an inordinate tendency in markets. I find that in the last 45 minutes of play the S&P futures change from minus to plus, 10% of the time and from plus to minus 7% of the time. Such changes seem random and consistent with previous periods.
2. I find it bracing and comforting to read old economic books. In reading Economic History Vol 2 from 1930 edited by Keynes I come across such articles as "The Finances of Tyrant Governments in Ancient Greece", "The Profits of the Guinea Trade", "The Housing of the Rural Population in the 18th Century", "Mason's Wages in Medieval England", "An Early Victorian Business Forecaster in the Woollen Industry".. all in all, the articles are more interesting to me and informative than the current articles in the major economic journals.
3. It is interesting that the upside down man seems to have the worst record of forecasting of the stock market ever, and now he is forecasting the bond market with the same techniques and I predict he will have a comparable record of accuracy in the fixed income markets since he uses trend lines and moving averages.
4. The book, The Perfect Bet by Adam Kucharski is amazingly interesting and useful. It contains a historical and analytical review of how Roulette, Lottery, poker, stock market and Horse Racing have used mathematical, physical and statistical methods to beat the house edge. Particularly interesting to me was the discussion of Roulette where Poincarre, Pearson,and Fisher are cited as important figures in the quest for winning.
5. It is always difficult for me to trade after holidays as I never never know whether the moves on the corresponding days were 4 or 5 days apart, and the stock markets all seem to have a positive bias.
6. I find the book Survival Analysis with Long Term Survivors by Maller and Zhou very helpful for studying market moves that are immune to normal failures.
7. The biography of George Washington by Ron Chernow which I listened to on compact disk leads you to the thought that Washington was a great man with tremendous military, political, financial and personal skills. We were lucky to have him as the leader of the Revolutionary War and the first president. There appear to be no liberal biases in the book as appear in other Chernow works except that there is am emphasis on Slavery and the Federalist case championed by Hamilton is lionized.
8. The stock market has had one of the biggest rises in the first two weeks in history and based on past years, it is due for a pull back.
9. When my 7 kids all asked me about forming internet businesses in 1999 I figured the bubble was about to bust. Now they are asking about forming crypto currency businesses and my 11 year old son has a job associated with mining where he makes more per hours than most people I know.
10. All the markets are influenced by the rise in the stock market. Crude, gold, cotton, the Euro, all the Asian Markets are at all time highs. When will the grains and coffee follow?
Russ Sears adds:
Regarding point 2, that is one of the reasons I value this site a key to my success. One hypothesis I have is that as printing costs have become cheaper, the value of the ideas exposed has not only become cheaper, but have turned negative. Now the cost is not in the printing, but in getting recognized. Hence value only exists for non-mainstream writers. But how to turn this hypothesis into more testable profitable idea?
I Sometimes Wonder, from Victor Niederhoffer
I sometimes wonder how big agrarian reformer traders like palindrome and drunk and upside down man and his twin can make money retrospectively outside of service loopholes and I think a large part of it is creating a buzz concerning their already held positions and another part of it is they made money in the past but haven't made as much as the market in the last x years? What do you think?
anonymous writes:
Some time ago I corresponded with professor Malkiel about the WSJ dart-throwing contest. I pointed out that the pros had (slightly) beaten the darts. Dr Malkiel's response was that this was explained by the announcement effect: People reading the picks of experts (vs darts) bought the expert's picks at the next open - believing the experts were in fact experts. This publicity added to the the expert's returns. And controlling for this, there was no difference - like the thousand monkeys composition problem.
As far as upside down people and sages, in a world of lawyers surely it is malpractice not to advertise positively one's positions.
Peter Ringel writes:
Two days ago the center-most headline on drudge was:
"CHINA MAY HALT PURCHASES OF US TREASURIES –Markets Rattled" (It linked to articles on Bloomberg and cnbc.)
An emotional argument and IMHO not the real driver of the current leg down in bonds. Bonds made some sort of short-term low.
I thought: "Wyckoff Lives", because it seems to be Wyckoff-style news-manipulation.
Today, I read the first paper on Kora's list: Front Page News: The Effect of News Consumption on Financial Markets by A. Fedyk
and I think: "Wyckoff Lives!"
-
The paper gives empiric to the fact, that front-page news on BBerg create higher volume and stronger drift in the minutes after the news-release – than non-front page news "of equal importance".
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The paper defines three categories of news PI("primary important"), SI_1("secondary important" on front page) and SI_2("secondary important" NOT on front page)
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The paper discusses the relation of SI_1 and SI_2
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The paper does not research the impact of PI-news - probably because we don't know what the control group (of news) would be .
I think it is an easy step to conclude that this behavior is gamed. E.g. if someone wants to exit a position, he will attempt to place news on BBerg's front-page, create a buzz and exit into that "artificial" volume.
The above describes a potential manipulation to exit a position and a resulting reversal (intraday).
Now I wonder if there are already papers that research news-buzz impact longer-term and for directional moves.
To research this I think a major problem is how to categorize and qualify the news and what would be the control group? E.g. for the "story stock Tesla" (the one with the buzz), what would be the "non-story Tesla"?
Stefan Jovanovich writes:
The question about the last year's stock market rise is whether the gains are to be measured in dollars or Euros. In dollars it has been a big deal; in Euros it was an 8% net return, less than half what could have been earned without the stock market risk by simply being short the Almighty dollar and long the Euro.
I agree FX impact & risk is often overlooked by the (global) public. We just had it in Poland, where a lot of private real estate debt was in USD. Then people were in trouble, because of the strong USD. The polish Gov ended up forcing the creditor to convert to zloties (the polish currency).
People Have Been at This for a While, from Stefan Jovanovich
The Oriental Institute sponsored a dual address by an Egyptian and Hittite scholar about the first recorded battle in history–Kadesh.
I found it fascinating.
anonymous writes:
I find the Hittites fascinating myself. They were very innovative. I think we still don't know how they got water into their mountain capital.
If I remember it correctly, for this battle they also had the innovation of better wagons. They moved the axis and were able to place more fighters in one wagon. The Egyptians had only two (?) per wagon.
Some months back I argued here that the military is a driver of innovation. I was in part thinking that because of the Hittites.
An Excellent (if Frustrating) EconTalk, from Alston Mabry
Dick Carpenter of the Institute for Justice and author of Bottleneckers talks with EconTalk host Russ Roberts about his book–a look at how occupational licensing and other regulations protect existing job holders from competition.
A Convenient Table, from anonymous
The UN provides a convenient table that ranks countries by you-know-what. Perhaps this was in the President's briefing book.
Comments
Arch Stanton on February 26, 2018 6:30 pm
Surprised Congo stayed out of the bottom 10. Usually it’s the benchmark.
Observation on Cryptos, from Jeff Watson
I just got back from shopping at Publix for our dinner. While going through the checkout line, I overheard two of the baggers talking about cryptocurrencies. One kid was giving market tips and advice to the other. An exact comment from the young tout: "buy Ripple today, it will never ever go down." Is there a school where they teach people to be tipsters?
Anatoly Veltman writes:
Funnier yet: Ether did absolutely nothing the entire summer and fall while Bitcoin went bunkers. This winter, Bitcoin actually came down, while Ether is absolutely ballistic!
Andy Aiken writes:
Has it occurred to you that there are fundamental reasons for these price movements? If you simply observed the movement of people as units or particles in the Concourse of Grand Central Terminal, it would be baffling.
But if you understand that these particles are individual people, each with a home and a workplace, each with a will and an intent, then the movement makes sense.
The intentions aren't incidental to the movement.
James Lackey writes:
Your fantastic quote might be true for all public markets. That is all I see when I want to move. Path of least resistance ideal.
anonymous writes:
I agree with Lack on Andy's excellent observation. Is it true or useful to say that:
a) we often don't know the distribution generating price signals
b) better to go with empirical or nonparametric distributions when possible, as opposed to formula driven?
c) is there anything to simplified agent-based modeling?
Comments
Randy on January 10, 2018 5:12 pm
Heard the same chatter at the barbershop yesterday.
Scot John Law on January 11, 2018 8:09 pm
The Concept: Crypto-markets are a classic asymmetric boom/bust event. I intend to construe the current phenomenon using a reflexive model borrowed from Soros. I wrote this out some time ago, I believe we are currently in Act 3. When Act 3 will progress to 4 is the question which haunts all speculators.
Underlying trend: Bitcoin and other cryptocurrencies use block-chain technology. Block-chain is a promising new technology that will have to be developed and built upon. A decentralized currency is useful for those seeking to operate outside the control of a particular polity. Etherium becomes a platform for ICO’s, and the coins start the proliferate.
The Prevailing Bias: The rampant rise of the cryptocurrency market is due to the inevitable rise of block-chain technology which will come to play a central role in modern economy. Although some of the rise is definitely due to “the fact it is a bubble”, there is no way that block-chain technology won’t be part of the future. Those who publicly come out against bitcoin don’t understand the technology. It isn’t just a currency; it is the future of business. It decreases the transaction costs of trust, and is a horizontal technology that touches all kinds of verticals. Although there are definitely “shit coins” out there, there are plenty of coins that will be a part of the future.
Misconception about the trend: Most of the “coins” in the market are actually a means by which upstart companies can easily raise huge sums of capital. Similar to pink-sheet stocks—yet even that analogy is contrived. None of the legal protections afforded to equity holders are available for “coin” holders. Companies are able to raise funds through this unregulated market, shirking most of the burdens placed on public corporations, because regulators have not yet realized the misconception.
How Prevailing Bias reinforces the underlying trend: The higher speculators are willing to pay for the coins, the more capital they can raise. As long as their businesses appear promising, aka seem authentic and capable of disrupting an industry using any of the concepts attributed to the initial conceit, people will buy their coins hoping it continue to go up. The more capital they can raise, the more they can spend on marketing, employees, and seeking to develop partnerships.
The Drama Unfolds:
Act 1 (The Beginning): The influx of capital through ICO’s to these upstart corporations creates a proliferation of companies with access to huge sums of money in a short amount of time. More companies pursuing easy capital enter the market and the number of coins continues to germinate. The rise in prices leads to more speculators buying hoping the prices will increase, more buying leads to higher prices, and more buying at high prices means huge influx of capital to companies. Companies start building out their teams, spending money on advertisements in the media and at conventions, and courting established corporations in hope of public partnerships.
Act 2: (The Test): Initial expectations of a correction begin to arise. A negative event, whether it be an issue particular to the crypto-currency market as a whole, to an individual crypto-currency issuer, or perhaps simply a negative trend in the price movement of a particular currency, will cause both the prevailing bias and the underlying trend to be tested. The trend will survive. The prevailing bias is very strong, and the belief in the future of the technology is fervent among most participants—at this stage the participants are only those who are technologically sophisticated enough to access this market. How the online communities, i.e. reddit et al., may influence the prevailing bias is uncertain—my suspicious is that crowd will move in lockstep. Furthermore, the corporate ventures will have made concrete progress using the capital made available to them in ICO’s: they have taken out loans in fiat currencies, leases on buildings, hired teams, and announced partnerships. While they may feel the squeeze of their contracting coin base, many of these companies have gotten auxiliary funding in fiat currencies from outside investors and partnerships, using the capital generated from ICO’s as collateral, allow some of them to ride out this sudden lack of liquidity.
Act 3 (The Acceleration & Weakening of the Trend): Having successfully withstood a negative test, or perhaps multiple negative tests, the underlying trend and the prevailing bias reinforce each-other, and the boom accelerates. Prices go up, companies get more capital and issue news of more corporate partnerships, driving prices further up and more participants into the market. Hordes of speculators enter the market, seeking rising profits, or simply volatility having been starved of it in current public markets, and thus weakening the prevailing bias because a smaller share of the participants believe ardently in the technology. Concurrently, the underlying trend begins to develop areas of potential weakness. For many of the companies attempting to scale their businesses, the lack of true innovation in their business models becomes apparent as the technology is equally adoptable by their competitors. Even for the few innovative business models, the hardships of both scaling the technology and growing a profitable business under a new capital structure, one that includes ICO funding, will provide a daunting test.
Act 4 (The Misconception Revealed): As the reinforcing boon grows and because less stable, the chances for the misconception to be reveal increases. Could happen a bunch of different ways. As the impact of the bubble grows larger, i.e. “crypto” corporations partnering with corporations viewed as important by the government, or crypto-currencies are being used increasingly in transactions, or a concerning portion of publics savings has been poured into the asset, or prominent institutions begin trading in the market, the government will grow increasingly worried and eventually step in to regulate. They will slice through the misconception; decentralized currency may live on, companies using block-chain technology may eventually prosper, but companies raising large amounts of capital without any regulatory oversight will not. They will impose legislation that reveals the misconception. Or, perhaps, the misconception will be revealed by the private sector: established institutions and corporations will implement block-chain technology, revealing the difference between a decentralized currency, a method for companies to procure unregulated capital, and a new technology—distinct phenomenon which have been uncritically subsumed by the prevailing bias.
Act 5 (The Bust): When the misconception is revealed, the jig will be up. As in all boom/bust sequences, when the misconception is removed the disparity between the prevailing bias and the underlying trend is revealed. The speculative holders, which constitute the lion-share of the participants at this point, will hear that the music has stopped playing and rush to liquidate their positions and realize their returns. The bust will be quick and painful. Corporations will suddenly become insolvent, having borrowed in fiat currencies against funds denominated in crypto-currencies. Short-sellers feast amidst the carnage. Only market participants who believe in the technology will remain, faced with dazzling losses. This stage is path dependent, so its outcome will be unique and unpredictable. The inevitability of regulatory action makes the outcome even harder to predict. What eventually becomes of the “crypto-currency market” is not a concern for present speculators, nor something a speculator can confidently speculate on, so I will end here. Would love feedback.
Andre on January 12, 2018 1:35 pm
It all screams dot com. A great idea met with unbridled enthusiasm. Although I admit there is some jealousy at not being along for the ride at what seems the easiest money ever made. It’s like printing one’s own money and having others buy it.
The Genius of Corvids, from Pitt T. Maner III
A great article about a fascinating group of intelligent birds.
Bernd Heinrich has written several books about them.
"13 Surprisingly Weird Reasons Why Crows And Ravens Are The Best Birds"
.
Comments
Barman on January 9, 2018 9:58 am
Bernd Heinrich also had many record-setting ultra runs in the ’80s.
Many Markets, from Victor Niederhoffer
Many markets are in a parabolic upward move with new highs and current prices well above the 20 day average, i.e they're trending… is it bullish or bearish and what is the affect on other markets that have not gone up big?
anonymous writes:
The move has been underway for several weeks, most recently with CL edging above 60 and GC breaking above 1308. In the midst of the NYC blizzard, the markets smell the long-forgotten florid boughs of the K-spring.
The rallies of the past decade were driven by geopolitical tensions, or fears of debt default in Europe. But the economic backdrop is qualitatively different now.
The question is whether the Fed can get ahead of it, or not, and it ends in a crack-up boom. Or, is it even a sustainable rally? It's difficult to get too confident with softs not joining in the fun.
Comments
j on January 6, 2018 3:16 pm
is it bullish or bearish?
Can a parabolic upward move be … bearish?
Yearly All Time Highs, from Kim Zussman
I checked SP500 weekly closes for new all time highs per year, back to 1951. 2017 was second highest total weekly ATHs in the series (also see attached plot):
year Count
1951 14
1952 13
1954 25
1955 20
1956 6
1958 10
1959 13
1961 20
1963 10
1964 23
1965 12
1966 3
1967 7
1968 9
1972 10
1973 1
1980 11
1982 1
1983 13
1985 20
1986 13
1987 18
1989 7
1990 2
1991 12
1992 6
1993 9
1994 3
1995 28
1996 14
1997 20
1998 16
1999 13
2000 1
2007 4
2013 18
2014 20
2015 6
2016 8
2017 27
And the outlook? Sorting years with at least 20 new weekly ATHs, here is comparison of mean returns for years following these years - along with mean returns for all years:
One-Sample T: nxt yr, all yr
Test of mu = 0 vs not = 0
Variable N Mean StDev SE Mean 95% CI T P
nxt yr 7 0.111 0.137 0.051 (-0.015, 0.237) 2.14 0.076
all yr 65 0.085 0.162 0.020 ( 0.045, 0.125) 4.24 0.000
so the return is +11% vs +8.5% for all years. No bearishness here.
Comments
Andre on January 4, 2018 1:06 pm
I’m wondering how studies with a year timeframe can be used practically in a speculation or trading system. Always in long can’t use it and in a trading system there’s too few observations in your lifetime to justify it. After all there’s sizable chance that the market bucks the statistics and then you’re out a year and are you now waiting for the next year? Year studies are used by arm chair market participants who are always in long and are just justifying their always in long.
The Second World Wars, from Alston Mabry
Kirkus Reviews:
Best 2017 Books of Disturbing Yet Necessary History
THE SECOND WORLD WARS: How the First Global Conflict Was Fought and Wonby Victor Davis Hanson
Not just another account of World War II, but a thoughtful overview of the battles that were "emblematic of the larger themes of how the respective belligerents made wise and foolish choices about why, how, and where to fight the war."
According to veteran military historian and Hoover Institution senior fellow Hanson (The Savior Generals: How Five Great Commanders Saved Wars that Were Lost—From Ancient Greece to Iraq, 2013, etc.), the war began during the 1930s as a series of fairly straightforward border conflicts—e.g., Germany versus its neighbors, Japan versus China. Suddenly, in 1941, as the result of poor decisions around the world, it exploded into a global conflict that the so-far-victorious Axis Powers were guaranteed to lose. Beginning with its cause, Hanson dismisses the time-honored denunciation of the Treaty of Versailles, which was softer than the peace Germany imposed on France in 1871 or the Soviet Union in 1918. It was the humiliation that nagged. Neither Germany nor Japan was endangered or impoverished; both believed that their honor had been slighted and that their racially superior citizens deserved better than their decadent neighbors. "The irrational proved just as much a catalyst for war as the desire to gain materially at someone else's expense," writes the author. Four long chapters on weapons deliver a few jolts. Everyone knows that infantry wins wars, but Hanson maintains that strategic bombing probably persuaded Japan to surrender. High-tech weapons—the B-29, proximity fuse, and atomic bomb—unquestionably helped the Allies. Vaunted German technology (rockets, jet planes, guided missiles) merely wasted money. Unique in its 50 million to 80 million deaths—the great majority of which were civilians and included far more Allied than Axis soldiers—and worldwide extent, WWII broke no rules. Hyperaggression and ruthlessness win battles; resources and stubbornness carry the day.
An ingenious, always provocative analysis of history's most lethal war.
Alex Castaldo adds:
The author gives an overview of his book in two interviews:
https://www.hoover.org/research/part-i-second-world-wars-victor-davis-hanson
https://www.hoover.org/research/part-2-second-world-wars-victor-davis-hanson
The State of Cryptocurrency Reportage, from Andy Aiken
The lede: Bitcoin drops 11% as South Korea moves to regulate cryptocurrency trading
Instead of the more relevant (other crypto did not drop commensurately): "Bitcoin drops as Snapshot Block for the Segwit 2x Fork Passes"
Boris writes:
Still acting as directional magnet for all other cryptos, at least for the larger ones - Only Ripple not following.
Heck of a run for Ripple (XRP) in the last 24 hours - now the third largest (71B) crypto by market-cap. Was second largest for couple of hours. Going from 1.16 (yesterday noon) to currently 1.67 USD - Market chatter of becoming the winner of 2018. Great pattern behavior to capitalize on. Stay tuned.
anonymous writes:
I would note that XRP is not a cryptocurrency, and is the opposite of the vision of a trustless, decentralized peer-to-peer transaction network. The XRP token itself has little utility in the Ripple network, and is just a demo token for Ripple, Inc.'s Hyperledger tech. Even if banks choose to use XRP to defray costs of using the network, the amount of XRP required is trivial. Ripple leadership has said that it would amount to about USD 10 worth of XRP for an institution's entire year of network fees. The futile attempts to explain that to XRP "investors" could merit a scholarly article by the scholarly disciples of Leon Festinger. The Ripple tech does have value, and the best way to play it (i.e. lowest risk:reward ratio) is through equity investment in Ripple. Ripple, Inc. holds 65% of the outstanding Ripple tokens, and starting in January will unlock these tokens, distributing them on exchanges.
Of course, the pumps in XRP are astounding due to new dumb money that regards a USD 1.70 token as "cheap" (there are 100B XRP tokens total) compared to ETH at 750 (95M coins) or BTC at 14500 (16M coins). Because not driven by changes in fundamentals, the dumps are dramatic too.
Speculative profits are profits, and making money from the oblivious greed of others is just as good as any other profit; no question.
Andy Aiken writes:
Life isn't like the golden days, when there was one phone company, the top marginal tax rate was 91%, stock brokerage commissions were hundreds of dollars per trade, and a heart attack or aneurysm had 95% mortality. Remember the placid days of yore, when people worked 6 days a week, 10 hours a day, and nonetheless spent 70% of disposable income on shelter and food? Those were good times, much better than letting people have money to fritter away on ringtones and vacation homes. When times were still good, people didn't die of fancy illnesses like Parkinsonism or Alzheimer's, they died of proper diseases like cholera and tuberculosis! Or they consumed a bit too much of the botulinum toxin that was omnipresent in the food supply. Sure, a few slipped through and died of things like ALS, but they were exceptions.
Comments
marion dreyfus on December 31, 2017 9:31 pm
A very healthy a wonderful new year for all my friends there.
Even Victor, w ho has been unfair.
Jim Davis on January 1, 2018 3:15 am
First rule of crypto investing.
The facts, logic, and any semblance of reasonableness are best left at the front door like a pair of wet galoshes.
The Rate of Return on Everything, 1870–2015, from Alston Mabry
Quick summary from Tyler Cowen: "The Rate of Return on Everything"
Here is what I learned from the paper itself:
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Risky assets such as equities and residential real estate average about 7% gains per year in real terms. Housing outperformed equity before WWII, vice versa after WWII. In any case it is a puzzle that housing returns are less volatile but about at the same level as equity returns over a broader time span.
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Equity and housing gains have a relatively low covariance. Buy both!
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Equity returns across countries have become increasingly correlated, housing returns not.
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The return on real safe assets is much more volatile than you might think.
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The equity premium is volatile too.
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The authors find support for Piketty's r > g, except near periods of war. Furthermore, the gap between r and g does not seem to be correlated with the growth rate of the economy.
I found this to be one of the best and most interesting papers of the year.
The NBER version says you can have it for free if you live in a "developing" country or are an establishment drone of various types, but in **big red letters** says that I can't have it, so here is the working paper version.
Federal Reserve Bank Of San Francisco Working Paper Series
The Rate of Return on Everything, 1870–2015 "scar Jordà Federal Reserve Bank of San Francisco, University of California, Davis et al
December 2017 Working Paper 2017-25
This paper answers fundamental questions that have preoccupied modern economic thought since the 18th century. What is the aggregate real rate of return in the economy? Is it higher than the growth rate of the economy and, if so, by how much? Is there a tendency for returns to fall in the long-run? Which particular assets have the highest long-run returns? We answer these questions on the basis of a new and comprehensive dataset for all major asset classes, including—for the first time—total returns to the largest, but oft ignored, component of household wealth, housing. The annual data on total returns for equity, housing, bonds, and bills cover 16 advanced economies from 1870 to 2015, and our new evidence reveals many new insights and puzzles.
Luigi Albertini, Harold Macmillan, from Stefan Jovanovich
Today is the anniversary of their deaths, Albertini in 1941 and Macmillan in 1986.
Between them they explain everything that needs to be known about The Great War. Albertini's work–the Origins of the War of 1914– is the best single work of history I have ever read. Macmillan's experience as a young man says it all.
From the Telegraph: "In his year at Balliol, 28 students went to the Western Front. Only Macmillan and one other came back."
Bitcoin, from Anand
The more I read about this market the more Bitcoin and its offshoots look like Railroad stocks in the late 1800s. Behind the shadows there are ‘whales’ who own large blocks with the credulous public chasing the market higher. Every time there is a mini panic these guys come in and support the market like a modern version of Jay Gould. For the time being they are seen as kind benefactors with some kind of wispy greater goals in mind (to save the market/solve global poverty/give humanity its freedom etc). I reckon they are pushing the market up together to liquidate their holdings on the gullible public. A couple of days ago LiteCoin founder said he’d liquidated his whole holdings as he didn’t want a conflict of interest. When it all crashes and the publics savings are wiped out there will be wailing and hand wringing but who are they going to complain to? After all, bitcoin buyers think the establishment is out to get them which is what drew them to go ‘off piste’ in the first place!
I don’t think many people are ‘trading’ bitcoin. We know the stress trading financial markets with a fraction of the volatility. Anyone who tries to trade these tokens is going to have a heart attack within a month. They are a mixture of ‘real money’ (money launderers/criminals gangs and rogue states like N Korea doing off the system transactions) and ‘long only investors’ most of whom are investment neophytes. The latter are the second coming of the silver brigade we saw a few years ago. In fact I think the Silver tin hat lunatics have migrated to Bitcoin and other tokens and picked up other followers along the way. Check the Silver price vs. Bitcoin movement (people have mentioned Gold but I think Silver is the one which is inversely correlated although I need to test it).
Andy Aiken writes:
The volatility is a profound boon to a trader, not inherently a nerve-wracking experience. It’s unclear what you think a trader actually does.
The concentration of ownership of BTC is not dissimilar to present-day ownership of US stocks or real estate.
As for the smear of an inherent criminality, this has been debunked here numerous times. It’s almost always the final argument of those who would prefer that humanity have no economic freedom at all.
Comments
Andre on December 27, 2017 6:01 pm
A person owning bitcoin in early stages would have to have been in a coma to still be in. I purchased three bitcoin in 2011 and i still wonder after reading creature from jeckyll island why i didnt conect the dots. In order to have been a big winner you would really have to be an insider but its the same with snything in speculation right? How can bitcoin go down to two dollars from 100 and now up to teen thousands. Why would someone bet on the second wave? I dont get it, maybe someday i will.
Andre on December 27, 2017 6:51 pm
Why don’t we all just take the quarters on the kitchen counter and buy ripple for 1.30 each in the event that this really manifests itself. with such exponential growth whats to lose?
Pierre Aribaut on December 31, 2017 4:51 am
I never bought any bitcoin, i guess now it’s too late and too risky to buy someone, like you say i want to have my heart safe, i’ve seen the volatility and the thousands of % before, i’ve also seen that sometimes the spread is huge, not good for trading also.
A General Observation, from Alston Mabry
A general observation: Reading various market analyses, it seems the modal form now is this:
(1) The market is over-valued versus some metric such as CAPE.
(2) Therefore, the market is going to crash.
As opposed to:
(1) The market is over-valued versus some metric such as CAPE.
(2) Therefore, it's reasonable to expect below-average returns going forward for some time period.
We seem to be very "crash sensitive".
Comments
Jeff Watson on December 27, 2017 7:36 pm
Well, today the flexions rolled out both Ron Paul and Jim Paulsen to sell the narrative of impending doom, this time likening it to the Russian crash. They’re not very subtle, disseminating their message which designed to scare and shake people out of their position in stocks.
Research Query, from Victor Niederhoffer
To what extent are the performance of the companies with the highest market values forecasting the future performance of the market? This was a 1930 hypothesis of Edgar Lawrence Smith on common stocks as long-term investments.
Stubby Pringle’s Christmas, from Victor Niederhoffer and Dailyspeculations
This is one of my favorite stories. I hope you enjoy it, and I wish you a Merry Christmas. — Victor Niederhoffer
High on the mountainside by the little line cabin in the crisp clean dusk of evening Stubby Pringle swings into saddle. He has shape of bear in the dimness, bundled thick against cold. Double stocks crowd scarred boots. Leather chaps with hair out cover patched corduroy pants. Fleece-lined jacket with wear of winters on it bulges body and heavy gloves blunt fingers. Two gay red bandannas folded together fatten throat under chin. Battered hat is pulled down to sit on ears and in side pocket of jacket are rabbit-skin earmuffs he can put to use if he needs them.
Stubby Pringle swings up into saddle. He looks out and down over worlds of snow and ice and tree and rock. He spreads arms wide and they embrace whole ranges of hills. He stretches tall and hat brushes stars in sky. He is Stubby Pringle, cowhand of the Triple X, and this is his night to howl. He is Stubby Pringle, son of the wild jackass, and he is heading for the Christmas dance at the schoolhouse in the valley.
[For the entire text of the story, please follow this link ].
Comments
astro the dog on December 22, 2016 6:28 am
and…Merry Christmas to you, thanks for all the hard work at your site.
Mark Bates on December 22, 2016 1:55 pm
I always love this story. Merry Christmas and a Happy New Year to you!
Jason Diomedes on December 22, 2016 5:39 pm
Real joy, especially Christmas joy, comes from the heart not from the purse.
Carol on December 24, 2016 6:17 pm
Thank you for the story of Stubby Pringle’s Christmas. I have been on the hunt for it and was delighted to find it here. Merry Christmas!
James Cook on December 25, 2017 1:25 am
Thanks for this, I read it every Christmas Eve thanks to you!
Bacon’s Book Free Download and Happy Holidays, from Jeff Watson
For all the new members of this site and for anyone who never got a copy the first time around, here's a copy of Bacon's book, "Secrets of Professional Turf Betting". The Chair and I both agree that this is one of the best books out there about markets. Since it's out of print, it goes for around $100 on Amazon or eBay, so look at this as a nice little Christmas lagniappe. Happy holidays to y'all and may the next year have all your trades winners, and may GS be on the other side of all your trades.
Comments
Pete M on December 25, 2017 5:01 am
There’s a good summary of this book in the review find here https://www.amazon.co.uk/Secrets-Professional-Betting-Robert-Bacon/dp/B0006X5YLG#secondary-view-R28BH2HBI1GJTB_1514192369424
A Quick Read on Autonomous Vehicles, from Stefanie Harvey
"The automakers and high-tech companies spending billions of dollars on developing self-driving cars and trucks tout the idea that autonomous vehicles (AVs) will help create a safer, cleaner, and more mobile society. Politicians aren't far behind in their enthusiasm for the new technology. "This is probably the biggest thing to hit the auto industry since the first car came off the assembly line," Senator Gary Peters (D–MI) told a cheering audience of researchers and executives at a recent computing conference in Washington, D.C. "It will not only completely revolutionize the way we get around, but [AVs] also have the potential to save hundreds of thousands of lives each year."
Such predictions, however, turn out to be based on surprisingly little research. While developers amass data on the sensors and algorithms that allow cars to drive themselves, research on the social, economic, and environmental effects of AVs is sparse. Truly autonomous driving is still decades away, according to most transportation experts. And because it's hard to study something that doesn't yet exist, the void has been filled by speculation—and starkly contrasting visions of the future. "The current conversation … falls into what I call the utopian and dystopian views," says Susan Shaheen, co-director of the Transportation Sustainability Research Center at the University of California (UC), Berkeley."
Best of 2017 Podcasts and Audiobooks, from Alston Mabry
The Best Audiobooks of 2017 from Phillip Pullman
2017 Best Audio Books from digital audiophile magazine
Audible's Best Audio Books of the Year
20 Best Audio Books of 2017 from Paste
The Atlantic's 50 Best Podcasts of 2017
My Best Podcasts of 2017 from the New Yorker
The 10 Best Podcasts of 2017 from Vulture
NPR's 9 Favorite New Podcasts of 2017 that aren't S Town
The Best Podcasts from 2017 from Thrillist
The Best Podcasts of 2017 from The Guardian
A General Observation, from Alston Mabry
A general observation: Reading various market analyses, it seems the modal form now is this:
(1) The market is over-valued versus some metric such as CAPE.
(2) Therefore, the market is going to crash.
As opposed to:
(1) The market is over-valued versus some metric such as CAPE.
(2) Therefore, it's reasonable to expect below-average returns going forward for some time period.
We seem to be very "crash sensitive".
BTC Questions, from Jeff Watson
Please excuse my ignorance.
Grain traders know how many cents a certain size order can move the market, and bond traders know the effects of big orders. For those trading Bitcoin, how much will the cash market move on an exchange if one is selling 1 coin, 50 coins, 100 coins, 1000 coins? Is the market thin, how liquid? Is the b/a spread narrow in the futures? Does the b/a spread vary during different times a day? Are any retail business allowed to go short yet? How many BTC's are for sale (real orders) at any given time? What constitutes a "Big order" in both cash and futures BTC? What time of day offers the most liquidity? Thanks.
Comments
Erich on December 21, 2017 6:20 am
For a decent real-time view of the cash market, see https://cryptowat.ch/gdax/btcusd/6h . You can see market depth, spread, and time and sales for the GDAX exchange (owned by Coinbase).
B on December 21, 2017 2:10 pm
Don’t know how many out there actually trade short term, the sentiment is more of a buy and hold crowd.
You can see most of the markets the spot trades in here: https://coinmarketcap.com/currencies/bitcoin/#markets
You can see those order books at the exchanges directly.
anand on December 21, 2017 9:37 pm
The more I read about this market the more Bitcoin and its offshoots look like Railroad stocks in the late 1800s. Behind the shadows there are ‘whales’ who own large blocks with the credulous public chasing the market higher. Every time there is a mini panic these guys come in and support the market like a modern version of Jay Gould. For the time being they are seen as kind benefactors with some kind of wispy greater goals in mind (to save the market/solve global poverty/give humanity its freedom etc). I reckon they are pushing the market up together to liquidate their holdings on the gullible public. A couple of days ago LiteCoin founder said he’d liquidated his whole holdings as he didn’t want a conflict of interest. When it all crashes and the publics savings are wiped out there will be wailing and hand wringing but who are they going to complain to? After all bitcoin buyers think the establishment is out to get them which is what drew them to go ‘off piste’ in the first place!
In response to your question, I don’t think many people are ‘trading’ bitcoin. We know the stress trading financial markets with a fraction of the volatility. Anyone who tries to trade these tokens is going to have a heart attack within a month. They are a mixture of ‘real money’ (money launderers/criminals gangs and rogue states like N Korea doing off the system transactions) and ‘long only investors’ most of whom are investment neophytes. The latter are the second coming of the silver brigade we saw a few years ago. In fact I think the Silver tin hat lunatics have migrated to Bitcoin and other tokens and picked up other followers along the way. Check the Silver price vs. Bitcoin movement (people have mentioned Gold but I think Silver is the one which is inversely correlated although I need to test it).
Dan on December 24, 2017 1:15 pm
The GDAX site is free to use with no sign-up. To check out market structure you don’t need to go through other sites: try gdax.com. Bid-ask is typically $0.01, the minimum trading size, but there’s a 25bp commission (with volume discounts, and 0 commission for market makers). Right now, at $14,000/BTC, you can sell 100 BTC at 13,890, or 1,000 at 12,800. Symmetrically, 1,000 BTC will cost you up to 15,800 (prices change pretty linearly with size). If you’re willing to go to 25,000, you can buy 10,000 BTC. These are standing orders on the exchange, so if you put in a buy order at 15,800, you should theoretically get filled with all the offers from 14 to 15.8k. I haven’t tried it. Is that a good market? How do you measure goodness in this context? Many of the participants have a basis at 1/10th or less of current prices, so that must have an effect.
This is all on one exchange. Gemini is another big one in the US (arguably even more reliable), and there are hundreds of others. The Asian exchanges have much bigger flows. Helps to be able to transact in Won.
russell thomas on December 24, 2017 9:26 pm
BITMEX is the futures exchange for bitcoin. Its based in hongkokng and its quite liquid with over a billion usd trading volume a day
B on December 29, 2017 12:29 pm
Bitmex is actually registered in the republic of seychelles. Good luck disputing a glitch on that platform.
Pierre Aribaut on December 31, 2017 5:06 am
@russel thomas : is that BITMEX itself that claims that liquidity ?
Another Book for the Stack, from Alston Mabry
Brink Lindsey of the Niskanen Center and Steven Teles of the Niskanen Center and Johns Hopkins University talk with EconTalk host Russ Roberts about their book, The Captured Economy.
Lindsey and Teles argue that inequality has been worsened by special interests who steer policy to benefit themselves.
They also argue that the influence of the politically powerful has lowered the overall growth of the American economy.
Comments
marion dreyfus on December 23, 2017 3:53 am
Another book worth a look is Galt Niederhoffer’s POISON, which begins carefully, almost elegisacally, but soon captivaes with the maelstrom of emotion and trouble the protasgonist, Cass, encounters as her husband of some years inisdiously toxifies their marriage bed, their home, and soon, the life of his wife. Galt carries the narrative along from highs to lowest lows, inhabiting the life of possible thousands of wives who doubt their husband’s fealty, and discover the cost when the abused wife tries to call attention to the declared villainous once-ardent husband. Sounds the knell of desperation, and touts the necessit to remain dispassionate, proof-oriented, and calmin the face of skeptics all around.
The Arthur and Elaine Niederhoffer Bench, from Victor Niederhoffer
Vic Niederhoffer and Bill McCarthy at the Arthur and Elaine Niederhoffer bench at the Bronx Botanical Gardens. Bill was head of undercover police and bomb squad and student of Artie, authored Vice Cop, the best true life crime novel. Bill and Vic are equally immobile now.
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The Lobotomization of American Students Education, from Stef Estebiza
"Vampires, Zombies and Hooking Up: 37 Examples of College Courses That Are Just too Crazy to Believe"
Stefanie Harvey writes:
In fairness #20 looks interesting. Very few young people have much experience with the Judeo-Christian texts and their influence on Western culture.
The titles are pithy to attract enrollment yet I think there are likely several good courses listed.
I am currently designing a course on wearable (skin) sensors for health monitoring and will choose the course title wisely.
What Can We Learn From Expert Gamblers, from Jeff Watson
Here's a link to a Ted talk titled, "What Can We Learn From Expert Gamblers? " He discusses the difference between expert, casual, and problem gamblers. He discusses the risk intelligence that all successful gamblers (and specs) have. The speaker then directs you to his website where there is a risk intelligence test that is very illuminating, and very fun to take. The test consists of 50 statements and one gives a percentage that the statement is true. Please don't game the test by answering 50% on everything.
Here's the risk intelligence test.
This website does offer another, more "accurate" risk intelligence test for a fee.
Tulips Can Kill You: a Family Story, from Jeff Watson
There has been much comparison between the BTC rally and the tulip bulb bubble back in the 1630's. Zero Edge has proclaimed the BTC "bubble" as the biggest bubble in history. Whether it is or not, none of that matters to me. What does matter is all the mention of tulips and the effect they had contributing to my family's considerable folklore.
Back in the late 1960's. my great aunt became rather batty, as most women on that side do. Since she was well off, people referred to her as an eccentric, rather than hanging the crazy moniker poor people would get. One day, my great uncle(by marriage) dug up a bunch of tulip bulbs and put them in their pantry's onion storage box. Apparently, he never told my aunt that he put them in the box. For the record, my aunt was arguably the worst cook in Illinois and it's lucky they never had kids as she would have probably poisoned them. My mom and dad jokingly called her refrigerator the ptomaine box and we were instructed as kids to always politely refuse her offers of food.
One day she was making him dinner and mistakenly used the tulip bulbs from the pantry instead of onions and shallots. That night, he ate the dish, got stomach cramps later in the evening, then dropped dead the next day. She said she didn't have any dinner because she wasn't feeling well. Because he was in his 80's, had chronic medical issues, and was an old man, no autopsy was ever performed, so we'll never know the exact truth of what killed him.
At any family gathering, we still like to joke that my great aunt got away with murder. It gets a lot of laughs, 50 years after the fact. Personally, I don't think she was a murderess or had any intent to murder him, as her brain was rather addled by that time. Furthermore, although tulip bulbs contain a few toxic glycosides, there are no recorded deaths from ingesting tulip bulbs. Still, it makes a great story.
Every time I hear about tulips, bubbles, onions, and shallots, I get a mental image of my great uncle eating that food and keeling over.
anonymous writes:
My mother was a child in Holland during the Hunger Winter of 1944-5; tulip bulb soup was commonly served because eating that was better than starving.
The Greatest Bubble Since Dotcom, from Mr. Boris
Printed 715 USD or 597 EUR–close to 50% in two days. Not a bad move in my investment book.
So whats next–Do we listen to naysayers? Do we look at the yield curve? Do we look at ECB buying bonds? Do we look at FED raising rates? Do we look at sales for the local pizza store, or how much 3-D printing there is out here?
By now, one has understood, that none of the above matters at this point in-time, and may never do. No, what works is the behaviour of price action as there are (clear) enough with clues of directional moves. Buyers&Sellers are watching price points, breakouts, momentum, retracement levels, sentiment chatter and possibly overbought/oversold territories.
Depending on your time-horizon, you could buy&hold, or take off some betting chips in the very short term. The crypto train will have retracements along the way, but the fundamental question is, whether this asset is a good way of adding diversification or some portion of spice in the portfolio for the long haul. Is this the beginning of a wide spread alternative investment vehicle that will outshine the internet boom era between 95-00?
Perhaps. For now we ride the trend until proven wrong and we don't resort to all kinds of mumbo jumbo, explanations of the past (even though good lessons can be learned) or general "I missed the move" and therefore this crypto thing is bogus. Spare the bullshit, eh. Everyone has their way/style of increasing the value of their investments, and that's the only thing that matters. You can talk, or you can act.
Market Comments from the Peanut Gallery, from Henrik Andersson
Centralized, broken hash function, aggressive developers, highly questionable PR, rolling their own crypto. Avoid like the plague. Happy to be proven wrong.
Chris Cooper writes:
Yes, that's the FUD, as they say. It pays to investigate deeper.
Centralized — a temporary measure only until the network reaches adequate scale.
Broken hash function — supposedly on purpose, never led to any loss of coins, corrected without subsequent issue.
Aggressive developers — true…but what I care about is extremely competent developers, and they have that.
Highly questionable PR — founders don't care about PR, which means that it gets little attention.
Roll their own crypto — true, and it was good…but when they got feedback about potential issues, they changed to standard crypto. They will likely change back at some point.
You could add these negatives:
* Crappy wallet
* Protocol designed for machines, not humans
* Uncertainty in confirmation time, though it's faster than most others
All these negatives, and still the coin is worth 12 billion USD at this writing. Why?
* Zero transaction fees, enabling micropayments
* Zero miners
* It scales
Tyler Cowen Podcast: Trade Policy, from Alston Mabry
Doug Irwin on US Trade Policy
Tyler Cowen thinks Douglas Irwin has just released the best history of American trade policy ever written. So for this conversation Tyler went easy on Doug, asking softball questions like: Have tariffs ever driven growth? What trade exceptions should there be for national security, or cultural reasons? In an era of low tariffs, what margins matter most for trade liberalization? Do investor arbitration panels override national sovereignty? And, what's the connection between free trade and world peace?
They also discuss the revolution as America's Brexit, why NAFTA is an 'effing great' trade agreement, Jagdish Bhagwati's key influence on Doug, the protectionist bent of the Boston Tea Party, the future of the WTO, Trump, China, the Chicago School, and what's rotten in the state of New Hampshire.
To What Extent, from Victor Niederhoffer
To what extent have the movements in bitcoin been predictive of gold the same day from the open of bitcoin and gold coterminously as well a bitcoin on gold over subsequent days. I've given up on using standard interrelations that I've taught half of the list to predict bitcoin because there is so much drift in bitcoin…everything is bullish. I feel like the jerks at Salomon who asked red dawn what the spread was in Russia when he showed them the assets were undervalued by a factor of 100. A blast from the past is that Viola the former head of the NY Merc has sold his apartment, the most expensive in NY for 100 mill.
Comments
B on December 13, 2017 10:49 am
When you have videos like this: https://www.youtube.com/watch?v=PZdLAo3sqv8
What are the chances that the euphoria is a bit too high currently?
Izzy on December 13, 2017 3:09 pm
An interesting remark on Bloomberg Radio Wednesday morning (12/13/17) was given by Dennis Gartman. He asked what type of asset is Bitcoin, is it more like a currency or a physical such as gold?
One would think if it were to be considered as a commodity type asset, then it should be readily fungible to traditional cash equivalents.
Anonymous on December 14, 2017 5:56 pm
That video was brilliant. I love his newly ‘mined’ persona reminiscent of a medieval prince … he is the bitcoin prince! Gilt candles in the background were the finishing touch! Annoyingly his prediction of 20k by Christmas was correct. He was just massively conservative in how fast it occurred. Another case of the wrong logic getting the right answer as so often happens in the markets.
The Future Corrupt Trump Administration, from Stefan Jovanovich
Grant's reputation for "corruption" is based entirely on his committing two sins: (1) he insisted that the government actually keep accounts, and (2) he called the bluff of the St. Louis Germans who were furious at his being willing to allow the accounting to include a review of the excise tax accounts that had been their own private slush fund.
Trump seems to be going down that same path towards academic reputational hell. He is actually going to audit the DOD.
Vince Fulco writes:
Reminds me of that sub-plot in the movie last emperor when Pu Yi asked for an audit of the family's warehouses since he didn't trust the eunuchs who had been administrators to the family for decades (centuries?) and suddenly a day later, everything went up in flames.
Jim Lackey writes:
Mr. Stefan's point is this, Ralph. I was a rookie trading the Nazz. SOES, Daytek and my first backer now in heaven.
We had an amazing edge, in execution. There was five 25 year olds sayin, "this can't last! How do I pay the rent much less support my Austin, Lack?" Magic words… "The warehouses are full" Hugs tech bubble. Limit up every week. We make selling them only when we are certain. That was the point. You made the call. Plz. Never call the turn. We all know.
Loving Vincent, from Duncan Coker
Loving Vincent is a visually stunning movie and highly recommended. The production is a blending of animation and art as each frame has been hand-painted in the style of Van Gogh often using one of his actual works as a base. The film tells the story of the last years of his life introducing us to the characters of a small French town where he lived and painted; they include his friends, benefactors, doctors, contemporaries as well as the countryside which inspired his work. The story puzzles over the mystery surrounding his death as the narrator seeks to deliver a final letter from Vincent to his brother. It moves very slowly but this is welcome as the unfolding art is so enjoyable to watch. In his short 8 years as a painter Van Gogh produced 800 works. Though he sold but one, he never waivered from his singular devotion to his craft. This films reintroduces us to his work. It is like gazing at one of his painting for 90 minutes and really absorbing the impact. Would love to hear Marion's review.
Comments
marion dreyfus on December 23, 2017 3:43 am
It is interesting that the film gets such a rousing thumbs up, since it is essentially a filmization of the play at 59 East 59th some months ago. There, the unraveling of the life of Van Gogh was paired with the slow unspooling of painting on large swaths of fabric coming down from the ceiling, across the floor of the stage. and ending at the edge of the stage, in front of the audience. The play was episodic, featured too much static talk from Vincent and somewhat less from his brother and sisterin law, but often in a dry, epistolary way, reading and reciting letters. We felt the play lovely to look at, as the art crawl down the walls and across the stage floor was enough to keep us mesmerized–but the play itself left most people cool. It did not last long on the stage because of this paucity of dramatic interaction. At no point in the play, for instance, did vincent actually even pick up a brush or put it to canvas. Perhaps the film accomplishes more by virtue of its medium being more obile, but it sounds almost as static as the play was. A shame: A wasted opportunity of a fascinating subject.
Bitcoin Mining Guzzles Energy and Its Carbon Footprint Keeps Growing
To the extent that Bitcoin has any fundamental value other than speculation it is as an alternative private means of transaction payment. One of its main attraction is the limited amount of bitcoins that can be created. From what I have read the validation process relies on complex computer programs that become more expensive to run over time running up more costs for electricity, etc. for those maintaining the records. Eventually the finite limit is reached when no more coins are created.
What then will be the incentive for any players to continue to run the block verification system? And even before then, if the value of bitcoins does not increase sufficiently, will it still pay so many to try to mine bitcoins. If transaction fees become necessary and if the cost of validation is not linked to the value of the transaction, will it not become uneconomical to engage in modest sized transactions? And if that is the cast would not its real purpose of another means of paying for transactions be defeated?
While the amount of bitcoins may be limited, what is to stop other players from coming up with their own systems? While there is a limit to the amount of bitcoins and newly created coins, there would appear to be no limit to the number of cyber coins that can be created, in essence creating many competing currency. What then is to prevent cyber coin inflation that reduces the purchasing power of all such coins. And if cheaper verification methods are not created would not that increase the cost to sellers of goods and services of transacting in so many different currencies whose relative values might fluctuate violently?
Might not this wild speculation turn out to be the tulip bulb bubble of the 21st century eventually?
Andy Aiken writes:
Rudy, yes, new cryptocurrencies and digital assets may be issued, but there is no reason to expect that this will weaken the value of bitcoin. Digital assets are unique and non-fungible. When the Venezuelan government hyper-inflates the bolivar, it doesn't affect the purchasing power of a dollar. In fact, it may even bolster the dollar's value, and we see a similar phenomenon in cryptocurrency. During times of relative risk aversion, the % of the total crypto market cap that bitcoin represents (referred to as bitcoin dominance %) increases.
There are different types of digital assets:
- Platform coins
Ethereum is an example of a platform, but there are others. Companies can issue tokens on the platform easily and use them for governance or stakeholder management. Although the most visible type of token issuance is through ICOs, there are many companies that will use them internally/privately only. The growth of usage of the platform will necessitate the use of the "gas" that powers transactions, which in the case of Ethereum is ether. Demand for ether will rise as the network grows, but in my view upside from here may be limited until some of the companies/apps based on the platform start delivering on their promises. Ether isn't a strict cryptocurrency like bitcoin, although it may be used as a currency. It is the transaction token for the Ethereum platform. The rise of this platform has led to the emergence of prominent competitors, each with a similar transaction token. Some of these are EOS, NEO, Aeternity, and Lisk. In my view, purchasing a platform token is a way to benefit as an investor from the success/growth of the platform. But this is a messier/more volatile investment due to the inherent risks.
- Tokens used within a specific blockchain-based application
There are specific tokens/coins that allow participation in a unique blockchain use case. For example, Augur is a decentralized prediction market launching next year. The tokens entitle the holder to a share of all transaction fees from the prediction markets, as well as voting rights to settle disputed prediction outcomes. Users of the platform can create markets at will, and operate as market maker. The blockchain basis ensures privacy/anonymity for participants while ensuring quick, accurate settlement. There are other interesting applications of the technology with an associated token, such as Golem (distributed computing), Air and Civic (identity verification), Storj and Sia (distributed storage).
Many of these business models will fail, and the associated tokens will decline to zero. Those that succeed could increase in value significantly, perhaps even surpassing the value of the associated platform token.
- Currencies
Bitcoin itself is the reserve currency for cryptocurrency, and I believe it will continue to play this role indefinitely. There are others that intend to play the strict role of currency, such as a. Privacy coins (DASH, Monero, Zcash). The networks for these coins use strategies to obscure sender/receiver of transactions, or blind the transactions themselves. b. Credit system coins (Maker, X8currency (not yet released), Decred). These coins attempt to build a non-debt based credit system for cryptocurrency. The business model is of critical importance here, so much DD is necessary before investing here.
Comments
Andre on December 12, 2017 6:12 pm
i wonder if winklevoss twins have orchestrated the largest pump and dump in history a la the Hunt Brothers.