Financial topics

[Marc]

Except for a some blue-chips and what seem like some damn good longer-term bets (often backed with some prudent underlying derivatives), I'd have to essentially agree with the gist of your current investing philosophy, Higgie: mostly be a damn good day-trader!

Getting back to Strauss and Howe, they mention in their Fourth Turning writings that in a First Turning, that even bad people get harnessed to socially useful tasks — and I can see why. In a First Turning, you have essentially a non-distorted, healthy economy with a good balance of private- and public-sector involvement. Towards the end of a Third Turning or early in a Fourth Turning, you can easily have (as we have now) major economic malaise (presently helped along via the gargantuan efforts to keep the whole economic system from collapsing).

I know that there may be plenty of the "less-government crowd" which doesn't agree with me here, but I think it would be a positive social development for Americans to have much better partnerships among businesses, state labor departments, nonprofits, other governmental entities, and universities — paired together in order to do what they reasonably can to find meaningful, challenging, self-actualizing work for the kinds of "bright square-pegs-in-round-holes" you have just written about. This does generally not mean "make-work": it means doing an effective job at finding meaningful, creative, needed work for creative, hard-to-employ persons in a way that serves both the employed as well as the social good. There could be an "employment specialist panel" consisting of, say, department of labor folks, university folks, and industry folks (and maybe some others) who do a sincere job of trying to employ these people; the employment solution, in many cases, may be "portfolio jobs" which entail working for more than one organization at one time in various labor/entrepreneurial/research capacities. It could also be combined with innovative, specialized academic programs which aim to make practitioner-scholars who have the best chance to succeed while engaging in novel, rewarding work and serving the social good. (Part of this would also ideally entail mentoring/coaching to assist such employed creative persons in handling portfolio careers, in handling risk and even business/research failure when/if it arises, etc.)

(Well, maybe when the next First Turning rolls around, we'll finally get it...but maybe Obama can get a toehold on it at least )

Thanks again, Higgie and all, for the great thoughts. —Best regards, Marc

[John]

Regarding whether there's a shortage of competent people within an organization, I have witnessed the demise of Eastman Kodak Company over a 40 year period. When I was a kid, probably half the people I knew had parents who worked at Kodak. 30 years ago, Kodak was one of the largest businesses in the world and part of the Dow 30. Many of my classmates in turn worked for Kodak. 3 years ago, I got a fairly complete list of my former classmates with their occupations. I was especially interested to see who still worked for Kodak. Turned out there were 3 or 4 people who still did. I knew them all personally and in fact talked to two of them briefly that year and corresponded with one. Those 3 or 4 people were all unremarkable so far as I could remember. For sure, none of them were in the top 10% of the class and it is likely that none were in the bottom 10% either. My best guess is they were average students and of average competence. They seemed to have a nagging feeling that they should have done something different with their lives. On the other hand, I was aware of several who had left Kodak and who almost for sure were more competent than the ones who still worked there.

In North Korea, people like the ones you describe get tortured and executed.

http://www.telegraph.co.uk/news/worldne ... dents.html

John

[Higgenbotham]

I'd have to essentially agree with the gist of your current investing philosophy, Higgie: mostly be a damn good day-trader!

Marc, I recall you giving that advice some months ago and it took awhile for me to realize that nothing is really as certain in this environment as the next 15 minutes.

Today, I am again going over the major World stock market averages. We all know that Asia's growth rate, although it has cooled, has been on fire for years. We all know that the huge LTRO originated in Europe. Yet, none of those averages exceeded their 2011 highs. The US stock market is the only major stock market in the world that exceeded its 2011 high.

If I happen to be short and the market all of a sudden begins to crash, then I suppose a day trade might turn into a trade that lasts more than a few hours.

[Marc]

If I happen to be short and the market all of a sudden begins to crash, then I suppose a day trade might turn into a trade that lasts more than a few hours.

Thanks, Higgie, for the affirmative response and the additional foresight in regards to how day-trading might interact with (or best mesh with) a crash. I personally feel that the really smart cat will look for bargains on derivatives (e.g., put and call options, plus more complex derivatives where prudent and in situations where they can be acquired at a bargain), and smartly combine them with day-trading. Go for, of course, a reliable, very-low-commission trader, and do your thing And, this gives you a leg up on all those honcho fund managers who don't really have the ability to do this. But, of course, combine opportunity with wise risk management if you do this.

(Actually, the recent JP Morgan massive trading loss really strikes me as stupid hubris in retrospect. A big variable in trading is what the government in many countries decides to do, and that can be hard to precisely predict; a failure to predict it right can result in really big losses if someone isn't careful — and REALLY big potential losses if your trade is so gargantuan that it really moves markets. Other major variables can intercede as well, of course. As such, unless you're betting in super-safe securities, or have DAMN good derivative-based protection which is cost-effective, don't bet $2 billion or more dollars in a single trading action )

Btw, as a last word, I added to the last posting I made as a result of one of those phpBB bugaboos that John just educated me about: typing the word "func tion," or derivatives of it such as "dysfunc tion," was causing me posting problems...also watch out for the word "e cho"! ) [I put spaces in those flagged words to avoid the problem!] —Best regards, Marc

[Higgenbotham]

And, this gives you a leg up on all those honcho fund managers who don't really have the ability to do this.

That's a good point. We know the funds need to be in the market every day. Instead of trying to predict a market like this, it seems to work better to look for opportunity. A prediction looks for the expected, whereas an opportunity is created when those funds who predict the expected fail to see it materialize (as is more frequently the case nowadays).

[Marc]

And, this gives you a leg up on all those honcho fund managers who don't really have the ability to do this.

That's a good point. We know the funds need to be in the market every day. Instead of trying to predict a market like this, it seems to work better to look for opportunity. A prediction looks for the expected, whereas an opportunity is created when those funds who predict the expected fail to see it materialize (as is more frequently the case nowadays).

Thanks again for the smart words. Putting my own twist on it, I feel that there's a continuum between "the expected" and "opportunities," and while I feel it can be smart to look for very-short-term trends that we feel are apt to hold for a New York minute or so (or maybe even hold for a few of them), it is also smart, indeed, to be ready to grab those opportunities that many other folks feel will happen but which don't happen. In essence, invoking smart, forward-thinking, quick-and-nimble strategy. Hope that helps further a bit —Best regards, Marc

[Higgenbotham]

“Inflation is the real risk,” to economic stability, he said. “People have to go to work and if gas costs more, perhaps they’re spending less money on other items they might buy…Some people say, ‘If gas prices go up, what do I have to give up?’”

The longer-term perspective beyond the month-to-month decline isn’t much brighter. According to the Sentier report, the January 2012 real median annual household income is still 7.8% below its level at the start of the recession in late 2007 and 5.4% below the level in June 2009, when the recovery started.

http://blogs.wsj.com/economics/2012/03/ ... d-incomes/

[John]

Haven't I been hearing over and over for the last
few days that gas prices are falling?

[Higgenbotham]

I posted that to show that Americans have lost more ground since the supposed "recovery" started than they did during the supposed "recession". They've lost 5.4% of real income during the supposed "recovery" but only lost 2.4% of real income during the supposed "recession". I think when this guy says inflation is the bigger problem than deflation, he is probably right.

[aedens]

They will eat there own at all levels. Apology is policy since only one in hundred will stand up for others and even care about the division of labor. Ethics is a class mandated when the natives need to be placated if, or when they are abused into action. Normalcy is a liability since since they are honest and fear one thing only. Rarely when the legal system meets justice you can avoid political economys avarice. No manager, or so few will admit today it is always about the external customer but the internal customer they cater to I have found to a large degree.
http://www.zerohedge.com/news/skynet-wa ... s-downfall
If you think these people even begin to care who is the greater fool. Leave the market since the desease has one cure only.
The taxpayer has been screwed to badly is defies reality on how they can even sit down. If you think for for second
as they say we are from the government and here to help you there is no hope for you at all.