The Future While It's Still The Future

America's coming economic crisis. A look back from the election of 2016.

Space: Sorry, but i just don't buy it. It is too easy and fashionable to hop on board the american empire/dollar decline fan wagon. I don't know how or why, but the crowd is always wrong, it is practically immutable.

No Deal

"One drawback to many money management schemes is that they are wedded to the assumption of a logarithmic utility function. Essentially, this model assumes that the increase in people's utility for additional wealth remains constant for equal percentage increases in wealth. The problem with this model is that it is unbounded, eventually it will tell you to bet the ranch.

There is a technical objection to unbounded utility functions, which is known as the St. Petersburg Paradox. I can give the thrust of it with a simplified example. Suppose you have a billion dollars. If your utility function is unbounded, there has to be an amount of money that would have such a large utility that you would be willing to flip a coin for it against your entire billion-dollar net worth. There is no amount of money for which a sane person would gamble away a billion-dollar net worth on the flip of a coin..."

Who is the Artist?

Kutchner and Collaborator No. 58 Starry Night

Painter Steven R Kutchner turns the unconscious walks of bugs into what appear to be intentional artworks. The colors, chosen by Kutchner, are applied leg by leg to the insects and their small scale movements are captured as large scale gestures on the canvas.


Here Comes Santa Claus*

"The best time of the year is a 17-day stretch from December 21 to January 7. Over the last 111 years, the Dow has gained an average of 3.39% during that 17-day period.

To put that in some perspective, the Dow’s annual gain is 8.32%. This means that more than 40% of the Dow’s yearly gain has come during this brief stretch which is less than 1/20 of the entire year..." (Crossing Wall Street)

image by antoine

Much Cooler than Street Magic

The street installations of Mark Jenkins.

via the new shelton wet/dry

To which of the following investors would mortgage-backed securities be most attractive?

You've got to appreciate the irony here. This is a question from the Canadian Security Course's (current) practice exam:

a. A young investor trying to build a portfolio.

b. A middle-aged investor concerned about retirement savings.

c. A senior with a large portfolio wishing to minimize taxes.

d. A senior needing income to augment a small pension.

You can leave your best guess in the comments.


A Little Bit of History Repeating

Having studied the stuff extensively I will be the first to admit that I'm a technical analysis skeptic, but as an open minded investor I can't help but notice an opportunity setting up in the U.S. equity indicies.

On December 11th the FOMC is due to make its rate policy decision, which many expect will involve an interest rate cut. The timing of this decision will correspond very nicely with what could be the completion of the technical pattern known as an 'inverse head and shoulders bottom'.

The same phenomenon took place on September 18th: a major sell-off, a wave of bearish sentiment, the formation of an inverse head and shoulders pattern followed by a huge rally on FOMC day that completed the 'pattern' with the break of the so called neck line.

Take it for what you will, but there is no doubt there are striking similarities in the price action and you can bet that a lot of technicians have their eye on this phenomenon. A break of the neck line before or on December 11th should send a lot of people piling back into equities. Whether or not this pattern will ultimately fail is anyones guess, but for the short term at least, it looks like Shirley Bassey was right.

The New Shelton Wet/Dry: The Oil Massage With No Happy Ending

"After burning through $185 million in 18 months, Boo.com ended the way it started: intoxicated by a dot-com pipe dream. Its bankruptcy marked the end of the ultimate parable of the new economy run amok — a tale filled with larger-than-life ambition, loads of hype, luxury living, a penchant for partying and, yes, a seemingly unlimited expense account..."


The US Dollar Continued

I had suggested just over a week ago that the US Dollar might be in the process of bottoming out. One of the reasons I thought this was the particularly pessimistic cover of the Economist. Let me explain. The Economist is simply a specific incarnation of the extremely negative sentiment surrounding the U.S. dollar. Although I did discover that the Economist had suggested circa 2000 that commodities were going to be worthless forever (near the exact bottom in the commodities market) my main reason for this suggestion was to be a contrarian. When everyone is on the same side of a market, whether it is stocks, gold, wheat, or Google, that market becomes very vulnerable to moves in the other direction for the simple reason that there is not really anyone left to buy (or sell in this case) and a whole lot of people sitting on profits (short sale profits count too).

The reason I bring all of this up, is that a second factor speculators look for has come into play in the USD: new bearish news has been unable to push the price to new lows. This week the markets decided that its significantly more likely that the Federal Reserve is going to cut interest rates when it meets in December. This news, especially in light of all of the dollar collapse and currency diversification talk, should have sent the USD reeling, or hitting new lows at the very least, but take a look at the chart, not only did the dollar not make new lows, it challenged the highs of the previous week:

Of course there are still a whole lot of people out there with Dollars to sell that could just decimate the thing. Maybe they are waiting for more attractive prices, or maybe the economic tides are turning and this could be a real bottom, nobody knows for certain. What is for certain is that there are two excellent indicators staring us in the face, so perhaps its time to test the waters.

The Urban Peasant Passes On

CBC Radio just reported that James Barber has died. This is sad news for anyone who grew up watching his wonderful, laid back style of cooking that espoused using no measuring utensils, and whatever you could find in the bottom of the fridge. CBC reports that at the time of his death he was sitting at his kitchen table with a pot of soup on the stove.

Rare Mummified Dinosaur Unearthed: Contains Skin, and Maybe Organs, Muscle

"To say we are excited would be an understatement," said Phil Manning, a paleontologist at England's University of Manchester who is leading the examination. "When I first saw it in the field, (I thought) 'Shiiiit, that's a really well preserved dinosaur..."