Friday, May 21, 2010

Trivia: Google PacMan

My score on Google PacMan!  How fitting that they chose today to celebrate PacMan's 30 year anniversary, the same day they received the go ahead on Ad-Mob.  Here's my score!

The Case For DOW 4500 WATCH IT Unfold!

Here is an intraday, DOW 4500 quick update, 10,232.33 is now resistance, the bounce back from the 9,918.82 low (Which was below the flash crash low, indicating the downside isn't done yet) this morning is currently at 10,186.13, no wait 10174 uhh 10159.38... ok 10,175.15 (On Bama, DoDD and Frank) news conference.

This right shoulder has made a turn in 1/4 of the time it took to create the head and 1/10 the time it took for the left shoulder.  If we blow through the February low which I am betting that we will by or in June. The next logical rest/rally point is 9,557.48-9,301.05.

Ugly yes I know...  Worse are the comments WalMart has made about the outlook on their business.  When WalMart is struggling it's time to take notice.  Their customer's are hurting with unemployment, higher fuel prices and personal finances concerns.  Hey well at least the weather is nice here in NY.      


Thursday, May 20, 2010

What The Rebound In the Art Market Signals...

Starting around February of this year, February 4th, 2010 to be exact I became aware of the suddenly big stirrings in the Art market. This was precipitated by the sale of Swiss artist Alberto Giacometti's six-foot bronze sculpture called "Walking Man 1" which sold for then a world record price of over $104 million, that is until the $106.5MM Picasso two months later. This sculpture, was on the market, primarily due to the failure of Dresdner Bank and the bank's new owners looking to raise funds. I guess the one thing about this sale that was so remarkable to me was that this piece was only expected to fetch $28MM "at most" in auction, and that there were 10 bidders participating in bidding it up. Source:

This just lends more credibility to the assertion I made in my article "On The Token Economy" On Our Token Economy System about the abundance of M1,2 and 3 money being able to literally create bubbles virtually overnight.

The conventional wisdom at this time and currently is that this is a very Bullish signal indicating that the markets were back and wealth was being created again.

The art market says more about the real mood among the actors of the world economy than opinion polls, and the European Fine Art Fair is its most important reflection. Source:
This much maybe true, however, I am not buying into conventional wisdom that this is evidence that the markets are rebounding. Instead, I see this as a contrarian and worrying signal that the rebound in the Art market is a sign that it is worsening. Specifically, that the sudden uplift in demand for Art is being used as a hedge against over inflated assets, which ironically is overheating the Art market. Collectibles Cars, Art, Wines Architecturally significant structures are now all in vogue, and the money chasing these assets is enormous.

Of course in support of this being a bearish signal it matters a great deal about the art that is being coveted and most sought after, in this article it details the works of Old Master's and it is not just paint on a canvas. The idea that suddenly a great number of European art (largely Dollar denomindated..natch) is now on the market is signaling that possibly the picture in Europe is decidely more dire. The contemporary Art market is also strong as evidenced, by the recent sale of Picasso's painting of Marie-Thérèse Walter, Nude, Green Leaves and Bust for over $106m. However, in support of a widely recognized formula it is not just any contemporary art, as remarked upon here at the Blog "The Art Machine".

"First recoveries: Old Masters, 20th Century Decorative Arts

Why: steady prices, academic prestige, strong vetting

Old Masters are the last to fail, the least effected, and the first to rebound. The fusty, the academic, the tried and true, may bore the speculators and thrill seekers, but they are the best investment and a good early signifier of market growth. As I noted in an earlier piece about Banksy, the art market loves a good prank for sure, and mystery has worked well for street art, just as experimentation works well for contemporary art: but they don’t encourage confidence. Mystery = Uncertainty = Risky Investment.

Second recoveries: Rare Opportunity Buys

Why: Last Chance Appeal

Scarcity is always a driver. If your Picasso was painted in 1932 and there are only five 1932 Picassos and most of them are privately owned and not like to to be sold within your buyer’s lifetime, then your gaudy, nearly sentimental, middling painting becomes a “powerful memento of Picasso’s most famous lover” and goes for a record $106.5 million."
The shift in the type of Art being accumulated is also different.  Here is what was being said about what was hot December 25th 2007, in this article "Boom times for the art market"
While art from all eras is selling well, works by modern masters like Warhol and Mark Rothko and living artists like Richard Prince and Damien Hirst are especially hot. In oil producing countries like the United Arab Emirates, the appetite is for modern American works by such artists as Keith Haring, Jean Michel Basquiat and Warhol, Peck said.

"The most money is chasing these modern and contemporary names, and that's just what's in fashion really," Peck said, adding that buyers with new money from Russia and China have a "limitless appetite for Western art and objects. Prices in some cases have doubled or tripled in the past year."  Source:
Continuing on this theme of the Art Market bearish signal check out search terms on Google and the following links from November 2006 and December 2007, look/sound familiar? Look at the jump in search term "Art Market" on Google. One big spike at the end of 2006 a point where the market was thought to be at a top, and then a big lull to coincide with the additional leg up to the top in 2007, and then another spike coinciding with market dislocations in the equities, Spring 2007 the end of 2008 etc. etc. This lends even more credibility as to my assertion that the Art Market is a good signal for down turns or at least good times in the market, i.e. no searches = good times lots of searches = bad times.

I couldn't resist this comment... I expect this was prior to the Japan bubble deflating...

"Last time the art market was this hot, back in the '80s, demand was mostly being driven by one small group of collectors in Japan."  David Norman is director of Impressionist and Modern Art at Sotheby's."Art Market On Fire", November 7, 2006
Remember Van Gogh's Sunflowers? It sold for a then record price of $40MM in March of 1987, and then on November 11th 1987, "Irises" sold for another record price for Art.

1987: Van Gogh fetches record price - A painting by Vincent Van Gogh has been sold for $49m (£27m) - a world record for a work of art. The final price was more than twice what the painting, called Irises, had been expected to reach. The anonymous purchaser must also pay a 10% commission fee to the auction house, Sotheby's, bringing the total to $53.9m (£29.5m). The sale was also accomplished in what may have been a record time given the figures involved - the bidding rose from the starting point of $15m (£8.5m) to reach the final sale price in less than two minutes.
Caution, we are again at world record level Art prices, this is the smart money trade.

The 2009 decrease in the return of the Mei Moses® All Art index of approximately 23.5 percent is the largest decline in the all art index since the 1991 decline of 38.7 percent. The 38.7% decline occurred after the bursting of the last art bubble of 1985-1990. The 23.5% was also the second largest decline since the great depression. The declines of 2008 and 2009 occurred after five years of positive annual growth averaging almost 20 percent. The 2009 decline of the all art index was particularly depressing given the substantial increase of most other financial assets"  Source:

Admittedly, I am no art critic or historian, but I can appreciate it and do enjoy taking a day trip to the art museum, and make it a point when traveling to stop at the more significant museums in the countries I've visited. I also noticed with mild astonishment at the quality and abundance of -- in my own non-expert opinion -- high quality art being readily and prominently displayed in many Hedge Fund and Hedge Fund of Fund offices I have had the privilege of visiting. A veiled reminder that its function is both beauty (of course, in the eye of the beholder) as well as an asset (in the eye of a collector/investor).

"At the presentation of "Art, a Resilient Asset Class" this week at London's Haunch of Venison Gallery, a panel of experts including Hoffman discussed the art market's upward trajectory.

The panel, chaired by Scott Reyburn, art writer for Bloomberg, comprised of Hoffman, Oliver Barker, head of contemporary art at auction house Sotheby's, Karen Sanig, head of art law at Mischon de Reya Solicitors, and Anders Pettersen, founder of information provider ArtTactic, and Dennis Lavin CEO of wealth manager Vistra in Jersey.

Sanig added that the art market had proved itself relatively uncorrelated to the financial market, having bounced back within 18 months to new highs and several new records, partly due to the perception of art as a safe, tangible haven for wealth.

New York auction results posted by the big auction houses in this month were a far cry from those posted in May 2009, a sign that a large number of major collectors are "clearly back in acquisitive mode", according to Thierry Erbmann, founder of information provider Artprice.

At the end of the Impressionist and Modern Art sales between 4 - 5 May, Christie’s and Sotheby’s posted a combined revenue up 205% compared with the previous year’s total. Their combined results from the Contemporary Art sales in May were nearly 230% better than the previous year.

The bought-in rates were particularly low ranging from 6% to 22%, and twelve new records were set.
Art is definately one of the two currencies for the cash n' carry trade -- although it might be tough to tuck Walking Man 1 under your arm without being conspicous --, the other one being fine jewelry (not Gold) see Harry Winston, Bulgari and Tiffany. As Barton Biggs, wrote in Hedge Hogging, as quoted from "The General" "Paper Assets are fine and wonderful things in normal times, he said but they are useless when anarchy reigns". Barton goes on to explain that "Disaster hedges must be highly portable, easily hidden and very marketable". Apparently at least one thief read Hedge Hogging and took Mr. Biggs advice to heart, having "made off" -- no pun intended --with paintings valued as approximately €500MM Euros ($600MM USD) from the Paris Museum or Modern Art. The paintings were "Le pigeon aux petits-pois" (The Pigeon with the Peas) by Pablo Picasso, "Pastoral" by Henri Matisse, "Olive Tree near Estaque" by Georges Braque, "Woman with a Fan" by Amedeo Modigliani and "Still Life with Chandeliers" by Fernand Léger. Source:

Maybe Greece isn't Lehman, perhaps it is the Bear Stearns subprime hedge funds in the Summer of "2007" or Bear Stearns itself in Spring "2008", i.e.. the canary in the coal mine, but as often the canary usually is the first casualty in this case they managed to get it to the vet on time. However, one thing for sure if Greece and Thailand (add live TV shots of anarchy in the streets) are foreshadowing what is likely to come it only makes sense that Art would be a most sought after, disaster hedge. WT

Melanie Clore, co-chairman, Sotheby’s Impressionist and Modern art department said: “At a time when there is such enormous demand for museum quality paintings by the Impressionist masters, it is exciting to be able to bring this extremely rare painting to auction." Source:

The Case for DOW 4500 WATCH IT Unfold! - Week 3

Dog vs. Dow years, Fundamental vs. Technical, if you covered up the timeline at the bottom Chart of the $DJI DOW you'd say that this chart resembled that of a typical company.  If you compared them at roughly the same time frame you could make the argument that they are highly correlated.  I wanted to demonstrate the lifecycle of a company with the lifecycle of a country.  The question is are our best days behind us or ahead of us? 

I'd like to still believe we have better days ahead, but I am convinced that the next few years are likely ones that investors are likely to want to forget.  In fact i think that it may be worthwhile to adopt the term "Devestors"  for this period during which return will be associated based on a broad decline rather than an incline.

Wednesday, May 19, 2010

Seeking Alpha - "On Our Token Economy"

Seeking Alpha published my Token Economy System post! Check it out!  Click here:
On Our Token Economy System

Or read here. See Below:

I remember being fascinated about a "Token Economy System" designed and implemented in a mental hospital setting. For me, a psych major with a bent for economics, this was an easy concept to grasp as it was based on the model for a “real economic system”. This novel approach to reinforcing positive healthy behaviors amongst the hospital residents was a resounding success. However, if in duplicating this system you skipped some steps or took shortcuts you could end up with something less than desirable. Like, for instance inadvertently reinforcing less desirable behaviors, while at the same time squashing good behavior. Or if there was cheating or widespread counterfeiting of Tokens the program would quickly lose its value and usefulness as a carrot to the residents and not have any effect on behavior whatsoever. In fact, if the price of the Token was highly valued and too difficult to attain, or too low in value to even expend the effort towards garnering, you would have a breakdown in its desired effectiveness in modifying behavior. These of course are the risks to a real economy system as well.

The last time I checked, the world was no sane place, and it is now apparent to me that it has a varying number of well developed "Token Economy Systems" that reward its “captive residents” with Tokens, be they Credits, Euros, Dollars, or Renminbis for certain "desired" behaviors, i.e. wanton consumption and production at any cost. These “Token Systems” started out quite well, but it is plain to recognize that some of the “residents” are developing some really bad habits that are causing many “other residents” to be denied their basic needs.

Here is the definition you are likely to find in a psychology journal or text book:

"Token Economy System"

A token economy is a form of behavior modification designed to increase desirable behavior and decrease undesirable behavior with the use of tokens. Individuals receive tokens immediately after displaying desirable behavior. The tokens are collected and later exchanged for a meaningful object or privilege.


Not too hard to understand. Relatively simple idea, good behavior = tokens vs. bad behavior = no tokens.

It is easy to see how pervasive the Token Economy Systems are, you don’t have to look very hard. For instance, if you look at the US One Dollar Bill it says "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE." Did you know that the One Dollar Bill, as is every US dollar denominated bill, is a "FEDERAL RESERVE NOTE"? Not too long ago you could take this note and exchange it for precious metal, ACTUAL Silver/Gold. That is not the case anymore. Calling it a note connotes that it can be turned into something of value, but what is that something?

Currently the US has 8,133.5 Metric Tonnes of Gold, which at $1,000 per oz. is somewhere in the $5 Trillion Dollar range of value. As a point of reference, there are currently $24 Trillion dollars in the US Retirement System/Structure (IRAs, Kehoes, Pension, Mutual Fund and 401k Plans), $3 Trillion or 16% of which are in 401k plans or at least were as of 2006. As of April 26th, 2010 there was close to $8.47 Trillion Dollars in M2 Money Supply, see graph below.

Of course as long as Gold goes up theoretically so does the Dollar, unless the US, IMF, Germany or China decides to sell their Gold which could have an immediate impact on the price. As far as the EURO goes, Germany, France, Italy and the EU bank have Gold Reserves that together outweigh US reserves. This lends implicit credibility to the status of the Euro, though which of these countries in their right mind would spread their Gold around. This is at the root of federalization of the eurozone. It's funny when post becomes prologue, in regard to the US and the individual states.

If any one of these three countries decides they have had enough of the Euro AND GO IT ALONE, it's splitsville. Bye, bye Euro. In fact, I would anticipate more of an alliance of the Euro countries into the haves and the have nots. Curiously, Portugal (383 Tonnes) has greater Gold Reserves than the U.K. (310 Tonnes). What does this say about the credit risk of Portugal vs. the U.K.? Spain has (282 Tonnes) and with Greece (112 tonnes) it is easy to see how Greece is the odd country out. Even Turkey (116 Tonnes) has more gold.

click to enlarge

The components of the US money supply, expressed in terms of M0, M1, M2, and M3, measured monthly from January 1959. The most recent data is February 2006 for M3, and July 2009 for M0, M1 and M2. (Note: The Federal Reserve previously published data on three monetary aggregates, but on 10 November 2005 announced that as of 23 March 2006, it would cease publication of M3.)

M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.

M1: The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).

M2: M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000).

M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of Eurodollars and repurchase agreements.

Every country in the world now has a "Token Economy System" but how long before the Token ceases to be perceived as real value? The U.S. as an example of too many Tokens circulating is not acknowledging that this is a worldwide affliction. Quite simply, there are just too many "Token" notes sloshing around the world. Add to this dynamic that this Token money is able to move 24/7 chasing the Sun, so to speak, creating huge risks in any one currency and/or asset. Bubbles can be inflated and burst in very quick and destructive ways, literally overnight.

I found it curious that the US Government would stop collecting and publishing information on the M3 money, particularly institutional money market mutual fund balances, deposits of Eurodollars and repo agreements. I doubt of course that they stopped gathering the data, more likely they just stopped reporting because it would fill in too much detail. Likely that the M3 money is enormous and static and is inherently problematic, because it can move incredibly fast.

If you are brave enough you can check out this Wikipedia entry on Money Supply and quickly ascertain that many industrialized and emerging markets, i.e. countries in the world, have increased their money supply over the last 20 years. At least doubling or tripling it, except Japan, which likely accomplished this feat in the 1980s.

I urge you to look up the definitions of “Token”, “Economy” and “System”. Actually if you just refer to the “system” I encourage you to follow this defintion, which in itself is a system.

If you looked at that definition it's not so hard to understand the complexity involved once you put a framework of simple ideas and declare it a system. How it quickly becomes alive, amorphous, unwieldy and wild. Like Frankenstein, a patchwork of pieces. Alive, but no Soul.

So I bet you are asking how the heck did we end up here, with an out of control “Token Economy System” and how can we make it better. Well the answer believe it or not lies within our learning about successful and unsuccessful implementations of “Token Economy Systems” in mental institutions. Let’s explore this a bit more.

The Purpose of a Token Economy System

The primary goal of a token economy is to increase desirable behavior and decrease undesirable behavior. Often token economies are used in institutional settings (such as psychiatric hospitals or correctional facilities) to manage the behavior of individuals who may be aggressive or unpredictable. However, the larger goal of token economies is to teach appropriate behavior and social skills that can be used in one's natural environment. Special education (for children with developmental or learning disabilities, hyperactivity, attention deficit, or behavioral disorders), regular education, colleges, various types of group homes, military divisions, nursing homes, addiction treatment programs, occupational settings, family homes (for marital or parenting difficulties), and hospitals may also use token economies. Token economies can be used individually or in groups.

Missing from that description are countries, companies, organizations and yes even not-for-profits. When the "Token Economy System" for use in mental institutions was envisioned we were still on the Gold standard. It was easy to describe a "Token Economy System" juxtaposed with a "Real Economy System". Looking back we can now see how we have supplanted the "Real Economy System" with a "new and improved" "Token Economy System", which in and of itself is not a bad thing in theory. It's just like in the mental institution, you have to be aware of the risks of a bad implementation.

In using a “Token Economy System” as a euphemism for a "Real Economy System" it is important to recognize the basic tenets for a successful Token Economy System. For instance:

Token Systems should never deprive individuals of their basic needs, such as sufficient food, comfortable bedding, or reasonable opportunities for leisure. If staff members are inadequately trained or there is a shortage of staff, desirable behaviors may not be rewarded or undesirable behaviors may be inadvertently rewarded, resulting in an increase of negative behavior. Controversy exists regarding placing individuals in treatment against their will (such as in a psychiatric hospital), and deciding which behaviors should be considered desirable and which should be considered undesirable.

In replacing the "Real Economy System" with the new and improved “Token Economy System” we needed to make sure that we manage the risks carefully as though it were a real economic system. Instead, we have ignored the risks and we have an unsuitable situation and potentially a volatile one. These risks are not in the Token itself, for the last time I checked we don't have an issue with the token... paper, bits and bytes, copper etc. Although very subjective, the Tokens in use easily meet the basic tenets of proof in a "Token Economy System":

Anything that is visible and countable can be used as a token. Tokens should preferably be attractive, easy to carry and dispense, and difficult to counterfeit.

Here in my view is where we fell short in our implementation. We need "A clearly defined target behavior". Perhaps we need to look at each "transaction", a reach for the common good? Are we doing enough in society to specify what acceptable behavior is? I know that we have delineated good behavior in comparison with bad behavior in broad terms, e.g. murder, stealing and terrorism, but are we not evolved enough to tackle the lofty aspects of what make us uniquely human? As many are oft to describe being created in the widely held notion of being in the "image" of an infinite being? Can we not prize more of humanity? Does this need to be regulated? In a successful "Token Economy System" it has to be in the manual, i.e. regulatory framework.

Individuals participating in a token economy need to know exactly what they must do in order to receive tokens. Desirable and undesirable behavior is explained ahead of time in simple, specific terms. The number of tokens awarded or lost for each particular behavior is also specified.

Another need is for appropriate "Back-up reinforcers". Does a 15-17 room starter castle count as an appropriate Backup reinforcer? Could we not use the amount of kids fed or clothed or educated as a meaningful status of accomplishment, wealth and celebrity? Or how about the number of elderly we idolize and respect?

Back-up reinforcers are the meaningful objects, privileges, or activities that individuals receive in exchange for their tokens.

We could make adjustments to meet a new and growing demand for a "System for Exchanging Tokens"; quite frankly the current system apparently doesn't work too well, and now is too unwieldy. Of course while some of the “residents” are benefiting from the way it is currently, too many don't and for the time being they are ok with shuffling about staring blankly, but when this changes and they collectively start channeling Chief Bramden - in One Flew Over the Cuckoos’ Nest - and throw the Hydrotherapy Console out the proverbial window it will be too late.

Perhaps a new system of accounting that records the Goodwill of a transaction is needed. In order for a good "Token Economy System" to flourish it needs a good "System For Exchanging Tokens". Might I suggest a requirement to measure "Therapeutic" value in addition to Demand and Monetary value. Just ask Goldman Sachs (GS). A new system to value and provide a mechanism to exchange Tokens and place value on meaningful back-up reinforcers and recognition of good behavior would go a long way towards fostering a fairer and more equitable “Token Economy System .

A time and place for purchasing back-up reinforcers is necessary. The token value of each back-up reinforcer is pre-determined based on monetary value, demand, or therapeutic value.

Of course a successful ‘Token Economy System” requires transparency. "A System For Recording Data", a baseline from which to measure how far someone or something has come or gone is essential. Yes, I know this sounds awfully Orwellian, but if we want a successful "Token Economy System" this is essential. If we don't like it let's go back to the "Real Economy System".

Before treatment begins, information (baseline data) is gathered about each individual's current behavior. Changes in behavior are then recorded on daily data sheets. This information is used to measure individual progress, as well as the effectiveness of the token economy. Information regarding the exchange of tokens also needs to be recorded.

Last but not least we need to ensure "Consistent Implementation Of The Token Economy By Staff", i.e. government(s) and business structure. The lack of fairness, inconsistency of enforcement and counterfeiting of tokens and unfulfilling and gaudy back-up reinforcers are undermining the foundation of our floundering ”Token Economy System".

In order for a token economy to succeed, all involved staff members must reward the same behaviors, use the appropriate amount of tokens, avoid dispensing back-up reinforcers for free, and prevent tokens from being counterfeited, stolen, or otherwise unjustly obtained. Staff responsibilities and the rules of the token economy should be described in a written manual. Staff members should also be evaluated periodically and given the opportunity to raise questions or concerns.

There is no doubt we are utilizing a "Token Economy System" the world over. The problem inherent in this framework is that of perception. If the system is perceived as broken and unfair, the benefits and rewards mis-placed, the rules re-written, the baselines smeared or erased and the residents restless, the "Token Economy System" for which it stands will break down completely and the residents will be looking to run the asylum. If we can't make these changes to make it a better system, we will revert back to a "Real Economy System" whether we intended to or not.

Disclosure: No positions

About the author: William Henderson

CHART OF THE DAY - Sunstone Hotel Investors - SHO

Here is just a quick snapshot of SHO Sunstone Hotel Investors.  I have two charts here one showing the weekly trend with Fibonacci S&R lines and a daily trend with a bearish channel triangle.  The key here is that SHO is at a vulnerable point here with the Market as a whole in a bearish mood.  SHO will likely breakdown even further.  Two items though lend me to believe this will hang tough.  1. Overall positive insider trading average -- even though it stopped over the last week-- and 2.  The major Fibonacci confluence at the $10.23-10.40 range makes a great support level and good entry point.  The round number 10.00 is a natural stop.  This stock has a nice Beta of 3.11, and daily average volume of over 1MM shares.  The PC Ratio is 0.5 indicating that it is still not a good time to go long, yet.  No Positions cause I am flat every day:-)


Monday, May 17, 2010

The Case for DOW 4500 WATCH IT Unfold! - Week 3

What about China?  I guess everyone is supersaturated with the noise and chatter regarding Europe, however no one i.e. media is concerned now with China.  As the old saying goes it is always the quiet ones that bite you in de butt.  Chanos China Bear, must be in his element right now.  Rodgers - China Bull, is likely sweating profusely tightening his grip on what is certain to be a whiteknuckle ride.

You can't help but notice on just about every stock chart I have looked at across sectors and industries the amount of insider selling that is taking place.  This has to be an enormous red flag to anyone thinking about going long.  If the folks are selling now shouldn't we all be.  We are working on a false premise, that the second half of this year was going to be as robust as the last couple of quarters in terms of GDP growth and job creation.  However, there has been no real basis for this and with the economic slowdown in Europe and China, we are likely to stall as well.  There used to be a saying that if the US were to catch a cold the world would catch pneumonia, well what if the rest of the world catches SARS, will we get it too?  Citibank should be the poster child for the current market aptly so.  I have heard of my friends and pundits backing the truck up and loading up with as much "C" as their axle will hold.   Right about now they have to be sweating, really sweating.  Somehow the financials have been avoiding the creaping krud the rest of the market has, but if you look at their insider trading it is very heavy on selling.  Which means you have to wonder if they are basically getting money for free to trade, buying treasuries with it -- and not lending -- that has got to be a great model, they can make money all day long, so why are the insiders selling.  Curiously enough GS mysteriously stopped insider selling since the begginning of May.  Although from the time they received the Wells Notice 18 months ago there was a steady flow of insider selling.  Once again Goldman was ahead of the pack.  Don't get sucked into the market yet, it still has a ways to go down, it is clearly struggling to move up and will continue to do so.  Geo-politically, more countries are unraveling in slo-motion but I would expect this to start to accelerate.   

Nassim, is sadly most likely correct.  Financial engineering is likely not going to survive this mess.  It's not a knock against math in the markets, but I suspect we need rocket scientists building the mathmatical models.  Accustomed to dealing with quantifying the unknown variables and risks.  Clearly we had the guys that couldn't make it in the rocket program building our model.

I also applaud JPM and GS for their respective 100 day earning streak.  I just wonder when the 100 day losing streak will occur? 


My Favorite Roller Coaster!

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