Material Meaning, Animal Spirits & Time Decay

Así lo vé Revoredo.

2011-11-19T16:44:00.001-08:00

Así lo veo yo.

Randolph Revoredo

El nuevo gobierno que sale de las elecciones españolas enfrenta retos hercúleos. De fallar, hay quien cree que será la gota que derrama el vaso de Europa, en unas circunstancias en las que nos da la impresión el sistema global se aproxima a un punto límite.

El mundo. Nuestra opinión es que se transita la cuerda floja. La situación macro de la zona Euro, de Estados Unidos y Asia de una forma u otra tienen el mismo trasfondo. Hay trémores volcánicos. El endeudamiento sistémico llega a un punto de saturación: un problema de deuda no se puede resolver con más deuda porque no da ni de lejos los mismos resultados que antaño. Antes funcionaba, ya no.

Como dice Wolfgang Schäuble, Ministro de finanzas alemán, refiriéndose en ese caso a la crisis de deuda de la zona euro, "no puedes combatir fuego con más fuego". No a estas alturas del partido, porque la deuda combinada (pública y privada) supera el 200% de lo que produce un país un año, en prácticamente todas las economías avanzadas.

Desde la desaparición de la convertibilidad al oro para el Dólar americano, el famoso "Shock Nixon" del año 71, la economía mundial entró en una era de expansión desbocada totalmente basada en el crédito. Financiada por la imprenta de los bancos centrales. Como consecuencia, un dólar de ahora vale dieciocho céntimos de los de entonces y los precios han aumentado un 450% Esta época, creemos, toca a su fin y las convulsiones de estos años se nos antojan estertores del moribundo.

La zona Euro es un eco de la sufrida por Estados Unidos en 2008. Aún entonces la solución a la crisis crediticia fue eso: una solución puntual. La administración pensó "Nos endeudamos a tope para salvar la situación, ya veremos luego". Se estabilizó al paciente, pero no cambió su estado. Se acudió a la solución de costumbre: imprimir más dinero para cubrir a los grandes bancos (que dicho sea de paso predicaron con el ejemplo endeudándose a tope para crecer en los tiempos de locura alcista) rematando así un historial nacional sin parangón de déficit público crónico y endeudamiento progresivo. Ahora, los acreedores pesan como una roca y lastra toda esperanza de creación de empleo. Gobierno, empresas y consumidores sobrecarcados. La situación del euro palidece comparada con la encrucijada sistémica en la que está inmersa el "U.S. Dollar".

Como desenlace a lo presente, nos imaginamos dos escenarios planetarios. Uno en el que al paciente se le proporciona calmantes, imprimir billetes, más de lo mismo, al alcohólico se le proporciona pequeñas dosis de alcohol para que no haga destrozos, un escenario así resultará en una economía con crecimientos anémicos, con frecuentes y breves recesiones, sin creación de empleo y descontento creciente, susceptible a shocks externos e internos de toda clase y, por supuesto, a un desenlace totalmente apocalíptico (como la guerra o el fin del dólar como divisa de reserva mundial, con consecuencias catastróficas para Estados Unidos y el mundo).

Puede durar décadas o explotar en unos pocos años. Ese mundo se inaugura con una devaluación en sincronía entre todas las divisas internacionales que sobrevivan la reciente crisis (porque aunque no se vea por la distancia, el Yen está en peor forma que el Euro). La devaluación del dólar hace que la divisa china le siga el paso replicándole, ídem la Libra, lo que hace que el impacto vaya hacia un Yen y un Euro presionados alza. Si la Unión Europea opta (Alemania da su brazo a torcer) y permite la devaluación -dando licencia al BCE para imprimir billetes sin respaldo- Japón se verá sumida en una radicalización de crisis monetaria (que ya sufre, por la manipulación de la divisa china) lo que le obligará a sumarse al coro de devaluación global, haciendo estallar las costuras de una economía estancada que dedica la mitad de su recaudación para pagar los intereses de su deuda pública. Dado que se sembraron vientos, las bolsas cosecharán verdaderas tempestades de volatilidad, complicando la financiación de la economía real. En la zona euro el contagio se extenderá a los países centrales (Francia, el primero) y el crecimiento será negativo o vegetativo de forma sostenida.

Otro escenario es la terapia de choque, que supondrá contracción económica, la entrada en la depresión y convulsión social a corto plazo. Una mezcla de ascetismo alemán y fin de la alquimia. Donde una reforma profunda del sistema financiero tan radical como para ver un nuevo Bretton Woods y provocar el fin del dinero barato y del consumo desaforado; donde se pase al ahorro como valor primario. Quizá no llegará a buen puerto, desembocando en conflicto bélico de gran escala (¡Ay! La guerra, esa compañera inseparable de la especie desde el primer cráneo roto). Tememos que esta opción, aún siendo la menos desperanzadora, sea el camino menos probable. Entre otras cosas por el tremendo coste político que supondría tomar las medidas necesarias para llevar a cabo tal proceso.

Es éste el contexto en el que el nuevo gobierno de España debe afrontar su trabajo. Le deseamos lo mejor.

Uno De Los Nuestros

2011-10-08T08:01:00.001-07:00

Difícil pensar en voz alta con tanto ruido alrededor. En estas situaciones, escuchamos el interior; autísticamente. Tanto se escribe y habla de la muerte de Steve Jobs que se nos antoja cualquier tecleo y palabra arar en el mar. La procesión se lleva por dentro. Sus antecedentes de cáncer, la renuncia sorpresiva a la gerencia de Apple y una foto raquítica, casi de campo de concentración nazi, a un mes antes de su ida hacían a nuestra materia gris anticipar un pronto desenlace, "la va a palmar; este tío se va a morir pronto". Pero olvidaba algo.

La noticia fue como si algo en el super tejido de la realidad se hubiera estremecido. Ese día hubo fuertes ráfagas, raramente con cielo despejado y precioso azul. La violencia del viento se deducía profunda porque las pocas y grandes nubes tomaron formas únicas, de diseño. Capturamos la imagen; lo vimos despedirse. Tenemos esas fotos.

Personalmente, ahora ya sabemos lo que se debe haber sentido vivir en los tiempos de la desaparición de Leonardo DaVinci. A mi lado, mi alter-ego me consuela: "si ya existiera el transplante de cuerpo, una persona como él no la hubiéramos perdido. La sociedad no puede darse el lujo de dejar ir a estos espíritus privilegiados."

Me parece que los analistas empresariales no llegan a comprender el alcance que tendrá este hito en el recorrido bursátil futuro de la empresa Apple. No hemos encontrado alguien que coincida explícitamente con nuestra opinión, que es esta: la empresa perderá su magia, tal como le pasó a Disney con Walt. Reinarán los burócratas y los abogados.

Sostienen que la empresa tiene una "pipeline" de nuevos productos en la cocina como para tres años. Ilusos. Por dos razones. Porque primero, tres años no son nada (¿Y después qué?); Segundo, es que creemos que no queda ni eso. Es cuestión de meses para que se evidencie la nueva realidad corporativa. El desarrollo de un producto nuevo no es lineal; nunca nada -insistimos- obedece a lo que se había previsto en el papel. Necesita correciones, redirección, inspiración para capitalizar la emergencia de inesperados eventos, los ejecutivos responsables de proyectos necesitan acceder a agujeros de gusano para ver más allá de las limitaciones del espacio-tiempo presente. Y el medium no estará. Ya no. Por eso creemos que Apple pasará a ser un gigante corporativo con unas finanzas muy saneadas y una inmensa montaña de cash. No habrá más crecimientos exponenciales. Hay quien dice que puede ser aun más profundo. El blog Free-Exchange se pregunta si el evento representa el inicio del declive de Estados Unidos, donde parece que la emprendeduría y la innovación tiende a concentrarse unos pocos poderosos.

Tras una pausa, al abandonar nuestro autismo voluntario y asomar la cabeza al mundo exterior para tomar una bocanada de aire, en medio del ensordecedor ruido escuchamos frases inteligibles del estilo "Fue un Einstein, fue un Edison." Defendemos la idea que Jobs no fue un Einstein porque no descubrió nada, ni un Edison porque no era un inventor de patentes per se: fué un artista. Un Miguel Angel de nuestro tiempo que hace visible y objetivo lo que solo somos capaces de fantasear.

Hace tiempo oí de un temido viajero llamado el cazador de almas. Éste recorría la inmensidad para coleccionar el espíritu de grandes poetas, líderes, artistas y filósofos justo en el momento de su último aliento, cuando sale del cuerpo y así evitar su desintegración al reunirse con el todo. Jobs escapó, y la prueba es la nube que fotografié.

Su partida me hace sentir solo.

Taleb´s Black Swan Refutated

2011-01-22T14:04:00.001-08:00

Do not be the turkey.

Thats the lesson Taleb´s book Black Swan.

He is wrong. Here´s why:

Death is a black swan. Most days in life are routine, some are eventful, few are life-changers, and finally the unexpected (unthinkable) happens: we die.

We are the turkey. No escape.

Does this mean life is a waste of time, a mistake?

The opposite is true: every day is precious. Life is every second we live.

-

Vincent

2010-09-27T15:11:00.001-07:00

Hablemos de cosas serias.

Este artículo de Revoredo se sumerge allí donde no llega el sol.
Profundo. Es la palabra que mejor lo describe; como para leerlo en El País o The New Yorker, por lo menos.

That starred heaven...

2010-07-02T16:03:00.001-07:00

"Two things fill the mind with ever new and increasing admiration and awe, the oftener and the more steadily we reflect on them: the starry heavens above and the moral law within."

Immanuel Kant

The Critique of Practical Reason

Conclusion

Profitable trading and FinReg

2010-06-26T08:30:00.001-07:00

Am still not sure how the new FinReg will affect my trading.

Clearly will change big players behaviors which might turn impacting liquidity, premiums and margins requirements on the markets I play.

The options market for one of my vehicles, the S&P500 index, is widely populated by investors seeking protection to his portfolios and in great extent by speculators.

The trend seems to be a growing share of speculators (mostly playing long Gamma long Vega strategies, i.e., premium buyers) relative to hedgers.

¿How will be affected?

All OTC derivatives will pass through exchanges. Is foreseeable several exchanges will explode in activity.

Meanwhile, former high risk financial products seems to become commodities, like vanilla options and exchanges-traded futures.

¿Will this change open a opportunity in the time decay/insurance business I am?

Have to think further about it. And follow developments how brokers react, so on.

As time passes I am more convinced of my linkages with the growing army of individual investors wanted to manage their portfolios on their own.

More and more I tend to see myself as the new breed of "market makers" providing liquidity to retail gamblers and yhose who want to protect their portfolios.

Open outcry in the S&P500 options markets is deemed to disappear sooner or later. Long time legal fights (ISE against CBOE) will finish opening SPX to the different exchanges, making electronic trading and machine market making the new normal. Something good.

¿Will FinReg speed up this process?

What I know for sure is that change is good. Greater changes drives better opportunities.

Now a change happening once in a generation is coming to place. Here and now...

Soluciones al "Riesgo Sistémico"

2010-06-22T07:33:00.001-07:00

Reportaje del WSJ en Español muy bien escrito, plantea una visión que los legisladores americanos fallan en ver: que tiene que haber alguien que asuma riesgos en el sistema; que de hecho lo hay, con larga tradición y no hay que volver a inventar la rueda regulando algo que el propio mercado ha hecho hace décadas. Lee aquí.

Sebastian Mallaby del CFR desarrolla en el Washington Post la tesis muy interesante de que el alto riesgo lo lleven quienes tienen estructura y experiencia para ello: los Hedge Funds o Fondos de Cobertura. Leer.

Venezuela Envidia

2010-06-21T04:29:00.001-07:00

Un artículo de Moisés Naím pone en evidencia claros contrastes entre Venezuela y Colombia. Cierto lo que dice aunque olvida cosas: no dice nada de que parte del éxito de Colombia se debe a que sirve de refugio a capitales que huyen de vzla (no por mérito propio); tampoco hay una palabra sobre cómo los cárteles de la droga, con su economía opaca, empequeñece a tamaño microbio el milagro económico y los números de exportaciones y empleo oficiales. Es la economía oscura, que Naím siempre ha pecado de ignorar por ser excesivamente exquisito en sus análisis.

Pudiera ser mejor analista si no estuviera pendiente de agradar a sus pares de Boston y Chicago con elaboraciones impecables (vistas y hechas desde un cómodo despacho en Miami).

Pese a todo merece la pena leerlo.

Things Intrinsic Limits

2010-06-06T12:35:00.001-07:00

A smart person might end knowing he is smart, but the average joe unlikely will discover himself hes average.

Life is a beach

2010-06-06T12:33:00.001-07:00

Al mendigo no lo hace el infortunio, sino la limosna.

Panhandler is not made by misfortune, but handout.

Simple

2010-06-05T07:35:00.001-07:00

"La máxima expresión del refinamiento es la sencillez".

-Leonardo Da Vinci

"The highest expression of refinement is simplicity"

-Leonardo

Closer to the soul

2010-05-30T17:15:00.001-07:00

People are obsessed with blood as symbol of life.

Instead, should look at orgasms. Is closer.

Schwabs Speaks

2010-05-28T17:40:00.001-07:00

These people is one of the biggest ecosystem´s ally, providers of raw material:

Charles Schwabs job is to keep America invested

"You're going to get maybe 5 to 10 percent per annum over 5 to 20 years--maybe 30. That's still pretty good."

Yes, appropriate. As well as I am trying to secure a risk management approach that allow me 200% annual return regardless market conditions, because 100% return minimum is already objective accomplished.

FinReg good news

2010-05-21T12:25:00.000-07:00

As Bloomberg says:

Restrictions on banks' ability to own hedge funds and trade for their own accounts would likely benefit the lesser-regulated private pools. The bill could push new investment and trading talent toward hedge funds. Limits on leverage and stiffer capital requirements for banks would give hedge funds an edge landing investors chasing bigger returns.

What this might mean is higher premiums due to less liquidity as well as new open spaces, new opportunities to entrepreneurial, talented traders and hedge funds. There would be limit and oversight for big hedge funds with assets over $100M, lowering incentives to create dominant positions (what banks PT units would leave) on stock market investing and trading and therefore opening opportunities to niche players like Alternative Investments Funds.

Sounds good.

What I believe

2010-05-16T13:52:00.001-07:00

We transit a 10-15 years window. Ocurring, perhaps, only once a century.

Since 2007 traditionally hermetic social structures -gears- are now dislocated, allowing profound changes.

Wall Street Banks disappeared, the modern economy based in credit is over;

Europeans face a unthinkable dilemma: either be countries or be Europe.

Only one will survive.

So, the change is global.

Brand-new visions, leaders and names will arise and last generations.

It hasn't happened since times of the Great Depression.

Worldwide.

If there is a moment meaningful enough to inspire ambitious ventures is this one.

I have been preparing 45 years for this moment. Must choose between a stable lifetime well-paid job or go uncertainty, buying storm.

I born this day of May 16 2010.

What Double-Dip Recession Means

2010-05-16T11:53:00.001-07:00

Are we unknowingly in a new great depression?

Shiller:

"I use a definition of a double-dip recession that doesn't emphasize the short term. Instead, I see it as beginning with a recession in which unemployment rises to a high level and then falls at a disappointingly slow rate. Before employment returns to normal, there is a second recession. As long as economic recovery isn't complete, that's a double-dip recession, even if there are years between the declines."

"Under that definition, there has been only one serious double-dip recession in the last century — and it was serious indeed. It started with the 1929-33 recession, which was followed by a recession in 1937-38. Between those declines, the unemployment rate never moved below 12.2 percent. Those two recessions, four years apart, are now typically lumped together as one event, the Great Depression."

Fascinating.

The Back-door of Growing

2010-05-13T16:02:00.001-07:00

"I basically have survived by recognizing my mistakes." George Soros

Dog eat alien

2010-05-01T12:35:00.001-07:00

key #2

2010-05-01T08:53:00.001-07:00

Macro perspective, risks of current state of things:

Buffett: "if world stops taking dollars then we're in real trouble"

Personal Note: Think about it.

It could not be that way

2010-03-10T09:07:00.001-08:00

Why nature is good in mathematics?

Why light exist?

Sia - The Girl You Lost To Cocaine (KCRW 2007)

2009-11-30T11:33:00.001-08:00

Pieces like this cut the world in two: good and bad music.

Dubai Default

2009-11-26T08:17:00.001-08:00

"When there are bad loans to be made, apparently Citi never sleeps."

Calculated Risk, remembering Citigroup bets on Dubai Sovereign Fund.

The mind of a Trader

2009-10-21T16:32:00.001-07:00

Income Trading Secrets

2009-10-07T10:42:00.001-07:00

"Negative gamma scalping kill profits"

Mark Sebastian.

Fake today

2009-09-28T12:49:00.001-07:00

No vivimos en un mundo de hoy, de titulares y noticia, no de apariencias fugaces sino de ayeres acumulados y de posibilidades laberínticas.

"We do not live today as it is, plenty on news and headlines -all appearances- but anchored in infinite cumulated yesterdays and labyrinthine possibilities."

On Achievement

2009-09-22T12:03:00.000-07:00

"Genius is eternal patience."

Michelangelo di Lodovico Buonarroti Simoni

Pithy summary of the war

2009-09-21T12:04:00.001-07:00

We won because "our German scientist were better than their German scientist"

Sir Ian Jacob, Churchill´s closest aides.

Beauty is Truth

2009-09-18T10:49:00.001-07:00

No words.

Technical Analysis

2009-07-07T12:38:00.001-07:00

Technical Analysis hopes rely on the use of geometry and historical patterns to predict future behavior. Is not that easy.

Path dependence exist, so, past events exert influence on future events, however, others factors are more important. Know others expectations, manage emotions, industry regulation, technology limitations, others players mistakes and know what role play each in the food-chain is essential.

Once understand why people lose money, nevermore (and once black numbers -$- start growing, will understand why anonymity and low-profile is the best PR).

Quants and Black-Boxes are delusional. Behind any computer platform and sophisticated software, everywhere, are motivated humans, emotionally involved, fallible.

Profit comes from one skill: better than market expectations.

Your Synthetic Thinking

2009-06-09T17:21:00.001-07:00

Twitter´s power rely in a simple truth: what cannot be said in 140 characters cannot be explained in thousand words. Period. $

More than a Tree

2009-05-08T15:52:00.001-07:00

Trees are more than meet the eye: is the shape of evolution, is the way how we walk through life, is how our brain construct cause and effect. Living beings are inside the same principle, whether is a virus, a cell or a horse; they all grow and propagate tree-wise. Certain physics theories represent particles behavior like ramifications, for example nuclear energy.

There are decision trees, stochastic trees.

Take a look at any nice one. Stay in front of it. Look its shape. Get abstract. See how the shape is everywhere, in every process, in almost each structure.

Have you ever seen a volcano skeleton? Astonishing similar to the 3-D shape of a burned Tree.

Look at the tree and ask to yourself the question: What does a tree mean in this universe?

Loops

2009-04-26T11:20:00.001-07:00

Loops seems to have an preeminent role in this universe. Are self-reinforcing processes that create a sustained environment.

They concentrate a great deal of energy and are everywhere in different shapes: hurricanes, spinning galaxies, electrons and neutrons, seasons, sell-offs and rallies in stock markets, sex...etc.

Write a little program and let a loop on purpose, when running it, in a matter of milliseconds, will blow out your memory.

As far as we are prone to think in a linear way, a borderline phenomena like loops, seems to attract too much attention and energy to be irrelevant.

...interesting

We, The People

2009-03-01T12:51:00.001-08:00

1.- The people are stupid.

2.- The people has the right to be stupid.

Dixit.

Veritas

2009-03-01T12:16:00.001-08:00

Reason wont find any truth; nevertheless is valuable to solve problems.

Mix it with some knowledge, a bit of passion and will make money (warning: have to have the proper IQ).

Good for business, bad for science.

Clouds Sea

2009-02-14T14:46:00.001-08:00

Yesterday I was flying in airplane, from the window saw a large and intriguing clouds carpet.

Two reactions took me.

One part of myself told me that there were a structure: clouds got a mathematical skeleton waiting to be discovered. There were an order; chaos is only appearance. Hidden inside each cloud rest an immutable formula. Inevitable, perfect, simple.

Couldn't -and cannot yet see the algorithm; nobody has see it so far. Though, like the challenge: I imagine testing mine and others IQ finding the elusive formula.

A wave of sunset lights reflected on the clouds diversified in myriads of tones.

Suddenly, tones and light became thousands needles inflicting me an ecstatic episode. My reason got paralized. My chest opened. Astonished and wordless, I absorbed the suffered beauty. Now is hard-printed in my bones.

I grew. Felt happiness.

Aftermath, I realized I'm not intellectual; am a aesthete. Sensibility outdo reason in me.

Mathematics

2008-12-30T12:28:00.001-08:00

Because the empirical way consistently fall short (the laboratory approach has intrinsic as well as technical limitations), several disciplines find mathematics as a relief and a delusion: not because math is a self-contained beauty it will reveal the truth on how we or the whole universe works. If the Universe is beauty, simplicity, perfection -a debatable subject, I concede- its does not mean that mathematics is the proper method to do so.

Mathematics is wide spreading universities as if anything new is under the sun.

A Fatal Flaw

2008-12-14T15:23:00.001-08:00

Since arising as an astounding force -the last century attested it- intellectuals use a great deal of energy and time demolishing dogmas of faith, specially the church as an institution. But the last time I was in Harvard realized I were in the modern Vatican. From there, as well as the M.I.T. and similar places, the spell spread around the world setting rules and expectations about reality, truth, future and happiness. I´d catch myself trying to scaling up in the cardinalician ladder and stopped for a second; I raised the following doubt: whether reason is not the religion of our times.

Funding Museums, Funding Art

2008-12-14T13:20:00.001-08:00

People often complicate things in excess. A streamlined model to finance museums might be search and spot new talented painters and photographers and put them on the window the museum is by itself. Once one is favoured, sell or rent his works should be easy.

Shorting gold, results

2008-12-06T05:01:00.001-08:00

Since decided to short gold and miners, Hecla HL is down almost 50% reaping huge profits while others bets break-even or loss slightly. Overall, we made money. Our strategy was a Bear Call Spread on HL, GLD and KGC. These days positions are now closed and in wait-and-see mode.

Welcome to the Real World

2008-11-02T08:17:00.001-08:00

Banks to Treasury: Keep Your Bailout. We'll Keep Our Bonuses

No comments.

My Dog Is Wise

2008-11-02T05:22:00.001-08:00

He is always watching, always with you.

Almost never say anything, his silence is wisdom. Here´s an example; his ability to relax in the middle of human-created storms is a message: learn not to panic, nothing is that important.

Always is ready to listen, and let you find the answer.

He knows not to expect not much from us. He don´t expect much about life. He don´t expect nothing at all.

My dog is wiser than I.

Be a human

2008-10-30T16:34:00.000-07:00

Our specie cannot live without passions and fears, hate and love, destruction and extremes, up and down, euphoria and panic; we ping-poing through history like a drunk man collision one wall and another. Thats my definition of human, our tale.

Shorting Gold

2008-10-30T15:55:00.001-07:00

Gold is immemorial; but, as I said before, now is not a good time to enter in gold. Indeed it´s starting to make sense design a portfolio strategy to short gold (invest for a profit when gold price drop), for a certain period of time. Bubbled since 2006 and now its popping. For how long? Maybe during one year or when gold hits $400-500: what happens first (which is, in my humble point of view, the fair price to invest, seeking long time wealth preservation, see chart below) Source here.

HL (see below) is a good prospect to short; GLD, KGC are too.

Is highly likely we are experiencing a change of short-term trend, reversing the bull-bubble market on gold of the last several years. A global recession, a victorious deflation at the short term, a huge liquidity trap we are enter into right now, falling commodities prices, oversupply everywhere, will offset at the short-term the threat on inflationary forces, because the Fed is not printing more money (at least by now; instead, is selling more T-bills which is in high demand) leaving only the huge, mammoth debt as a pending issue, at all counting for inflationary pressure at the short term (2008-09). There are lot of anecdotal evidence everywhere, people are hoarding cash, US dollars to be specific, more than gold. The run for the dollar might not be a coincidence.

As a foot note, Roubini published an article it worth to read.

Will China take over U.S. world hegemony?

2008-10-28T12:19:00.001-07:00

I developed a fantasy where, in a final process of long dated growing rivalry, China enter in war with U.S. because defaults of T-Bills (which is a good chunk of today more than $1.2 trillion in China reserves). It would be the most crucial event marking the end of a era, our era. How long? when? I don´t think and hope will be soon and if it would happen, as long as it is a fantasy, not a prophecy. I belong to this world and love America in his essence.

But. There´s a trend. A development.

Year 2036 maybe, for China to manage lot of unknowns, like build and consolidate world-class prestigious universities, fill the technology gap, educate his mostly farmer population, extend new aesthetics (in movies, music... ) and values (Confucians?) etc.

Another question (and hope) might be whether the U.S. is able to recover from his decline by itself and/or with the help of close friend nations (Britain, Israel, Japan, Germany...).

Out there should be no doubts that there are signs of America decline: auto-destructive politics (mixed with a high degree of plutocracy and -worst yet- endogamy politics), debt burden increasing at alarm rate (which is) trade deficit on play (which is) lots of IOU to foreign countries (which is) dependence on third parties surpluses (which is) definitely not good to the American political statu quo.

It is said that the Roman Empire economy was based on slavery, which is supplied with war victories; when slaves base weakened, the whole empire suffered, started decadence and finally got broke. Nowadays the modern economy, if is based on credit, when weakened: will the hegemony suffered to the point to finally decline inexorably?

Or if it is based on labor, will the world statu quo survive even when the shrinking productive population on developed countries makes it unsustainable by 2050 (because insufficient funding to finance pensions, schools, social security, armed forces for example)?

Gold bewilder you?

2008-10-23T06:45:00.001-07:00

Marketwatch says: "Gold is often seen as an investment safe haven whose prices tend to rise when the economy falls into troubles, but its recent slumps have defied conventional wisdom."

In the same article, "Investors worldwide are selling everything, including the kitchen sink, and gold is no exception," said Peter Grandich, chief commentator at Agoracom, an online marketplace for the small-cap investment community.

Today gold is down breaking year long supports, and as said before these days may are not the best moment to buy gold as a safe investment. Is a better idea to buy when gold slip to 300$ or when the current bear and recessionary cycle we are entering right now ended (2112 or even later). Exception: if Wretton Woods 2 system cracks (see here and here), which is a increasingly real danger, may prove valuable to collect Gold Mints like 1oz. Golden Eagles as soon as possible (more on this topic, later).

PS: about gold miners stocks and speculation. Don't be confused, keeping miners stocks is not a good idea right now: when the stock market´s up, the gold is often down, pulling miners; when the markets slips, gold is usually up, but miners are down (because they are companies and are in the many investment fund portfolios stressed by margin calls). Not a good bet today.

A new entirely different financial system must emerge from this mess

2008-10-22T14:42:00.001-07:00

For those who believe the financial crisis is over or will return to what it was, an image worth million words (financial ninja´s nice work)

Guarding your back

2008-10-22T14:01:00.000-07:00

What is the best way to preserve a capital we want to be real safe?

Gold in the form of coins, like 1oz Golden Eagles, is proving to be a good defensive long-term action (more than ten years) against eroding one´s principal. Has many advantages: It is out of sight from tax authorities (which is definitely good), do not need a bank (for anything), is bullish in difficult times and is extremely portable.

The cons are many, worth mention: 1.- because his bullishness it is not good to buy these days, as the price chart shows (source here). 2.- is a non-income generating asset, reason why you wont keep in gold mint the capital you will need from here to ten years (except exceptional situations, like life-or-death, or investing in a relative´s higher education).

Alternatives. T-bills nowadays might provide a negative return and -more important- for the first time in U.S. history is subject to a remote probability of default, likeliness turning higher and higher as the Treasury needs foreign investment to finance his emergency measures; and, at the end, frankly, a T-bill is paper, you buy paper, an IOU issued by the world most reliable institution today subject to a never seen and imagined stress (I don´t want others make uncertain experiment with my money, don´t you?). In addition, T-Bills usually is bought through a bank (a institution that should be avoided because otherwise a risk on bank dependence may rise).

Another very discredited way is Real Estate: today suffering heavily from bubbles bursting (which is not a bad new to keep in mind as a long-term investment), but there are unavoidables: needs maintenance (which is money out), management (money out and headaches), pay high property taxes -even if it is a non-income producer; also are less liquid, is not portable and -this is critical when we talk about capital preservation: real estate is a primary target for government or banks seizures (has too much visibility).

Excess cash is good for several reasons to keep in hand today (in hand, I repeat, no in a bank account), but not fine to keep for long-term purposes (later, more on this topic)

Your wife

2008-10-22T06:25:00.001-07:00

If there is a uncontroversial truth, it is this one: your wife is the boss.
Not matter how fine your plan looks, if she say "I oppose it". Never
mind. Forget it. Drop it. Don´t waste time.

You don´t know what you don´t know

2008-10-21T15:39:00.001-07:00

Simple as devastating.

This assertion travel to history and touch Socratic philosophy: "I
know that know nothing" Which is really a big step itself. No personal
progress is possible ignoring what you don´t know in any endeavour.
How do you know you got the skills to do anything and achieve
excellence if don´t know what are you missing?

Extremes favours the wealth

2008-10-21T15:13:00.000-07:00

As this image shows, differences in material earnings seems to be related with inequality. From The Economist