Wednesday, 14 May 2008
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Of Gold and Current Trends  ubermunch 22:46:36 |
| | Gold still hovers over the $860/oz mark. As usual, whenever such a price spike occurs -- and they do not do this often -- plenty of voices dot the landscape which see the trend as ever-continuing (world without end of profit, Amen). The truth is that this gold-silver bull run is something of a sucker's rally.
I mean to suggest by this that supply and demand (coventionally construed) forces have little to do with the recent price surges. It isn't like everyone has decided to get married and suddennly we need 500 million new wedding sets. Speculation -- mostly the down side (the fear-driven, "I hope the world doesn't blow up" kind) sits behind the wheel. People are buying ETF's, options and futures. A few are buying Yamana and a few other good gold mining companies.
Yamana (AUY) has been faring well, as have PAAS and several others. I do not presume to offer a buy, sell or hold suggestion on best of breed stocks like these. Your assets, your problem -- I mean gain. In any case, much of the recent precious metals price hike has an almost oversimple (monocausal) relationship to the plummeting U.S. Dollar, and spiking crude oil prices.
This shows that the present gold buying frenzy is tied to one thing -- market confidence. It could go higher, but only in proportion to more people getting more scared. It's a fear rally. Complex market activities rarely make things this simple, but the long-term trend patterns really are that obvious in this case.
Let's get practical. What does this mean? It means that when the new president orders the removal of troops from Iraq -- or perhaps a few days earlier - at the very latest, an upper time limit for the artificially high gold and silver prices will become manifest. Gold will freefall and the dollar will bouy again. Oil will have moderated -- in its every bumpy fashion - before then. It's price, if not already significantly diminished will drop sharply too.
Investors simply do not like the U.S. presence in the middle east (the put options crew on the other hand totally digs it). It represents all things that could go wrong -- the X factor. Markets hate unpredictable short term futures. One suicide bomber, one angry crowd, one nutjob Iranian dictator, can change everything in an instant. Once the U.S. withdraws, the perception of strong -- more efficient -- markets returns.
The stock market will surge in the short term and settle perhaps a couple thousand points (DJIA) higher than its present (NASDAQ maybe 500) level. This capital will flow in part from precious metal and oil sales (profit taking from the present spikes). I am suggesting this merely as a forecast, based on observed trends and isolated factors, nothing more. Actual mileage may vary.
But my two-cents worth indicates - people have asked me in person "Should I consider buying gold or silver now?" -- that one would be wise to buy the dollar on the cheap instead (buy the bottom, not the top). Expect gold's price soon to drop like, er, a gold brick. The other way to play the market is to buy gold puts 6 months out or so -- after Novermber 4, we should begin to see the price fall sharply if it hasn't happened already.
If you're in it to win it -- and you should be -- you must consider the recent trends and isolate the most relevant factors which make for the current spike in gold-silver-oil prices and the simultaneously diminished US dollar. Put together the formula and forecast based on the most salient features and up and coming geopolitical changes. The next president will pull our troops from Iraq. We only have candidates favorably toward that course of action still in the ring.
This renders the circumstance I call "pull out announcement" day very likely within about a year. We can reasonably expect a huge price DEflation ("disinflation" actually in market techno-babble)in the fear rally benefactors.
Gold, silver and oil prices will bungee jump. What has gone up .....
Do not buy gold or silver here. Either buy the USD or sell gold, silver, oil. You can also sell the CHF since the swiss franc is levered to gold prices. But remember, if you do take my advice and get crushed into financial powder, it's your fault not mine. I only promise that my recommended courses of action are entirely reasonable. I never promised you that markets would behave reasonably. *People* drive markets. Watch how they drive their cars on the freeway before investing or changing anything. They are going to drive the one pretty much like the other.
So do not do the equivalent of riding your bike across the Nasdaq freeway, or someone is going to die. Find a way to drive a tank. Insulate your risk level to the best of your ability. If you want to play defensively, you buy utilities and companies which specialize in basics, things people need to purchase come Shell or high water. PG & E is not going to stop selling electricity whether we pull out of Iraq or just decide to commandeer it permanently.
People will not stop eating. McDonalds is not going out of business anytime soon. These kinds of stocks can serve as anchors in unsure times. Walmart is still humming. I am sure you could easily plunder a "top ten defensive stocks" list somewhere on the net. You can use these as a way to insulate your portfolio by diversifying your assets across a more secure spectrum.
I also recommend that anyone with any invested assets whatever should watch Jim Cramer's "Mad Money" on CNBC at least once a week to keep in touch with the latest market trends since Jim always keeps his grreeeeedy little fingers on the market pulse. And he's more fun than a barrel of balding monkeys.
If everything unfolds exactly as I have specified, on the other hand, well, I told you so. And if you didn't take advantage, well then, raspberries on you. You could have made oodles of money. It is your duty to make huge amounts of money. I just wanted you to know that. |
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Monday, 7 April 2008
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| Economics A La Carte ubermunch 21:55:47 |
| | A few modern sayings:
Money isn't everything. There's good whiskey too. And DVD's.
Inflation hasn't ruined everything. Dimes can still be used as screwdrivers.
If its overtime, overbudget, and wholly unnecessary, it's Democratic. If it's market-driven and way too expensive, it's Republican.
Fractional Reserve Banking: Democratic taxes used for the purpose of insuring partially-subsidized and federally-funded Republican promises, which being better than gold, remain backed by the full faith and credit of the U.S. Congress.
Inflation: The process whereby the money supply grows faster than the money.
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Friday, 4 April 2008
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| Where Your Treasure Is ubermunch 03:37:02 |
| | This portion of a line taken from the so-called "Sermon on the Mount," which was really more like a High Priestly lecture on Christian Ethics regarding the kingdom of heaven, has the Lord Jesus remarking: "For where your treasure is their will your heart be also." The word "for" tips us off that this was something of an ethical punchline, the sum of what came before. It had to do with WHERE (not if) one stores up his treasures.
Storing up treasure in heaven amounts (within the context of this lecture) to using your money to subsidize and advance the kingdom of heaven on earth. Jesus taught his disciples to pray "may Your will be done ON EARTH as it is [already done] in heaven. It is after all, the kingdom OF HEAVEN Jesus is teaching about ON EARTH to the earth-bound citizens of that kingdom.
The pharisees and scribes, those whom Jesus' audience would have looked to for ethical inspiration and guidance, Jesus told them plainly, would not enter the kingdom of heaven. This would have shocked everyone. It was designed to arouse the question, "Who then can be saved if the kingdom of heaven is that stringent in its admission requirements?"
But Jesus had already answered this, "blessed are the poor in spirit, FOR theirs is the KINGDOM OF HEAVEN." The clear implicate is that the pharisees and scribes -- who knew the Bible far better than most -- weren't getting in for the reason that they were not submissive to God. They could quote chapter and verse at length, but did not grasp the more basic points about mercy, justice and humility. This was not so much a failure of the intellect (though it was that too in the end) as a failure of heart. They had no heart or instinct for charity, faith and hope. These were strangers to the most basic virtues lauded in the Bible; and they interacted with Jesus in their discussions with Him very clumsily on such topics.
Matthew 5-7, the section in question essentially teaches the basics of the kingdom of heaven -- who are and are not its citizens and why? Since we belong to the kingdom, how ought we to teach and to do, and how does this compare to what the pharisees and scribes teach and do? The backdrop of current (then current) false teachings and practices of the pharisees and scribes forms at every point the basis for rebuttal on the part of Jesus in this section.
It is a contest of priesthoods -- one based on the Older Covenantal priesthood of Aaron and Levi versus the New Order of Melchizedek, represented by the High Priest, who is here doing the teaching. Teaching the people formed a basic duty of the High Priest. Over his breastplate, when he went in to sacrifice, first for himself (with the first priesthood) and then for the people, rested 12 gemstones, the very ones recounted as those making up the New Jerusalem in Revelation 21. These literally covered the heart (area) of the High priest. Where the High priestly treasure was, there his heart was also.
Jesus used this implied scenery, and the temple scenery more generally, to pepper his teachings with metaphors or pictures well familiar to the people already. When Jesus first sat down and began teaching here, Matthew tells us, Jesus and his disciple went up to a mountain. The Temple in Jerusalem was likewise built upon a mount. This was no accident. The Great High Priest, however, did something extraordinary in his teaching here. He reversed the order. First the High Priest would teach, and then dismiss the people in the Name of the Lord with a pronounced blessing.
Jesus BEGAN with the blessing, putting the last first. Those who seemed to be first would end up last if they did not repent. Even the format Jesus chose reflected his thinking in this regard. "Blessed are" begins the repeated 8-fold section which both begins and ends with exactly the same phrase "for theirs is the kingdom of heaven." The High Priest began by blessing the people of the kingdom, pronouncing upon them the full blessing of God, which mimicks Paul's Ephesian affirmation that we have "every spiritual blessing in Christ Jesus" as members of the kingdom of heaven.
This sharply contrasts with the 7-fold curse of Matthew 23 which the Lord of the covenant -- for blessings and curses are the sanctions of the covenant (heaven or hell being therefore the only two options -- purgatory not included, offer void where prohibited). The blessings of Matthew 5 and the attending implicit rebukes offered to the scribes and pharisees by chapter 23 have matured into the full-blown pronounced curse of the Almighty via His Great High Priest. The next chapter (Matthew 24) follows by strict logic not foreign to rabbinical debates. The Temple would be destroyed. It's priesthood had just been cursed by the High Priest in God's Name. Not one stone would be left upon another. All this - the murder of the many prophets over the ages - would culminate in the murder of the Son, the Heir. Thus, the Old Covenant priesthood would be disinherited by way of Lex Talionis.
Matthew 5-7 anticipates this in its teaching on murder. The warning Jesus gave, "agree with your adversary quickly while on the way to court, lest he -- 1. deliver you to the judge 2. the judge hand you over to the officer (civil authorities) [for punishment] 3. And you be thrown in prison -- describes exactly the sequence of events Saul of Tarsus would seek against the Christians, and that they would incur repeatedly in preaching the Gospel first in Jerusalem, then Judaea, Samaria, and then to the ends of the earth (an idiom for the Gentile nations whose capital was Rome).
This was prophecy and a warning against those who were going to persecute, "revile and say all manner of evil against you for My sake" -- which was the final "blessed" -- blessed are those who are persecuted for righteousness' sake (which refered to both Jesus and his disciples in the near future). Their persecutors would be the scribes and pharisees (and Sadducees). They had put their trust in a Temple made by men, on earth. The Lord Jesus came from heaven. He told them plainly, "Destroy this temple and in three days I will raise it up." John adds, "but the Temple of which He [Jesus] spoke was his own body. This was made by the Holy Spirit, whose power "overshadowed" -- the language of the ark of the covenant where the Cherubim "overshadowed" the mercy seat -- Mary who conceived by the power of Holy Spirit. This implied that Mary was carrying the mercy seat. No man contributed anything to the growth and development of the infant Lord Jesus. He was -- like Adam -- with respect to His human nature, a direct creation of God, and therefore the second Adam and miraculous Son of promise, the seed of Abraham.
The Lord Jesus was from heaven with respect to BOTH his natures, as fully God and fully Man. Those who put their faith in Jesus with all their heart have their minds set on things above, not on earthly things (Col. 3). For where your treasure is there will your heart be also. "Therefore, lay up treasures for yourselves where moth and rust do not corrupt and thieves do not break in and steal."
This makes one a member of the kingdom of HEAVEN. His treasure is THERE. So heaven is in his heart. Heaven in the heart -- Christ in you the hope of glory -- is the substance of the kingdom. For this, Jesus said of his disciples (next) that they were: 1. The salt of the earth 2. The light of the world 3. A city set on a hill 4. A lamp removed from under a basket to give light to the whole house.
This is in each case a description of the temple and its priestly duties. Israel was created de novo by God as a nation to populate the earth that would preserve it. They would live righteously before God as a "royal priesthood and holy nation," so that God always had a reason NOT to destroy the world ever as in the days of Noah. God had promised never to do so again. In order to preserve the earth then, we learn from Abraham's bold bargaining with God, that a certain number of righteous must populate what is to be spared.
Thus, the True Israel, with its priestly sacrifices offered for the sins of the whole world annually, preserved the earth, so really and truly that, without these sacrifices, God would be bound by his holy law to destroy it again. His promise not to do so had means. Israel was the means. And it depended therefore for its survival on the integrity of the priesthood.
His disciples were becoming the True Israel, the Messianic kingdom which "comes down out of heaven" (Rev. 21) and depends upon a Temple (and sacrifice) "made without hands." Theirs was the 8-fold blessing of Christ, theirs the salt of the earth, the light of the world; now recall that the priests set in order the lampstands before the Lord to enable the priests to do their duty in the Temple. These gave light to the whole House (of the Lord). The Temple complex was large, a city unto itself set upon Mount Zion. This is that "city set on a hill" about which Jesus taught "set [down] on a hill (the mount on which He taught). The crowd in front of Him was a city, the New Jerusalem. Let your light -- the seven lampstands of Revelation 1 -- so shine before men that they may see your good deeds and glorify your Father WHO IS IN HEAVEN [as the Lord of the kingdom of heaven, whose temple and High Priest are right in front of you as though you were the priests serving in that Temple].
Jesus is the Temple glory, and the High priest. Remember that only the High Priest could literally walk right into the glory of the Temple. For he was "most holy to the Lord." The treasure committed into the Temple service was "Corban," and these citizens of the kingdom of heaven stand in its place. The treasure was not far from the Temple glory.
Where your treasure is there your heart will be also. |
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| Congress Rakes in the Money on the War They Voted In ubermunch 02:22:37 |
| | Here's a conflict of interest with legs. Crazy legs. Congress has been, well, here's the article caption.
"WASHINGTON - Members of Congress have as much as $196 million collectively invested in companies doing business with the Defense Department, earning millions since the onset of the Iraq war, according to a study by a nonpartisan research group.
Not all the companies in which lawmakers invested are typical defense contractors. Corporations such as PepsiCo, IBM, Microsoft and Johnson & Johnson have at one point received defense-related contracts, notes the report by the Washington-based Center for Responsive Politics."
The rest you can read here: http://news.yahoo.com/s/ap/20080403/ap_on_go_co/congress_defense_investments
Comments: Okay, here is the problem. War comes along and what do people do? They do what they always do, get patriotic. Wave the flag a few more times than normal. Congress decides, hey, we can support the war effort by investing in companies helping the effort overseas. But then their portfolios do well, perhaps really well. But they forget that it was THEY who made the war not only possible, but put it into effect by ratifying its existence and subsidizing it with "appropriations," political-speak for big coin.
This means that by the same reasoning they employ -- we can help the companies who help the war effort (to be patriotic) -- they forget that their critics are going to carry the logic back one step further, reading it thus: We can help **US** help the war effort by helping companies that help the war we started. And this will make us money for spending taxpayer money in large quantities.
The Van Til take is this: facts do not speak for themselves. Which is actually the case remains open to one's predilections for interpreting. The cynical read goes like this: these guys voted in a war that would necessarily requires new defense contracts by this or that company, so they could invest their money with a nearly certain high rate of return on their investments.
Someone else might simply suggest they did not intend this from the start but couldn't pass up the OP once it presented itself. In either case -- or even the simple "patriotic interpretation" -- they are just trying to help out and why not make money while doing so? -- leaves the obvious on the table.
No matter which is the case, this is BOUND to look really bad, providing their critics with extraordinary "fuel for the fire," as it CLEARLY engenders a rather excruciating conflict of interest. I am going to have to make the call:
This was extremely unwise. The Biblical rule is this: never trade your reputation for riches. "A good name is better than great riches; to be esteemed is better than silver or gold" (or even lucrative commonstock shares or awared defense contracts). A bad reputation has staying power, and it serves to decapitalize one over LONG TERM. Thus, the Solomonic prohibition above serves to mean that one should never seek short term gains at the expense of longer-term assets, especially the chief asset of a good name.
The Lord's prayer BEGINS with "May Your Name be kept pure (holy)..." This is a top priority for God, so we ought to think as He does regarding our own reputations. David said "above all, he who rules over men must be just...."
This means that a reputation like that of the apostle James -- called "James the Just" by his peers -- forms a crucial element of what should be congressional priority. Wealth should take the back seat in this instance, and they should divest all such interests as soon as possible. Donating some of the proceeds to a legitimate charity not related to their own interests would prove a wise course of action. James the Just would recommend a "widows and orphans" care type of organization, or perhaps one that helps provide medical care for Iraq veterans. Their war; their bill. WWGSD? (What would the good Samaritan do?)
"Whoever is kind to the needy lends to the Lord; and He shall repay him [the idea is with interest] for what he has done."
"Wisdom is the principal thing; therefore get wisdom. In all your getting, get understanding." -- King Solomon
P.S. would the person who keeps posting mindless porn crud next to my posts please grow an honor limb and cease and desist? No one is interested, and I find it offensive. Children may well view my posts since many homeschoolers have an interest in teaching their children biblical truths that actually require careful consideration and discretion in analyzing current events by the biblical legal standard. Don't hate education. |
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Thursday, 27 March 2008
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| Some Test Answers I Found Worth Reporting ubermunch 21:22:21 |
| | Ancient Egypt was old. It was inhabited by gypsies and mummies who all wrote in hydraulics. They lived in the Sarah Dessert. The climate of the Sarah is such that all the inhabitants have to live elsewhere.
Pharaoh forced the Hebrew slaves to make bread without straw. Moses led the Hebrew slaves to the Red Sea where they made unleavened bread, which is bread made without any ingredients. Moses went up on Mount Cyanide to get the ten commandos. He died before he ever reached Canada but his commandos made it.
David was a Hebrew king skilled at playing the liar. He fougth with the Philatelists, a race of people who lived in Biblical times. Solomon, one of David’s sons, had 500 wives and 500 porcupines.
Without the Greeks, we wouldn’t have history. The Greeks invented three kinds of columns - Corinthian, Doric and Ironic. They also had myths. A myth is a female moth. One myth says that the mother of Achilles dipped him in the River Stynx until he became intolerable. Achilles appears in “The Illiad”, by Homer. Homer also wrote the “Oddity”, in which Penelope was the last hardship that Ulysses endured on his journey. Actually, Homer was not written by Homer but by another man of that name.
Socrates was a famous Greek teacher who went around giving people advice. They killed him. Socrates died from an overdose of wedlock.
Then came the Middle Ages. King Alfred conquered the Dames, King Arthur lived in the Age of Shivery, King Harlod mustarded his troops before the Battle of Hastings, Joan of Arc was cannonized by George Bernard Shaw, and the victims of the Black Death grew boobs on their necks. Finally, the Magna Carta provided that no free man should be hanged twice for the same offense.
You can read more of these at http://www.innocentenglish.com/funny-bloopers-mistakes-quotes/history-mistakes.html |
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| Resolving the Looming Social Security Crisis ubermunch 19:40:31 |
| | Please notice I used the term "resolve" here rather than "solve." This problem has no solution, since the promise of offering cheaper money (future money has to be adjusted for inflation) for more expensive represents a form of theft. If I take from you a dollar and pay you back that same dollar later (when it is now worth only 50% of the original in purchasing power), I am effectively paying out 50 cents for every dollar I take in. In other words, with social security, you pay the government handsomely to take your money from you forcibly, manage it badly (you get less than 2% interest on it when you could get 10% in the better bond funds available right now), and now we learn you won't get back even one lousy dollar for every good one you contribute.
The problem is not the way social security "works," (somebody shoot me for using that word next to SS) but the way it steals. In my circles, where people pay attention to logic, the only real debate surrounding SS is whether it properly amounts to a Ponzi, or else a Pyramid scheme.
Since everyone acknowledges that the program is pretty much "doomed by numbers," the resolution must take the form of cutting our losses, not trying to make a fundamentally bad scheme profitable. In the stock market, you sometimes win and sometimes lose. When you see that a certain stock seems determined to cost you money, the best move you can make they call "SELL."
The latest specs on SS look like this:
"The trustees estimate that by 2017, the funds going in to Social Security will be less than the benefits promised."
"By 2041, the trustees have estimated that the trust fund - that is, the money the government owes the system - will be tapped out and in-coming funds would cover only 78% of promised benefits."
You can read up on the dire details at: http://finance.yahoo.com/focus-retirement/article/104720/Social-Security-Looms-for-Next-President?mod=retirement-preparation
With the Social Security structure fundamentally doomed, "selling" looks like this:
1. Return the money taken from the owners as soon as possible
2. Begin with the eldest contributors first, since they have been paying in the longest
3. Add 20% to the total amount taken from the owner, since the mismanaged money resulted in lost opportunity to make money (called "opportunity cost"), because it was mismanaged, and because inflation has eaten into the purchasing power of the original dollars contributed.
4. When the program runs dry, begin taking funds to repay younger contributors in like fashion from other programs that are doomed or simply wholly unnecessary. The government could raise money by selling off some of its assets as well. They could for instance sell the National Aeronautics and Space Administration to private interests, by offering an IPO and inviting investors to purchase commonstock in the firm. This SHOULD be done since the government does not properly have an interest in using taxpayer money for such activities. The job of the government is strictly the administration of justice and national security. Bigger government means more waste. Private interests always do it better. There is a growing movement anyway for private corporations to gain marketshare in this industry anyway.
The same could and should be done for the U.S. Post Office. The salaries of workers would go up markedly. No one would be fired; they would simply change bosses (from Uncle Sam to Uncle *shareholder* -- but I must warn you I run a tight ship). Taxpayers could be invited to invest their "tax returns" in the new companies (just send a prospectus of the new company, and come up with a great name, along with the refund and an apology). They would probably jump on the opportunity. I would.
NASA could be required to provide assistance to the U.S. government if and when necessary (like any other private firm).
In any case, sooner or later, taxpayers will being requiring of the government greater accountability -- because of what would otherwise become a blight down the road on the U.S. government's good name -- with what happens with their hard-earned dollars (Americans put in more hours per week per capita than any other nation). This resolution offers a chance for the government to come up roses, as they say.
People may even stop asking the question, "So was SS a Ponzi or Pyramid scheme?" (Answer: who cares. I got my money back with interest; and how bout those Red Sox?).
In sum, I am recommending decentralization of all non-essential departments or agencies by way of privatizing them. The IPO is the best way to go after streamlining the departments and shoring up their fundamentals. It worked for Google (and how!). A chance to show patriotism by purchasing stock shares -- sell, sell, sell it -- many would not pass up.
In the specific case of Social Security, I am recommending simple restitution and repayment for requiring a bad investment. The U.S. government could always wisely make an offer to the ones to be repayed to convert some or all of the repayment in the form of stock shares at the IPO. This would cut down the amount of cash on hand needed for repayment (offering a second form of repayment to the borrower).
This would also grow the total assets in the U.S. economy by drawing both foreign and domestic investment in an entity previously unavailable to investors, and would provide room for earnings growth where none existed before (government agencies do not grow by improving their earnings; corporations do). Moreover, the corporation itself can reinvest the money invested therein. It is not governed by regulations the way U.S. agencies are.
Think "More people hired," "stronger economy," "more business-to-business capitalism," "more tax revenue generated" (capital gains tax).
It is the choice of the government of course -- Social Security Crisis, or Social Security Coup. The wise man turns liabilities into assets whenever possible. Flip this house and go red-to-black. It's not a crisis. It's a fixer-upper op, if they privatize other agencies while dissolving a no-win liability (cutting their losses), and use the privatized agencies (new corporations) as investment opportunities for the money just freed up. They might even be able to pay back most of the debt in commonstock shares. They could even toss in some deal-sweeteners for the first so many to buy in, warrants and other customary goodies.
Buy low, sell high. |
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| How to Power the United States Without Foreign Dependence ubermunch 03:48:55 |
| | 1. Use solar power technology [from offshore platforms] to pump water -- highly pressurized water - to create a fast moving underwater current. Improve solar cell electricity production using graphene instead of silicon to capture more of the visible light spectrum per cell. This is already being done. Mass production may still be a few years off.
One could also combine a small amount of liquid oxygen with ethanol to use as jet or rocket fuel. The original V-2 rockets did this in WW II. Jet engines can be used to drive powerful pumps capable of conveying large amounts of water over long distances. Jets can pressurize.
2. Drive a water turbine to excessively high speeds for enhanced power production using such a method (I got this idea from overclockers who act similarly with microprocessors). Water-jet streams created right now by high pressure pumps (50 thousand psi) travel at some 2000 mph (Mach 3). These can cut through titanium. Their power is extraordinary.
3. You could use such a stream -- or several together -- to create very fast moving underwater (piped) oceanic currents. One could also use siphoning technology (Do not merely "push" at one end, but also "induce" or "draw" the current at the other). Such currents could be used to spin water turbines at very high speeds.
At present, one such turbine -- a Francis Turbine -- yields 750 megawatts of power. I see no reason why we could not increase this production by orders of magnitude, since this runs on water that accelerates via gravity and centipetal force only. We could easily outpace this productive capacity with pressurizing and/ or inductive engines. These could run on ethanol too. It (E85) burns very clean and rather hot compared to other, non-renewable fuels. Switchgrass (and other cellulose-rich carriers) is turning out to be the ethanol boon however.
Capitalistic note: As of about six months ago, ethanol futures contracts became salable with the Chicago Board of Trade (CBOT), but so far as I know, these remain unavailable on the NYMEX.
4. Then we could desalinize and pump inland millions of cubic metres of water to render desert lands arable. Israel is already doing this (something similar) with desalinization technology.
5. With this technology, we could produce all the ethanol we want, or greatly increase our food supply (just say "yes" to lower food and commodity prices), enhance land prices, etc.
For more on any of the above topics, just type "Solar power," "Desalinization," "Water jets," or "Water turbines" into wikipedia.org's search engine window. This would make a great study for a science project or research paper.
Best Fishes.
P.S. my Bible is greener than your Das Kapital (Gen. 2:15; Ps. 24:1). |
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Tuesday, 18 March 2008
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| Chuck Shepherd's News of the Weird ubermunch 03:11:04 |
| | The title above names an oddball column I just can't resist visiting once in a while. As you might expect, it delineates all news wild and weird, and sometimes off-the-hook funny. 
Here is a latest news item that bears comment. Oh I must.
"News That Sounds Like a Joke"
"Toronto police announced in February that they had arrested the man who had stolen a backhoe with the intention of driving it to a car wash in order to break down a wall and get at the facility's coin machine. The call to police came from a snow plow that was hot on the backhoe's heels, with the driver having diverted from his route to chase the thief. [Toronto Star, 2-13-08]"
My comment: So here you have something of a race transpiring in Toronto, with a snowplow in hot pursuit of a backhoe-gone-wild. The only thing missing is the Police Zamboni overtaking both on the shoulder, in a surprise maneuver, bolting hard left just in time to cut off the backhoe before exiting the main thoroughfare.
Once on one of those wild shows -- Caught on Tape style docu-dramas -- I saw a pizza delivery guy rush to cut off a criminal making a run from the scene of a police car after nearly running down an apprehending officer who made what he thought was going to be a routine stop. Pizza delivery guy made the bust by cutting off the man who was now attempting (after crashing his vehicle) to make a getaway on foot. No dice. Pizza guy was all business, and eventually cut off the runner (who hit the car pretty hard and appeared dazed, long enough for the arresting officer to recoup after the surprise bolt.
It was a dominoes-PD arrest  (maybe something more like Pizza Party on wheels -- with a strong sense of citizenship, and extra pepperoni  ), somewhat stunning, but probably not as spectacular as a Backhoe v Snow Plow road rage contest. I would have favored the backhoe. Who knew. |
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Monday, 11 February 2008
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| Presently, I am at Stanford Univers... ubermunch 22:44:09 |
| | Presently, I am at Stanford University, doing admin stuff and looking for ways to enhance the studies which concern this blog. I shall dabble from time to time. This is my theory-construction blackboard, as you will have noticed. 
The Stanford bookstore is outrageously interesting. They have books on game theory, stochastic processes, and differential equations, which I have been thumbing through. Also of interest to me in regard to this blog are books covering extensive lists of formulae used in various disciplines, from math to electronics and engineering. I am considering which of these (if any) might prove adaptable to the point at hand. Probability theories used for quantitative decision analysis deserve at least a cursory glance too. This means I am grazing widely. Let's face it, bookstores totally rule.
As a side note, I ran across an intellectual sort of fellow interested in economic history. We chatted. He reminded me of a "Churchill-ism" I had long ago forgotten. A woman who regarded herself as something of a nemesis to him once blurted in a moment of anger, "Man, if I were married to you, I'd put hemlock in your tea." To which he retorted, "Madam, if I were married to you, I'd drink it." That's totally for free.
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Friday, 11 January 2008
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| Where Am I Now In The Project Development Scheme? ubermunch 19:41:56 |
| | This should be a brief post. So far I have put together the basic skeleton of five indices to be used in the initial trial phase of my covenantal (i.e. biblical) trading strategy. I am working on these five indices:
1. Precious Metals Index
2. Energy Index
3. Money Valuation Index
4. Cost of Mercy Index
5. Cost of Justice Index
Each of these should in the end yield a single number which will estimate the specified "Index component" -- price of precious metals in ounces in 3 months, price of energy in three months (probably reckoned in PMI ounces, the price (value) of the USD compared to foreign currencies and the cost of money to US customers in dollars (This will then be converted to PMI ounces), The cost of mercy in PMI ounces, the cost of justice in PMI Ounces.
The last two will invoke statistics already in use to describe the cost of insuring different kinds of people in different countries -- perhaps police officers and others who work with criminals. The higher the estimates, the more danger to them insurance companies foresee. This way I can lean to the experts with the best statistical research without having to do it myself (directly). I will use other like social indicators also, combining them into an index which necessarily puts numbers to the costs, so that I can average them (hopefully 3 months out; or else 6 months out, or in the worst case scenario one year out).
I may be able to find a website which lists this information (crimes etc) in a moment by moment fashion. In any case, I intend to use the best information available and that which is most often available (closest to real time) I can find, or three months out (my preferred time frame for a short term forecast).
The end result should be 5 particular numbers which change with the markets showing the current estimate by the markets of what the cost of each of these will be in 3 months.
This will be my rough draft for a biblical model of market forecasting. A rough draft necessarily will need refining. As I learn more -- as the project proceeds (God willing) I will make the necessary changes (The point is to do what Mister Eastwood advised in a movie: adapt, improvise, overcome). Whatever changes I make as I proceed I will do my best to explain.
Together with the 5 numbers, I will probably display a sixth which averages the 5 into a single number so I can watch the 5 elements change in real time, and their average, to see the cause effect relationship their bear on the final quotient. This provides (putatively) an overview of the real market dynamics, those trends which actually move the markets, and their likely future counterparts (short term future counterparts).
The result is a 6 or 7 (I may add an index) panel of "judges" which tell me what to do with my money now to anticipate markets in 3 months or less. I can adjust the formula to collapse the time frame if I wish. And the trend indicates Point A (now) will head to point B (three months from now) identifying not necessarily a future price but a future trend. You can buy or sell into the trend long before the three month indicator specifies since the current price will have to reach the specified index point from where it sits now.
This is trend forecasting, not price forecasting. The future price specified would still be correct if the market "heads that way" and you buy the early trend. If you sell before it reaches the price specified 3 months out and you make money from the trend, it doesn't matter if the trend continues or not to reach the price specified or else falls short. The trend was still correctly named by the future price, which functions merely as a "target," suggesting which direction the market will turn and run.
If this does not make sense, try thinking of a compass. The future price names a place in the markets, as though one might say "Alaska" when asked which direction is North (when standing in California). If you head toward Alaska, you are moving approximately North. Even if you never make it all the way (walking), if one had said you would go North in advance by saying "He will head toward Alaska" (the 3-month out price number), the direction prediction would have been correct (profitable) for our purposes.
Which way will the market head? -- this is the question my indices propose to answer. They will do this by naming a price either higher or lower than the current price. I am not promising the price will be exactly reached, but hoping to see that the direction it indicates actually names the trends the markets follow. Once you put an automated trailing stop in behind a market trend, you can't lose if the trend continues for even a very short time. If the price prediction is incorrect because the trend keeps going, you win even bigger. If it is incorrect because the market turns around after moving only 3/4 the way up, you should still be able in most cases to make a hefty profit.
You do not need to be perfect in trading. You only need to outperform the competition.
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Monday, 7 January 2008
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| The Parable of Talents in Light of the Markets: What Can We Learn? ubermunch 01:45:09 |
| | Exodus 37: 23-24
And he made his seven lamps, and his snuffers, and his snuffdishes, of pure gold.
Of a talent of pure gold made he it, and all the vessels thereof.
The Exodus passage above lets us in on a little-known secret. Behind the parables of Jesus, the particular weight of pure metal he chose, the talent, looms a liturgical picture. The 7 lamps -- and their peripheri -- amounted to precisely one talent, or some 75 pounds by modern measure, of the highest quality gold available ("pure gold" which likely came from Ophir in the case of the Temple). The Egyptian gold and silver used to make the tabernacle would have had its origin in any number of countries from which it was brought as gifts to Pharaoh, just as the wise men of the east country later brought gold to Jesus and his parents from a long distance to Bethlehem. Egypt was never known for gold production.
The tabernacle and Temple of the OT displayed prophetic imagery of the Church, and the saints which comprise it, in the form of this single talent of gold, molded and hammered to render seven identical lampstands. They were identical down to the least detail. That is because this talent shows the Church in the resurrection unto glory. Yet, this "talent" stands behind the more famous parables of Jesus, flush with capitalistic imagery, in his discussion of talents and servants, or employees.
It begins: [Matthew 25:13-18 (King James Version)][With my usual comments in brackets like these:]
"Watch therefore, for ye know neither the day nor the hour wherein the Son of man cometh. For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods [i.e. to be stewards of them in His absence].
And unto one he gave five talents [of gold], to another two [talents of gold], and to another one [talent of gold]; to every man according to his several ability; and straightway [without any further delay] took his journey [left]. Then he that had received the five talents [of gold] went *and traded with the same,* and made them other five talents. And likewise he that had received two [gold talents][engaged in trading with the gold] , he also gained other two [doubled his money]. But he that had received one went and digged in the earth, and hid his lord's money."
Here, specifically, the master delivers his goods as "talents," representing both cities (we find out later) and churches (which we know from Exodus already). These cities are ruled by priests and kings. The "far country" to which the Master goes represents the ascension of Christ to heaven, where He remains "a long time."
Specific points of interest to us "here now" are these:
The Master, clearly the Lord Jesus by analogy, went away for a long time. In that interim, he appoints stewards over His House. We can lawfully, the Bible teaches infer from the greater House to the lesser, our own homes.
The Master expects us to engage in trade. We are capitalists because we are Christians. Capitalism is not some bizarre form of man-made doctrine or practice superimposed on this or that biblical text to squeeze out the meaning we would like. Jesus wants profitable servants. Profit is the stuff of capitalism, and what motivates the employer and employee alike. All riches, we learn in Revelation, belong to Jesus. He disperses these to His servants as He sees fit -- some 2, some 5 and some 1.
This does not teach that all men should have the same distribution of wealth (an important presupposition in all forms of envious economic systems like socialism or communism. These are based on coveting, a specific form of which the Bible calls envy. The twin sisters of coveting in the Word are properly called "envy and jealousy." Envy seeks to prevent others from having what it does not, while jealousy seeks to obtain what others have to "keep up with the Simpsons."
Each profitable servant doubles what he is given by engaging in trade. This shows that God judges according to what you do have, not according to what you do not. To whom much is given, much is required (the man with five talents must earn five more, while the man with two need only earn two more to be considered a profitable servant). God is a merciful judge. Daniel understood this, whose name appeals to God as judge for just this reason, "Dani-el" means "God is my [merciful] Judge" or "may God judge me according to charity."
Trade is for the purpose of doubling your money, or replicable profit. The measure of success in trading should be judged the way the bible judges it, in terms of doubling the original investment. The rule of 72 helps a great deal in describing an interest-bearing time frame for doubling one's money by way of a non-stochastic and non-geometric shorthand. The interest-rate divided into the number 72 yields in approximate years the amount of time it will take to double one's money at the specified rate. If you invest 2 ounces of gold and put it at 6% interest with this or that fund, it will take just about 12 years for you to possess 4 ounces. In another 12 years at that rate, you will have 8 ounces (assuming you are earning gold and not some other denominated form of money).
The rule of 72 thus shows a thought-pattern regarding investment or trading which mimicks the biblical pattern. This means that this rule may lawfully form a part of calculating in the biblical schema of finance and mathematical calculation. In short, the rule of 72 is a biblical rule by logical inference from this parable. Who knew.
Next, although the word "interest" does not appear here, later the Lord Jesus reproves the one with only a single talent, not because he possessed but one talent to double, but because he did not double his money by "putting it at interest with the bankers." This shows that, contrary to Islam, the charging of interest is not only lawful, but represents a form of work (or "trade" as it is here called) commanded by the Lord. Those particularly interested in the regulative principle of worship and government in the Church (the backdrop of our talents schema is openly ecclesiastical) will be happy to note the command-based nature of trade, of interest charging and bearing, and of the use of gold as the immanent bearer of economic value from the transcendent world (God created and appointed gold and silver to show forth eternal value -- the tabernacle, Temple and Church)
Interest charging and bearing has its limits, a limit set by the ecclesiastical rule of the tithe, at 10%
This limit applies to commercial enterprise, not to interpersonal charitable loans, which the Bible requires to be made at zero interest. The Bible views attempts over and above this appointed ceiling as a form of the "fast money" forbidden in the Proverbs of Kings (Solomon, Hezekiah, Jakeh and Agur), which aims at cutting ethical corners to make a buck. This is because exorbitant interest rates aim to use time against the indebted. God is the Lord of time, and so, He is Lord of money also by good and necessary consequence. But God is good and works all things together for good, showing kindness to all men in natural revelation (rain plays no favorites so crops grow to feed all). But He sets the ethical limits on the use of time, what we may or may not do with our time, and how that behavior will affect others (including heirs not yet born) over time. God alone may use time against the wicked as He sees fit, and the limit on interest rates controls the power of economic negative sanctions.
The point of limiting interest rates is the limiting of negative sanctions. The point, here, in case you have missed it, is negative sanctions. God reserves to Himself and those appointed by him to impose negative sanctions, and does not permit that right to common financial institutions.
Returning to the above parable, we note that the Lord uses money to impose positive sanctions upon his servants - rewards - but only for those willing to join in the labor effort. God does not reward evil, but he does subsidize all men when that is required to ensure the subsidizing of the righteous.
The stock market has everything to do with trade, interest (in the form of percentage of capital gains per trade. the effects of trading compound when a person wins consistently. One could with only 8 successful trades, go from holding only one thousand dollars, to holding over 100 million dollars, given the right trades. Sometimes bond funds and other instruments pay interest directly in the traditional sense.), lending money for gain over time (profit, earnings), and several other economic relations implied in these activities.
Our takeaway from this parabolic introduction:
1. The talent, unless specified was a gold talent in the ancient world, though silver talents also procured goods and services in the Bible. Other metals -- bronze, copper, etc -- could be used as money in the ancient world (The Roman empire used bronze, Greece at times used iron), but the standard in Israel was limited to gold and silver, while precious stones were viewed as less liquid (non-monetary in most cases) assets of great value. The Church set the standard, and is pictured in gold and silver in the OT (primarily gold).
The phrase, "According to the shekel of the sanctuary" refered to the silver shekel, as a form of money worth much less than gold, but of real value in Israel. This means we should primarily measure money in ounces, or other common weights of metals, and should think of world currencies in terms of gold and silver (and I always add platinum for its several characteristics in common with these). In other words, in the Bible's view point, the U.S. Dollar is worth so much gold, not the other way around, though these are interconvertible. Gold links currencies as the proper medium of exchange between them.
2. Trading in the markets is not only permitted, it is commanded; and the Bible sees work as a tradable commodity, the exchange of time and skill for money, which can then be used to trade for more money, by means of interest or capital gains. The Proverbs 31 woman does both. She works with her hands; she also sells her goods at the market for profit, and she also does what Warren Buffett does. She buys land, improves it, and use both the land (by appreciation) and the improvement -- in her case grapes of the vineyard to make wine to sell at the market -- as a dual form of income --multiple income streams, one which appreciates (uses time to acquire value) and the other which provides recurring income (seasonally). Since she also works with her hands to produce goods, this means she has three streams of income. If she puts some of her money (profit) at interest with the bankers (bond funds can yield 10% interest), she has four.
Creating multiple streams of income is the surest and fastest way to real wealth. Solomon taught this principle both in the Proverbs and Ecclesiastes. It is a form of diversification of earnings.
3. One should keep in mind when trading, that the gold and silver (money), are created for glory and for beauty, the glory of Jesus. This means that funding Bible-believing and -obeying (and I would argue confessional) churches should form one of the goals of engaging the markets. The tithe is mandatory; what you give over and above that is from the heart. The purpose of using money is to glorify God and enjoy Him forever. This means we are to use to it build his kingdom, the Christian Church and its many efforts in the world, and to aid the cause of justice (it is lawful for instance to subsidize campaigns to promote good law), healing and mercy, especially toward the poorest and weakest, and toward the household of faith.
4. The Bible thinks in terms of replicable profit, multiples of 100% gain from the original, capital investment. This justifies the use of the "rule of 72" in the way we calculate marketability, profit, earnings and the like.
5. Charging interest for the use of money is a form of "renting it," at a specified rate of return. This involves at least a verbal, better a written, contract. The Bible recognizes contracts as a lawful means for exchanging commodities and securities in a legally-enforceable way.
By charging interest, the lender effectively puts his money to work, as though it were a servant sent out into the world to work and make money for the owner. Lending is a form of work. It is also a form of trading. It trades the temporary use of money for a guaranteed rate of return for that use. The lender gives up what he could have been earning with that money in the markets himself, by allowing others the use of it. This rental costs.
This example shows the point that trading, work, and charging interest are interchangeable concepts. All work is a form of trading, and all lawful trading is a form of work. Loaning money at interest puts money to work.
6. The Proverbs 31 woman multiples the different forms of work -- land appreciation, crop production, manual labor, (moneylending?) to create multiple streams of income, and consequently her household lacks for nothing, and wears the clothing of royalty (purple or scarlet clothing was extremely expensive in the ancient world, and in hard times functioned as salable assets to procure much food or other commodities. It was like wearing a very large bank account). She has plenty of surplus income to engage in charity, opening her hands to the poor. I would say that she sunsidizes the Church, except that she represents the Church herself, in the resurrection, as is fairly obvious from the fact that she never stops working (24/7 labor). Her lamp -- the biblical symbol for the Church -- does not go out at night.
7. The specific number of talents, one, five and two, bear a particular mathematical relationship to each other that is worth exploring. Other parables of like kind use 30-fold, 60-fold, or else 100-fold for expressing this kind of profitable relationship. The precise reasons -- and there are precise reasons -- for selecting exactly these and not other numbers in relationship to each other I have not yet explored, but am sure this is a worthwhile enterprise, and plan to do so later if God is willing.
The 30-60-100 series is not hard to read. Sixty doubles thirty, and the 100 more than triples the 30, just as the man with 10 talents earlier (having doubled his allotment of five) was given extra -- the superabundance (overflow) of others who did not work or worked the least. If I recall correctly, I earlier read somewhere that crops produce statistically in just this fashion, never 50-fold or 80 fold, but along the lines of 30, 60 or 100 (I'll try to hunt down sources on this one later).
1 + "2 doubled" are five. Recall that the "1" talent was not doubled. So there is an integral relationship which these numbers bear to each. The reason for this relationship, and why Jesus chose them remains to be discovered. But I must pry. Oh, I must. I love a mystery.
And this I will go on to do later if God wills. |
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Saturday, 5 January 2008
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| Brief Notes On Plausible Indicator Experiments -- The Postmillenial Indicator ubermunch 20:50:23 |
| | Postmillenialists are noted for an eschatology or view of time characterized by optimism based on the goodness of God. This is the source of all economic value as well, highlighting as I have the link -- a necessary connection -- between economics and eschatology. Confidence breeds investment and new business. Postmillenial outlooks breed optimism. Thus, the postmil outlook favors new business, trading and investment -- pushes free market capitalism forward under the assumption that sanctification and dominion are inevitable -- the notion -- a very Christian notion -- of progress over time.
Free market capitalism proceeds upon optimism. People risk more in optimistic times and tend to succeed more when their outlook is bright. Surveys show repeatedly that the more optimistic people tend toward greater success in life. The same is true in business. People open the doors of new businesses with the expectation they will succeed. Investors put their money where they think it most likely to win the earnings they want. In less optimistic times, people move money from stocks into precious metals, oil and bonds. Optimism is a key indicator both of the likelihood of success, and of stock market investing and trading. It even affects the commodities and derivatives markets.
What we need, therefore, is a postmillenial "confidence index," something like a counterpart for investors of the consumer sentiment index, somewhat popular these days. But this is an investor sentiment index which isolates precisely one sentiment -- the one most central to success - optimism. How could we measure investor optimism? I believe the Precious Metals Index (PMI) provides the key to this. We can measure optimism in gold -- platinum, silver and gold to be precise. Here is what I mean.
The typical quote you get from a quote service website -- yahoo has a good one -- comes with the standard features you expect -- last price, bid, ask, trade volume, EPS and a few others. I have been wondering out loud about using these in different combinations to see if they might yield some new insight of provide some useful data stream not already available to investors on the typical quote sheet.
To rethink market cap, you could start by converting a company's market cap from dollars into gold ounces. This values the company in gold, according to real (money) value. Even better, one could use the precious metals index (PMI) -- by dividing its index number (the PMI "ounce" - an average ounce of platinum-gold-silver) into the market capitalization of any company -- to show the value of a company in terms of precious metals generally (not just gold).
This will enable economic dominion by feedback using the biblically prescribed source of immanent economic value from the transcendent world. We use precious metal values to isolate absolute present value of a company's total investment (market cap) with which investors have valued it, and then isolate how much invested value is then based on *future expectations* or confidence. We will measure this confidence in PMI ounces as a ratio compared to the absolute invested value of the company. Then we can compare each such number of one company against another to see which companies investors are the most confident about -- or least.
If you measure the market value of a gold mining company in precious metal ounces, it would reveal some interesting data unique to the metals markets. For instances, if a company yields a particular number of ounces per year -- say 1.2 million -- and it is valued at 5 billion dollars, you could measure the value of the company in terms of ounces mined per dollar.
This would enable you to see how much -- if you add the ounces they have stored -- their company is worth because of what it can pull out of the ground, and how much value it has simply because investors like it (extra value not tied to precious metals production). This would give anyone a way to compare the bare market value of the company with its present value, giving one a good idea of how much value is there based on the expectation of FUTURE production of metals in ounces.
You could also use this expected growth in PMI's to reconstruct the current Wall Street "PEG" by defining expected growth in terms comparing absolute versus remaining value of a company in PMI ounces. I would recommend then, we use the traditional price to earnings (P/E) ratio and then divide it by the expected growth PMI number, and render it a whole number by rendering it as its reciprocal (divide the fraction by one).
This could serve as a direct "investor optimism index." Remember, we have together -- in my musings -- decided that it was investor pyschology which we really want to know to be able to outperform the markets -- to do ahead of time what the markets themselves will do by intersubjective transactions (trading). This investor optimism index would work in its present form only in the precious metals index. So what of the others?
Using other indices, each specific to this or that sector, and using the format I have so far specified (or a modified version thereof) I plan to create indices for each of the major industry sectors in a kind of valuational "unit" which will correspond to the "ounce" in precious metals. We can convert the market cap into these units and these use them in a fashion analogous to the ounce with -- I believe -- great utility. The easiest way to do this would be to convert or read all other company market caps in gold ounces or in PMI (averaged precious metals) ounces.
This would enable us to measure in REAL or "transcendent money value" ("non-nominalist") standards (i.e. the PMI ounce) the market capitalization of companies presently, and their remaining "investor confidence" or optimism value.
This accomplishes several important goals:
1. It enables us to use an absolute value indicator (appointed in the Word) as the valuational basis -- way of judging economic value, known as the PMI ounce.
2. It gives us a non-arbitrary (though conventional) way of measuring the level of confidence investors show in each company for comparative purposes.
3. It enables Christians to feel confident about the measuring stick they use to guage the stock market, and know they are thinking in ways obedient to Scripture (correctly). Christians understand the value of this innately.
4. It provides a further basis for reconstructing (reforming) Wall Street's conventions, measurements, and market assessment tools, bringing them in line with God's Word.
5. It will eventually enable the construction of an objectively-based market feedback system to forecast accurately the intersubjective, short-term dealings of market participants (buyers and sellers). This is -- you will have noticed -- a project already under way.
I regard this reconstruction of company valuation in light of absolute (appointed) money value as a major step forward in that direction. This is called "progress," and it is inevitable. The progress of working out the biblical worldview in light of current markets can only end in good, profit to be precise.
God willing, I will continue this reconstructive effort of Wall Street conventions in light of real money and biblical standards. The law of the Lord is perfect (complete, sufficient to the task), so it should be fun. We have already seen how this sufficiency begins to work through the questions of market analysis, valuation and investor confidence. It starts with Scripture, and with the biblically reconstructed notion of money -- real money -- with currency nominalism thrown under the bus.
The PMI ounce will form the basis of our bus driving. |
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Thursday, 3 January 2008
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| My Precious Metals Index Is Under Construction ubermunch 04:26:25 |
| | The stock markets of the world make up a vast "money network," accessible both by the traditional means through a stockbroker, and online by way of various kinds of trading accounts one can open for a relatively small sum.
The notion "economic value," the idea that this piece of paper is "worth" four of those cans on the grocery store shelf has its origin in the distant past. We have already seen how the need to measure the value or worth of one kind of thing in units of another kind of thing -- how many pounds of wheat is my car worth -- gave rise to a medium of exchange we simply call "money."
Money enables us to measure all kinds of things against others using the same units of value -- dollars, yen, pounds, dinarii, quarters, nickels, or what not. This comparison of relative values -- 3 cans of fish for five dollars -- takes place in quantified units ("5" dollars, not yummy dollars), for "3" cans of yummy fish. For that much money they had better be.
This means that math can go a long way in enabling our study of money ("economics"). Math provides a way of comparing the relative values of all kinds of things against other things we might we to know about. These are value comparisons.
The stock markets thus thrive on numbers, plottable charts, fundamentals (a numerical way of describing the particular features of a company -- market capitalization, price to earnings ratios, earnings per share, and the like, whose stock one might wish to purchase. Just WHO is selling this stuff? Fundamentals -- basic company characteristics -- put numbers to the answer to this question. It is a company with the following traits .... [Then the listings of numbered characteristics begins].
So as India and China gobble up gold, and the Saudis tighten OPEC oil production , what am I going to do about it? I am working on a project which attempts to create a system of real-time market feedback using the "index," several indices working in tandem actually (which will form a matrix) to tell me the most covenantally relevant features of the markets in shorthand -- or "at a glance."
How the market "really" works. Large numbers of people interact to buy, sell and appraise a host of different kinds of instruments people use to make money. These include options, futures, stocks, bonds, and "warrants" among others. There are peripheral or adjunct markets which have grown up around the others, which second markets service or cater to the needs, wants and wallets of traders and investors. These offer all kinds of software programs for better market clarity, trading platforms for faster execution times and custom-trading parameters you can automate (i.e. "when any stock matches these specs, buy or sell it when I am out golfing"), information devices, trading strategies and systems, and a host of other ways to give traders and investors "the edge."
This means that the markets are "intersubjective." These rational interactions cause the markets to follow sets of determinable "trends," patterns that emerge from the chaotic mix using numbers to describe them -- sometimes very fancy numbers. Fancy or no, numbers rule the day. We count money in numbers.
At first I thought the way to defeat the markets -- make good money by trading -- would be to obtain OBJECTIVE data from the real world to better the competition which uses more often than not relative judgments rather than the sort Christians would recogize as the more absolute kind. By thinking this through, however, I have come to correct this somewhat misguided view.
Investors and traders act as they do because of what the believe. Many of their beliefs find root in real word data -- supply and demand figures, total amount of gold now in existence, number of employees at a given company, etc.
But it is their BELIEFS about these numbers, not the data themselves, which determine the "averging effect" upon the market as they interact. In other words, how investors feel, and what traders believe -- I will call this collectively "investor pyschology" -- about the market data they consume governs their behaviors ultimately.
In principle, there is an unlimited amount of information one might glean from the objective world about this or that economic possibility -- a purchase or sale of some commodity or stock. This means that we need to isolate those most important to most investors from all the many which do not actually figure into the more important equations.
Think of it this way. The tautology should help: "The markets always do what the markets are going to do." Now imagine you could do the same thing -- moving exactly as the markets do -- but only slightly ahead of them. This would make you rich very quickly. It matters little if the reasons for market movements are rational or not -- and they are primarily (but not entirely) rational.
The intersubjective decisions of the marketmovers combine highly specific -- not all -- sets of data from the real world and interpret it within a set of frameworks or value systems not shared by all other traders. Some of this simply results from the fact that different traders come from around the world, from different cultures and life situations. This means they are bound to think differently about what kind of world this is, how we know what we know, and who we should live our lives, make our money, and save, spend or invest our assets.
The intersubjective markets average conflicting worldviews, economic philosophies, and trading strategies. It's a Van Til thing. This means that in a strict sense, you do not need to have more or special "objective data" (though this certainly could help) that the others do not in order to defeat the markets.
Trend forecasting -- using numbers -- which explain in advance the "averaging effect" which falls out into particular trajectories (trends) can be enough by itself to win handsomely. Other helps come from how one manages his purchases -- trade management strategies. For instance, you can use devices which limit your risk -- trailing stops form a good example of these. But if you gain, you can let your profits RUN.
I believe the most relevant market data can be summarized using a set of biblical (objective) values to zero in on which factors most important tells the trends. Covenants rule the world according to the Bible because God is covenantal and so if all of life. God governs by way of covenants, which have both blessings and curses associated with them (sanctions).
The structure of the covenant can be applied to markets to create a highly successful trading strategy which creates a network of indexical feedback indicators -- these tell you "what the markets are REALLY doing -- and enable you to see the forest for all the trees first, and then to analyze the trees in their real-world (market) context.
To win, in other words, you do not always need "more information," you need more of the right kind of information -- covenantally relevant information -- isolated for you by a system constructed according to the dictates of covenantal demands.
In other words, we must see in the dark using special glasses [covenantally-structured indices] which others do not have, and then we can "move faster" than the competition -- efficiently placing the right buy and sell orders at roughly the right times. The indices, if properly constructed, isolate the right numbers, which tell a story (give much information in few letters and numbers).
This should enable us to transfer wealth, in the form of numbers, from their accounts to ours. Joseph did something similar on behalf of pharaoh in Egypt.
So far, I have come up with a trial version of the first index to be used in a system of many such indices working together. As I have already described elsewhere, the Bible teaches that God is the source of all value, whether you count that value in numbers, or compare it to qualities -- like courage, love, justice, mercy and the like. God is the source of ALL value, including economic value.
He produces profitable servants like the Proverbs 31 woman. All hard work brings a profit, and the skillful worker will serve before kings - those who pay the most -- not before obscure men. Work is a form of trading, the exchange of time and skill or effort for money. All businesses trade to get ahead. So do all employees.
God has appointed gold and silver -- I would argue by implication also platinum (though I am aware this may prove controversial) -- as the immanent expression of fundamental value from the transcendent world. As the Sabbath of the new creation in Genesis was "made for man," so also the gold and silver of the lands of Havilah and Ophir -- for "the gold of that land is good."
One man in particular, the Lord Jesus Christ and Second Adam, is worthy to receive all wisdom, knowledge, honor, power, RICHES, glory and strength." This means that God created the vast wealth of the earth FOR Jesus from the beginning. Psalm 24:1 says "God gave to men the earth," and the Chief of all men now holds the title deed (Psalm 2, "Ask of me and I shall give thee then nations for thine inheritance").
"Worthy is the Lamb that was slain to receive all .... riches....."
The transcendent value of God, which has as its ultimate source His goodness in particular -- thus do we call merchandise "goods" and services (work) - so that God's original good work -- the created order has real (objective) value. The earth is good because 1. God MADE it good and 2. God CALLED it good 3. God has redeemed it - all of it in principle -- in Jesus. He holds the title deed.
Now God has chosen that certain precious metals form the basis of expressing economic value, the value of God's goodness reflected in all good things -- goods and services -- which in the Bible are cleary gold and silver, as was used in the former covenanted "holy land," the home of God's people of old. Peter, refering to money said, "Silver and gold have I none ....".
Thus, the Bible compares gold to the faith of the saints, and silver to redemption and grace. The Lord was betrayed for 30 shekels of silver, the price of a common slave. This was the "blood" money, which blood of the Lord Jesus - His once for all sacrifice -- saves His people from their sins.
The Bible sees salvation -- which is by God's grace alone then -- as holy or special and special -- uniquely precious metals, He has chosen for such symbology in the Word for their INHERENT value. These are not mere commodities like all others. They have unique characteristics, which make them uniquely suitable as the foundation of all real money, or basic economic value.
Thus, my first index constructed by the demands of the covenantal structure, consists of precious metal values, those of platinum, silver and gold. Now covenants are forward-looking in the Word. Their sanctions specify who inherits and who does not, but this is future. First the covenantal vow (or oath) is taken, then later the sanctions imposed. This is why heaven or else hell await one's demise.
This means several things for the purposes of constructing this index.
1. I will be using platinum, gold and silver prices in the markets currently. These are called the precious metals "spot prices."
2. I will be using the price of platinum, gold and silver FUTURES contracts six months forward. These are the estimated "future prices" of the precious metals.
3. I will be using the stock prices of the ten largest gold and silver producing companies.
Here is how my formula will look. I will construct it step-by-step, so that math types can follow the number crunching, and see how I adjust it as I go. Are you ready?
Okay, first we must represent the price of platinum as it is now (Platinum spot price). For this I will use the symbol for Platinum found on the periodic table of elements, and likewise gold and silver. If you do not know what that is, no worries. It just makes our venture oh-so-scientific.
Platinum = Pt. Gold = Au, and Silver = Ag. Platinum is a Latin word; in Latin, if you wish to say gold, you say "Aurum," (Au) and if silver, "Argentum" (Ag). Get it?
So the spot price of Pt today, we call the variable "Pt."
The price of platinum that is scheduled to be delivered "six months from now" in futures or options contracts -- promises to buy or sell and deliver the goods -- we will call for short "June 08 platinum." Make sense? Six months from now it will be June of the year 2008. So we call the Pt which must be delivered from the seller to the buyer in June of this year "June 08 Pt."
I will represent it this way -- Pt (F6) -- which means the price of platinum six months in the future. Pt (F4) would be the price of April 08 Platinum. And so on. What then -- following our trend -- is Au (F9)? This is the price of gold scheduled for delivery in September of this year on a futures or option contract. So here we go now. Fasten your seatbelts.
(Pt x Pt (F6)/ 2) x (Au x Au (F6)/ 2) x (Ag x Ag (F6)/2)/ 3 = Z
Do NOT let this equation scare you. Do not be intimidated by symbols. These are no different than the letters you are reading right now (which are also symbol combinations). But you have been trained to read these: you know the rules instinctively, so you see the effect of their combinations almost "at a glance." You can and should learn to do the same with numbers and letters like the ones above. It takes a little time, but anyone can do it. You did not learn to read all at once either. It took work, yes? (oops, I said the "w" word again).
This will be modified by the next equation which will:
1. Multiply the prices for each component in the gold and silver indices of the final price of each stock at day's end. For instance, Each of the last ten days for the stock "NEM" (Newmont Mining) has a "last" price listed. I will multiply these ten numbers together and then divide by ten, to provide the average price for the last ten days of NEM. I will do the same for each of the other components.
2. Then I will multiply those ten-day "recent price averages" together, and divide by ten (or five in the case of the silver index since it has only five components). This will give me an overall -- representative -- "10 day moving average" for the price history of the gold-and silver mining markets. This is the average price for precious metals in the market for the last ten days. This is a number which represents "what's happening now."
3. I will then use this number as a basis to compare to the "Z" above to see if the present trend is expected to continue, rise, or fall in the near term. If it rises, I will argue for a buy signal. If it falls, this means "go short." If it remains roughly the same, this is a "hold signal."
We can represent this series by using D10 x D9 x D8 x D7 x D6 x D5 x D4 x D3 x D2 x D1/ 10. This simply means the last ten days' "last price" we will multiply together -- for any one stock (like NEM) -- and then divide by ten. This averages the price for the last ten days of Newmont Mining. D1 represents "today's last price." You can look these up on any good stock website.
Suppose that ten days ago, NEM ended up the trading day at exactly $45.00. This would mean that D10 would be $45. We would then multiply this by the last price for day 9 -- say $42. And so on down the list until we get finally to today's last price. Then we divide that total by ten ot get our average "last" for the past ten days for NEM.
Then we use this final average for each of the ten stocks in our gold index, and average them too, by multiplying THEM together, and then dividing by ten.
With the silver index, we will go ten days deep also (following the same multiplication series), but when we average these together at the end, we only divide by 5 since the silver index has only 5 component stocks (listed below).
Then we will average the gold and silver indices together, giving twice as much weight to the silver index, since it only has half the number of components that the gold index does. This will make them representatively equals in our final trifold "precious metals index."
Now according to our first equation, what does the number "Z" represent? It is not as hard as it looks. The first number Pt x Pt (F6)/2 combines the spot price of platinum (which is about $1500 today for one ounce) with its price 6 months out and then divides their compound by 2 to get an average "3-month out" price for Platinum. Then I do the same for gold and silver. Then, finally, I avergage the 3 "averages" of each metal to get a combined "3 month out precious metal index."
This is a form of forecasting by averaging spot and future price estimates. This is a short-term forecast, you will notice. I have used -- and will be using weather forecasting as a model to compare with what I am here doing, and these work best with short-term forecasts.
Here are my top gold companies and silver miners, which I intend to use in making up my price components for the proposed gold-silver indices used [as subsets] to figure into the precious metals index (which I started with the above formula just now):
[Watch for updates, as the gold company list may change a little. These are listed only by market capitalization and general viability. I intend to figure into the equation also some version of the price to earnings growth projections, since the PEG represents a forward-looking indicator, like futures prices.
1. Anglo American plc (AAUK [ADR])
2. Barrick Gold Corporation (ABX)
3. Newmont Mining Co (NEM)
4. Goldcorp Inc. (GG)
5. AngloGold Ashanti Limited
6. Gold Fields Limited (GFI)
7. Rangold Resources (GOLD)
8. Agnico-Eagle Mines Limited (AEM)
9. Kinross Gold Corporation (KGC)
10. Yamana Gold Inc. (AUY)
Silver Company Index Components
1. Compania de Minas Buenaventura SA (BVN)
2. Pan American Silver (PAAS)
3. Silver Standard Resources (SSRI)
4. Apex Silver Mines Ltd (SIL)
5. Coeur D'Alene Mining (CDE)
If any of this seems "over the top," please be patient. When I put some numbers to it, it should get easier. I have other modifications to make too, so stay tuned.
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Friday, 21 December 2007
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| The Biblical Theology Of Stochastic Analyses In Financial Markets ubermunch 23:08:54 |
| | Stochastics -- say "Stoe-CASS-tix" represents a field that studies the very "bumpy" cases of many isolated instances of this or that sort of thing which happens often -- let us say a rise in the price of a stock (my stock -- and statistically "manages" them when they seem to be random occurences. Stochastic equations find order in the chaos and then label it by assigning a particular set of numbers to explain how that pattern got THERE. Stochastic descriptions would turn all plotted camels into horses. They "manage" [apparent] randomness.
The patterns described by their oh-so-fancy numbers they call "deterministic" features. This means they got there because some law of logic, math or physics made it fall out that way. The cause of the larger pattern then was not random, even though the pattern describes instances which could have been otherwise than what they were -- and which are otherwise than that in most instances. Imagine a child waving a paint brush wildly about a canvas of a very large size. He just slashes and yanks the paintbrush now this way and now that. Who knew purple could fly.
The emerging patterns on the canvas will at once appear random -- because the wand-waving youngster does not plot his actions -- and will also shows certain repeated features reflecting the size and shape of the brush, and consistency of the paint, used for the project. Gravity will guide the drips that come after the paint slams into the big white.
Are these patterns random? Yes and no. Now you see the dilemma of the stochastic analyst. He wants to find order in otherwise choatic sorts of activities. But what does the Word of God say about all this?
Well, before we can answer the question directly, we need to specify a few terms. Some things happen but they simply could not have happened otherwise. God has foreordained whatsoever comes to pass. But this has to do with "first causes," or the ultimate scheme of things. God does not tell us in the Bible HOW He does this, but He does tell us that He is the ultimate cause of all things, though not the author of sin in any way or at any time.
This means we are dealing with second-order causes -- what laws of physics, and animals and people bring about -- when considering the stochastic question. Now all these events (caused by people, etc), even though they are ultimately necessary, are to us "contingent." You don't have to finish that cookie you are eating for instance. But if you do, it was foreordained (ultimately necessary, but by way of second order causation, a "contingent event.").
Now the Bible recognizes these distinctions without employing the fancy vocabulary to describe them. Here are some examples for our stochastic perusal.
Deuteronomy 22:6 reads "If a bird's nest chance to be before thee in the way in any tree, or on the ground, whether they be young ones, or eggs, and the dam sitting upon the young, or upon the eggs, thou shalt not take the dam with the young:"
Eccl. 9:11 "I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all."
2 Chronicles 18: "And a certain man drew a bow at a venture, and smote the king of Israel between the joints of the harness: therefore he said to his chariot man, Turn thine hand, that thou mayest carry me out of the host; for I am wounded."
Other translations read "perhance" where the KJV says "at a venture," meaning that from the standpoint of what the archer intended, it was a random shot fired carelessly toward the battle zone. He had not particular target in mind.
Luke 10:31 "And by chance there came down a certain priest that way: and when he saw him, he passed by on the other side."
From these few cursory references of the Word -- there are plenty more which could be adduced in favor of my point -- chance is real in the world of appearances. Humans simply cannot see the angelic causes associated with divine intervention in human affairs, or when God strengthens a man in his spirit to give him greater courage or self-control. These are supra-historical causes with respect to the source, but earthly enough (historical) in their effects. Any man with wisdom for instance, got it "from above."
So some events show order which cannot be accounted for strictly in terms of natural and historical causes. Ahab's fatal blow was "perchance" with respect to second order causation, but divine ordained, and -- the text does not say this but I believe the context requires it -- guided by angelic hands. Certainly -- for the immediate context does tell us this much -- the lying prophets who lured Ahab to the place of "arrow exposure" lied because of the spirits which moved them.
Now, insurance companies and others who deal with risk management -- that would include all investors or traders in financial markets -- must deal with the idea of which caused what. Investors demand explanations for price surges of commodities, people blame oil companies, we praise good company managers whose stock price soars on good news which they helped bring about by business-saavy efforts.
But there are far too many causal variables in the picture. One market affects another, political uprisings half-way around the globe cause oil prices to surge, even rumors of takeovers (buyouts) can cause a particular stock's price to soar or plunge. So the task of incorporating all the apparently chaotic -- meaning unpredictable -- factors involved in any one market trading day seem mind-bogglingly unmanageable.
And yet, the ever present lure of money to be made if one can accurately depict the conditions in this or that market even one day ahead press the point of expensive efforts (and not a little software) to try to forecast accurately tomorrow's financial state. We just can't "let it go," where the dominion mandate and profit motive bids us press on. So how to properly manage this chaotic but potentially oh-so-profitable tangle of ours?
The Bible offers two answers. First, we must emphasize the ethical aspects of trading. That's right -- ethics not math -- forms the bibical basis of long-term profit. God blesses some kinds of actions and curses others. Each leads to the expected outcome upon your income. All of life is covenantal, and this includes trading. Righteousness exalts a nation, and through the blessing of the upright is the city exalted.
Second, having seen to our duties as the Bible requires, we are then to move onto the next most important parts of trading, those concerning skills. Skills come in sets, each appropriate to the better performance of some professional undertaking. "Do you see a man skilled in his work? He will serve before kings [who notoriously pay the best], not before obscure [common] men."
This is where the stochastic question enters the picture, to which, of course, the Bible has the answer. The outline of its answer, I have given briefly in expounding the ideal of creating an objective -- non-arbitrary, real-time and corresponding -- financial data feedback system.
Mister Bible guy: How do you manage the massive influx of all the variables which could possibly or likely affect your stock price, or that of the stocks you are considering for your portfolio?
Bible Guy: You do not. You are not God, and every fact is a fact "in relation" to all other facts. You are not omniscient, and you never will be. So the Bible says, "Do not boast about tomorrow; for you know not what a day may bring forth."
What you do is this: You find -- study and isolate -- the most covenantally-relevant features affecting pricing in the markets in which you trade, and you use these representatively -- for representation is point #2 of the covenant -- to formulate a stochastic equation to manage these. The Bible acknowledges that "too much data" is the problem for non-omniscients like you and me.
The solution is not to know everything, but to isolate the most relevant features for the markets in which you trade, and for the stocks -- or options, etc -- you prefer. This will necessarily have individual-specific features. It is not a one-size fits all project, since different markets display different prominent features as most "covenantally relevant."
Here is a text from ecclesiastes (5:4-6) showing the direct relevance between oath-keeping and your income:
"When you make a vow to God, do not delay in fulfilling it. He has no pleasure in fools; fulfill your vow. 5 It is better not to vow than to make a vow and not fulfill it. 6 Do not let your mouth lead you into sin. And do not protest to the temple messenger, "My vow was a mistake." Why should God be angry at what you say and destroy the work of your hands?
Is is lawful to trade derivatives -- futures and options -- since some of these instruments are "layered," i.e. not fully collateralized? The short-term answer is "I don't know," but I do know that the Bible has the answer. I cannot study everything in a day. And if it is not lawful, you should avoid trading them since -- God commands us not to do that which is unlawful and because this will harm your long-term trading prospects. God only blesses well-doing in the markets. But these are the kinds of questions you need to ask to do the job right. You have to know the ethical side of trading.
Back to stochastics. Statistical management of "bumpy randomness" has a biblical warrant with respect to utility. We can create math formula which help isolate and forecast market features of the greatest covenantal import. Some of these features are covenantal simply because the Bible teaches on these topics. For example, the Book of Ecclesiastes tells us about expanding (emerging) markets in these words:
Ecclesiastes 5:11 reads:
"As goods increase, so do those who consume them. And what benefit are they to the owner except to feast his eyes on them?" The first part of this text indicates that as the pool of labor (and GNP) expands, a rise in consumerism always attends it. The larger the number of people actually working, the greater that nations totally discretionary income. This in fact is the backbone of capitalism, and the reason why free-market capitalism always generates a higher standard of living for more people.
With the freedoms necessary to let wage-earners and would-be employers negotiate the best price between themselves, the largest number of people will gain employment (everyone who wants it), thus learning skill sets from on the job training and task management which in turn make them still more marketable to raise the price of their next negotiation with future employers. They also gain colleagues who can help them this way (never underestimate people in your "network" as excellent resources). Experience looks good on a resume.
Such freedom as free markets require also allow people to start their own businesses, perhaps after gaining some experience of a particular kind working in some field or other. This also provides two other freedoms. Businesses, when they grow, hire more people. And starting them provides opportunities for would-be investors to own shares of a promising company, enabling them to supplement their income with labor and skill sets that you and your excellent company expend. In any case, Solomon notes by way of careful observation that employing a larger number of people (expansion of an economy) results in a rise in consumer spending. And so it does. This also implies that people tend to spend what they earn. Saving and investing do not come naturally, as these are future-oriented financial activities, not fast food purchases with extra cheese.
Since the Bible plainly teaches this connection between GNP and consumerism (and its economic implicates which I have not fully explored here), I regard it and its implicates as covenantally relevant and established. The three Persons of the godhead cannot lie, and "every matter is established on the testimony of two or three valid witnesses." Between biblical passages on economic topics, and the many implicates they bear (esp. when compared to one another), Christians might be surprised to find | |
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