Good Evening and Good Night: Portfolio/Market Update, July I - part two

link to part 1

"It is better that one should suffer than that many should be corrupted. Consider the matter dispassionately, Mr. Foster, and you will see that no offense is so heinous as unorthodoxy of behavior.” Brave New World

(Francesca Albanese)

Good Evening.

Reality and topologies vs narrative and stories: which?

I made money for the family I was born into using the financial markets for about three decades beginning in the mid 80's, from high school. That sort of thing has always been relatively easy for me: look outside at the world, at a subject in the world - the real world; notice how a model of the same aspect is representing it - from betting on American football to currency exchanges to different bond and equity prices; smell it, that extant model or valuation in context - to sense if it tastes right; if it doesn't, accumulate information in all and anyway you can - then eat it, digest it, eat some more until the thing starts coming clear, starts smelling right; finally, see what you can do to have fun with it - the money, the win, the whatever the goal. 

Usually that means taking something of a risk, that articulating an affect: buying a currency, giving a football team plus points, selling a company bond, etc. Because reality is out there and can to most useful effects be delineated: this national economy is solid and has little governement debt; one team won the super bowl last year by that many points; this company's financial statement doesn't square. 

It doesn't matter what you or this group thinks or that analyst said or that phd lectured or what 'science says' (good grief - when did that horrid, malignant phrase enter popular parlance? Science rests on uncertainty. Or it isn't science.) Reality, way back then and pretty much until a few years after the financial crisis of 2008, eventually makes its way into market representation. It's the market that represents reality - not the other way round. Sure, it's always a bit of a dialoge of course but... reality trumps. Models only model reality.

 That should be banal. Yet, today, it - reality - usually isn't even considered. Reality must imitate markets. And prosaics, the dull but reassuring story I tell myself or that my group tells itself, trumps reality. (In case one insists on being part of the cool or smart group even here: as an entire group the older left displays that sort of fanaticism and fundamental stupidity much more than maga-ians. Many magas voted for Obama and will vote for Mamdani, though with diminished expectations. 'Wokians' on the whole overwhelmingly still prefer their stories and public personalities to reality and unfaltering principles, still believe Obama as having been a good, peace-loving president, still need that thier pompous social hierarchical grooves instead of mea culpa and personal change. Blue pill folk.) 

Though something of that kind of duality has always been around, the acceleration vis-a-vis markets can be traced rather directly to the way the so-called Great Recession of 2007 was resolved. Namely that it wasn't and still hasn't been. Merely a marked acceleration of what had been ongoing for the previous decade and a half - historic accumulation and extreme concentration of wealth, dismantlement of government and destruction of production, collective identity and personal affect in the west; development of relative well-being, diffusion of wealth and a healthy 'fuck you' to international finance and banking dominance in the so-called global south.

The obfuscation of reality by various means might be the worst aspect of the preceding 2 decades, mostly designed, I think, by a relative very few rather mad, malificent people. Technology has accelerated the deal. Swipe left. Describe the Ukraine affair as a losing proxy war - and get labelled a Putin troll. Swipe. Note the number of bombs and wars and deaths caused by the Obama or Biden administrations - be dismissed as a maga fascist. Scroll. Appreciate Mamdani's platform and applaud his election - get guffawed as a naive socialist. Thumbs down. Genocide! - Antisemite and sanctioned (though at least most have, if quietly, accepted that real time horror show)! Data on the danger of s-protein mrna anti-covid injections - ignorant conspiracy theorist! Data on temperature or association of compostion with the same - brainwashed woke. And on. Bring all the data you want to a discourse: whatever story defines your interlucator's role of affect remains determinate, entirely, to him-her-them. While you... are swiped away. Cassandra lives here. Reality - doesn't count anymore. At least for some.

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disclaim and all: (Note to anyone perusing: for now, I've none of these things - those who know me know the primary cause. He did actually steal literally every thing. Just suggestions these and no conflicts of interest or certified advice. Investing, or betting, is always problematic and filled with risk. Then again, so can be eating a pizza.)

For others, likely most, it does. Reality remains - and that's a problem to some. Well, to those who consider you as livestock, mostly. But most of those people who accept reality don't have any let alone a large stake or influence in market valuations and asset prices, which are basically - if the magnificent 7 are included - insane. In much of the west. A change is gonna come - but how and when is a bit tricky to figure.

Because those who wish to throw away the perception and consequences of reality, for various motivations, remain at work (see 'kicking the can post: link. ) Legislated repression (on governement bond interest,) stablecoins and CDC's (digital currencies,) very soon to be here - and offered around the world (likely via easy credit.) In simple terms: the USA-London economy doesn't really make much anymore - except for debt. Call it credit. Which is being weaponized. And expanded. We're already at the door of necessary re-financing of a massive chunk of US debt - which would have caused a squeeze. But many measures have been taken. Still, it will come.

So... in the practice portfolio the direct hedges aren't time-set (options) but simply things to wait on: shorting the q's (QQQ ticker symbol, the Nasdaq,) a little and buying-trading a lot of the VIX (using VXX ticker, volatility.) It's mid summer - this later rarely jumps until September-October. Because at least a substantial fall is not merely the least unlikely but probable outcome even if transient. Policy is creating a wave of easy credit again in a host of ways but--- it won't be enough to eliminate pesky reality. 

We could, you know, make such a beautiful, real world. It is up to you, to us. And it's much easier and more direct than you've been led to imagine. It does, however, require letting go and fighting for something.. big.

Hmmm. Alas, my next video clip is a tad too long so youtube has abandoned processing it. So... replace with something funner: