Why is it that many of my favorite videos on YouTube have only 48 hits? Check out this one by The Stems, a band from Perth, Australia. I can't stop playing it on the bass.
Thursday, June 9, 2011
Tuesday, June 7, 2011
Folks, This Is Not A New Game We Are Playing
"All the perplexities, confusion and distress in America
arise not from defects in their Constitution or Confederation,
nor from want of honor or virtue, so much as downright ignorance
of the nature of coin, credit, and circulation."
nor from want of honor or virtue, so much as downright ignorance
of the nature of coin, credit, and circulation."
John Adams in a letter to Thomas Jefferson, 1787
Latest Observations
The quote by Adams and the latest chart of the Adjusted Monetary Base are submitted without comment. Is any needed?
I will, however, leave with a few rhetorical questions: How can you not buy all the gold and silver you can in this environment? Aren't ten years in a row of gains enough for you? Do you seriously believe that the government will rein in spending? Is a trillion and a half dollar annual deficit not a big number to you?
Just sayin'.
Thursday, June 2, 2011
The Danger of Living on Bread and Circuses: Alice Schroeder
http://www.bloomberg.com/news/2011-06-02/the-danger-of-living-on-bread-and-circuses-alice-schroeder.html
Rome in the first two centuries A.D. faced a yawning gulf between rich and poor. The mighty empire built on tribute reached its geographic limits. Its economy created few exportable goods. Slaves acquired by conquest built most of its bridges, roads and aqueducts and took jobs in farming, mining and construction. As this cheaper labor replaced Roman citizens, idle, unemployed, hungry people filled the capital.
The Caesars created make-work and part-time jobs, subsidized housing and doled out grain. Even more, they found, was needed. “A people that yawns is ripe for revolt,” wrote Jerome Carcopino in “Daily Life in Ancient Rome.”
The emperors added holidays until, eventually, the Romans spent half their days attending gladiator games, public executions and chariot races. Disgusted, the satirist Juvenal accused his fellow citizens of selling out for bribes of “bread and circuses.” The Romans did nothing to prove him wrong, until two centuries later the empire was divided forever and Rome was sacked by Visigoths.
The complicated causes of Rome’s decline have long fascinated historians, and provide a lens through which to examine the vulnerability of other dominant cultures. Americans’ addiction to entertainment has been compared to the circuses of ancient Rome. We can, and do, spend much of our free time watching dreck on TV like “Half Pint Brawlers,” about a company of self-styled “midget wrestlers” who attack each other with staple guns and broken bottles. In fact, in 2009, people over age 15 spent an average of 58 percent of their leisure time watching television, playing games and using the Internet -- an increase of 16 percent from 2003.
Although hit hard by the recession, spending on digital media has now begun to rebound. The question is who benefits. We produce a lot of content, yet most of the devices it comes on are not made in the U.S.
The conquest-driven Romans stand out in history as an extreme example. They brought home their imports, including slave labor, as plunder. This made the “bread” as cheap as it could be, and put the Romans themselves out of work.
We merely face a situation in which our labor costs, laws and regulations make U.S. business less competitive than that of other countries. In the 1990s, manufacturing workers went through a draconian loss of employment as work was sent offshore. The very thing that drove the jobs overseas made the bread cheap. During the high-growth bubble decade that culminated in 2008, the sales growth rates of basic consumer goods such as apparel, cars and sporting goods averaged less than 2 percent, so low as to be deflationary in real terms.
The proportion of our total population that is currently working has fallen to 58.4 percent, the level it was in 1983, when far fewer women were in the job market.
Simply put, what has been good for American consumers hasn’t been good for workers.
Look at the big picture, and you also see how, unlike Rome, whose armies looted the lands they conquered, the underemployed U.S. must borrow money to pay for our bread and circuses. Rome was so rich that it took hundreds of years for the empire to crumble. We’re broke, which accelerates the day of reckoning. Reform of U.S. entitlement spending would buy us time, but wouldn’t fix the employment situation.
On a positive note, this bread-and-circuses economy does offer new opportunities. People who can help make things cheaper will do well. They can use digital technology to build businesses of truly global scale. Lastly, anyone who can satisfy the public’s lust for mind-rotting drivel has a viable career ahead in a growth industry.
Drowning a country in vicarious debauchery may be a lousy way to sustain a civilization. Still, there is something to be said for “Half Pint Brawlers” and its ilk. TV-watching keeps people at home, instead of marching in the streets.
(Alice Schroeder, author of “The Snowball: Warren Buffett and the Business of Life” and a former managing director at Morgan Stanley, is a Bloomberg News columnist. The opinions expressed are her own.)
Rome in the first two centuries A.D. faced a yawning gulf between rich and poor. The mighty empire built on tribute reached its geographic limits. Its economy created few exportable goods. Slaves acquired by conquest built most of its bridges, roads and aqueducts and took jobs in farming, mining and construction. As this cheaper labor replaced Roman citizens, idle, unemployed, hungry people filled the capital.
The Caesars created make-work and part-time jobs, subsidized housing and doled out grain. Even more, they found, was needed. “A people that yawns is ripe for revolt,” wrote Jerome Carcopino in “Daily Life in Ancient Rome.”
The emperors added holidays until, eventually, the Romans spent half their days attending gladiator games, public executions and chariot races. Disgusted, the satirist Juvenal accused his fellow citizens of selling out for bribes of “bread and circuses.” The Romans did nothing to prove him wrong, until two centuries later the empire was divided forever and Rome was sacked by Visigoths.
The complicated causes of Rome’s decline have long fascinated historians, and provide a lens through which to examine the vulnerability of other dominant cultures. Americans’ addiction to entertainment has been compared to the circuses of ancient Rome. We can, and do, spend much of our free time watching dreck on TV like “Half Pint Brawlers,” about a company of self-styled “midget wrestlers” who attack each other with staple guns and broken bottles. In fact, in 2009, people over age 15 spent an average of 58 percent of their leisure time watching television, playing games and using the Internet -- an increase of 16 percent from 2003.
Digital Age
When entertainment dominates a society, it changes more than the culture; it also reshapes the economy. You can see that circuses are where the money is from the rise of digital entertainment, which has steered enormous amounts of discretionary income toward digital content and the devices that run it: laptops, televisions, gaming consoles, smart phones. In the decade leading up to the 2008 financial crisis, the only major industry other than health care that consistently showed strong real growth was consumer electronics.Although hit hard by the recession, spending on digital media has now begun to rebound. The question is who benefits. We produce a lot of content, yet most of the devices it comes on are not made in the U.S.
Trade Imbalances
This exemplifies another problem that vexed the Romans and faces us today: Dominant economies tend to import more than they export, creating trade imbalances. The manufactured stuff of life, basic items such as food, clothing, cars, phones and furniture -- the bread, as opposed to the circuses -- costs less to buy if produced elsewhere than if made by a highly developed country’s own citizens. The result is a loss of jobs at home.The conquest-driven Romans stand out in history as an extreme example. They brought home their imports, including slave labor, as plunder. This made the “bread” as cheap as it could be, and put the Romans themselves out of work.
We merely face a situation in which our labor costs, laws and regulations make U.S. business less competitive than that of other countries. In the 1990s, manufacturing workers went through a draconian loss of employment as work was sent offshore. The very thing that drove the jobs overseas made the bread cheap. During the high-growth bubble decade that culminated in 2008, the sales growth rates of basic consumer goods such as apparel, cars and sporting goods averaged less than 2 percent, so low as to be deflationary in real terms.
‘Service Economy’
Offsetting the loss of manufacturing work, the leverage- happy bubble era created so many jobs for bankers, hairstylists, airline ticket agents and home health aides that we began to describe ourselves as a “service economy.” But service businesses are vulnerable to the very same forces that drove the fat out of manufacturing. Take retailing. Since the 1990s, businesses that helped make the bread cheaper, such as superstores and warehouse clubs, were the only major category of retailers to show strong growth. Now these businesses, too, are severely pressured by more efficient online sellers, which are growing twice as fast as their offline counterparts.The proportion of our total population that is currently working has fallen to 58.4 percent, the level it was in 1983, when far fewer women were in the job market.
Consumers and Workers
It’s true that this percentage should improve as the economy moves past the lingering effects of the financial crisis, but recovery won’t alter the fundamental trend. Structural forces are creating some very serious employment headwinds, faced especially by younger, less educated men.Simply put, what has been good for American consumers hasn’t been good for workers.
Look at the big picture, and you also see how, unlike Rome, whose armies looted the lands they conquered, the underemployed U.S. must borrow money to pay for our bread and circuses. Rome was so rich that it took hundreds of years for the empire to crumble. We’re broke, which accelerates the day of reckoning. Reform of U.S. entitlement spending would buy us time, but wouldn’t fix the employment situation.
On a positive note, this bread-and-circuses economy does offer new opportunities. People who can help make things cheaper will do well. They can use digital technology to build businesses of truly global scale. Lastly, anyone who can satisfy the public’s lust for mind-rotting drivel has a viable career ahead in a growth industry.
Drowning a country in vicarious debauchery may be a lousy way to sustain a civilization. Still, there is something to be said for “Half Pint Brawlers” and its ilk. TV-watching keeps people at home, instead of marching in the streets.
(Alice Schroeder, author of “The Snowball: Warren Buffett and the Business of Life” and a former managing director at Morgan Stanley, is a Bloomberg News columnist. The opinions expressed are her own.)
Tuesday, May 31, 2011
Monday, May 30, 2011
Modern Day Tea Leaf Reading
I have been actively speculating in the stock market for a few years now. I call it speculating as opposed to investing since investing in my mind involves long term goals based on fundamentals as well as possible usability of what is purchased. Speculating to me is simply trying to make a short-term profit without regard to fundamentals. Therefore, I am more interested in current public sentiment than I am long-term fundamentals.
The way to determine public sentiment is by the use of historical charts. For a long time chart-reading was considered akin to divination. There are still some who don't put so much importance on it but I am for whatever works. The thing about reading charts is they are open to interpretation. It is definitely not an exact science but we are dealing here with decisions and actions of a large bunch of people. When you're dealing with herd mentality you can get surprised at times but the charts show that a herd's major moves can be predicted with a good degree of certainty.
I remember when I first started looking at charts. I couldn't get much useful information out of them because I didn't know what I was looking at. I eventually learned about "indicators" which are mathematical formulas derived from the charts which show which way the herd is favoring. "The trend is your friend" is a common and useful saying.
My favorite indicator is named the MACD, short for Moving Average Convergence/Divergence. The MACD has only been around since the 1970s! Here is a wikipedia link explaining it. The chart below is from the article.
For the example above this means:
What this tells me is when the moving lines goes south of the zero line, sentiment is more negative than positive, and when it goes north it is more negative. But the real fun starts when the blue MACD line crosses the red MACD signal line. Keep in mind that the MACD is a "lagging indicator," so we are not trying to find an exact bottom or top. If you want the exact bottom or top I say good luck. I am only interested in trends. I will let the herd change course before I put my money to work. There is still plenty of money to be made without picking the bottom or top. (There is some debate how dependable the MACD is. I have found that it is very dependable in precious metals and mining stocks but not as dependable elsewhere. That's fine with me as I concentrate on precious metals).
So let's see how this works in the real world. Here is a 1-year daily chart of Silver Wheaton, or SLW. I recommend opening another browser showing this blog so you can look at the chart on one side of the screen while you read the comments below.
The top chart are "candlesticks" which show the daily price action, volume is numbers of shares traded, then we have our MACD with the RSI below it, the Relative Strength Indicator. We won't talk about that one today.
We see that this stock went from under $20 to $47, came back down some, and is now at $36.53. Of course it didn't go in a straight line because that isn't how sentiment works, but if you followed the MACD you would have done well. Again, we are looking for when the blue line crosses the red line. You can see the MACD turned north early in August when the price was under $20, but let's call it $20. It then went up to about $27 by early October and flattened out while the MACD turned south slightly saying to sell. It then turned up again at the first of November at $28 and shot up to $35 in a little over a week. The MACD wanted to turn down but didn't quite cross. It finally crossed down hard in December at say $38, went down until $30, then turned up and went all the way to $45 and turned down and said to get out. Even though it went down to $38 and back up to $47, the MACD said "be wary." It then ripped down hard to the $33 area and has now turned back up again.
What we can see here is the zero line is quite important in reading sentiment. The MACD was only below the zero line three times in the last year. The farther the line goes below the zero line the worse sentiment is, and the farther the line goes above the zero line the higher sentiment is. The way you use this is, to buy cheap, you have to buy when sentiment is too bad and sell when sentiment is too good. This is what the MACD does for me in the precious metals arena.
Secondly, the severity of the crossing of the line usually involves more volatility. People are throwing in the towel at lows and piling in with buying at the top. People jump on the bandwagon en masse near tops and sell like it's 1929 at lows, it's just how people are.
Here is a 6-month chart of the same stock. (Move your other browser down to the 6-month chart). How would you have liked a nice little 50% profit in 5 weeks, $30 to $45?
By using the daily chart we see that you could have sold in December, waited until the first of February to buy in at $30, sold out at say $44 only 5 weeks later, and bought back in last week at $34. Notice how the MACD tried to move north at the end of March but it was above the zero line. These moves are not as strong because sentiment is already positive, or above the zero line. Yes, the price WAS going up, but we were running out of buyers. The up-turn last week was way below the zero line and indicates another very profitable and playable move. Also, the angle of crossing and its ascent is sharp which is very good. I got in at $34.50 and am already up $2/share and will hold on for a nice ride. When the MACD turns up like this below the zero line then in my opinion this is where there is the least risk. You just can't let the first down day scare you out.
So when you play the daily chart the moves are normally a few weeks to a month or two, sometimes longer. Of course it doesn't go in a straight line and shorter-term traders are buying and selling the whole time. You have to figure out what kind of trader you are, in other words, what time frame you are comfortable with. I prefer the daily charts. You can play shorter or longer time frames, but the shorter time frames are probably less reliable because they are smaller herds.
These charts can be found at bigcharts.marketwatch.com. Enter SLW and click on Advanced Chart. You can then select indicators as well as time frame and chart style. I also use a 9-day SMA or Simple Moving Average which is embedded on the top chart. The candles tend to stay above the line on up moves and below the line on down moves if you want intermediate plays.
To quote the Mogambu Guru, this investing stuff is easy!
The way to determine public sentiment is by the use of historical charts. For a long time chart-reading was considered akin to divination. There are still some who don't put so much importance on it but I am for whatever works. The thing about reading charts is they are open to interpretation. It is definitely not an exact science but we are dealing here with decisions and actions of a large bunch of people. When you're dealing with herd mentality you can get surprised at times but the charts show that a herd's major moves can be predicted with a good degree of certainty.
I remember when I first started looking at charts. I couldn't get much useful information out of them because I didn't know what I was looking at. I eventually learned about "indicators" which are mathematical formulas derived from the charts which show which way the herd is favoring. "The trend is your friend" is a common and useful saying.
My favorite indicator is named the MACD, short for Moving Average Convergence/Divergence. The MACD has only been around since the 1970s! Here is a wikipedia link explaining it. The chart below is from the article.
For the example above this means:
- MACD line (blue line): difference between the 12 and 26 days EMAs
- signal (red line): 9 day EMA of the blue line
- histogram (bar graph): difference between the blue and red lines
What this tells me is when the moving lines goes south of the zero line, sentiment is more negative than positive, and when it goes north it is more negative. But the real fun starts when the blue MACD line crosses the red MACD signal line. Keep in mind that the MACD is a "lagging indicator," so we are not trying to find an exact bottom or top. If you want the exact bottom or top I say good luck. I am only interested in trends. I will let the herd change course before I put my money to work. There is still plenty of money to be made without picking the bottom or top. (There is some debate how dependable the MACD is. I have found that it is very dependable in precious metals and mining stocks but not as dependable elsewhere. That's fine with me as I concentrate on precious metals).
So let's see how this works in the real world. Here is a 1-year daily chart of Silver Wheaton, or SLW. I recommend opening another browser showing this blog so you can look at the chart on one side of the screen while you read the comments below.
The top chart are "candlesticks" which show the daily price action, volume is numbers of shares traded, then we have our MACD with the RSI below it, the Relative Strength Indicator. We won't talk about that one today.
We see that this stock went from under $20 to $47, came back down some, and is now at $36.53. Of course it didn't go in a straight line because that isn't how sentiment works, but if you followed the MACD you would have done well. Again, we are looking for when the blue line crosses the red line. You can see the MACD turned north early in August when the price was under $20, but let's call it $20. It then went up to about $27 by early October and flattened out while the MACD turned south slightly saying to sell. It then turned up again at the first of November at $28 and shot up to $35 in a little over a week. The MACD wanted to turn down but didn't quite cross. It finally crossed down hard in December at say $38, went down until $30, then turned up and went all the way to $45 and turned down and said to get out. Even though it went down to $38 and back up to $47, the MACD said "be wary." It then ripped down hard to the $33 area and has now turned back up again.
What we can see here is the zero line is quite important in reading sentiment. The MACD was only below the zero line three times in the last year. The farther the line goes below the zero line the worse sentiment is, and the farther the line goes above the zero line the higher sentiment is. The way you use this is, to buy cheap, you have to buy when sentiment is too bad and sell when sentiment is too good. This is what the MACD does for me in the precious metals arena.
Secondly, the severity of the crossing of the line usually involves more volatility. People are throwing in the towel at lows and piling in with buying at the top. People jump on the bandwagon en masse near tops and sell like it's 1929 at lows, it's just how people are.
Here is a 6-month chart of the same stock. (Move your other browser down to the 6-month chart). How would you have liked a nice little 50% profit in 5 weeks, $30 to $45?
By using the daily chart we see that you could have sold in December, waited until the first of February to buy in at $30, sold out at say $44 only 5 weeks later, and bought back in last week at $34. Notice how the MACD tried to move north at the end of March but it was above the zero line. These moves are not as strong because sentiment is already positive, or above the zero line. Yes, the price WAS going up, but we were running out of buyers. The up-turn last week was way below the zero line and indicates another very profitable and playable move. Also, the angle of crossing and its ascent is sharp which is very good. I got in at $34.50 and am already up $2/share and will hold on for a nice ride. When the MACD turns up like this below the zero line then in my opinion this is where there is the least risk. You just can't let the first down day scare you out.
So when you play the daily chart the moves are normally a few weeks to a month or two, sometimes longer. Of course it doesn't go in a straight line and shorter-term traders are buying and selling the whole time. You have to figure out what kind of trader you are, in other words, what time frame you are comfortable with. I prefer the daily charts. You can play shorter or longer time frames, but the shorter time frames are probably less reliable because they are smaller herds.
These charts can be found at bigcharts.marketwatch.com. Enter SLW and click on Advanced Chart. You can then select indicators as well as time frame and chart style. I also use a 9-day SMA or Simple Moving Average which is embedded on the top chart. The candles tend to stay above the line on up moves and below the line on down moves if you want intermediate plays.
To quote the Mogambu Guru, this investing stuff is easy!
Saturday, May 28, 2011
August 15th, 1971
This is the infamous video clip of Richard Nixon welching on the promise to redeem paper Federal Reserve Notes in gold, as was promised to the world in the Bretton Woods agreement of 1944. While Tricky Dick blamed evil speculators for crisis, there remained one reason and one reason only why the United States welched. This is the same reason the printers of paper money have welched since the creation of paper money...they always print and print until the bluff is called. Come on, it isn't rocket science!
Friday, May 20, 2011
In Honor of The End of the World
Here is a video of a great local band I used to go see in Tempe, AZ ten years ago called Bit O Jane. The song is about an end of the world prediction. These guys were over the top talented. I just inserted a picture of a place a couple of miles away so it is crude, but dig the song!
The title is Another Song, written and sung by Andy Langlois. It is 9 minutes long, a jam song.
http://www.youtube.com/watch?v=cf38HexW-Vk
The title is Another Song, written and sung by Andy Langlois. It is 9 minutes long, a jam song.
http://www.youtube.com/watch?v=cf38HexW-Vk
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