Saturday, November 23, 2013

Stable value II: Seeding the chimera ...

Moral: Wherein we continue to argue the seminal importance of stable value, versus the chimera, to a sustainable economy.

... and feeding the game.
            (which is to bulge the markets, then pull off from the top,
                          and let the masses/poor suffer the consequences)

We might also say that this is a lesson for Janet, and for Ben, if it's not too late.


Motivation: For the past three years, I've marveled at how the markets would shoot up after a loss, as if seeding were taking place. Recent readings on AT (algorithm trading - includes a bunch of stuff, including high-frequency trading) are the basis for the following. We will summarize some of these. Too, we can look at how seeding keeps things going up enough to motivate the moms and pops (as we see now) to put in their real (as in, earned by other than ill-begotten gains) into the game. At which point, there'll be a massive sell off by those who will take their "gain" leaving the moms and pops holding the bag (depleted and shriveled, as it will be at that point). Of course, then the likes of Warren and other bottom feeders come to play.


Lesson one: If you have a stable-value asset, you can go and extract your principle at any point. Too, the principle does not diminish (insured - however, as we know from AIG, and its ilk, insurers are bosh, to boot). Now, if I'm in the chimera, and if I take early, I can laugh all the way to the bank. On the other side, if I am real long, perhaps way down the pike, I might make something.

Lesson two: How is that? Consider, when stock is sold higher (sold by an insider, bought by a stupid optimist), all stock of that ilk goes up. You see, money is pulled out of the air and reported. Ah, the DOW went up, it is reported (everything is gold-plated - skies are clear, the future rosy -- hah -- this, by the way, is where the rising water level really comes from -- except, we're not talking about something real, with water, like the Panama Canal). Okay, we see a lot of stocks changing hands, but does the whole mix of a type trade? No. This is why CHIMERA is very much apropos. Now, those running the game will talk value and pricing, etc. Yes, there are real things behind the stock (if it's legit - but, FB? wouldn't you say wishes are what's there?). These, depending upon the view, have value anyway exclusive of what the gamersters say (who do not add value). Too, we can talk about future earnings, and such. Yes, that's true. But, stable value would provide a better basis (we'll get to that) than the shaky basis (supposedly capitalism at its best via the ca-pital-sino).

Lesson three: Now, stable value can lose some. It can lose a lot. Yet, if done right, it is more apt to pay for all invested than the market and its chimera. You see, if stock is sold lower (several ways this might happen, such as insider as buyer), all of the ilk get the negative influence. The trouble is that when there is a downturn, the value (per) keeps dropping draining the water level substantially. Moms and pops are ruined (we know the stories).

Lesson four: ...


Now, as of yesterday, we're at the point were regular people are pulling their money from supposedly safe places (no such thing under Ben) into the chimera. That doesn't denote a bubble? Oh, things will be dire this time around.

Image obtained from Seeking Alpha,
see posts on this blog,
Source: Bernanke's put to expire
One of the money handlers did a report. Oh yes, ordinary workers can accumulate $1M by following a few rules, one of which, incidentally, is living beneath one's means (saving, and hoping to not be slapped silly by the Bens and Janets of the world). That's fine. Too, if your employer matches savings, well, get the money while the getting is good. Then, the problem is the experts argue for the necessity of the chimera.

That necessity argument is not true. We can show how following the rules, except for the chimera part, does work when using a good stable value approach (ratcheting, if you would). Yes, one can get up to 7 figures using tried-and-true techniques. However, it does require discipline. And, not keeping up with those Jones' and their arses is one thing that the money people didn't mention (why? ah, they're into luxury -- where is the money manager who will take a vow of poverty and simple living?).


The above-referenced articles talk about the research that needs to be done with regard to AT. Yet, these financial engineers (flim-flammers, in my opinion) have been allowed to spawn such off on the economy. That is, we have this ilk wrapping crap into gold (misusing-abusing mathematics and computing) and telling us that it doesn't stink. Silly games indeed.

Note: This is mostly done, except to map in pointers to posts from 2008, 2009, and onward talking this same stuff. Finance as fiction is very much still true - despite all of the suffering of the past few years. Do those intellectuals and fat cats ever learn that their actions trickle down more negatively than not?


By the way, the AT folks also use experiment and such. Dear rational folks, wherever you are, what parent, in their right mind, would experiment with their kids in a manner with severe negative consequences as a possible end? Wait, probably more than we would expect. How can we lift the maturity level of these gamerster who have been allowed to shroud themselves in a "market " aura while really they're mostly about the continual fleecing of the populace?

Remarks:  Modified: 01/15/2015

11/24/2013 -- The ACM has a review article on algorithmic trading that everyone ought to read. Essentially, if we use a plane as an example (consider what Boeing has had to do to get the 787 out and about), we would say that the financial folks are putting passengers on experimental aircraft with little regard to their safety and comfort. The whole notion is atrocious. How does it happen? They've coached things in mathematics and computerese, plus they've bastardized Adam Smith's ideas. Where is our sandbox, and where is the stable economic system that we can build?

12/03/2013 - Where would we be without Bing? This is too rich. In terms of the sons of Samuelson, we have to be looking at the entrapment being laid upon us by the technical pursuit of stupid goals. Yes, said that right. Because certain pockets are filled to bulging and particular "families" reap the reward for generations (as opposed to the general population - US, okay? - are being indebted to several generations out) is not grounds to claim that these methods are anything other than shortsighted and inimical, beyond imagination. ... Now, we're hearing that Janet is as clueless as was her predecessors. But, that is a whole other issue. ... For a time, there was consideration of changing the focus of this blog, but after a little elapse (and removal - such as, 48 hours unplugged from all things web and cloudish) it's obvious that the discussion needs to be held and the truth grappled with (dangled by choice). One new thrust will be a re-look at the Lord/serfs thing (especially, in the perspective of families who have held on to their trusts over many generational changes - see The Atlantic for an article that grates - we'll explain).

12/05/2013 -- If only Ben would put a shot across the bow.

12/16/2013 -- HFT's contributions to the turmoil'd (froth'd) markets.

12/19/2013 -- Ben did his parting shot (whimper that it was); they're going to taper slowly, less than a 1/8th on the bond buy, starting next month. And, he's going to torture savers for another year or so. We'll have to see how the pieces fall. The markets got heavily seeded today in hopes of luring in the idiots and moms/pops (who cannot afford the pending losses). So, it's pop, fizz, ..., again. Too, we'll see more goo-goo talk to the immature markets and the addicted investors thereof. One of many technical issues that we'll have to get into: Nanex's view.

09/17/2014 -- Yes, she did. The coo-coo, goo-goo goes on. The landscape is strewn with the lifeless bodies of the savers. Thanks, Janet.

01/15/2015 -- At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

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