Understanding The Cryptocurrency Boom

I recently came across a December 1996 San Jose Mercury News article on tech pioneers’ attempts to carry the pre-browser Internet’s bulletin board community vibe over to the new-fangled World Wide Web.
In effect, the article is talking about social media a decade before MySpace and Facebook and 15 years before the maturation of social media.
(Apple was $25 per share in December 1996. Adjusted for splits, that’s about the cost of a cup of coffee.)
So what’s the point of digging up this ancient tech history?

 1. Technology changes in ways that are difficult to predict, even to visionaries who understand present-day technologies.

 2. The sources of great future fortunes are only visible in a rearview mirror.

Many of the tech and biotech companies listed in the financial pages of December 1996 no longer exist. Their industries changed, and they vanished or were bought up, often for pennies on the dollar of their heyday valuations.
Which brings us to cryptocurrencies, which entered the world with bitcoin in early 2009.
Now there are hundreds of cryptocurrencies, and a speculative boom has pushed bitcoin from around $600 a year ago to $2600 and Ethereum, another leading cryptocurrency, from around $10 last year to $370.
Where are cryptocurrencies in the evolution from new technology to speculative boom to maturation? Judging by valuation leaps from $10 to $370, the technology is clearly in the speculative boom phase.
If recent tech history is any guide, speculative boom phases are often poor guides to future valuations and the maturation trajectory of a new sector.
Anyone remember “push” technologies circa 1997? This was the hottest thing going, and valuations of early companies went ballistic.  Then the fad passed and some new innovation became The Next Big Thing.
All of which is to say: nobody can predict the future course of cryptocurrencies, other than to say that speculative booms eventually end and technologies mature into forms that solve real business problems in uniquely cheap and robust ways no other technology can match.
So while we can’t predict the future forms of cryptocurrencies that will dominate the mature marketplace, we can predict that markets will sort the wheat from the chaff by a winnowing the entries down to those that solve real business problems (i.e. address scarcities) in ways that are cheap and robust and that cannot be solved by other technologies.

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"The Big Short's" Steve Eisman Reveals What The Next Big Short Is

“That Wall Street has gone down because of this is justice… They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

      – Steve Eisman

One decade before he became famous for the being the inspiration behind Mark Baum’s character, played by Steve Carell in the movie the “The Big Short”, Steve Eisman was making hundreds of millions predicting the next big short, namely the collapse of the subprime mortgage industry. Which is why every appearance of the otherwise reclusive financial guru sees broad popular interest, and this past Sunday, when Eisman appeared at the beachfront Fontainebleau Hotel in Miami, where several thousand Wall Street securitization professionals are convening this week for their 22nd annual ABS East Conference, was no different.

Incidentally, it’s the same gathering where, in one scene of the film “The Big Short,” the character based on Eisman bursts into outrage at a mortgage executive giving a talk.


Steve Eisman Photographer: Daniel Acker/Bloomberg

Eisman hadn’t attended a securitization conference since 2007. But Information Management Network, the organizer of an annual confab in Miami, decided to changed that when it invited him to give the keynote speech Sunday. Continue reading »

Book Review :Elder, The New Sell & Sell Short

Most traders have read Alexander Elder’s Trading for a Living, originally published in 1993. Elder has, of course, written other popular books such as Come into My Trading Room (2002) and Entries and Exits (2006). His latest work, The New Sell & Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines (Wiley, 2011) is an expanded second edition of his 2008 book. It comes with a built-in study guide: three sets of questions and answers. Although it is a paperback, the charts and graphs are printed in color and the stock is of high quality.

The first part of the book covers Elder’s signature contributions to the trading literature: psychology, risk management, and record-keeping. It is brief because we’ve been there before, but Elder does describe some new ways to keep records—an ongoing project because he believes that “the single most important factor in your success or failure is the quality of your records.” (p. 341)

Part two tackles the all-important question of how to exit a (long) trade. Elder offers three alternative scenarios: sell at a target above the market, be prepared to sell below the market using a protective stop, and “sell before the stock hits either a target or a stop—because market conditions have changed and you no longer want to hold it.” (p. 59)

Elder then moves on to shorting stocks, futures, and forex; he also has a section on writing options. Finally, he points out some lessons of the 2007-2009 bear market. Continue reading »

The Death of Money-Book Review

103729This is a hard book to review. I have respect for the author, and most of his opinions.  But extraordinary claims require extraordinary proof.  There is evidence here, but not extraordinary proof.  I agree that we are in a bad spot, and that there is reason to be cautious.  To claim that the current international monetary system will disappear by 2020 or so requires more than the book delivers.

Let me begin by saying the book is worth buying.  It will make you think.  Thinking is a valuable exercise in which few engage.  Most of us imitate, which is far easier to do than thinking, and usually saves time on common issues.

The author focuses on the weaknesses of US economic policy, but is less critical of bad economic policies being pursued around the world, with the poster children being Japan, China, and the EU.  The US has its problems, but also its unique strengths.  Though I am a critic of US economic policy, we are better off than most other large nations.

One criticism of the book is that it is not focused.  Make your case, and don’t go down many “rabbit trails.”  That said, the rabbit trails are interesting, and you will learn a lot from them, though they don’t support the central thesis of the book.  I think the book needed a better editor, because a tighter book would have made the case better. Continue reading »

Nicolas Darvas on stops: "no loss-free Nirvana"

I was just rereading Nicolas Darvas’ How I Made $2,000,000 in the Stock Market and came across this interesting summary of his trading method and risk management approach in the author’s intro. I’d like to share it with you.
Quoth Darvas:

“I built a fortune with serenity by avoiding premature selling yet making an exodus from most of my stocks with the use of a single tool: the trailing stop-loss. 
I have discovered no loss-free Nirvana. But I have been able to limit my losses to less than 10 percent wherever possible. My stop loss method had two effects. It got me out of the wrong stock and into the right one.”

Full passage in the image below:

Nicolas Darvas stops trading losses stocks

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Malaysia Islamic clerics forbid forex trading

Malaysia Islamic clerics forbid forex trading

Malaysia’s highest Islamic body has issued an edict forbidding foreign exchange trading by Muslim individuals, saying such speculation violates Islamic law.

The National Fatwa Council ruled forex trading by money changers or between banks was allowable but trading by individuals “creates confusion” among the faithful, according to a report issued Wednesday by state news agency Bernama.

Council chairman Abdul Shukor Husin warned “there are many doubts about it (forex trading) and it involves individuals using the Internet, with uncertain outcomes,” Bernama reported.

“A study by the committee found that such trading involved currency speculation, which contradicts Islamic law,” he was quoted saying.

Forex and religion don’t have a great history. The only time Jesus uses physical force is when heexpels the money-changers from the temple. Matthew 21:12-13:

And Jesus went into the temple of God, and cast out all of them who sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves,
And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.

Skipping over any doctrinal issues, trading foreign currency is a terrible idea for individual investors. It’s a zero-sum game and you most likely won’t win.

You’ll notice that it’s always around forex that trading outfits style their sales pitches in order to lure in customers. If you’re saving for your retirement, trust me, stay away from forex.

60 Minutes: Bill Gates 2.0

For Bill Gates, technology is still the solution. He shows Charlie Rose some inventions he’s working on to help heal the world.
Bill Gates speaks with unexpected emotion about his relationship — and rivalry — with the late Steve Jobs; and, he goes back to Lakeside, the Seattle high school where a rummage sale held by the mothers’ club set him on his path to help change the world. Then, Outtakes from a psychology professor’s lab in which children had to choose between fairness and chocolate
 

The Official Bankster Dictionary

In the underground world of banking, doing wrong means doing right, up is down, and left is right. I happened to stumble upon a secret version of the Bankster’s Dictionary the other day when I was visiting a bank. I’ve posted some of the terms below that were contained in the Bankster’s Dictionary to help you understand bankster language.

US Federal Reserve = European controlled private bank.
Central Bank = Counterfeiting Ring Leader
Criminal Underworld Currency Counterfeiters = Competitors that must be arrested and jailed.
Savings Account = Devaluation Account, Cash Advance for Gambling Division
Gambling = Banking Primary Business Line
Fraud = Banking Secondary Business Line
Las Vegas, Macau, Atlantic City = Model for running business operations.
Inflation = Currency Devaluation through anti-free market manipulation of interest rates.
Fractional Reserve System = Fractional Expansion Citizen Bankruptcy System, BSE (Biggest Scam Ever)
Futures Markets = Manipulation Casino, SkyNet Three-Card Monte Scam
Pablo Escobar, Joaquín ‘El Chapo’ Guzmán, The Ochoa Hermanos, Yakuza = Cash Cows
El Subcomandante Marcos aka Delegado Zero = Anti-poverty activist that must be wacked and shut up
Independent Media = Terrorist
Mass Media = Allies
Allen Stanford, Bernie Madoff = Occasional Patsies and Necessary Fall Guys to appease the public’s ire at us.
Stock Markets = Manipulation Casino, SkyNet Three-Card Monte Scam
Commercial Investment Firm Rating of “Buy” and Hold” = Contrarian Indicator to SELL!
Commercial Investment Firm Rating of “Sell” = Contrarian Indicator to “BUY!”
Barbarous Relic = USD, Euro, Yen
Beta = Empty Statistic meant to impress naïve investors
Loan = Usury
USD, Euro, Yen, etc. = Fantasy Digital Idea made real by banksters to control humanity
Women’s Liberation Movement = Expansion of Tax Base from only men to men AND women
Income Taxes = Wealth Transfer from citizens to owners of central banks.
Gold = Bankster Kryptonite
Silver = Bankster Kryptonite
Truth = Banker Kyrptonite
Lies & Deception = Bankster Standard M.O.
Free Markets = Fairytale story like Santa Claus, Easter Bunny and Tooth Fairy to be taught in business schools worldwide.
Drug Lords and Underground Crime Syndicates = Provider of global banking liquidity and huge year-end bonuses
Parasite = Favorite insect
Capitalism = Dead system that was killed by Central Banking but false scapegoat we can blame when we cause economic crashes and despair
Miscellaneous Charges = Small Monthly Charges to siphon off money from bank accounts that customers will never notice or complain about
Computer = Vehicle to rig all stock markets and commodity markets with HFT programs that execute trades not possible if executed by humans and if executed in a clear and transparent market.
Boom = Unsustainable price distortions caused by interest-rate manipulation and market rigging.
Bust = Opportunity to make money twice as quickly as in a boom!
Market Crash = Engineered event to ensure the peasants will never accumulate enough wealth to rebel against us.
Rising Markets on Mondays or Tuesdays into OpEx Fridays: Ruse to sucker more people to go long in order to fleece them by the time Friday arrives.
Declining Markets on Mondays or Tuesdays into OpEx Fridays: Ruse to sucker more people to go short in order to fleece them by the time Friday arrives.
Presidents and PMs = Best puppet and marionette allies to be rewarded handsomely after they leave office (see Tony Blair and the current POTUS)
Superior Judges, SCOTUS = Made Men
War = Double Bonus! Opportunity to devalue money at faster rate than during peace time and opportunity to accumulate more wealth from interest charged on war appropriations.
Universities, Colleges and MBA programs = Re-education camps to indoctrinate students into fairytales of non-existent free markets, non-existent capitalism, and lies about how stock markets, real estate markets and economic cycles really work.
Economic Journals and University Tenure = Carrot dangled in front of economic professors to ensure that they repeat to the world the “official” party line.
Key Economic Indicators = False manipulated statistics designed to dumb down citizens into believing economy is recovering even as we increase their economic suffering
Ben Bernarnke = Shakespearean clown.
Conspiracy = Best Word to Discredit Truth about the global monetary system when the truth somehow escapes our censorship algorithms and makes it to the mainstream media we control.
Machiavelli = Role Model
Ivy League Schools = Indoctrination Camps for media representatives and professors we will send to brainwash other global regions into believing our propaganda
CNBC = The Cartoon Network.
Goldman Sachs = Rookie Farm Camp for global criminal banking syndicate.
World Bank & IMF = Banks used by Western countries to impose crushing debt on developing nations to stunt their growth.
Bailout = Transfer of Wealth from citizens to us.
TBTF = Lie used to ensure we can perpetuate fraud.
Quantitative Easing = Currency Devaluation.
Fiat Currency = Worst Possible Idea
Propaganda = Daily Financial News Feed
Compartamentalization = Process to keep good people working as cogs in the machine within the banking industry ignorant of the fact that they are inflicting massive harm upon society.