@ Kitty (B)

(A) Technical analysis? According to Andrew Lo, of MIT, this field has some merit. However, in its popularly presented form, it suffers from a lack of rational, disciplined research. For instance, price pattern interpretation is largely equivalent to a Rorschach examination where one sees what he or she has been conditioned to see.

I personally use many forms of analysis to form a conclusion: technicals; fundamentals; econometrics; etc. Being conversant with arithmetic, algebra, geometry, trigonometry, calculus, differential equations, complex variables, linear algebra, statistics, etc., I naturally prefer a mathematical orientation to my work. I find random walk to be somewhat silly and the efficient market hypothesis to be rife with so many anomalies as to be of little use in decision making. A good book by George Cooper explaining why the efficient market theory has caused so much financial grief to the world’s investment victims is, “The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy.”

While I would never discuss any details of my own proprietary models developed over quite a long period, the financial conclusions I discuss are back by a bit more research than you see here. Besides, I usually do not simply buy or sell, but usually engage in pairs trading or in some balancing of related derivatives. I much prefer highly volatile markets. Going after, say, 10% per annum is ultimately a loser’s game, after factoring in mistakes, commissions, taxes, and inflation.

The most valuable lesson I have learned in trading is to trade in the direction of the prevailing trend. This has several implications: how does one define a trend; what mathematical techniques are available to assess trending; how can one assess change of trend; what methods are available for trading within the trend; what investment vehicles are correlated with underlying physical phenomena; how does one time entries and exits; how does one establish position size; how does one manage risk in accordance with his or her personal tolerance level; etc.

Consistently profitable trading is one of the hardest endeavours of which I am aware. I wish something as easy as astrology really worked!

(B) Orson Welles was a larger than life character who was full of varied personal experiences. This video shows that he was also very full of the product he was advertising:

http://www.youtube.com/watch?v=o5LkDNu8bVU

http://www.pbs.org/newshour/video/share.html?s=news01n2d2eqa98

and

Revenue gone missing
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_408527.html

Goldman Sachs, however, is expecting 2009 to be the most profitable year in its 140-year history, reports the Guardian. As a result, Goldman staffers are salivating at huge bonus payments — their biggest ever. (And reason enough that Goldman was in such a big hurry to pay back its $10 billion of TARP bailout money.)

The irony is that overall revenues in the banking and securities industries have fallen significantly in the last few years, but the collapse of Bear-Stearns and Lehman, along with the merger of Merrill Lynch and Bank of America, means fewer companies are dividing up the spoils.

Also good for Goldman: Big government deficits. The more bonds the U.S. Treasury has to sell to fund government operations, the more money Goldman makes as one of the prime brokers authorized to bid for those bonds.

David Williams, an investment banking analyst at Fox Pitt Kelton, said: “This year is shaping up to be the best year ever for investment banks, or at least those that have emerged relatively unscathed from the credit crisis.

“These banks are intermediaries in the bond markets where governments and companies are raising billions of pounds of new money. There is also a lack of competition that means they can charge huge sums for doing business.”

Last week, the firm predicted that President Barack Obama’s government could issue $3.25tn of debt before September, almost four times last year’s sum. Goldman, a prime broker of US government bonds, is expected to make hundreds of millions of dollars in profits from selling and dealing in the bonds.

What does it say about our system of economic organization that a devastating global economic contraction, complete with levels of unemployment not witnessed in decades and major industries collapsing, while states like California face bankruptcy, is turning out to be “the best year ever” for investment banks, who played such a large role in precipitating this second great depression in the making?

― Andrew Leonard

I’m keeping an eye on the silver price also as a possible gauge of a future dollar collapse. I think the flat line you referred to is just a result of no trading on the weekend. The fact that it occurred at 14.0 is a coincidence. However the increase in silver price is telling us something I think.

My suspicion is that the election in Japan is at play. Here’s why. The opposition party there is on the verge of their first major win ever (almost). They have said that they don’t want to do business with dollars and would only want to loan to the US in yen-denominated bonds. (See “Carter bonds” for an example). If the US agreed to this (and they would have to I think) then it would undermine the dollar seriously. Already we have Geithner and HIllary kowtowing again to China, no doubt working out some secret behind the scenes deal to keep $$$ flowing from there. The US is getting increasingly desperate to find over $1.5 trillion in loans this year.

http://online.wsj.com/article/SB124874574251485689.html#mod=rss_Politics_And_Policy

http://www.debtdeflation.com/blogs/2009/07/27/rudds-essay-is-on-the-money/

Just as everyone thought the Twin Towers would be fine once the fires were put out, then were surprised when they fell… so everyone in the media thinks the world economic system will be OK, until it collapses.

Because in each case it’s an inside job.

http://www.youtube.com/watch?v=xUvuQTD8FCI&feature=player_embedded

http://www.youtube.com/watch?v=at3MNu8BRwQ