Capitalogix

Capitalogix Commentary 06/28/09

Rolling Stone is not where I typically read insightful Market commentary.  Nonetheless, Matt Taibbi wrote a piece for them you should read.  The article is called "The Great American Bubble Machine", and it details Goldman Sachs' role in engineering every major market manipulation since the Great Depression.  Take a look.

Also, here is a link to the text of the article.

Other Asset Classes.

This chart caught my eye.  It shows the top-ten residential real-estate markets, and let's just say none of them are around here.  Click the picture to go to Reiden's site for more data.

 

I guess Goldman Sachs isn't the only one who can create Bubbles. 

Also, I'm hearing a lot more rumblings from experienced traders about buying a little gold.  Richard Russell, of Dow Theory fame, says: “The way the world is going, ‘gold will be the last man standing’. Gold will be wanted because unlike everything else, gold can not go bankrupt. Gold has no debt against it, gold is not the product of some nation’s central bank. Gold is pure intrinsic wealth. It needs no nation to guarantee it. Gold is outside the paper system.”

Confidence In the U.S. Equity Markets.

The VIX closed at 25.93 today, down more than 16% from Monday’s close of 31.17 to the lowest closing level since September 12, 2008 – the last trading day before the Lehman Brothers bankruptcy was announced.  A rise in volatility from these levels would likely be bearish.

Bespoke notes that the Michigan Confidence joins the growing number of indicators that are now at or better than Pre-Lehman levels.  It is currently at its highest level since January 2008.  This month's reading is also the fourth consecutive month-over-month increase in confidence.  

Market Metaphor?

This NYC hotel claims that one of its rooms is not only a tourist attraction, but is “art”. Art that starts to smell bad in warm weather.

Room Covered In Melted Cheese

Business Posts Moving the Markets that I Found Interesting This Week:

• Why Isn't The Stimulus Stimulating? Seems Like Speed Will Matter. (Forbes)
• World Economy Tracking or Doing Worse than the Great Depression. (VoxEU)
• Morgan Stanley Topples Goldman as M&A Leader this Year. (NYPost)
• List of Banks with the Biggest Profits and Losses Last Year. (Economist)
• Tech Sector Strength May Be Weaker than Claimed. (Barrons)
• Why Computers Can't - Yet - Consistently Beat the Market. (Forbes)
• Michael Jakson's Debt, Private Equity & His Hedge Fund Backer. (FinAlternatives)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• What Is Your Favorite Michael Jackson Song? Interactive Retrospective. (NYTimes)
• Windows 7 at Half Price: Why is Microsoft Offering Discounts? (InformationWeek)
• New Defense Industry Niche: Researchers Developing Tiny Flying Spies. (Forbes)
• New Book on the Secret History of the National Security Agency. (USNews)
• Super-Intelligence: When Will Computers Be Smarter Than Us? (Forbes)
• Google Voice: Smarter Phone Calls for Your Smart Phones. (NewScientist)
• Can You Get Fit in Six Minutes a Week? The Research is Promising. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.

The Hows and Whys of Firewalking

I recently went to a Tony Robbins seminar in Toronto. One of the highlights of the event was the Firewalk, which is a barefoot walk across red-hot embers.

Learning the technique is not really that hard (it is basically walking at a normal pace, while not hesitating or tripping).  The hard part is doing that knowing that there are burning embers under your feet.

It is breath-taking on several levels.  The firewalk is cool in-and-of-itself; isn't it?  So, it doesn't have to mean anything beyond doing it.  Yet, there are some great opportunities to make it more impactful by leveraging what you make the experience mean.

For example you can use the experience as a powerful memory, triggering feelings of being able to do anything you commit to ... or breaking through what used to be your limits.  Or the firewalk can be taken as a metaphor for life ... and being able to put yourself into a resourceful state, and choosing to take the right action regardless of what's happening externally or in your mind.

What Goes Through Your Mind?

I was scared the first time I walked on fire. Even though I knew it would do it, when I got to the front of the line, looked down, saw the burning embers, and smelled the smoke ... my mind wanted to scream "NO"!!  I had a whole lifetime of conditioning that touching hot things was dangerous, and certainly walking barefoot across hot coals made little sense to my logical mind, and even less sense to that primal instinct part of the mind that's there to protect me.

That's why many of the techniques used in the seminars revolve around getting into a peak state, and filling your head with phrases that you repeat again, and again, and again. If you're saying "yes", "yes", "yes" ... There's no room for your brain to say "no".

Is It State of Mind ... Or Science?

I'm not going to pretend I understand the science of why it's possible to walk barefoot for 30 or 40 feet across burning coals, without injuring yourself. But you don't have to be a scientist to guess that hesitating in the middle might have painful consequences.  This video is well done and explains a lot.

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It is Better the Second Time Around.

I've done the firewalk many times now, and still enjoy it. It's really interesting to watch the faces of people doing it for the first time. Some express abject terror, others pump themselves up into a manic state, while still others follow the crowd with a glazed look on their face.

This time, I tried something different than what I've done before. Instead of working myself into a peak state and charging across the coals triumphantly, I wanted to do it from a place of calm resolve. To me this is a different type of peak state.

In some ways it's about being more present to the situation and my own capabilities. Since I had done this before, being afraid would be somewhat irrational (however emotions do not have to be logical). I didn't want to numb myself to the experience by focusing internally, or by jacking-myself-up into a warrior state; instead I wanted to enjoy the sights, sounds, and smells of what was happening -- and how cool it was to do this from a purposeful intent.

A Little Bit of Mastery Goes a Long Way.

As a trader, the winning, losing, and the uncertainty and certainly trigger fear, greed, and doubt. Learning to master these states, and keeping a clear head, leads to a much longer career.

It's funny, because I wasn't sure that going through this exercise again would have the same impact. It did, just for different reasons than I have before. I highly recommend it. Feel free to contact me if you have questions or comments.  I'd love to hear about your experiences.

You Can Still Change The World

Here is a quick video about Inspiration and Entrepreneurship.

It begins with the question, “Do you remember when you were a kid…And you thought you could do anything?” and then proceeds to tell the viewer that the hope possessed as children is renewable as an adult, and as an entrepreneur. It is well-done, fun, and only takes about two minutes. So, seize the day ... and watch the video.

Direct link to video on YouTube.

Read more about the video in this WSJ article.

Capitalogix Commentary 06/21/09

Time flies when you are having fun.  We're almost halfway through the year, and the markets have rallied now for three-plus months. That sounds positive ... So why are so many people focused on the  Federal Reserve's two-day meeting that ends Wednesday?  My guess is that many investors will be watching for any changes in the long-term economic outlook.

So we are at a Tipping Point, once again.  There is cash on the sidelines waiting for a sign that it's safe to get back in the game; and there are investors who are looking to protect their rally profits, or are afraid of the next leg down.

This daily chart of the Dow Jones Industrial Average Index highlights what bulls and bears see.  We'll soon know which is more committed.

From my perspective, I understand why discretionary traders might want to try to buy this pull-back.  There is a clear Risk-Reward; and it's easy to set your stop.  However, experience warns me to be wary of set-ups like this where market breadth is weakening.  My wife doesn't like charts that have too many marks on them ... she says they are confusing.  So I tried to find a different image that conveys what this chart may be whispering to the little bird.

Finally, I was reading Paul Kedrosky's blog when I ran across this chart showing the price of crude oil from 1861 through 2208.  It comes from BP.  It provides an interesting perspective.

Business Posts Moving the Markets that I Found Interesting This Week:

• This Recession Tracks the Great Depression, Can We Avert the Worst? (FT)
• Charts of the Recession In Historical Context. (Investment Postcards)
• The Importance of "Being Right" vs Making Money.  (Dash of Insight)
• Economic Recovery: Are Happy Days Here Again? (Wharton)
• The Myth of the Rational Market. (Slate)
• MF Global Preps Managed Futures Offerings. (FinAlternatives)
• Key Ideas from Forbes CEO Conference. (Forbes)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Microsoft Readies Free PC Security Software. (Technology Review)
• Ten Commandments from Entrepreneurial 'Evangelist' Guy Kawasaki. (Wharton)
• Plan To Teach Military Robots the Rules of War and Let Them Loose. (NewScientist)
• Amazon Acquires Two iPhone App Software Makers. (WSJ)
• Google Searches for Ways to Keep Big Ideas at Home. (WSJ)
• New Research Shows That Fat Can Be Good For You. (Ode Magazine)
• MoneyB-ball 2.0 - Quantifying Basketball’s Intangibles. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.

Pixar's "UP" an Eye-Opener

I highly recommend seeing the new Disney - Pixar movie, UP, in 3-D.  It was terrific ... much better than I hoped or expected.

Frankly, when my son asked me to see it with him, I agreed reluctantly.  As he later reminded me, Pixar movies usually are better than you'd guess.

The animation was as good as I expected.  Yet, the 3-D effects were the best I've seen, because it seemed real and natural, rather than a gimmick.

On the surface, this adventure comedy is about an old-man trying to fulfill his lifelong dream to see the wilds of South America.  Then soon after setting-out, he learns he isn't alone on his journey, since a wilderness explorer -- 70 years his junior -- has somehow become a stowaway on the trip.

The story and underlying message were good and uplifting. And not just because the old-man choice of transportation was to tie thousands of balloons to his home.

It is worth the few extra dollars to see this in 3-D.

Clusters of Thoughts

It surprises me how many of my thoughts cluster on a particular theme for a period of time. I guess it makes sense because I think and write about things I notice that catch my interest.  And as my focus changes from time to time, what interests me changes.  It is kind of like not being able to get a song out of your head ... only it's about what you focus on.

I heard a good explanation for this at a Tony Robbins seminar this week.

He has an exercise where you open your eyes and look around the room, paying attention to anything that has a bright green color to it.

Try it, look around the room noticing everything you can remember that has green in or on it.

Then close your eyes, and without looking around again, try to remember anything that was red.  You probably can remember a lot more green things, than red things.

Tony calls this "reticular activation". But it's just a fancy name for the same reason that if you buy a white Lexus, all of a sudden you see white Lexus cars everywhere you go. The things you focus-on show up more often in your life simply because you notice them more often.

If you're curious, this week, the theme that I'm noticing in my personal, professional and business life is time, speed and pace. Here's a link to that post.

Capitalogix Commentary 05/14/09

The Swine Flu made headlines again.  Apparently, no one cares that the the U.N.'s World Health Organization officially declared the outbreak to be a "pandemic" this week.  If you don't know what to look for,  this picture illustrates some symptoms.

If the Markets' continued rally is taken as evidence, then it also appears that people don't care about the threats weighing down the economy.  The Major U.S. Index Averages are holding above their 200-Day declining moving averages and overhead resistance.  Also, Bespoke notes that eighty-four percent of the stocks in the S&P 500 are trading above their 50-day moving averages.  With that said, momentum is waning ... three months into the rally. 

Of course, the length and staying power of the rally says something about how crowds work, and why the majority of traders are often wrong at turning points in the market.  The following video makes the same point, a different way.  On the surface, it starts with a lone male, dancing at a music festival.  It is fascinating to watch what happens when other people feel the urge to get in on the fun. It takes about one-minute for people to start joining in.  By two-minutes, there's a crowd.  And by three, it's a mob.

Here is the direct link to the video on YouTube.  This says something about human nature, doesn't it?

Business Posts Moving the Markets that I Found Interesting This Week:

• Ritholtz's Graphic: 7 Factors that Led to Crisis. (Big Picture)
• Sentiment Overview: Bulls Rushing in at Alarming Rate. (Seeking Alpha)
• Optimistic Unemployment & Housing Forecasts Looking Silly. (Global Economic Analysis)
• Poking Holes in Efficient Markets Theory. (NYTimes)
• If Volume Is Rally’s Fuel, We’re Running On Fumes. (Traders Narrative)
• Ranks Of Active VCs Dwindling By Any Measure. (WSJ)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• The Top Twelve Funny Indicators That The Economy Is Bad. (Big Picture)
• Why Microsoft Windows 7 XP Mode is a Major Advancement. (eWeek)
• Making Fat Disappear with a Genetic Strategy from Bacteria. (Tech Review)
• When Sleep Leaves You Tired: It's the Quality, Not Quantity. (WSJ)
• When a 'Chosen' Tibetan Lama Says "No Thanks". (Time)
• How Twitter Will Change the Way We Live. (Time)
• More Posts with Lighter Ideas and Fun Links.

Capitalogix Commentary 06/07/09

Last week, as the Markets approached their 200-Day declining moving averages and overhead resistance, I said that a sustained break-out to the upside would be significant here. 

Well, the Markets gapped higher last Monday, and held their ground.  From most logical and technical perspectives the action has seemed relatively healthy considering the circumstances ... three months into the rally. 

It is somewhat funny that unemployment continues to go up, but people focus on how the increase is slowing.  This seems to be happening on several fronts.

Frankly, from a trading perspective, a bullish response to bad news is a bullish sign.  And I don't want to look a gift horse in the mouth, either.  This Market is quite well-behaved, and has acted as if "Bull-Rules" apply.  So, trade what the market gives you. Still, from another standpoint, I'd like to see a pull-back. 

Money Shot: A Commentary On Investing.

What is so funny about this video is that the people being interviewed don't know they are a satire of the investment market as a whole.  It is worth watching.  Hope you enjoy it.

The Daily Show With Jon Stewart	M - Th 11p / 10c
Money Shot
thedailyshow.com
Daily Show Full Episodes Political Humor Economic Crisis

Business Posts Moving the Markets that I Found Interesting This Week:

• Jim Rogers 100% Long For The First Time Since '87. (Street Insider)
• New Bull: Does Rare Coppock Curve Pattern Signal the Next Move? (CNBC)
• Was 2008 an Outlier? Not as Much as You Might Think. (SeekingAlpha)
• Is Microsoft Repeating GM's Mistakes? (Infoworld)
• What Does Tivo's Patent Win Mean For Investors? (WSJ)
• Banks Raising Billions to Repay Government. (DealBook)
• Taleb's ‘Black Swan’ Hedge Fund Bets On Hyperinflation. (FinAlternatives)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Becoming a Savant: How To Unleash Your Brain's Inner Genius. (New Scientist)
• Why Meetings Suck: The Four Quadrants of Communication. (Integral Life)
• Will Google Wave Transform How You Communicate And Collaborate? (ZDNet)
• It Just Got Easier to Port Virtual Apps into the Cloud. (Tech Review)
• Microsoft Readies Incentives For You To Adopt Windows 7. (ZDNet)
• Personalized Medicine Could Be The Next Big Thing. (Forbes)
• How Casinos Find and Target Their Favorite Customers. (Wharton)
• More Posts with Lighter Ideas and Fun Links.

TXT

Software to Help You Manage Your Mind

Visual Thinking, Idea Mapping or Mind-Mapping ... whatever you call it, there are some terrific new tools available to help you think, plan and write better.

I find I'm using it more often and for more things, like: note-taking, process maps, brainstorming and presentations.

How Does It Work?

Mind-Mapping is related to outlining. So you already know how to do it.  It is intuitive, and makes it easy to see thought structure and relationships. It also makes it easy to review and re-organize the framework that organizes your data. Here is an example showing what you can do with a tool like this.

How Can You Use Mind-Mapping Software?

I use this type of software like a virtual whiteboard.  It helps me organize a meeting or present a thought process. What used to be a form on a piece of paper, now becomes the dynamic center of collective focus.  For example, here is a map template from Mindjet's MindManager; it is used to evaluate an idea using SWOT analysis (which stands for: strength, weakness, opportunity, and threat).

The structure of the outline and actually helps control focus and trigger new ideas. And the software allow me to add detail and new items in any order.  The result is better understanding and often, new ideas and possibilities.

Brainstorming.

The computer age has made it a lot easier for me to collect data. Then what? Data is a raw material, but I often want to think better ... rather than to just have more data. So, I use visual thinking tools to help me make sense of lots of ideas. It often helps me see relationships and move items around to places where they fit better, or trigger new thoughts.

For brainstorming, the software is a lot like writing ideas on Post-It Notes and moving them around on a whiteboard.  I like being able to enter information the order that occurs to me, rather than having to understand the bigger picture.

In fact, it's by placing all the seemingly random bits of information page and dragging them around into piles, that the bigger picture often reveals itself to me.

To do that, I try to figure what relates the piles, and I create a label for that category. I then try to figure out how categories fit together, and ultimately come up with a better understanding of the thought framework. From there, it doesn't take much work to fill out weaker areas of the outline, adding an idea here, moving an idea from there.

The Software Tools.

Even if you tried a tool like this before, it is time for a fresh look.  These tools have evolved and are worth having and using.

Mindjet's MindManager is the tool I use most often. The current version is stable and mature, with a nice feature set and the ability to export information into a variety of programs and formats. I especially like the new option to export a live branching version of the mind map in PDF format.

Mindjet offers a template gallery for you to download 70+ sample maps to use.

Another tool I've been using more of lately is Tony Buzan's iMindMap.  Buzan is a well-known proponent of mind mapping and has created a visually appealing tool.

It's compelling, and I'm trying to use it more. They also have a nice collection of videos explaining the software and concepts behind mind-mapping that is worth exploring.

Personally, though, for real work I find myself going back to Mindjet product.

In addition, there's an open-source version called FreeMind. Here's the link to try that tool as well.