Tasteless but necessary – Part 1

If there’s one thing in this world that is both tasteless and necessary, it would be water. Actually, scratch that, air would be equally important but that’s not my point. I’m focusing on water. The human population of the third planet in a solar system that is on the outer reaches of the milky way galaxy (as it is known by by the indigenous inhabitants of the planet) has grown to over 7 billion people last year. All 7 billion people needs to drink water to survive [citation needed]. I am going to split this research into a few parts due to the large amount of research papers, websites, and information in general that I have to go through.Now that’s out of the way, it’s time to ask the important question.

How much water do we have?

From studied so far, the volume of the world’s oceans is 1.332 billion cubic kilometers [1]. That’s a lot of water [citation needed]. I don’t think I need to exaggerate exactly how much that is. But I will. That amount of liquid is roughly half the water based lubricant you go through in one night when… well you get the idea. I don’t think a racist homophobic necrophilia incest joke is acceptable anywhere other than 4chan (and if you don’t know what 4chan is, go check it out. It’s a nice place [citation needed]).

In terms of freshwater (all in cubic kilometers), we have 24 million in ice caps, glaciers, and permafrost, 23 million in groundwater, and around 10.5 million in fresh water that is available to drink as is (if you don’t mind the occasional deadly bacteria or virus). 3.8 trillion cubic meters of water is withdrawn every year (excluding evaporation), which when converted into a similar metric as what we were using before would yield… 3800 cubic kilometers of freshwater. Oh well, that’s a lot less than I thought. You know what, we’re in the clear! But wait, that’s just the withdrawn from the reserves. A research done shows that the average American uses around 420 litres of water per day. So some simple maths yields around 50 trillion litres of water in a year. Which once again… isn’t that much. If it weren’t for the fact that only 1 percent of our freshwater is readily accessible due to stupid things like, being trapped in other less convenient forms, such as ice. 1% of 23 + 10.5 + 24, gives us around 570 thousand cubic kilometers. Suddenly, 3800 out of 570,000 seems like a lot (~0.66%). It would mean that if there wasn’t any replenishment via the water cycle, we would run out of water in 150 years.

When nature kicks you in the balls, it usually doesn’t end with just one kick. So of course things are going to get worse from here. Fresh water isn’t spread evenly in the world. Some areas are affected by droughts (South Africa is brought up a lot when we talk droughts) while others are constantly flooded (Atlantis is a good example). So we’re stuck with technically enough water for the world population right now, but just with really, really bad distribution. So we need to move water around. Except that it is a lot harder than it seems. Moving water by trucks is extremely inefficient. Moving it by any form of transport that we have is extremely inefficient. So we need to build some canals that funnels water into areas that needs water.

But geography puts the ‘anal’ in ‘canal’.

Water tends to flow in a downward direction [citation needed]. Unfortunately, mountains tends to go upwards. It’s kind of axiomatic that way so there’s not much that we can do about it. Water doesn’t seem to like it when you tell them to go upwards. This is actually good, otherwise there’d be no land. Distance is also a major factor. There is nothing that distance can’t break down. From relationships to water, distance tends to ruin things and is up there right after ‘time’. However, we all know that distance and time is related so in reality, that whole family is bullshit. I’ll end this here for now. There will be more coming soon, though a temporary lack of internet might delay it a bit.

 

Technical Analysis: Let’s get Irrational

Before we move on, you may wonder why I’m wondering why I’m continuing this at such an odd time. Or most likely, you didn’t think that but are now. Nevertheless, it is because I am very busy and apparently, it is too much to ask for me to do some decent research because there has been some issues accessing some sites for data that I wanted to pool. So now, you get a short version of what I intended to go through (and without charts because I want to satisfy my own rambling before all else).

Picking up from where we left off previously, price action dictates who makes and who loses money in the market. When you try to think about what drives the price action, you move into the realms of fundamental analysis. Technical analysis is all about the numbers.

The demand and supply of the market isn’t always rational. In fact, from my experiences, it rarely is. Human emotions kick in and affect traders who then buy and sell in a blinded frenzy. I dare say that this contributes greatly to the noise element in the market. In fact, it’s better when the market is irrational. A bunch of logical thinkers gathered together would provide as much progress as a philosophy session. My particular ‘style’ of technical analysis involves me deducing any information asymmetry within the market and act upon it before the market has time to digest everything. Err… fancy way of saying pick up on a movement before it has finished.

I’m gonna go into specifics into how I do it exactly but maybe brush up on Elliot Wave Theory if you’re not familiar with it because what I do is an extension to it. I’m keeping this one short because I suck and I have no time and life is bad and saof;jg  13409237u5 rilkdfmngsv 9i43oj4t klj……

 

 

Bold Calls: Jan 2016

In private, I’ve made some bold calls. This affects my trading and I see it as a way for me to exercise my ability to predict long term movements based on an unique style of analysis. I won’t bore you with specifics as that isn’t the point of this entry.

In 2015, over a ramen lunch with close friends, I made a bold call to say that the US equity market will fall 30% from the peak, the Aussie will fall 40%, and China 50%. This was around June 2015. So far, China is looking to have almost hit my target as it is almost touching that magical 2600 mark. Honestly, being a massive Chinese hedge fund, the Australian markets is gonna tank a little as well. I guess we’ll see some results by mid year. The US markets are probably the most difficult to predict. I believe it will be heavily affected by who gets elected for presidency this year.

My new bold call for 2016 is Gold (gold vs US to be precise). I am fairly bullish on gold and I expect an initial target of $1200/oz followed by a rally to $1400/oz (it is currently $1100 as I am writing this). This is based on increasing volatility, the distrust in the growing Chinese/other emerging economies, a beautiful technical bottom plus reversal patterns emerging.

My second call would be for bitcoins. As mentioned in my very first post here, the block chain technology is worth a lot of money. The ability to decentralize the settlement system alone is enough to save enough money to make Scrooge McDuck drool. This along with the fact that we’re half way to mining everything out means that suddenly there is a supply squeeze that can raise the prices faster than twitch chat raising dongers (a very specific reference so kudos if you got this one). My personal target is $1000/coin but I believe we have to wait for around the end of the year for that to come about.

To sum up, bitcoin and gold will be the best performing currencies in 2016 (I’m counting gold as a currency because it pretty much is) and your phone is ringing because I’m calling it!

Some thoughts on gaming: urn reel monies

Continuing from my earlier lengthy article, I am going to talk about what I think will happen in the future. The trend has been somewhat established and the wheels are now turning. Needs a bit of grease but generally speaking, it sounds pretty good… well, not sounds pretty good since it needs grease but you should be able to come to the correct conclusion despite the bad metaphor. I must admit that I once again succumb to the temptation of bad research (as I have a few deadlines looming chillingly over the horizon) but I will aim to provides links to my sources whenever I feel inclined to do so.

E-sports is essentially the name of the game now (all puns intended). As the name suggests, it is considered a sports, with professional athletes competing for the top spot in global scale events. ESPN has covered the growth of e-sports as well as notable events across different games. With the massive reaction and cheering of TI5 still ringing in my ears (I need to get that checked out), the e-sports community is pushing ahead by organizing not just bigger events, but more events, allowing the general gaming community as a whole to enter. Amateur tournaments are event being hosted in backwater countries like Australia!

Lured by the scent of money, betting companies are now entering the fray. I am not talking about betting hats (please refer to my previous article for an explanation on hats), I am talking about real money. Sportsbet (a major player in Australia) is currently covering the Nanyang Dota2008 2 Championships, LoL World Championships, CS Go Dreamhack Open, and I’m sure there’s more but I got the idea after scrolling through 3 pages. As with fantasy baseball that has been popularized relatively recently (compared to the actual sport I guess), fantasy e-sports, along with gambling is clearly going to be a space worth watching.

Seeing as I live in Australia, I enjoy simple things such as using the metric system, riding in my kangaroo to work, avoiding dropbears while commuting, and using Aussie statistics. From the Australian Wagering Council website, I found some interesting facts and figures. Sports betting only contributes 1.2% of total betting revenue, around AUD$200 million. It has over 2 million Australians involved yearly, which doesn’t sound impressive until you realize that we have a total population of around 23 million. Now, I know that Australia is not something most people would consider as a standard, and that we do have a gambling problem like a middle aged alcoholic found in a casino… which is a fitting simile when you realize that most of our gambling laws are made under the same act as our alcohol laws.

While gambling doesn’t provide much investment opportunities, outside of the current rudimentary system of calculating odds which can be arbitraged by those who are keen enough to accumulate data for themselves, the e-sports community provides other interesting opportunities. One of the more prominent would be Virtual Reality (VR). I assume that it is already common knowledge that some of the larger tech companies are addressing VR as a serious investment opportunity. Looking at Oculus Rift, the version that I’m referring to is due to be released Q1 of 2016, it essentially brings portable entertainment into the real world. I believe I’ve made jokes about how the real world has awesome graphics with crappy gameplay. Well, that’s all about to change if I can be seeing the world through a VR augmented lens. Hot girls? Check. Zero need for human interaction? Check. ability to immerse myself fully and integrate my current technology into it (you can plug in your phone)? Check. Well, I guess this is where the human race goes extinct. Not by nuclear warfare, but by being too obsessed with virtual things such that all productivity drops to a level where only the maintenance of said virtual world is sustained. Kind of like Wall-E.

One step further is the world of augmented reality (AR). Looking at companies like this must truly make one reconsider the concept of reality. I just came back from Melbourne, where I played a VR/AR game. It was a Left 4 Dead styled shoot ’em up zombie first person shooter. Apart from the fact that you cannot adjust the field of view, so the focus makes people like me suffer from motion sickness around half an hour in, the game was pretty good. There are some other problems with the actual aiming and the fact that there were some other restraints, it was a pretty good experience. Nothing good enough for me to actually name them but enough to give them a mention so that if you’re interested, you can go google for it.

Major tech companies such as Facebook, Google, Amazon are all investing in some kind of ‘reality’ technology. Perhaps in the future, all our wants and needs can be fulfilled by virtual or augmented reality. To the point where we can simply sit back and consume virtual products that are delivered straight to our brains via the headsets. Where the world’s only professionals are pretty much those who live in the real world maintaining the servers and creating newer and better ways for the hardware to tickle our pleasure sensors in the brain. It seems that if there is artificial intelligence set out to destroy us, this would almost seem the most logical and fool proof. With everything we want at immediate disposal, the need to procreate etc. all disappear and the human race eventually dies out in this slippery slope scenario. On the other hand, I get to live in a world where I get to sleep all I want and eat everything I want and have fun with whomever I want. Sounds almost fair.

Hmm… the matrix almost sounds like a nice place to live. I’ll take that blue pill thank you very much.

The unfortunate tale of shopping for Christmas Presents on Christmas Eve

Santa Claus doesn’t even count for small talk nowadays… is how I’d like to begin this segment. Unfortunately, I am almost sure that there will be copyright issues on the horizon if I did that so I’ll stop it there. I don’t plan on doing anything too heavy for this particular entry. Nor do I intend for this entry to have a point. I am just lamenting the fact that I have yet to buy Christmas gifts as life has been slightly busy lately. Somehow, the Christmas holiday atmosphere has made my days all the more hectic. As the title can possibly allow one to gather, I plan on ranting a bit about the retail sector today.

The fall of Lehman Brothers was so magnificent that it made me question whether I shall ever open a business with a sibling. What I want to say is, there are many factors and risks that are out of your control. One moment, the market is good, the next, your balance blows up in a fashion reminiscent of the 4th of July. It has always been my thoughts that the Australian retail sector is undergoing something similar. People are so desperate for profits that I feel that they are pushing sales for the sake of sales. It reminds of me an old retail joke that I heard while I was selling mattresses.

Sales A: “We’re making a loss on each unit we sell, what do we do?”

Sales Manager: “Don’t worry, we’ll make up for it with volume.”

The only thing I see saving this year’s Christmas figures is Star Wars. Hopefully, the ticket sales will be enough to create a positive effect and get people not only going out to watch the movies but also out shopping while they’re at it (and if you consider the drinks and popcorn sold, that’s just a bonus!).

Looking at the department stores, Westfields and Chases has never been so quiet so close to Christmas. I recall a few summers ago (I live in Australia) when I could barely move about while shopping. The perfume section at David Jones and Myers are full of eager sales people who are more than willing to spray and puff the latest scents and sell things while giving up gift bags, vouchers, future discounts, free samples, a foot massage, a tractor, a flamethrower etc. Along with the traditional Boxing Day sale where everybody everywhere simultaneously teleports to their nearest shopping center credit card in hand, it makes the pre Christmas season anything but festive.

I personally believe that there is a move away from giving Christmas presents on Christmas Day. As mentioned earlier, a fat man dressed in red who works very specific hours is too hard to believe even before you see your kindergarten teacher kissing him. So we intuitively understand that the presents are store bought and not made by elves captured and put to slave labor (unless by elves are what you call the Chinese). Delaying the purchases a bit can yield serious savings. If it’s possible to short the market value of goods, shorting between the 24th and the 27th would definitely yield profits higher than students at a college party. And they get pretty high.

This is it for now. I’ll probably have something for new years so look forward to that.

Merry Christmas,

The Uninformed Trader

So… time for Bitcoin Futures?

Recently, the US Commodity Futures Trading Commission (CFTC) has pretty much settled the argument on whether or not Bitcoin, the popular virtual currency, can be regulated. They filed charges against Coinflip Inc but did not impose any penalties and apparently was settled without anything being confirmed or denied. I am not saying that I expect to see Bitcoin futures any time soon but trading Bitcoin contracts on the CME would be pretty sweet (albeit unlikely). For more information on that, please go research with a few keywords on any search engine and you will pretty much find all the articles that are useful in this regard. I am not writing this to provide any insights and to argue whether or not the CFTC was correct in their decision making, rather, I wish to highlight the more prominent and less discussed (nowadays at least) topic of why Bitcoin is worth anything at all!

Though… I should just state my opinion, just for the record. I do agree that it is a commodity. Bitcoin is used more for investment than purchases. Most of the people either trade it or buy and hold similar to investment in equity or gold. Technically, you can also buy goods and services using gold at whichever store that finds it acceptable to take gold as payment (I dare say most would if you give them enough) but most regard it as something to hold (or wear, I don’t judge). This property is congruent to what we can observe for Bitcoins. Some very specific stores accept it as payment, while most prefer to buy it simply to hold (I have yet to hear of anybody wearing Bitcoin as bling so please inform me if you find some photographic evidence). All in all, I agree that it should not be considered as a currency due to (and I’m gonna give a few other examples that I’m too lazy to flesh out but should be fairly obvious. It is a certainly failure as a research student but I prefer to see it as a win for my laziness) the lack of liquidity, relative focus in investment purpose, and the small net value (calculated in the billions rather than trillions like mainstream currencies).

A lot of people marvel at how Bitcoin went from practically worthless to over $1000 to the now $200 per coin commodity (and I use that word in a very general sense). Ooh, I should mention that those values above are in US dollars. I live in Australia but I’m gonna try to give everything in terms of a better (read: more useful finance-wise) currency. It seems that people nowadays have all axiomatically accepted that Bitcoin is worth something. Where that comes from no longer seem to matter, or at least discussed in as much frequency as it once was.

Popular opinions include the underlying technology of the Bitcoin itself, the idea and innovative method and how much people treasure a cryptocurrency that gives anonymity in the current age of big data. This is one that I personally support as I believe that these all give value. A fundamental principle of business is that it must create value for its customers and clients. In the usual sense, this value can be reflected by the generation, or aid in generating wealth. However, Bitcoin offers something totally different. it doesn’t generate wealth, but allows wealth to be distributed anonymously and safely. Arguments for illegal uses aside, this makes a very interesting and very handy way for businesses to conduct transactions. Recently, 14 banking organisations (including Lloyds, Barclays, UBS, Commbank, Goldman etc.) are looking to invest in Bitcoin application and technology.

Some argue that the technology of Bitcoin can be applied to replace the current central clearing system of markets. This could be true given that the participants who now also have a new duty do not increase their prices to cover the additional cost, or raise prices simply because they’re providing a new service. Block chain and crowd verification is useful perhaps to fool HFTs, but that doesn’t seem likely either as the market requires transparency to function more efficiently (my PhD research may make me a bit biased in this regard but the evidence for this is too strong to simply ignore) so purely from the perspective of increased costs to the market, we cannot justify the block chain applications.

Alternative currency? What about using it as an alternative currency for places with political instability or high inflation? Well, Bitcoin isn’t really known for stability. There are also other currencies more suitable for these situations, like using the US Dollar for example. It is stable, it is big, and it is trusted by anyone who knows where the US is on an atlas. So this argument also breaks down right from the start.

“But wait!” You exclaim as you take a sip of scotch and readjusts your tablet and sitting position due to the fire from your fireplace starting to get a bit too warm (this is how I picture my audience…) “If Bitcoin can’t be used in the secondary market, and can’t be used as a currency, and is an unstable commodity, what on earth is it good for?”

A good question (as expected from my reader!). Well, it is the concept that decentralizes a clearing system that makes it so useful. The ability to remain anonymous while clearing transactions based on a general consensus (OK… I know I didn’t sell that well) is something that we can really use soon in the future where all our purchases will be recorded in the ‘big data’ one way or another. When supermarkets are emailing me discounts on feminine hygiene products because I went shopping with my girlfriend once or twice, it really makes you think. Maybe if I paid for her stuff with bitcoins rather than my card that is linked with my rewards card, I won’t get all the ads. Anonymity is, to borrow the slogan from Mastercard, Priceless. On the other hand… if we all use Bitcoins, think of the value that we miss out from the reward points and the chance to save 20% on tampons…

Think of the points people!