William Koldus Thinks

Koldus, my favorite contrarian in Seeking Alpha, thinks. I mean differently. He says the best is yet to come. Copy/Paste from his article:

"Intuitively, we know that this near record-setting bull market has been different, as investors have gravitated towards yield focused investments, including bonds and dividend growth stocks.

Visualizing the outperformance of defensive sectors over their economically sensitive counterparts is eye opening.

These defensive sectors, including bonds, as measured by the iShares 20+Year Treasury Bond ETF (TLT), and utilities, as measured by Utilities Select Sector SPDR ETF (XLU), have correlated closely with S&P 500 Index itself, which I argue has become a defensive, safe-haven global liquidity instrument.

(Source: WTK, www.stockcharts.com)

Meanwhile, economically sensitive equities, including energy equities, as measured by the Energy Select Sector SPDR ETF (XLE), and material equities, as measured by the SPDR S&P Metals & Mining ETF (XME), have dramatically underperformed.

Take in the chart listed above for a few minutes, which shows SPY up 101.6% over the last decade, TLT up 96.0% (which is even more remarkable in my opinion), XLU up 87.1% over the past ten years, XLE up only 10.8%, and XME down a remarkable -44.0% over the past ten years.

From looking at the above performance chart, where do you think the undervalued opportunities are today?

Now taking in the information from the decade performance chart, what if I told you that economic growth is accelerating..."

Koldus thesis is in harsh opposition to China's Xi who just said that China is now passing from fast growth to moderate growth energized by innovation alone. What happens if the financial markets and Xi are wrong about their expectations for growth?

As for me, I am fully invested in Israeli shares. I also started to collect Nvidia, for its AI chips. They advised me no, because it is too expensive.

PS.: Koldus is a Hungarian name, it means Beggar. Nomen est...

Hot Water Distribution Problem

A large catering kitchen of the Haredi sector hired me to design the wastewater and water system. I finished the wastewater design but the hot water system requires consideration. In their current facility they have the problem that the hot water stream arrives to the faucet only after a minute or so, and they want instant hot water at a certain temperature and pressure.  And they dont want electric heaters. The kitchen is divided into two separate sections that implement different kashrut rules - I assume, one is more severe than the other, or one is Ashkenazi and the other is Sepharadi. I didnt ask - it is not my business. BTW my origin (Hungarian Jew) impressed them favorably. There is ethnic favoritism among the Haredim.

I am planning a gas heater with a recirculating loop with lots of electronic sensors. There is also the problem that it cannot work on the Sabbath. They also forbid me to work on that day. 

 

Did Alex Viznitzer take bribes?

Alex Viznitzer (left) former manager of the National Road Corporation (Netivey Israel), was publicly disgraced because apparently he allowed "transference" of monies to the party whom he owed his post. The affair disappeared from the papers (the party is in the governing coalition) but now the police sent a letter to him and thirty other NRC employees calling them to audience. The new affair is called Affair 618 and Alex stands accused that between 2004 and 2010 asked for and received bribes from suppliers for advancing the payment of the amounts due to them. Alex received the Corporation with enormous debts and mountains of unpaid bills, and sure, he worked like a dog to get them paid. Did he took bribes? Having met him, I doubt it, but who knows? He had been a poorly paid immigrant engineer and has a beautiful, large family.

Another functionary, Igor Wagenfeld, is suspected of receiving bribes for hiring experts and consulting engineers. Apparently, a fixed percentage of the payments was being transferred to his brother's foreign account. He declared that the police is trying to inflate his influence and he was never in a position to hire consultants. Source: Globes.

I think that the police has nothing solid so they are applying pressure a large group in the hope that, trying to save themselves, will complicate each other. It may work.

The Swedes: Defenseless Natives?

pyrrhus left an insightful comment on the West Hunter blog: October 23, 2017 at 12:53 am   As Prof. Greg Clark shows in ‘A Farewell to Alms’, there’s no real question that centuries of executions have reduced violence (and resistance to authority) in the native population in much of the West to very low levels. Unfortunately, as we see in Sweden and the UK, this form of natural selection has also left the natives virtually defenseless against violent foreign invaders and criminally negligent governments…..

Buoyancy of the Jews

Globes (an Israeli business paper) reports that the world's largest fund "Bridgewater" managing 160 Billion dollars has Israelis in its top positions. This is so anomalous that one has to ask itself: What percentage of the world's very high IQ people is Israeli? Of every 10,000 humans, one is an Israeli Jew. Yet you find us everywhere where intelligence is imperative. I shall ask Leone (you know, Tanquam ex ungue leonem) and also make a guess, but just now I am trying to force myself back into the routine of work. It is not easy, after an intense vacation in London.

PS.: Il Leone has calculated Ashkenazi IQ = 112 while Thompson estimates the world's IQ=86.  Ashkenazi are about 8 million while the world 8 billion. IQ has a Gaussian distribution, so about half of the high IQ extreme may be Ashkenazi. Since there are many subgroups in the world, the estimate is wrong; yet we have some very special individuals.  

How to Win in the Stock Market playing against AI machines

AI machines can teach themselves to play go and defeat all human opponents. In fact, AI can defeat humans in every cognitive competition. I am sure this capability has been applied to investing, so a human has zero chances of winning in the investing arena. The effect of the introduction of very high intelligence players must have had several effects, and the immediate one is the death of the day-trader business. Second is the inevitable death of trading programs, as AI discovers them in no time and invents effective strategies and out-games them.

In fact, we may have reached a point where AI machines are playing themselves in the stock market and acquiring increasing intelligence and experience leaving no space for the human investor.  This is the end of all fund managers and strategists. The overall effect of AI machines playing themselves taking over the stock market is increased rationality and intelligence, fewer mistakes and panics (which are consequence of human/animal cognitive failures) and  after a while, greater stability and less volatility. I think that the current bull market is a reflection of AI machines gradually taking over the trading in the markets, and the bull market has at least one or two years to go. In this scenario, the optimal strategy for a human player like me is to hold a diversified, balanced, index-based portfolio and wait with patience that the market rises its worth.

I think that the only space left where that strategy may be improves is the complex, special area of mergers, liquidations, bankruptcies, political revolutions, Brexits and wars and so. How to find them, how to discover what is going on and what will be the outcome is very time consuming. I don't have the time to research those special situations. I am getting old and lazier than used to be.

Pushkin, The Black Slave Poet

My daughter and I spent a full day in the Southbank Center's Poetry Event. Colorful poets sung about their dreams, which were what they imagined the London cultured public would want them to dream: Universal Peace, Love, No Borders, etc. After all, they had to thank the Brits that invited them to London all expenses included. Not one original insight, not one arresting image.


There was also a panel of established poets discussing poetry. They were most Politically Correct, longing for a world without gender, race, class (Marxism is in fashion again), borders, Trump. One elderly Jewish poetess talked about underground poets of Russia, all of them White and none a penniless refugee... At some point she grasped the crowd's indifference/dislike, and changed the focus to Pushkin, who - she emphasized - was AN AFRICAN, descendant of an AFRICAN SLAVE, therefore glatt kosher for the Southbank communists present. How come that Pushkin (pic) was a Black Slave poet? His Grandfather had been born somewhere in Africa and became a general in the Czarist army, married into the Russian high aristocracy. She needed a PC poet and the nearest she found was Pushkin. BTW Pushkin owned lands with hundreds of slave mujiks.

Notwithstanding the reigning hypocrisy, Pushkin is a great poet and we enjoyed London very much.