Monkey Throw Dart

Saturday, December 21, 2013

The End






Tuesday, December 17, 2013

Happy Holidays from the Federal Reserve

Still seems a bit smug. 

Thursday, December 12, 2013

Thamsanqa Signs Fed-Speak?

                                                                                                   Say wha?

At first I thought that Thamsanqa Jantjie, interpreter to the stars, was telling the batter to bunt.  Shortly after, I discovered that he was describing the method by which the Federal Reserve creates money out of nothing.  A Nobel Prize may be in order.

Does Homer Simpson still work for the Secret Service?

Related links:

Friday, December 6, 2013

Here We Go Again: NAMG, and CLDS

Here we go again
She's back in town again
I'll take her back again
One more time

I had received an investor report in the tree mail a few months ago, and just receive one yesterday so I thought I would document, once again, why these fancy brochures should go directly from the tree mail to the circular file. That's the file that the trash guy empties on a daily basis.

Whoever writes these reports can talk a starving dog off a meat wagon, sell ice to Eskimos, and peel a monkey away from his banana stash.  These creative writers are true masters of the "Straight Line" pitch book.

Let's see what could potential make me a very wealthy chimp this time:

Cloud Security (CLDS)
The report states,

"NSA calls cyber crime the biggest criminal enterprise of all time, making CLDS a massive profit opportunity!"


"$9,000 in CLDS could leap to past $250,000!"

Well, I have to give them credit, it takes a criminal to know one, and who know cybercrime better than the NSA?

Looks like there was a little upside here when I received the report, but the rest of the potential upside is all downside.  Can pump and dump be considered a cybercrime?

Here we go again
The phone will ring again
I'll be her fool again
One more time

What about the report I just received yesterday?

North American Oil and Gas (NAMG)

The report states,

"A Southern California oil boom is taking shape that could make nimble investors (like you) incredibly rich!"

Wow!  "Nimble" is the word.  Look at the multiple pumps (peaks) and dumps (valleys) on this charts.  Looks more like an EKG of Southern California's last earthquake.  I'm a little insulted that I didn't receive this report until the last push before the death spiral into the tar pit.

I've been there before
And I'll try it again
But any fool knows
That there's no way to win

Here we go again
She'll break my heart again
I'll play the part again
One more time

Get past the commercial at the beginning of this video. A combination of Ray Charles, Billy Preston, and an always photogenic Nora Jones is worth the wait.

Thursday, December 5, 2013

Chart Gazing

Market Capitalization to GDP


Shiller PE ratio for the S&P 500. Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10


Just looking.


Ever seen Ritholtz' comment section "instruction"?

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

Is that an example of sarcasm, or reverse psychology? Reverse sarcasm? Sarcastic psychology?  Good stuff, either way.

Sunday, December 1, 2013

December: A Knight in Shining Armor?

December has a fairly good record for staying in positive territory.  With a year like 2013,  who would be crazy enough to bet against a strong finish?
19 out of the last 23 years have had gains.  Since I almost nailed my October prediction, I'll venture a guess that the markets will fall 1% by the end of  the year.  No point in me switching sides at this late stage.  Stubborn and contrary, yes, but apparently I have learned much from the Black Knight...

"It's just a flesh wound."

Thursday, November 28, 2013

A Banzai Holiday

Destroy the image and you will break the enemy.
~Shaolin Abbott, Enter the Dragon

 Let’s stop those damned pictures. I don’t care so much what the papers write about me — my constituents can’t read, but damn it, they can see pictures.
~ William Marcy “Boss” Tweed

If you don't know William Banzai, you might want to check out some of his holiday "cheer".  This prolific visual master of political and social commentary, and Photoshop maestro, will make you laugh, learn, wonder, and remind you that the devil is in the details.  Whenever I try to turn a turkey into a Twinkie, or photograph the Fed "chairmen" at the prom, the inspiration is all Banzai.

The is here although it might be worth checking out the full Banzai and commentary at Zerohedge.

Wednesday, November 27, 2013

Monkey Makes Plans and Mr. Market Laughs

The wheel is turning and you can't slow down
You can't let go and you can't hold on
You can't go back and you can't stand still
If the thunder don't get you then the lightning will

~Lyrics, The Wheel

By the end of last year, I had the new "add-on" completed for the CMI 4.0.  The Cheetum Market Indicator 4.0 would now become the "MensaMonkey", the version of a market timing method that would outperform the market and put some serious distance between the five-year performance of a monkey created program and the S&P500.

The "add-on' was a longer term signal generator that is used as a hedge.  It was intended to put the "brakes on" under specific market conditions.  This would be coupled with a trend-following system that was capable of out-performing the market over the last few years.  A reduction in risk with a slight reduction in reward is a great trade-off when playing both sides of the market.

As it turned out, the hedge I was looking for worked great, but unfortunately these longer term "risk-on" signals overwhelmed the short-term trend following signals, and as you can see the rest is history.

 Looking back at my research, the limited data available for construction of  the longer term signal, or hedge, seemed to be the culprit.  Haste makes waste, and some of the deadly trading system "sins" listed in the previous post had re-surfaced. It's possible to get away with using limited data for a while but eventually the weakness in the system is exposed by the ebb and flow of the market.  The 2012 market timing method (CMI 4.0), if left alone, would have handled this years up-trend quite easily. This proves that sometimes additions are really subtractions.

It ain't over 'till the fat monkey sings, but with a month to go and eleven months of muted MensaMonkey performance, it is unlikely that the final result will look much different than it does now. 

Sunday, November 24, 2013

Plan the Trade, Trade the Goat

I can saw a woman in two
But you won't want to look in the box when I'm through
I can make love disappear
For my next trick I'll need a volunteer

 ~Lyrics, For My Next Trick I'll Need A Volunteer

The Monty Hall Problem

Suppose you're on a game show, and you're given the choice of three doors: Behind one door is a car; behind the others, goats. You pick a door, say No. 1, and the host, who knows what's behind the doors, opens another door, say No. 3, which has a goat. He then says to you, "Do you want to pick door No. 2?" Is it to your advantage to switch your choice?

The answer (and there is only one answer) is that it is to your advantage to switch your choice. A good enough explanation comes from Wikipedia, and more detailed proofs are available on the internet.

 Contestants who switch have a 2/3 chance of winning the car, while contestants who stick with their initial choice have only a 1/3 chance. One way to see this is to notice that, 2/3 of the time, the initial choice of the player is a door hiding a goat. When that is the case, the host is forced to open the other goat door, and the remaining closed door hides the car. "Switching" only fails to give the car when the player picks the "right" door (the door hiding the car) to begin with. But, of course, that will only happen 1/3 of the time.

Even after an explanation, those not familiar with the laws of probability and chance sometimes don't get it.  I can tell by either that glazed-eye look, or a nod of the head and a "yes" which means, " I don't understand".  Some stubbornly stick to their initial (and wrong) assumption that it makes no difference if offered to switch their choice and select another door.  The "if it walks like a duck and quacks like a duck, it must be a duck" logic, usually stated with conviction, does not hold water. That's unfortunate because ducks need water.


Since I believe that the best teachers are the one's who know what it's like not to understand, I usually try to re-state the Monty Hall problem using 100 doors.  Behind one door is a car, behind the 99 other doors are goats.  The contestant picks one, then Monty Hall opens 98 of the doors, and then asks the contestant if he would like to switch.  That usually does the trick.

Of course, if that fails, just whip out the deck of cards and run through multiple Joker-Joker-Ace scenarios, and the magic of the laws of probability will appear before unbelieving eyes.

The world can be a very counter-intuitive place.  Events occur that are contrary to what intuition or common sense would indicate.  For trading plans, or attempting to solve real life riddles, using assumptions based on skewed data, circumstantial evidence, curve fitting, observational selection bias, over-optimization, gambler's fallacy, or emotion is no substitute for cold hard facts or solid confirmation that the laws of probability and chance will work in your favor under any condition.  Anything else is just a guess.  But that's okay, best guesses are necessary sometimes... as long as an open mind is close at hand.

You can "trade the plan" without all the back and forward testing if you want.  It just tends to get a little expensive.
This seems to correlate, and I do like pirates, but...

Wednesday, November 20, 2013

Sun Setting Soon on Solar?

The enlightened ruler is heedful, and the good general full of caution.
~Sun Tzu

As usual, I missed another solar sector "upturn".  That's okay because I seem to be better at taking advantage of solar sector downturns.  Maybe the solar industry will finally take hold and reap Tesla-like gains (we all know those are permanent) but in the meantime I'll keep the solar stocks on the radar and ride them back down to where they came from.  Who knows when that will be but I'll guess that the peak will occur in 2014 when the clouds roll in and render those solar panels useless once again. 

Here a look at the year-to-date gains made by some of the more popular solar stocks compared to the SPY.

And here is a look at the decade-long peaks and valleys of this sector...

Ignore the lower indicators (volume, stochastics, and money flow).  They just came along for the ride.