https://www.nytimes.com/2017/03/28/business/dealbook/blackrock-actively-managed-funds-computer-models.html?_r=0


As if there wasn't enough group-think in markets as is: Blackrock is going ROBO.
Institutions are embracing HFT, AI, Quantitative strategies, thinking that this will allow them to outperform. However, the logic is flawed. You will never remove the inherent Herd-Mentality of market participants. A machine will never replace the Creativity & Intution of the human mind.
This reads more like a liability blanket for me. Markets have most certainly been altered and corrupted from Central Bank Intervention spawned from the financial crises. However, do not fool-yourselves into thinking Passive-Investing is the only way, Active management can never outperform, or that Robots will always outperform humans.
Some day, inevitably, the tides will turn & it is the Bear-Markets that separate the wolf from the sheep.

There exists in inexhaustable number of lists created on the pros & cons of globalization.
Proponents generally argue about the benefits of multicultural integration, a romanticized view that the strategy will 'raise all boats in poor and rich countries alike.' The added competition promotes global economic growth, creates jobs, makes companies more competitive, lowers prices for consumers, etc, etc, etc...
In many respects globalization has worked wonders for lowering the worldwide poverty rate. I don't think that anybody will argue that many developing nations have benefited immensely from the drastic reduction in trade barriers.
These arguments are all well & good and play hand-in-glove into this fairy-tale, new world order, utopian society that we all like to believe is attainable.

As a newly formed nation, American industry could not cost-effectively compete against the substantially lower prices of established old-world European empires such as Great Britain. The tariff, effectively 'protected' American labor and business interests, serving as an economic buffer as well a revenue stream for federal government.
Tariffs were effective in achieving this goal. Perhaps, the industry that found the greatest success was the steel industry.

As with most things, the rapid integration of the global economic landscape brought about positives and negatives.
​

to be continued...

I’ve finished my Fall Semester at the University of Montana. It’s good to be back in school. I am much more driven this time around.

When you have goals, direction, focus: you are able to extract more out of life.

I spent my days situated deep in the judicious wings of the the Mansfield Library.  Hours of laborious study passed as my mind revved. More knowledge, new connections, different perceptions, a stronger foundation.

I went into this semester with a desire to learn. With the determined work ethic I established with trading, I was able to complete an entire block of diversified upper core business courses. Business Finance, Management & Organizational Behavior, Principles of Marketing: I even managed to squeeze in a ceramics class to work the other side of my mind. Most surprising this semester was my Operations Management course. Operations is an element of business that not many people immediately think of. However, it’s usefulness and relevance is undeniable! I believe that a solid background in operations management has the ability to dramatically improve efficiency & capability allowing one to live a highly-productive meaningful life.

I’m a senior now.. Close to a meaningful goal post but my life's only just began..

Internships, specialized classes, not to mention career and my personal ambitions: I’ve got a lot on my plate.

All I know with certainty is: No matter what it takes: I’m going to succeed.

​​I am extremely excited about the prospect of getting involved in the enormously lucrative industry of legalized gambling. Our organization's mission statement is simple: Results. We utilize the most efficient and cutting-edge developments in marketing research and technology to maximize customer acquisition for our clients. Our marketing team has been approached by a representative of Bigsky Enterprise. Bigsky Enterprise is a large diversified conglomerate that is considering spearheading a new division entitled, ‘Bigsky Goldrush.’ Bigsky Goldrush would be a casino headquartered in the state of Montana. Knowing that there are various ethical, legal, and financial risks; Bigsky Enterprise is seeking consultation as to whether we think this foray into legalized gambling is a viable business opportunity; and if so, what our organization can do to ensure the undertaking is successful?
 
Gambling has long been a controversial activity in Montana. The first Legislative Assembly of the Montana Territory outlawed several games of chance, and the 1889 Constitution forbade gambling. (Article III, section 9, of the Montana Constitution.) You don’t have to look very hard to see the various deleterious economic, psychological, and social impacts the activity has on people. The 1998 Montana Gambling Study was legislated by House Bill No.615(Chapter 494, Laws of 1997) to examine the social and economic impacts of gambling in Montana. The study discovered that: in 1997, 78 percent of Montanans gambled in some form, and that, 3.6 percent of all Montanans can be identified as problem or pathological gamblers. “Problem and pathological gamblers informally admit a very high incidence of illegal acts as well as having very high rates of divorce, bankruptcy, credit problems, domestic violence, drug and alcohol dependence, depression and suicide attempts.”  Increased gambling is statistically correlated with increases of crime. The study claims that, “for each additional $1M in gambling, roughly 172 crimes will occur.” It is easy to get addicted to the euphoric rush that comes with fast money; but the thrill rarely lasts forever. The truth is, American Novelist Hunter S. Thompson was quite right when he said; “Gambling can turn into a dangerous two-way street when you least expect it. Weird things happen suddenly, and your life can go all to pieces.”
 
There is a flip-side to every coin and gambling is not all bad. The popularity of the activity is undeniable. Figures found in the Montana Gambling Control Divisions 2014 Biennial Report revealed that in 2014, Montana video gambling machines generated a whopping $379,607,573 in annual net income! There are enormous societal benefits that are created with this cash flow; the most significant being the ‘Video Gambling Machine Gross Income Tax’ which is a 15% tax that is applied to income from line game, keno, and video poker video gambling machines. In FY 2014, the Montana GCD (Gaming Controls Division) returned 92.19 percent of the tax revenue collected through gambling activities back to Montana citizens with a distribution of $57,006,892 into the state’s general fund. The general fund largely encompasses the money used as the source of state government financing. Indeed, there is an argument that Montana has grown dependent on this income stream; “Unlike the federal government, (the) Montana state government cannot operate at a deficit.” Every dollar of tax revenue helps immensely.  Balancing the budget is of utmost importance as passing a balanced budget is actually the “only constitutionally required duty of the Legislature.” (Montana.gov)
As of 2012 the money collected in tax revenue, while sizable in dollar terms, amounted to a mere three percent of the general fund. I believe we would be doing a great service to ourselves, as well as the dignified citizens of the state of Montana to try our best to raise that tax revenue number, much higher, with the addition of the Bigsky Goldrush Casino! This undertaking will be no walk in the park. With big money, comes fierce competition and with an estimated population of only 1,032,949 people, (US Census, 2015) Montana is not exactly a population-dense state. To secure our foothold in the market space, we will need to differentiate the Bigsky Goldrush Casino brand from the competitive swarm of 1,347 (GCD, FY16Q4) active gambling operators in Montana. This will take careful analysis and compilation of market research to determine which target segments we wish to pursue to maximize profit.  We can say with certainty that the locals love to gamble! In the GCD study it was found that (in 1997) 78 percent of Montanans had gambled in some form and out of those people, roughly 94 percent of the money that was wagered went towards video poker and keno machines. Rudimentary analysis of the market share of video gambling device manufacturers in Montana quickly reveals one company that towers above the rest. International Game Tech (including their subsidiaries Spielo International, and Gtech) control a domineering 37 percent of the marketspace. The company’s stock, IGT, has significantly outperformed the S&P since the merger of Gtech and International Game Tech on April 7, 2015, soaring over 63%! (Stockcharts.com, 2016) This information could very-well suggest that many astute investors are currently seeing opportunity in the gambling industry and are speaking with their wallets as money flows into the (current) leaders of industry.
             
Most of the information I have relayed to you relates to the sole activity of gambling, in which, most operators have chosen the ‘turnkey’ route of using (primarily rented) video gaming machines. The reason for the gravitation of this strategy is clear. The numbers suggest that video gambling machines work. MGC figures state that the average gaming machine in Montana pulls in an annual gross income of $22,753. These machines have minimal overhead as well as low maintenance costs and are clearly needed to be incorporated into the backbone of any serious gambling operation. With a properly executed (and well-marketed) strategy it would seem feasible to be able to create a profitable operation using machines alone. Now, let's take this analysis one step further and take into consideration the fact that 93% of gambling establishments hold alcohol licenses, the rapid growth of Montana as a highly-sought-after residential and tourist destination, as well as the seemingly endless alternative avenues of income streams the casino business model can produce!
             
I believe that Bigsky Enterprise is onto something with this Bigsky Goldrush Casino concept. There are indeed various moral and ethical concerns that have the potential to negatively impact our brand that must be accounted for. However, utilization of our extensive research and insight in marketing, coupled with a brilliant, well-executed business plan creates an asymmetrical risk-reward paradigm in which we all benefit. Let’s take on this project, make immense profits, provide a fantastic source of entertainment for the community, and sleep well at night knowing our tax-dollars are hard at work, supporting the state we love!
 
 
 
 
 
 
 
References
 
Census.gov. (2016). Montana Population Estimates, July 1, 2015. http://www.census.gov/quickfacts/table/PST045215/30
 
Gambling Control Division. (2014). Montana Department of Justice Gambling Control Divison Biennial Report Friscal Years 2013-2014 and Report of the Gaming Advisory Council. 8-23.
 
Gambling Control Division. (2017). Video Gambling Device Manufacturer Market Share Fiscal Year 2017- Licensed Active Machines. https://media.dojmt.gov/wp-content/uploads/Manufacturer-Market-Share-1.pdf
 
International Game Technology PLC. (2016). 20F Annual Report for the fiscal year ended Dec. 31, 2015. http://phx.corporate-ir.net/phoenix.zhtml?c=119000&p=irol-IRHome
 
Montana., (1991). Constitution of the State of Montana. Helena, Mont: Published by Mike Cooney, Secretary of State. Article III § 9
 
Montana.gov., (2016). Budget Basics. http://leg.mt.gov/css/fiscal/budget-basics.asp.
 
Stockcharts.com. (2016). IGT Daily Stock Chart. http://stockcharts.com/h-sc/ui?s=igt
 
Taylor, S., Nemecek, B., Brod, R., Williams, P., & Caldwell, R. (1998). The 1998 Montana Gambling Study. Montana Legislative Services Division. 8-10.
 
Thompson, H. AZQuotes.com. Retrieved October 25,2016, from AZQuotes.com Web site: http://www.azquotes.com/quote/293660.
 

On October 13, 2016 I went to a presentation being held in the North UC Ballroom. The presentation was from the head of the Minneapolis Fed, chairman Neel Kashkari. I have long been at odds with the easy-money monetary policy the Federal Reserve has adopted since the 2008 financial crises and wanted to hear the rhetoric that came straight from the horse's mouth. Mr. Kashkari has had an interesting career he began his studies in mechanical engineering and was hired on as a contractor working for NASA. After his stint in ‘rocket science’ he went to Wharton University and obtained an M.B.A. Kashkari went on to work for Goldman Sachs for a while under the Goldman CEO at that time, Hank Paulson. Once Hank Paulson was appointed to be the United States Secretary of the Treasury by president George W Bush, Kashkari followed Paulson into the treasury as an aide.
In early 2008, when the malfeasance of the reckless bank MBS (Mortgage Backed Securities) racket came to roost, Kashkari along with treasury aide Phillip Swagel spearheaded TARP(Troubled Asset Relief Program). This is the infamous $700B program in which the treasury effectively purchased the worthless MBS off of the crooked banks balance sheet by swapping them with safe liquid treasury bills. The intent was to try to prevent runs on the banks while at the same time encouraging them to lend. Kashkari did not go into too much detail on this but he did state, ‘I’m the guy who bailed out the banks.’
After the treasury, Kashkari retreated from Washington DC. He found is way to Northern California where he would work for Pimco where he ran several funds with ‘spotty performance’. In 2013 Kashkari, wishing to return to public service ran a failed campaign in attempt to be elected Republican governor of California. In early 2015, Neel Kashkari was unanimously elected president and CEO of the Minneapolis Federal Reserve. Despite the questionable morality of the ‘bank bailout’ which Kashkari spearheaded, he did mention throughout his presentation that he is of the belief that there are certain banks which are too large and control too much influence over the financial ecosystem. Kashkari has been actively working on plans to try to ‘break up the big banks.’ He mentioned that one such proposal will be revealed November 16 in New York.
Kashkari was well spoken. He did not lecture for long but rather spent much of his time with the floor open for questions. I was amazed at how many people showed up to this presentation. I honestly, did not think that many people knew or cared about the Fed, but I was proven wrong as the ballroom was filled with well over 120 people, mostly older members of the community. I wanted to rail into him, give him a piece of my mind and that I am of the belief that the reckless monetary policy adopted by the Fed over the past eight years has accomplished nothing but blowing massive asset bubbles which sooner or later will inevitably burst ushering in a recession far greater than what was experienced in 2008. The Fed never let the recession play out and let the debt unwind, instead what they did was paper over the problem with cheap money which worked great for the portfolios of  financial elites at the expense of horrible deleterious effects for the masses.
Kashkari spoke as if he was a hero. The savior of us illiterate uncouth mortals who know nothing of the workings of financial markets. He claimed that if he did not step in to bail out the banks we would've undergone that which could only be compared to ‘much worse than the Great Depression.’ If his bank account is anywhere near as inflated as his ego, he is most assuredly a very wealthy man. A gentleman sitting next to me asked him a pointed question, ‘Now that the Fed has adopted this ZIRP (Zero Interest Rate Policy) what tools does the Federal Reserve have to help combat the next recession? Kashkari's response illustrated the rampant obliviousness that underpins all face public relations of the Federal Reserve.
“Well, it is amazing that the low interest rates are not creating more business investment and economic growth. Perhaps it’s because people have been shocked by the events of 2008 and have changed their spending/investment habits. Granted, the Fed has less (firepower) now that rates are so low but what we could do is help encourage investment by keeping (long term) rates lower for longer… Another option is to (further) expand the Feds balance sheet (With Quantitative Easing).”
 So there you have it, The Federal Reserve's adopted ZIRP/QE monetary policy is admittedly ineffective and yet their only solution is to keep beating the dead horse by squeezing even harder on the rotten lemon that has long been pulped dry. This is one of the most powerful people in the financial world. A well spoken, brilliant individual who you would think is well-aware of the conundrum of the box he is trapped in? This is the very box that he helped create with his TARP program and bank bailouts. But from his speech I honestly could  not tell…
Kashkari, the hypocritical hero. He bails out the big-banks (but wants to break them up.) He saves us all from Financial Catastrophe (The Greatest Depression) and yet he admits that we have experienced sluggish growth (the worst recovery since the 1930s Great Depression) and a decline of labor force participation (lowest labor force participation since the 1970s.). Look, the guys done well for himself, I wish I was in his position (the money and the power.) Really, who can fault this man for trying his best to keep the wheels spinning in time of crises? It was an interesting experience and I’m glad that I went but in my honest opinion: If this person is the best of the best. If the only solution to bad monetary policy is to continue squeezing the lemon until the next catastrophe.. We’re in trouble…

In a stunning act of rhetoric: OPEC Agrees to First Oil Cut in Eight Years  The market, unable to see past the incessant jawboning headlines coming out of OPEC for years promptly responded with a $4 pop in crude oil.
This monumental achievement in perception engineering was made 'possible because Iran will be exempt from capping production.'(Bloomberg) 
As oil prices have fallen over the past few years, OPEC producing nations have responded paradoxically by scrambling to make up the loss in revenues with an increase in production. This has led to all-time-highs in oil production globally.

Brilliant! The cartel is back together. Everything is grand in the biggest commodity manipulation circuit the world has ever known. Back to business as usual, everybody wins, right?
​Not so fast! There is an old Arab Proverb that goes, 'Trust in God but Tie Your Camel.'
There is serious money on the line. It's a game of prisoner dilemma. Work together and you both benefit but cut their throat and gain market share.

All things said and done, nothing has been accomplished. Two years and nothing but market drift, marking time sideways reliant on incessantly yapping jawbones losing cartilage fast.

After the Fed moved last December markets experienced a swift sell-off. The Fed responded by immediately reversing their rhetoric from one of 'rate normalization' to one of 'data dependence.'
The Macro continues to deteriorate as the markets stagnate, waiting for the signal to make a move.

The Magic-Ratio continues to hold it's deflationary trend. 

Stuck on autopilot 15,000ft in the air. The Feds lost control of the QE Jet. We're quickly running out of fuel...
​How do we land?

I have had a lot on my plate lately. For starters, I had to deal with the fallout of a certifiably crazy ex-girlfriend. This black-widow basically led me on and played me for eight months taking advantage of my kindness only to stab me in the back in a most spectacular fashion!
Anyways, I learned an incredibly valuable life-lesson from the experience and that's:
​When it comes to crazy women; Avoid them from the very beginning. There are always red-flags.
​Everything you need to know about dealing with women can be summed up in this 100% accurate video.

I urge my readers to refer to this matrix next time you are thinking about chasing that dime.
​There is a direct correlation between hot & crazy. The Danger-Zone is very real and must be avoided at all costs!
With this crazy girl officially out of my life for good I can now return my focus towards the priorities: 
​Bettering myself and making a fortune through finance & markets.

I am currently going back to school at the University of Montana. My plan is:

• Finish my undergrad degree in Business-Finance.
• Find a job with a hedge fund or other type of money management institution.
• I then want to further advance my career and earning potential with CFA certification.

I have now been active in trading and markets since 2013. I know that a career in Finance is right for me. The markets are thrilling. Trading is not easy but I am passionate about markets and I am well aware of the fortunes that can be made through astute, focused, disciplined asset allocation & financial planning.
I will never give up trading but trying to make a living purely trading is a suckers game.
The more intelligent route is having a 'real' job. Safety to fall back on. I went to a meeting of the schools Finance Club and one of the professors claimed that CFAs make an average salary of $250k/yr!
That's what I need to do. I need to gain a foothold in the financial industry and trade on the side.
I will work my hands to the bone, I will do whatever it takes. 
I aim to achieve success & will stop at nothing until I have made my fortune.
​

As far as markets go: for about a month or so I have had on only two positions.
Long: Sugar
Short: Crude Oil
I was flat for a long time but on Friday Sugar broke out surging more than 5%!
Crude has been chopping it's way lower as the constant rumors of oil production cuts slowly lose their effectiveness.

Equities are simply much too dangerous to mess with at this time. The SPX chopped sideways for 2 months only to get obliterated in a day on 'Fed Rate Hike' rumors. Until these Central Banks get out of the markets, I fear that equities will continue to diverge from any semblance of traditional fundamental valuation metrics.

Stay focused, choose your partners wisely & work your ass off. We want success. Let's make it happen!

I believe that soft commodities are in the early throws of a new Bull Market. 
Quantitative easing has brought upon markets an insatiable demand for financial assets. 
Companies have been taking advantage of the relentless bid with record debt-issuance 

The bid is there, despite corporate earnings power not keeping up.

I have never seen Mr. Market reward the majority. Whenever sentiment reaches extremes like this, it usually marks some sort of top but who knows? I think that at best, equity markets are dead-money moving forward. The bulls all say, global QE, Zero Interest rates, don't be a fool, buy the dip. But the Bears say, open your eyes, look at the distortions, the earnings are deteriorating and there is a mania in the credit markets never seen before in the history of markets. This will surely not end well!
You know, I am in that Bearish camp and thus, I refuse to play the 'greater-fool' equity casino. 
However, I have my eyes elsewhere. Quietly, in the shadows we see the soft commodities making progress.

Soft Commodities have been in a devastating five year Bear Market. As financial assets benefited immensely from quantitative easing, real assets suffered. Call it oversupply, call it momentum, whatever you want to call it: investors have favored financial assets over this time period. The trade has been front-running the central banks in the bond markets and chasing yield wherever you can get it. 
​However, no trend lasts forever. As the treasury pool shrinks, equity valuations get stretched to unfathomable extremes, sooner or later sentiment will change once again in favor of real assets. 
The gold & silver markets have been on fire this year. I believe this is a crucial first step towards a more pervasive bid in commodities. 

The major risk to the thesis is the Dollar. But as long as the dollar sports this dead-money action I believe the softs have a good shot at a sizable rally.
​

​

I've compiled a List of Agricultural related companies. As you can see. Ags are hot! A bid in these equities helps confirm my thesis that investors are already beginning to shuffle money into the sector.

This market is treacherous. Just when you think you've got it all figured out Mr. Market will surely beat some humility into you. However, the S&P is a crowded trade. The credit markets are cracked out to the max.
Not many people have their eye on agriculture yet & that's what I look for. 
Beat the crowd, plant some seeds and watch them grow. This Bull-Market is in it's early innings!