Hi Malcolm, (EDIT: I want the folks here to know that I respect Malcolm’s experience and levelheaded views on the world. Malcolm’s optimism is at times in disagreement with my optimism, but I attribute the differences primarily to different time horizons. Malcolm is one of three folks from SI that I have met in person so far, and we have known each other for two years (long for internet time), and we both survived my Softbank Chronicles in relatively good order).
Your post encouraged me to do what I had meant to for some time, namely SI archeology, aggregating and porting my Softbank experience from my previous ‘home thread’ to here, and to my own hard drive. Sorry folks, it gets long, and it is holiday in HK.
Malcolm and I first met here ...
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and knows I can hype when I want to …
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and knows me well …
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Those were truly magical days when money, women, wine, caviar, holidays, and more money just congealed in a collage of beautiful colors, splattering every where, releasing the endorphin brew relentlessly, attacking one’s senses and non-senses via the 24-hour video show (three time zone Softbank ticker watching) …
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The adventure started out thus for me shortly before my first SI post (in November 98 at split adjusted Yen 2k per share)
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kicking off a posting hobby …
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with the fever eventually progressing to …
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When a sell of Softbank must be accompanied by an apology to the thread ...
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I was suspicions for feeling too good ...
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and so I was accumulating NEM via Put writing even back then … out of fear, and looking to the future ...
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Talking electronic systems, coconuts, and Bre-x even back then ...
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and, more importantly, knowing my own limits ...
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and thus always cautious, even during mania heat fever …
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The 24-hour per 24-hr Softbank video show eventually ended, after a sudden clarity of vision ...
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Most important of all … moving extremely and furiously fast when I have to, as in a game of Unreal Tournament …
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Never forgetting to aggregate experience for later benefit …
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but I did make a small mistake near the end … by not selling all and worse, buying back some …
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even as I knew what I feared …
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When the end was finally near, I was positioned more or less thus …
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and feeling thus insanely and sexually frenzied …
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almost sexual, again that word … as Softbank went from 169k to 200k in a matter of days …
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Finally, saved by the final dead cat bounce …
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and then the arena got very quiet …
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And yes, I remembered the all-important sense of humor and proportion, even as own blood flowed freely, all over, mixing with those of others
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Otherwise not much has changed, especially in regard to OT posts … for those who know me well, like those on this thread :0)
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Back to Malcolm’s post …
<<the depression was not only caused by excess money supply leading to a bubble and its collapse; it was also caused by rabid protectionism, as in the U.S. 1931 reaction to the situation>>
I agree, and we should watch for signs that protectionism is getting stronger political support. I am curious to see how Japan and the US intends to cooperate on Japan’s pain-sharing (export) and the US pain-sharing (capital flow).
Both, BTW, will want to keep the gold bomb from blowing up.
<<there is a political matter. It's not only the welfare statists who want inflation>>
A lot of debtors are rooting for inflation now without saying so, but they also fear that should they fail, deflation would be the actual outcome.
<<In brief there are few dedicated fans of sound money>>
I am counting on this impetus. I do not know nor care at this moment what the eventual outcome is (inflation vs deflation) and will only place my bets when the outcome is highly visible to everybody else … walking off with the booty in broad daylight.
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<<Promises of huge tax reductions won that>>
Financed by borrowing, and then rescinded via higher utility bills, leaving nothing to buy toilet paper.
I am concerned that a multi-year grind is what we are in for, because just as a car starts to lose control on the icy roads in upstate New York, one fast steering wheel adjustment will keep the car on the road, only to have the car get into an even more dangerous situation, facing an oncoming truck, and so on and so forth, until the Maestro and other great ones realize that the real economy is heading for the cliff, is not a car, but a rocket ship, with limited fuel, with limited steering fine ability, depending on gravity to do much of its propulsion, and a small steering effort has an enormous effect on "distance to target" by the time the rocket reaches Pluto.
When you look at past financial blowups, you will notice that a big one follows one or several small ones, with a gap of maybe a few years. My theory is that because equally clever folks back than were trying to steer, just as we are steering now.
The internet and computers just makes people want to steer faster and harder, as the new technologies allow them to do, and perhaps the new techs will also enhance the ultimate size of the implosion, and the depth of the crater. We will have to evaluate this possibility as we proceed gingerly forward.
Japan has been steering for a while and they are not stupid as the media make them out to be.
There are a few shoes to drop in Japan yet ... stock valuation by traditional measures, non-functioning financial system, insurance companies, beginning of the "rust belt" played out earlier in the US. A Japanese VC just told me about an investment on which he was applying a 7% hurdle rate on the discount of projected cash flows. I told him he was crazy, but he reminded me of the "risk-free" financing rate and how he was using 4 fold the risk-free rate as discount factor. I told him he was academically correct but economically flawed. Now, if them guys are investing for a hurdle of 7%, that spells more bad news later on - waste of money ala internet boom, only on some other asset class.
I want a tech asset class that can, at least on paper, meet the requirements of a 45% per annum hurdle rate, say perhaps ... not a lot of schemes can jump higher than the 45% per annum hurdle over, say, oh, 10 years, plus a fat P/E termination value ...
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Chugs, Jay |
