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The Ghost In The Machine, Part 1

Tyler Durden's picture




 

Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,

Tanzan and Ekido were once traveling together down a muddy road. A heavy rain was still falling. Coming around a bend, they met a lovely girl in a silk kimono and sash, unable to cross the intersection.
"Come on, girl," said Tanzan at once. Lifting her in his arms, he carried her over the mud.
Ekido did not speak again until that night when they reached a lodging temple. Then he could no longer restrain himself. "We monks don't go near females," he told Tanzan, "especially not young and lovely ones. It is dangerous. Why did you do that?"
"I left the girl there," said Tanzan. "Are you still carrying her?”

? Nyogen Senzaki, “Zen Flesh, Zen Bones: A Collection of Zen and Pre-Zen Writings” (1957)

A student says, "Master, please hand me the knife," and he hands the student the knife, blade first. "Please give me the other end," the student says. And the master replies, "What would you do with the other end?"
? Alan W. Watts, “What Is Zen?” (2000)

The trouble with Oakland is that when you get there, there isn’t any there there.
? Gertrude Stein (1874 – 1946)

It’s a big enough umbrella
But it’s always me that ends up getting wet.

? The Police, “Every Little Thing She Does is Magic” (1981)

Everyone who lost money on the SNB’s decision to reverse course on their three and a half year policy to cap the exchange rate between the CHF and the Euro made a category error. And by everyone I mean everyone from Mrs. Watanabe trading forex from her living room in Tokyo to a CTA portfolio manager sitting in front of 6 Bloomberg monitors to a financial advisor answering a call from an angry client. It will take me a bit of verbiage to explain what I mean by a category error and why it’s such a powerful concept in logic and portfolio construction. But I think you’ll find it useful, not just for understanding what happened, but also (and more importantly) to protect yourself from it happening again. Because this won’t be the last time the markets will be buffeted by a forex storm here in the Golden Age of the Central Banker.

A year and a half ago, when I was just starting Epsilon Theory, I wrote a note called “The Tao of Portfolio Management.” It’s one of my less-downloaded notes, I think largely because its subject matter – problems of misunderstood logic and causality in portfolio construction – doesn’t exactly have the sexiness of a rant against Central Bank Narrative dominance, but it’s one of my personal favorites. That note was all about the ecological fallacy – a pervasive (but wrong-headed) human tendency to infer qualities about the individual from qualities of the group, and vice versa. Today I’ve got the chance to write once again about the logic of portfolio construction AND work in some of my favorite Zen quotes AND manage something of a Central Bank screed … a banner day!

I’ve titled this note “The Ghost in the Machine” because it starts with another pervasive (but wrong-headed) human tendency – the creation of a false dualism between mind and body. I know, I know … that sounds both really daunting and really boring, but bear with me. What I’m talking about is maybe the most important question of modern philosophy – is there a separate thing called “mind” or “consciousness” that humans possess, or is all of that just the artefact of a critical mass of neurons firing within our magnificent, but entirely physical, brains? I’m definitely in the “everything is explained by neurobiology” camp, which I’d say is probably the more widely accepted view (certainly the louder view) in academic philosophy today, but for most of the 19th and 20th centuries the dualist or Cartesian view was clearly dominant, and it was responsible for a vast edifice of thought, a beautiful cathedral of philosophical constructs that was … ultimately really disappointing and empty. It wasn’t until philosophers like Gilbert Ryle and Van Quine started questioning what Ryle called “the ghost in the machine” – this totally non-empirical but totally accepted belief that humans possessed some ghostly quality of mind that couldn’t be measured or observed but was responsible for driving the human machine – that the entire field of philosophy could be reconfigured and take a quantum leap forward by incorporating the insights of evolutionary biology, neurobiology, and linguistics.

Unfortunately, most economists and investors still believe in ghosts, and we are a long way from taking that same quantum leap. There is an edifice of mind that dominates modern economic practice … a beautiful cathedral where everything can be symbolized, where everything can be securitized, and where everything can be traded. We have come to treat these constructed symbols as the driver of the economic machine rather than as an incomplete reflection of the real world things and real world activities and real world humans that actually comprise the economy. We treat our investment symbols and thoughts as a reified end in themselves, and ultimately this beautiful edifice of symbols becomes a maze that traps us as investors, just as mid-20th century philosophers found themselves trapped within their gorgeous constructs of mind. We are like Ekido in the Zen koan of the muddy road, unable to stop carrying the pretty girl in our thoughts and trapped by that mental structure, long after the far more sensible monk Tanzan has carried the girl safely over the real world mud without consequence, symbolic or otherwise.

The answer to our overwrought edifice of mind is not complex. As Confucius wrote in The Analects, the door is right there in front of us. Exiting the maze and reducing uncompensated risk in our portfolios does not require an advanced degree in symbolic logic or some pretzel-like mathematical process. It requires only a ferocious commitment to call things by their proper names. That’s often not an easy task, of course, as the Missionaries of the Common Knowledge Game – politicians, central bankers, famous investors, famous economists, and famous journalists – are dead-set on giving things false names, knowing full well that we are hard-wired as social animals to respond in ant-like fashion to these communication pheromones. We are both evolved and trained to think in terms of symbols that often serve the purposes of others more than ourselves, to think of the handle rather than the blade when we ask for a knife. The meaning of a knife is the blade. The handle is not “the other end” of a knife; it is a separate thing with its own name and usefulness. The human animal conflates separate things constantly … maybe not a big deal in the kitchen, but a huge deal in our portfolios. Replace the word “knife” with “diversification” and you’ll get a sense of where I’m going with this.

Here’s what I mean by calling things by their proper names. The stock ticker “AAPL” or the currency ticker “CHF” are obviously symbols. Less obviously but more importantly, so are the shares of Apple stock and the quantities of Swiss francs that AAPL and CHF represent. Stocks and bonds and commodity futures and currencies are symbols, not real things at all, and we should never forget that. The most common category error that investors make (and “category error” is just a $10 phrase for calling something by the wrong name) is confusing the symbol for what it represents, and as a result we forget the meaning of the real world thing that’s been symbolized.

A share of stock in, say, Apple is a symbol. Of what? A limited liability fractional ownership position in the economic interests of Apple, particularly its free cash flows.

A futures contract in, say, copper is a symbol. Of what? A commitment to receive or deliver some amount of real-world copper at some price at some point in the future.

A bond issued by, say, Argentina is a symbol. Of what? A commitment by the Argentine government to repay some borrowed money over an agreed-upon period of time, plus interest.

A currency issued by, say, Switzerland is a symbol. Of what? Well, that’s an interesting question. There’s no real world commitment or ownership that a currency symbolizes, at least not in the same way that stocks, bonds, and commodity contracts symbolize an economic commitment or ownership stake. A currency symbolizes government permission. It is a license. It is an exclusive license (which makes it a requirement!) to use that currency as a medium for facilitating economic transactions within the borders of the issuing government, with terms that the government can impose or revoke at will for any reason at all. That’s it. There’s no economic claim or right inherent in a piece of money. As Gertrude Stein famously said of Oakland, there’s no there there.

Why is this examination of underlying real world meaning so important? It’s important because there is no positive long-term expected return from trading one country’s economic license for another country’s economic license. There is a positive long-term expected return from trading money for stock. There is a positive long-term expected return from trading money for bonds. There is a positive long-term expected return from trading money for commodities and other real assets. But there is no positive long-term expected return from trading money for money.

Unfortunately, we’ve been trained and encouraged – often under the linguistic rubric of “science” – to think of ANY new trading vehicle or security, particularly one that taps into as huge a market as foreign exchange, as a good thing for our portfolios. We are deluged with the usual narratives that alternatively seek to tempt us and embarrass us into participation. On an individual level we are told stories of savvy investors who look and act like we want to look and act, taking bold advantage of the technological wizardry (look! it’s a heat map! that changes color while I’m watching it!) and insanely great trade financing now at our fingertips in this, the best of all possible worlds. On an institutional level we are told stories of liquidity and non-correlation (what? you don’t understand what an efficient portfolio frontier is? and you call yourself a professional?), both good and necessary things, to be sure. But not sufficient things, at least not to cast the powerful magic that is diversification.

There are only a few sure things in investing. First, taxes and fees are bad. Second, compound growth is a beautiful thing. Third, portfolio diversification works. At Salient we spend a lot of time thinking about what makes diversification work more or less well for different types of investors, and if you’re interested in questions like “what’s the difference between de-risking and diversification?” I heartily recommend our latest white paper (“The Free Lunch Effect”) to you. One thing we don’t do at Salient is include currency trading within our systematic asset allocation or trend-following strategies. Why not? Because Rule #1 for tapping into the power of portfolio diversification is that you don’t include things that lack a long-term positive expected return. Just because we can trade currency pairs easily and efficiently doesn’t mean that we should trade currency pairs easily and efficiently, any more than cloning dinosaurs because they could was a good idea for the Jurassic Park guys. The point of adding things to your portfolio for diversification should be to create a more effective umbrella, not just a bigger umbrella. I like a big umbrella just as much as the next guy, but not if I’m going to get wet every time a forex storm whips up.

So if not for diversification, why do smart people engage in currency trading? There’s a good answer and a not-as-good answer to that question.

The good answer is that you have an alpha-driven (i.e. private information-driven) divergent view on the terms of the government license embedded within any modern currency. This is why Stanley Druckenmiller is an investing god, and it’s why anyone who put money with him before, during, and after he and George Soros “broke the Bank of England” in 1992 has been rewarded many times over.

The not-as-good answer is that you have identified a predictive pattern in the symbols themselves. I say that it’s not as good of an answer, but I’m not denying that there is meaning in the pattern of market symbols. On the contrary, I think there is real information regarding internal market behaviors to be found in the inductive study of symbolic patterns. This information is alpha, maybe the only consistent source of alpha left in the world today, and acting on these patterns is what good traders DO. But because it’s inductively derived, anyone else can find your special pattern, too. Or if they can’t, it’s because you’ve carved out a nice little parasitic niche for yourself that’s unlikely to scale well. More corrosively, the natural human tendency is to ascribe meaning to these patterns beyond the internal workings of the market, something that makes no more sense than to say that goose entrails have meaning beyond the internal workings of the goose. The meaning of the Swiss franc didn’t change just because you had a consistent pattern of market behavior around the EURCHF cross. Deviation in the expected value of the Swiss franc in Euro terms did not become normally distributed just because you can apply statistical methodology to the historical exchange rate data. I get so annoyed when I read things like “this wasn’t just the greatest shock in the history of forex, it was the greatest shock in the history of traded securities! a 30 standard deviation event!” Please. Stop it. Just because you can impose a normal distribution on the EURCHF cross doesn’t mean that you should. And if you’re making investment decisions because you think that this normal distribution and the internal market stability it implies is somehow “real” or has somehow changed the fundamental nature of what a currency IS … well, eventually that category error will wipe you out. Sorry, but it will.

I don’t mean to be snide about any of this (although sometimes I can’t help myself). The truth is that an aggregation of highly probabilistic entities will always surprise you, whether you’re building a baseball team or an investment portfolio. Portfolio construction – the aggregation of symbols and symbols of symbols, all of which are ultimately based on massive amounts of real world activities that may have vastly different meanings and underlying probabilistic natures – is a really difficult task under the best of circumstances for a social animal that evolved on the African savanna for an entirely different set of challenges. And these are not the best of circumstances. No, the rules always change as the Golden Age of the Central Banker begins to fade. The SNB decision was a wake-up call, whether or not you were directly impacted, to re-examine portfolios and investment behavior for category errors. We all have them. It’s only human. The question, as always, is whether we’re prepared to do anything about it.

 

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Wed, 01/21/2015 - 22:03 | 5690802 Groundhog Day
Groundhog Day's picture

Fuck you yellen

Wed, 01/21/2015 - 22:07 | 5690812 zorba THE GREEK
zorba THE GREEK's picture

I hope the ghosts don't spook the gold market.

Wed, 01/21/2015 - 22:14 | 5690835 TeethVillage88s
TeethVillage88s's picture

There should be a national discussion about who has power, what power they have, why they have power, why money is allowed to influence power, who has money, and as we delineate all those power hubs and who has power or control over the power hubs...??

Then we have to ask what power does Wall Street have over the CB, What power does the CB have, Why is the CB called a Federal Reserve as if it is government or official, why do we grant CB power to people we know nothing about, how can we change the system to audit the people that gain membership to the CB, how can we understand the banking System without Full AUdit and Oversight of Money, CB, Money Creation, Money Created by Wall Street, and where money goes what is it's effect after created by each of the Chartered Banks involved in the US & State banking Systems???

- Power Hubs
- Power Players
- Banking Power Players
- Super Banking Money Creators
- Power to Create Derivatives, where, who
- Who creates the most money, Where does the Money go, what assets end up seized by the Money Creators, Toxic Assets?

Wed, 01/21/2015 - 22:24 | 5690868 KnuckleDragger-X
KnuckleDragger-X's picture

A national discussion but with whom and by whom?

Wed, 01/21/2015 - 22:30 | 5690888 Newsboy
Newsboy's picture

The thing that was making easy money for a lot of people was a money loser (about to worsen) for the people who controlled it.

Why didn't they warn everybody they were going to change the rules?

Wed, 01/21/2015 - 23:28 | 5691044 TeethVillage88s
TeethVillage88s's picture

KnuckleDragger-X above;

National Referendums would get students of almost all ages to think about what we are doing at the Federal Level.

We must engage the Enemy. But we must start intelligent, Honest, Study, Research, Disclosure, FOIA Requests, whatever it takes. Students, House Wives, Welfare Adults, News Outlets, Magazines...

How many City States are we aware of?

- Wash DC
- New York City
- London
- Geneva, Switzerland
- Luxembourg?
- Frankfurt?
- Paris?
- Brussels, Belgium

- Moscow, Russia

- Beijing, China
- Shanghai, China
- Hong kong, China

- Singapore, Singapore

Hey anyone know anything about the Family Kong behind the Hong in Hong Kong?

- Concentrated Power
- Concentrated Control
- Concentrated Banking
- Concentrated Legislative Power
- Concentrated Lobbying
- Concentrated MIC HQ

--

Newsboy from above;

Yeah, they change the Rules

- in 2008 ZIRP/LIRP for 6 years is a policy change that severly affects Savers & Household Investors & Retirees
- Manipulation from QE & ZIRP for 6 years is to Ignore the other classes of People in the USA... while not discussing how the US Systems have all become so complicated they require expert guidance... this means markets are not accessible to Main Street... this is Classism... This is Monopoly over the US Markets... Even the Tax code figures into this complicated Scheme to manipulate markets and take money from the unsophisticated.

Thu, 01/22/2015 - 00:14 | 5691171 OceanX
OceanX's picture

"There should be a national discussion "

Yes, let's have it in a court room. Start with indictments and finish with consequences...

Thu, 01/22/2015 - 08:20 | 5691597 doctor10
doctor10's picture

the "real discussion" needs to be over whether or not we will live again by the US Constitution. If so , all the above is logically resolved.

 

Wed, 01/21/2015 - 22:47 | 5690945 duo
duo's picture

Anything that moves in a "20 sigma event" shouldn't have been described by a normal distribution anyway.

Wed, 01/21/2015 - 22:06 | 5690815 TeethVillage88s
TeethVillage88s's picture

Repost:

CB is Racketeering & Treason (Just like US Congress, Our So Called Parents, who ship Jobs overseas while taking Bribe Money from the US Chamber of Commerce and Our Kiretsu Corporations to do it). FX Exchange is probably a Racket too.

These guys just "Gaslight" everyone into thinking Banking & Finance & Legislation & Income Taxes have to be hard. Just like writing out long Legislation to put on top of reams of other Legislation. Tax Code of 70,000 Pages. WTF?

- You can't come up with one reason why we need Central Banks
- We can set up Regional Centers for Cash Notes in the Event of a Bank Run
- Leader of Last Resort, Discount Window, we know they should have called it the Government Printing Office from 2008-2011, we don't need that if we don't export Fraudulent Derivatives and have to bailout foreign governments to prevent war

- Look at Domestic Private Investment Levels, Look at Capital Equipment & Facilities Expansion... these are small numbers compared to the $1.7 Quadrillion in Global Derivatives, WTF?? USA is the Richest county, but we don't have anywhere near $1 Quadrillion in Assets & Stocks & Bonds

- CBs are very cool with Exporting Jobs & Industry & Military Secrets & National Technology (They are Vultures)

- CB are chill with new minimum wages & Obama Care Taxes... and they don't have a problem with Augustine's Law, the exponential Increases in the Cost of US Military & US Weapons... So they don't count Food, Shelter, Health Care, Social Security, Education, or Military Costs in Inflation... and Fiscal Policy is not their Bailiwick... Even though Federal Spending is Exponentially Growing & represents Half of the Economy Now

NO, I'm sure we can't find a single reason to have a CENTRAL BANK... Not when they are all on the Take, and True Pirates, True Racketeers.

Wed, 01/21/2015 - 22:07 | 5690818 stocktivity
stocktivity's picture

Draghi better shock in the morning. All futures are pointing green.

Wed, 01/21/2015 - 22:54 | 5690966 tom a taxpayer
tom a taxpayer's picture

Yes, could be nasty if Draghi only does "Shuck and Awe".

Wed, 01/21/2015 - 22:38 | 5690918 Tom Serfo
Tom Serfo's picture

Every little thing she does is magic

Wed, 01/21/2015 - 22:04 | 5690806 TeethVillage88s
TeethVillage88s's picture

SOTU = Shame On The Union

Wed, 01/21/2015 - 22:50 | 5690876 KnuckleDragger-X
KnuckleDragger-X's picture

The union of the many states has ceased to exist and has been replaced by a three ring circus......

Wed, 01/21/2015 - 23:33 | 5691036 TeethVillage88s
TeethVillage88s's picture

Or an Orwellian Circus?

A Circle Jerk?
A Dope Ring?

Neofuedal Dystopia?
Idiocracy?

A Banana Republic... I'm just getting Started wow.

Well Let's See we have Zero Transparency over Free Press, only partial Transparency over Government, Banking, Transnational Corporations, MIC, and our FED. We have no idea how much USD Fiat is create each year and by whom.

- Wall Street Banks
- Central Banks, Federal Reserve
- Federal Government
- CIA & SPy Agencies
- Shadow Banking
- And how can you grant a money creation charter to Private banking at all, they create fiat, but commons don't benefit???

Deleted I see I posted below already

Wed, 01/21/2015 - 22:07 | 5690817 Pairadimes
Pairadimes's picture

"Woohaa, I got you all in check!" - Janet Yellen

Wed, 01/21/2015 - 22:12 | 5690821 Son of Captain Nemo
Son of Captain Nemo's picture

The question, as always, is whether we’re prepared to do anything about it.

The answer is "No"... 

Because if understood where we are we now we would have prepared for it long ago!

The reset button will only happens when the 1% and everyone underneath the pyramid-ponzi go down together in a smoldering heap!

Wed, 01/21/2015 - 22:39 | 5690922 Nobody
Nobody's picture

First off, all humans are conniving, carnivorous primates and we are only separated from the rest by our ability to have empathy.
Second, assets are that which one believes is of value. Is it better to have your asset base in monetary assets or in those assets that further your way in life. Is a tractor that can break ground, plant crop and provide a means to survive better or worse than a hedge fund account in FX?
Your call

Wed, 01/21/2015 - 22:46 | 5690947 tom a taxpayer
tom a taxpayer's picture

Where is S.I. Hayakawa when we need him?

Wed, 01/21/2015 - 23:00 | 5690984 YHC-FTSE
YHC-FTSE's picture

Category error: I think you're preaching to the choir when you mention that the underlying meanings of symbols are more important than how the symbols relate to each other in a predictive pattern. Most people know full well how fiat currencies work - money supplies, political expediencies in keeping relative values for import/export industries and so forth. You can't pass an article on derivatives at ZH without an astute observer commenting on the sheer insanity of CDS counterparty risk. Strip any symbol used in finance to its component parts and it's not hard to figure out that fundamentals have very little to do with the fantasy casino called the markets that are rigged for the big boys to play their games on suckers. For what? Because the entire future of pensions, debt service, GDP, and keeping the status quo depend on these nutjobs doing what they do in the investment banks.

The CHF was merely the case of getting a wake up call to the batshit crazy race to the bottom and looking at the precipice of infinity and ruin. Sooner or later, countries will start to de-peg from all the debt riddled crazy printers, including the reserve currency. I'm looking very closely at the NOK in europe and their trillion dollar sovereign wealth fund that is 70% in equities which has the effect of stabilising their currency in fx. I won't hold my breath, but it will happen if they are smart and it will be like de-dollarization when they sell.

Like the author, I also think the mind or consciousness is a product of the brain, although I like the software/hardware analogy better to describe the relationship. As for what you call ecological fallacy, it's not terribly hard to work out that individuals do not necessarily exhibit the same qualities as the group, plenty of examples exist to dissuade any notions that cultural, racial, and national characteristics can be used to predict the behaviour of an individual (Outside broad marketing targets).

All in all, quite an interesting read. Thanks.

Wed, 01/21/2015 - 23:03 | 5690998 buzzsaw99
buzzsaw99's picture

You fucked up, you trusted us. [/otter]

Wed, 01/21/2015 - 23:11 | 5691018 disabledvet
disabledvet's picture

I found it interesting that when I google searched "the end of a reserve currency" up popped a zero hedge article and all us commenters.

 

WE ARE IMMORTAL!

HAHAHAHAHAHAHAHHAHAHA!

 

Wolf Blitzer???  NEIN!

PhD economists?  NEIN!

 

"World Leaders"? NEIIIIIIIIIIIN!!!!!

 

 

HAHAHHAHAHAHAHAHAHA!

Wed, 01/21/2015 - 23:18 | 5691034 Impotent_Smurf
Impotent_Smurf's picture

Most people know full well how fiat currencies work - money supplies, political expediencies in keeping relative values for import/export industries and so forth.

You give most people too much credit. I up arrowed your post, though. It is very good.

Thu, 01/22/2015 - 13:55 | 5692889 Livermore Legend
Livermore Legend's picture

"The Tao of Alpha" is a far more worthy read than the above Article.....

Indeed...

"to seek it ['ALPHA'] takes REAL SKILL...."

"Part 1" above can be Summarized:

Anyone taking POSITION based on the Actions or Non-Actions of ANY other PARTICIPANT, be it Individual, Entity or "Central Bank", is basically INCOMPETENT and is a SUCKER waiting to be parted from their Capital....

If one doesn't KNOW what POSITION to take based on their own "REAL SKILL", they should either refrain from Playing the Game....OR make NO COMPLAINT when they LOSE.....

"Part 2" Not Needed......

Wed, 01/21/2015 - 23:58 | 5691142 Dragon HAwk
Dragon HAwk's picture

Money is only worth what it can Buy. The fact that we can not simply tie our Money to a market basket of Goods and have it remain stable, is a big reflection of how many parasites we have in our society

Thu, 01/22/2015 - 00:04 | 5691151 Captain Willard
Captain Willard's picture

This article was very erudite. But I think, despite all his learning, he may have missed the point.

People who were short the Swiss Franc borrowed it to buy something else in the author's "category" of valid, cash-flowing assets. So the Franc was a source of funds, not a use of funds.

Thu, 01/22/2015 - 01:14 | 5691252 HumourMeBlack
HumourMeBlack's picture

What I’m talking about is maybe the most important question of modern philosophy – is there a separate thing called “mind” or “consciousness” that humans possess, or is all of that just the artefact of a critical mass of neurons firing within our magnificent, but entirely physical, brains? I’m definitely in the “everything is explained by neurobiology” camp, which I’d say is probably the more widely accepted view...

So, first we must deny ourselves, then...

It wasn’t until philosophers like Gilbert Ryle and Van Quine started questioning what Ryle called “the ghost in the machine” – this totally non-empirical but totally accepted belief that humans possessed some ghostly quality of mind that couldn’t be measured or observed but was responsible for driving the human machine – that the entire field of philosophy could be reconfigured and take a quantum leap forward by incorporating the insights of evolutionary biology, neurobiology, and linguistics.

the machines win.

How sad.

 

 

Thu, 01/22/2015 - 02:17 | 5691314 Batman11
Batman11's picture

OR .....

Traders are professional gamblers and sometimes they lose.

 

Thu, 01/22/2015 - 03:35 | 5691373 Wait What
Wait What's picture

great post Mr. Hunt, great post.

thank you for having the eloquence to consolidate the ideas we share in a way i never could. kudos.

Thu, 01/22/2015 - 03:59 | 5691387 Clowns on Acid
Clowns on Acid's picture

"categories" ... or from a risk management perspectove .. stochastic jump processes...due to central bank over reach. Pricing of prermiums , expected / implied volatility, is going thru the roof mutharucker.

Thu, 01/22/2015 - 05:38 | 5691460 basho
basho's picture

the whole point to Tanzan and Ekido was that our lives are dominated by our desires, our craving for sensual satisfaction, our greed.

unless one addresses and understands this there is no way out and you will always be carrying the lady across the stream, so to say.

the author is trying to stuff a sq. peg into a round hole. 

it ain't going to work no matter how much zen you quote.

delusion remains.

Thu, 01/22/2015 - 07:23 | 5691518 falak pema
falak pema's picture

All this theorizing of how modern philosophy is more advanced than Descartian duality, to then come to financial problem solving where portfolios and symbols are symbiotic in zenitude but antinomic in exactitude.

To align all the faces of this rubic cube you have to be a man who understands that omelets cannot be made without breaking eggs and portfolios cannot mature as you want them to if somebody keeps pulling the carpet from under your neuroscientific and zen deep fried feet.

What an awesome trip behind the mirror and what a shame we have to leave sweet Alice there all covered in mud.

More prosaically, here is an interesting take on the motivation of the SNB move.

http://kingworldnews.com/former-white-official-exposes-shocking-real-reason-historic-58-sigma-move-swiss/

Thu, 01/22/2015 - 09:23 | 5691752 d edwards
d edwards's picture

I never make predictions, especially about the future.

And

It ain't over 'till it's over.

Berra the Yogi

Thu, 01/22/2015 - 05:45 | 5691469 Ghordius
Ghordius's picture

way better article then expected

"Please. Stop it. Just because you can impose a normal distribution on the EURCHF cross doesn’t mean that you should. And if you’re making investment decisions because you think that this normal distribution and the internal market stability it implies is somehow “real” or has somehow changed the fundamental nature of what a currency IS … well, eventually that category error will wipe you out. Sorry, but it will. "

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