Contrarian

Obama solves climate change conundrum

https://youtu.be/fNrSEH4WVBw

E81AF6C9-59A1-4F4F-85F6-9C7BE5447CC7.jpeg

Obama has cut the Gordian Knot on climate change. Who knew?

“…the reason we don’t [invest in climate change policies] is because we are still confused, blind, shrouded with hate, anger, racism – mommy issues…”

Call me a sceptic, but even if I believe that 97% of scientists were correct on climate change, I should be more intrigued why the 3% don’t agree. Could I be missing something? After all 97% of economists believed it was a new paradigm right before the GFC almost sent us back to the financial Stone Age.

Perhaps Mr Obama should check the following study from Professor Valentina Zharkova. It might not be racism.

She explains and confirms why a “Super” Grand Solar Minimum is upon us:

Principia Scientific wrote,

Professor  Zharkova gave a presentation of her Climate and the Solar Magnetic Field hypothesis at the Global Warming Policy Foundation in October, 2018. Even if you believe the IPCC’s worst case scenario, Zharkova’s analysis blows any ‘warming’ out of the water.

Lee Wheelbarger sums it up: even if the IPCC’s worst case scenarios are seen, that’s only a 1.5 watts per square meter increase. Zharkova’s analysis shows a 8 watts per square meter decrease in total solar irradiance (TSI) to the planet.

The information she unveiled should shake/wake you up. Zharkova was one of the few that correctly predicted solar cycle 24 would be weaker than cycle 23 – only 2 out of 150 models predicted this. Her models have run at a 93% accuracy and her findings suggest a SuperGrand Solar Minimum is on the cards beginning 2020 and running for 350-400 years.

The last time we had a little ice age only two magnetic fields of the sun went out of phase. This time, all four magnetic fields are going out of phase. 
Would you ignore the 1 in 75 contrarian view whose model has predicted accurately or the 74 in 75 that have missed? It’s probably just racists with mommy issues that’s to blame…After all if Obama says it’s true, it must be right. Right?

Thoughts for the day – Group think, crypto and taxi drivers

6FE1E60D-D240-464D-AB5A-E4305B63F7E6

It is important to challenge convention. I have had countless questions from people on bitcoin and crypto lately. Sort of reminded me of the above. Perhaps the golden rule of investing doesn’t lie in complex models and sci-fi scenario analysis but the simple question of whenever an overwhelming majority think something is great, it is time to take the opposing view and vice versa. I haven’t been in a taxi yet to confirm Bitcoin is overdone. As I put it – gold needs to be dug out of the ground with effort. The thing that spooks me about crypto (without trying to sound conspiracy theorist) is that state actors (most top end computer science grads in China end up working in the country’s cyber warfare teams), hackers or criminal minds (did you know 70% of top end computer science grads in Russia end up working for the mob (directly or indirectly) the value of coins in the system could be instantaneously wiped out at the stroke of a key. We’ve had small hiccups ($280m) only last week. So as much as the ‘security’ of these crypto currencies is often sold as bulletproof, none of them are ‘cyberproof’.

Think of why your Norton, Kaspersky or Trend Micro anti-virus software requires constant upgrading to prevent new threats trying to exploit new vulnerabilities in systems. We need only go back to the Stuxnet virus of 2010 which was installed inside computers controlling uranium centrifuges in Iran. The operators had no idea. The software told the brain of the centrifuges to spin at multiples faster than design spec could handle all the while the computer interface of the operators showed everything normal. After a while the machines melted down causing the complete destruction of the centrifuges which were controlled from a remote location.

So much in life is simple. Yet we have lawyers writing confusing sentences that carry on for pages and pages, politicians complicating simple tasks, oil companies trying to convince us their additives are superior to others and so on. The reality is we just have to ask ourselves that one question from Mark Twain,

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

The beauty of honesty

A3DCAABE-D864-4D34-AEFF-CC75DC64743D

The above quote is from quirky fund manager Dr Michael Burry MD towards the end of the movie, The Big Short. It says so much of today. One mate who is a very decent asset manager in Australia wrote to his clients, “I realise such may fly in the face of typical adviser recommendations (show me how someone is paid and I’ll show you how they will behave) however, I would rather lose a client than lose a client’s capital.

We share similar views on the state of the global capital markets. We joked about his long message to his investors sounding like Jerry Maguire burning the midnight oil writing the “fewer clients, less money” manifesto which got him sacked.

Now that our world is moving further and further toward automated everything including pre-emptive responses (which I scoffed out the other day about LinkedIn) it is truly refreshing to see this authentic honesty. The irony is that as much as machines are pushing us into ever tighter time windows, humans instinctively carry long term memory whether trauma or positive life events.

May your honesty be paid back in spades when those you saved a bundle recall your genuine gesture.

Storing the Fukushima nuclear waste

IMG_9846.JPG

Scattered throughout Fukushima prefecture are some 5.5mn black bags containing soil contaminated by the crippled reactors. This picture is on the outskirts of the exclusion zone. To put it in perspective this is what it looks like from the air. They now have huge black tarpaulins draping over them to keep it dry.

IMG_9905

Most of the ‘unusable land’ has been converted into waste dumps like this or solar parks. Cars with flashing blue lights waft slowly around the neighborhoods to prevent theft and looting from deserted homes.

Even driving into Sendai some 100km+ north the highways have radiation level information alongside speed limit signs. A reminder of that terrible event 6 years ago which was highly preventable had the money been spent on relatively low cost sensible placement of the back up generators (in the $10s of millions) on high ground. It was forgone because the plant was scheduled for closure 6 months after the quake. The idea was that the risks of a tsunami or quake were so negligible that penny-pinching was the right thing to do. Of course PM Kan refused to give the order to release the presssure inside the reactors against the advice of nuclear experts. The clean up is in the 100s of billions. Go figure.

IMG_9906.JPG

Fukushima City feels dead. It is a long way from the reactor but unsurprisingly infamous for one thing now. As I mentioned a few weeks ago I’m guessing the government will turn up investment projects to revitalize it.

For a good video on the reactor check ABC’s Mark Willacy on Foreign Correspondent

The wisest investment is to ignore the professionals

contrarian

The sell-side is littered with highly paid experts that present us with rational explanations for their bullishness. However it is actually their lack of bearishness that is the problem. Looking over history the ratio of their sell recommendations on company research is highly inversely correlated with market movement. In the chart above we can see how far off the mark brokers are. When sell recommendations decline to all time lows, the market  tanks. Think back to 2008. We are now seeing the same ratio of low sell recommendations  we did just before Lehman went bust. The market is set to tank again. Maybe Brexit becomes a catalyst but it is not the cause.

Goes to show you that the brokers are worth keeping. It is only in that they stay consistently wrong that we can invest wisely. Keep up the good work.