Geopolitics, Anarchy & Optimism
It seems strange to include optimism in the same subject as anarchy. I am working on an article for publication due tomorrow so my newsletter might be shorter than usual. Let us see, sometimes I have more to say than I think.
As a news junky I am feasting on an incredible diet of high impact news at the moment. From a geopolitical point of view I am seeing tensions between China and the “West” (USA in particular) escalate at a troubling pace. There is no secret that China wishes to regain its former glory as an economic super power. I just completed a great economic book called Clash of Empires by the excellent father/son economic team at Gavekal. We are witnessing a decades long strategy for Renminbi reserve currency status. I however, think the Chinese Communist Parties activities through the first half of 2020 are likely to halt progress on this front.
The behaviour of the cops in Minneapolis who murdered George Floyd through excessive force is unacceptable, it sickened me to the core. However the anarchy that has boiled over into violence and looting is also unacceptable. The problem is with a 100,000 people dead from Coronavirus, 40+ million unemployed & GDP set for a – 30% drop in Q2 you are dealing with a society on the verge of a meltdown or perhaps the meltdown is melting.
The fact that US & Global markets are rallying against the above backdrop is the subject of my article for tomorrow. However I will share a sentiment measure that is registering extreme bullish sentiment which is actually quite bearish, that is the CBOE put / call ratio. As per the reading on Friday there were 0.46 put buyers for every call buyer. This places us near to the levels where previous large selloffs have fallen from (note to self, being long is much easier ?).
For those of you who get excited by space exploration, do yourself a favour and watch the first 8.30 minutes of SpaceX’s Falcon shuttle ride to the International Space Station, I loved it
Ok it is time to learn.
Our Dirty Money Secrets
A psychology researcher named Schwab asked a group of people to hang from a horizontal pole for as long as they could. The average time they could manage was 45 seconds.
He then deployed different coaching techniques to enhance their performance, he managed to get them to hang on for an average of 75 seconds.
He then offered them MONEY if they could improve further. They amazingly increased to an average of 110 seconds which is getting close to the human limit if you were holding on for dear life, roughly 135 seconds.
Money is one of our prime drivers.
Psychologist Aaron Kipnis, Ph.D. runs a workshp about our attitude towards money. One of the activities he gets his clients to participate in is where the group sits in a circle and they write anonymously on a piece of paper the most shameful thing they have done for money. The notes are thrown in a hat and then they are discussed in a group without judgement. The brave owner of the note is then invited to share the circumstances that brought them to their activity.
As you can imagine this is pretty hectic stuff, but we all have our own shameful relationship with money. As traders I think it is incredibly helpful for us to come to terms with what our deep dark money secrets are. By opening up to ourselves (and to me if you wish ?) where we have done things for money that are truly embarrassing we can start the process of healing our relationship with money which believe it or not is an incredibly important step towards becoming a better more healthy trader.