Short market comment

This is basically the same text I used as an answer to a comment on a previous post:

In short: Stocks are currently (March 16, 3pm Central European Time) down by 33% from February 20, 2020. My base case if the corona situation develops in a benign and controlled fashion is another -33% (to a total of -55%). That should take most stocks to fair value, not cheap, and enable fundamentally based investments.

If things turn ugly we could see a third -33% (to a total of -70%), and given the adverse effects on the economy that would still not be cheap, just fair. Worst case scenario is a fourth -33% (for a total drop of 80%) on top of the first 3.

I expect maximum quarantine/lockdowns in most of Europe by end April and maximum US by end of May (with perhaps 50m US citizens infected). Maybe stocks will bottom by then, since everything about this crash is faster, bigger, more frequent than usual. But the recession and financial crises that follow will probably take markets to a lower low further down the line. In any case we should see a bottom for stocks within 12 months from now, as long as we don’t get a second virus attack of a different strain (unlikely but could happen).

as long as we don’t get a second virus attack

Volatility will be much higher than anybody expects, except Hussman. We could see rallies and drops by 20% on single days (circuit breakers prevent more than -20% and close the market for the rest of the day).

If central planners manage to lift markets with a quadrillion in helicopter money, gold will rise even more than stocks. I would take every opportunity to load up on gold and Bitcoin now that they are falling with the rest of the market due to margin calls. I don’t think gold will fall below 1250. And I think it’s an extremely good buying opportunity here at 1475.

And 6 months from now silver might bottom at ridiculous levels and provide the real buying opportunity of the century – or at least the decade. Maybe silver will rise by 1000% from 7 or 10 to around 100 in the coming years. And gold could go to 5 000 or 10 000 USD/oz after the current little correction.

NB, NO recommendations given here. Do your own research. I hold no licences and I never give recommendations to buy or sell financial instruments or anything else.

An acid test for your career aspirations

Topic: Detailed career opportunities

Length: 2646 words

Executive summary: Almost every profession can be approached with the future-proof Big 5 human challenges and Big 5 singularity technologies in mind, and still be kind of fun and rewarding in itself. So, not just robotics. And, yes, still hating on finance :)

Remember to bookmark this site, sign up for my free newsletter, and read the first page of my free e-book (and more are coming). Not least, share this article to save at least one poor schmuck from a death by automation.


Show me the money!

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I’ve realised two things:

1) you don’t care about happiness

and

2) you demand precise guidance for your education and career (as opposed to general “whatever makes your heart beat, or help humankind with robotics” type of advice)

 

Nobody cares about your schmakapalbhati breathing, grandpa

So, where does this realization come from all of a sudden? Well…

I get very few questions about, and reactions to, articles about financial investments, about pension savings, about the future of robotics, about fulfillment and happiness vs. fortune and fame. You know, the things I actually write about, the “know yourself”, “lower the threshold to get started”, “champagne spray parties aren’t that fun” kind of posts.

What I do get is an endless stream of demand for career advice: “Should I study this or that?”, “Should I work here or there?”, “Should I focus on a traditional career or go it alone as an entrepreneur?”, “Which industries should I target?”, etc.

I thought I had already answered all of the above with:

  1. Skip (formal, traditional) school
  2. Just say no to finance
  3. Be an entrepreneur
  4. Solve the big 5 with the big 5
  5. Have fun no matter what you do

have fun

Done!

 

Robotics! How hard can it be?

When that, to my great surprise and deep disappointment, wasn’t enough I specified:

Work with robotics (which I thought was self-explanatory)

That still didn’t cut it, apparently, so I tried this:

Think of all the separate parts of a robot; legs, fingers, muscles, arms actuators, sensors, tools; or it’s sub-systems; motion, balance, vision, smell, and figure out what part or system you think needs improvement.

Another line of attack could be visiting every local robotics company you can think of and connect the dots, i.e., identify which companies could benefit from each other without competing. Or, think about ways to combine several different solutions to, e.g., vision or balance, into the same robot.

I got nothing but glazed over eyes and open mouths from that (I know Japan is ahead in both fields that spring to mind, but I’m strictly talking robotics here. Then again, robots… never mind)

BB8

So, I tried being specific:

“Here are videos of bipedal robots, BB8-type of ball balancing robots (5 years before BB8), quadripeds (and more). And here are bipedal robots using gyroscopes for balance, and here are humanoids using fancy software algorithms choosing the optimal foot movement from an internal trial and error simulation of 100 different choices in a hundredth of a second. And here are quads learning from experience, and here are robots actually forecasting when they’re about to be hit and (simulating and) bracing before impact.”

Nothing. Except the occasional “you know a lot about robots”.

I elaborated:

“And here are robots using sound (see round corners, measure distance), laser (distance), stereoscopic cameras (Kinect 3D), radar, x-rays, object databases (to recognize objects and forecast their texture, weight etc. beforehand), memory (gradually build a coherent 3D memory of the surroundings and add incoming/new objects from there), blueprints (it helps knowing the building rather than just looking and feeling).”

“Wow! They can see in so many ways”

or

“Yeah, yeah, schmobotics, but will I get rich more predictably in management consulting than in finance, albeit richer in the latter if I rise to the top?”. “Should I take that job in the economy department of a hedge fund or stay as sales at a big investment bank?”

robot landing

No!

No, no, no! The proper reaction would have been: “Ah, but if we combined sound, laser, Kinect, blueprints, repositories and memory in the same robot, it would actually know exactly what it is dealing with. I wonder if it could catch a baseball if…”, and “What if you built a quadriped that had balance balls for feet and very small such pressure sensitive balls for fingertips (great for gripping delicate things just enough not to let them slip).”

“Perhaps not on all feet or all fingertips. It could be equipped with a gyroscope as well… several…, and a simulation engine that dealt with sudden blows as well as predictable impacts (hello vision!). “I wonder what power source they are using?”. “What kind of ‘muscles’ do they use? Pure mechanical spring systems might be better (already done though).”. “What if it falls down or rolls over?”

“Hey, Sprezza! How come a bipedal robot isn’t much better at managing stairs than humans? Why do they act as if every step is completely new to them? Shouldn’t you be able to give it a hard kick in the back, and it should be ready long before impact, and either bracing enough (judging your weight and kick speed and power correctly) or having another plan for regaining its balance, as well as be able to catch a baseball at the same time? Why not do an impromptu somersault with in-air side-split before making a perfect superhero landing on the stairs?!”

Yeah, I guess I shouldn’t hope for such a question, since monkeys are more likely to fly out of my ass long before that happens.

Ouch!

And we’re still only talking about robotics, and in very crude and tangible respects. I haven’t even updated the above thoughts in the last 5 years and still the kids don’t get it. So, here’s a slight update:

Add “cop” to the mix…, as in robocopters. There are multicopters everywhere now: quadcopters, hexacopters, octocopters etc. for filming, selfies, weaponry, inspection, search and rescue, even plans for commercial airliners. The Avengers live in a large octocopter since several years back.

So, now I can direct young people to Youtube videos of cars that can drive on vertical surfaces aided by copter fans, to swarms of small quads interacting, helping each other maneuver, accelerate, catch things, and soon, with your help, maybe showing emergent behavior as in Crichton’s amazing (his best) novel “Prey”.

Don’t forget AlphaGo’s amazing Go victories, and its future careers in health care, online poker, mining, global warming research etc. Or Alphabet’s other robot ventures (through Boston Dynamics), not to mention all the slithering, swimming, crawling and flying things on display in various TED talks.

The reason I singled out robotics as a good example of a change resistant career, was that I thought the opportunities within programming, mechanics, sales, miniaturization, materials, batteries, solar, project management etc. were self-evident. In addition, automation stands a good chance of being the last industry to be automated.

Apparently these things weren’t self evident, so let’s be a little more specific:

I think robotics has the potential of becoming for this century what the auto industry has been for the last century.

At present there are a lot of stupid single-purpose robots everywhere – some are status symbols, some are not anymore. They are called cars, washing machines, dishwashers, vacuum cleaners etc. Soon, more general-purpose robots will take over more and more household chores, caretaking of sick and old, companionship, telepresence/socializing. I also think robots can become the new status symbol that so far has been reserved for cars.

They had that vision a little prematurely in Rocky IV (released in 1984), but now, 30 years on, there may be just ten years more before its realization. Aibos and copterdrones have been pointing firmly in that direction for at least half a decade now.

Okay, so I’ve understood I have to be much more concrete when guiding you. I do get it, you don’t have the same experience as I do, or the overview and time to think about how certain technologies and human challenges combine to form tremendous career opportunities for you.

My bad.

I’m such a COK (meaning suffering from Curse Of Knowledge) for not being more clear and precise about these things. This post is meant to remedy that.

 

It’s not just about robotics, but all the Big 5

The way I see it is this. If you want to be as future proof as possible, you should work in areas that are hard to automate (preferably the automation-enabling industries themselves) and that deal with the largest and most challenging issues the human race is facing:

“5” Challenges

  • Energy
  • Pollution
  • Global warming
  • Food
  • Water
  • Longevity/death
  • Depression (in the wake of automation, unemployment and abundance)

 

I think the best way to deal with the above big challenges is to be found in the following exponentially developing technologies:

“5” Technologies

  • Artificial Intelligence
  • Robotics
  • Nanotechnology
  • Biotechnology
  • Additive manufacturing

 

More specific areas where you could contribute are listed below. Remember that each one of the below are meant in the widest of senses. “Programming”, e.g., means everything from actually coding, to designing user friendly apps or planning out whole systems, to marketing them. The same goes for VR (headset hardware, treadmills, software, games, simulation software…) or genetics (reading the code faster and cheaper, finding useful patterns/genes/diseases, visualization software, marketing) and so on.

Subcategories

  • Programming
  • Virtual and Augmented Reality, vision
  • Bionics (sense restoration and augmentation, X-ray vision, e.g.)
  • Artificial agents
  • Space exploration and mining
  • Artificial biology
  • Genetics
  • Stem cell research
  • Organ printing
  • Driverless vehicles
  • Neurology/brain interfaces
  • Multi-resistant bacteria/bacteriophages
  • Mechanics
  • Motors/actuators
  • Psychology/emotion sensing and manipulation
  • Surgery
  • Health care
  • Pandemics
  • Carbon capture
  • Desalination of sea water (source, clean, transport, finance…)
  • Fusion (chamber, materials, fuel, storage…)
  • Solar cells
  • Housing (prospect, plan, materials, energy, agri)
  • Migration (where to live, how to be integrated, educated)
  • Debt clean-up
  • Entertainment (incl. porn)
  • Psychology (dealing with migration or not fitting in the automated world of the future)
  • Energy storage (batteries)
  • Vertical farming
  • Insect farming
  • Algae farming
  • Ecological (insect fed) fish farming

Since those technologies themselves are in the vanguard, and driven by human creativity, they are the least likely to be automated anytime soon. Rather they are advanced by humans aided by tools provided by the previous technological generation in an ever accelerating cycle. That’s where you want to be, whether it is in engineering, design, marketing, psychology etc.

I guess you need a list for that last part:

  • Engineering
  • Design
  • Marketing
  • Psychology

 

What do we want? And how?

We want a time machine! When do we want it? It is irrelevant!

time machine

by Pixabay

Alright, sorry for that. My apologies.

What do we want? Well, you want money, I know that much, but why do you want it?

“That’s irrelevant, just show me the money” you might say, but it would be wrong.

You want to buy food, clean water, a roof over your head, clothes, other stuff, healthcare, energy for running your tools. Well that and a Lamborghini, fancy food, champagne for your spray parties at Ocean Club, Marbella etc.

How are these things going to be produced? With the help of better and better tools provided by the big 5 technologies.

 

What’s your part in it?

Well, what can you do? What are you interested in? Your education doesn’t really matter, unless you want to become a medical doctor, a lawyer, a finance slave or work at a top tier management consultant. Most every other line of work lies wide open.

Just start tinkering, taking things apart, meeting people, interviewing them, reading stuff, connecting dots, studying online (here are 144 resources) and soon you’ll be the expert, the having ‘right’ education or not. If you’re driven and interested, you could fit 50 hours a week of your future-proofing, on top of the lowly bread winning activity you temporarily have to engage in. Remember how you could play all day long as a child, with no regard to remuneration for your efforts? That’s how I feel about blogging and podcasting, and probably would about tinkering with robot hardware and software too.

After just one single year, your 2500 hours will have brought you close to expert level, in whatever you single out as your area. Imagine where you’d be in 5 (the length of a typical education) if you keep at it.

 

Speed things up with a little acid

I’m not you, and I can’t go through the pros and cons associated with every conceivable job. However, think more in terms of satisfying yourself, than living either vicariously or conspicuously. Think more in terms of exploring and possibly leading for the experience in itself, rather than becoming a CEO or other kind of manager, just for the status and money.

 

Life is not about being a rock star, it’s about rocking and rolling

 

…you still need the money however. Sure.

And you want to feel pride about your work, and not having to fear being axed all the time. Well then, back to the list of future-proof jobs, industries, challenges, their intersections with each other, with your interests and skills; and…

Perhaps, if it’s legal where you are, try 50 ug of LSD to gain a fresh perspective on it all; your interests, your abilities, your aspirations. Reading this post again right before should set the stage nicely. Here is a great 15-minute video detailing the differences between the effects of LSD and psilocybin respectively.

N.B. I haven’t. No, promise. Scout’s honor. Whatthef…, read my lips: I. Haven’t. Dropped. Acid. Or munched ‘shrooms.

Ever.

LSD

 

Do it for the rainbow, not the gold

“But what about finance?”

Well, here’s some food for thought: Finance wasn’t cool or high-paying when Buffett or Marks or Dalio and other finance gurus entered the business.

They did it because they were fascinated by understanding business models and doing research. In short: they did it for fun, not money. They did it for the rainbow; there just happened to be a pot of gold at the end of it as well. If you focus too much on the gold, you’ll miss the rainbow altogether.

Since they began in the business, we’ve experienced 40 years of falling interest rates and more and more (over-)banking, as well as rocketing valuations to the highest point in history (median MC/GAV, which unlike all other models is more than 90% correlated with subsequent decade long average returns).

That’s why and how they got rich, including dozens of followers and wannabes riding the same spectacular wave of financial innovation and money debauchement. I think that trend is about to reverse, leading to much worse prospects for employment, careers and riches.

Thus, I think it’s time to focus on real innovation and production (virtual reality counts as real) instead of the ephemeral Ponzi scheme that is finance.

Oh, and if you claim to have a ‘burning interest’ in finance, investing or management consulting, you shouldn’t care about slaving away at Goldman or McKinsey. Or about being paid the big bucks by somebody else. Open your own shop, manage your own money, develop your own models in collaboration with like-minded people on social media.

 

Rock on!

This is the summary: Rock not rock star.

Fun, unique, human, entrepreneur, problem-solving; not an employed drone in a soon-to-be-automated mindless toil in whore village – at least not as more than a short gig to get started.

By the way, my wolfram just lit up: anything worth doing is future proof. Well, unless you really think driving a truck, ship, airplane and similar extremely automation-prone jobs are meaningful and fun if it weren’t for the pay.

Now, sign up for my free newsletter, and share this article with a friend heading in the wrong direction.

Oil opportunities and the slippery slope of contango extraordinaire

Retarded Redux

Once, a friend from business school wrote in his capacity as a business journalist “It’s fascinating how retarded Syding is. He still hasn’t realized that…“. That was 20 years ago.

Well, here I go again, I just realized* there is this thing called contango…, and consequently I’ve had to update my view on oil.

*not really, see more below


 

Oil update – to keep or not to keep

This is a quick update on my thoughts on (brent) oil

It’s not a recommendation to buy or sell anything (see disclaimer page), it’s simply my thoughts on the issue of low oil prices potentially going (much) lower before exploding higher, and what that means for investments in oil futures and oil stocks.


 

Oil and Asperger’s

Back in August last year I wrote this article on brent oil and Asperger’s – about how I had profited from having both.

Today I’m long oil again, both a brent certificate/ETF (a Swedish instrument: Olja S)and two oil exploration companies (DNO and ShaMaran).

The case for oil is pretty easy and straight forward: the world is growing and we have reached peak cheap oil production. It will only become more and more difficult and expensive to find and extract oil, while the easily accessible oil reserves become depleted and go off-line one after the other. 

The case against oil relies mainly on solar energy and more effective use of energy, including storage (batteries). Well, that and the coming super recession.

I’m pretty sure renewables won’t be able to fill the oil supply/demand gap within the next five to ten years – at least not unless oil prices sky rocket again, thus making non-subsidized alternatives attractive enough. I also think a recession has been more than priced in. I consequently think oil prices will be much higher than today 18 months from now, and yet much higher 18 months after that.

10$ oil

In the short term however, there are a few snags, including 10$ oil:

  1. Easy money has fueled malinvestments in north American shale oil/gas production capacity. Nobody wants to be the first to fold, but some need to fold though in order to rebalance the oil market and support higher prices. The latter is taking longer than expected. Crashing oil junk bonds is, however, a good sign things are moving in the right direction.
  2. Crashing oil prices have forced Opec to pump even more oil than usual on order to keep their countries afloat. Russia, Saudiarabia, Kuwait, UAE and Iran simply refuse to agree on the needed production cuts. Instead they seem hell bent to keep at this chicken race at least long enough to crush the north American shale industry.
  3. Oversupply. The combined production of a pumped up Opec, Iran coming online and massive investments in shale production capacity have created a shortage of storage capacity. Once the industry runs out of storage (including in tankers and refined products) excess oil can and will be sold at just about any price.
    1. Yes, 10$ per barrel is conceivable (for a very short time) – if that is what’s needed to make anybody find use or (build) temporary storage for it, not to mention paying the cost to move the product.

Contango extraordinaire in the face of a storage crisis

The reason I am considering taking my oil profits to the sideline for a while is solely based on the risk of a storage crisis which could spark a panic sell off that in a single month can create a truly massive contango, wiping out 20%, 30%, 50% of the value of an oil ETF or certificate.

I have based my investments on Opec doing what they can to crush the shale industry.

I have been ready to sit through a bottom in oil prices caused by both a supply war and a simultaneous recession.

I have been quite calm, faced with a contango of  1-2% per month for the rest of the year, and a total of 20% until the end of 2017. No problemo.

oil futures

What I hadn’t really considered, until I listened to the MacroVoices podcast the other day, was the risk of literally overflowing oil storage facilities (check out some of the statistics here), and thus nobody willing to take delivery of oil at just about any price, while next month’s futures still trade at more or less reasonable prices. Even if current contango is limited to 1% per month, temporary spikes can kick that up to tens of per cent per month.

oil storage

picture from Art Berman via MacroVoices

I previously thought it would be quite easy to find alternative uses, or to build temporary storage facilities if you stood to make a dollar or two per barrel per month in arbitrage, but it seems it just isn’t that easy.

Hence, if a long oil ETF trade as of today is to become profitable, the current oversupply of 2 million barrels per day pretty soon has to come down to zero. It only takes a few per cent production cuts by, Russia, Saudiarabia, Kuwait and UAE to accomplish that. However, they just won’t, if Iran is increasing its supply at the same time, and definitely not if it means the US shale industry will survive.

If the cuts or shut-downs, shut-ins, don’t come soon enough, any product relying on rolling oil futures contracts over from month to month, could be more or less wiped out, and not recover sufficiently in the ensuing rally, due to too low a starting point.

Veering

So, it’s a chicken race, and I’m not entirely sure I want to be part of it anymore. The risk of suddenly losing even ‘just’ 10% in a single month’s contango simply is too much of a gamble for me.

I will keep my oil stocks, but I just might sell my oil certificates as early as this Monday.

If I were you, I would think long and hard about what kind of oil exposure I had and why.

With that I leave you, and encourage you to spread this article far and wide, to help others in their quest for making a quick buck in oil.

P.S. If you haven’t subscribed to my newsletter or read my eBook already, don’t hesitate to sign up. It’s free, spam free, easy to unsubscribe, and I hear it’s pretty entertaining as well as useful (sometimes)