The Cultural Complex

I have a Jungian based book in my library called The Cultural Complex compiled by Thomas Singer and Sam Kimbles. I was delighted to hear that Tom Singer was visiting and speaking to the Jungian Society in Sydney, so last night I went along to his talk. Tom is a psychiatrist and a Jungian analyst, his area of interest is how cultural complexes manifest in different countries. It is always a kick for me to meet the author of a book that has had a profound effect on my life (2 other come immediately to mind – see below*)

This is a subject that has tremendous meaning for me, as a few years ago I coined the term The Market Complex to describe my world view on how the cultural complex plays out in our trading world.

Before we go further lets understand what the great man, Jung, had to say on the complex:

The complex has a sort of body, a certain amount of its own physiology. It can upset the stomach. It upsets the breathing, it disturbs the heart – in short, it behaves like a partial personality. For instance, when you want to say or do something and unfortunately a complex interferes with this intention, then you say or do something different from what you intended. You are simply interrupted, and your best intention gets upset by the complex, exactly as if you had been interfered with by a human being or by circumstances from outside. (Jung 1936/1976)

The idea behind the cultural complex is that there is another level of complex that exists within the psyche of the group. From here you can see where I am going with my thesis of The Market Complex. Have you ever felt overwhelmed by an irrational force that drives your trading in an unexpected direction? These impulses are often attributed to neuro-chemical reactions operating at a primal level of brain function. However, they can also be attributed to the emotional charge of ideas that tend to cluster around an archetypal core shared by individuals belonging to a group.

These are big philosophical ideas rooted in a more esoteric branch of psychology so we don’t need to get bogged down in the jargon. The key point to walk away with is that the market as a collective can often behave in a way that makes no sense to ones own rational understanding, and even more alarming we can sometimes do things that almost feel like we are acting under the influence of an unknown force.


* Prof Burton Malkiel – A Random Walk Down Wall Street

* Prof Sanford Drob – Kabbalistic Visions: C.G. Jung and Jewish Mysticism & Reading the Red Book: An Interpretive  Guide to C.G. Jung’s Liber Novus.

Preparing for launch

First to get the trades out of the way selling 100 SPY at the open to lighten up my broad market exposure. I still hate this market and think it is expensive.

The bulk of my time and energy is now focused on the launch of on the 20th May. I will write more when my schedule allows it.

Herewith Sefirot Freestyle Fund performance to date, in terms of the stated goal we are winning with a Sharpe Ratio of 0.42 vs 0.11:



Feeling Disloyal

I am feeling terrible that I am not posting on this site, like I would like. I am however tweeting a lot these days and can be followed on @mickson

As we have just finished Feb I wanted to post our returns. On the positive side of things the fund is profitable; however the strength of this bounce/new high coming has surprised me. I continue to opt for a very most index exposure. I have been toying with buying some non-correlated instruments of an exotic nature, but I have decided to stay away from it and stick to my main objective of beating the S&P500 on a risk adjusted basis.

Lastly, I am currently reading Market Mind Games by Denise Shull who I had the pleasure of meeting in New York in December. I will reserve comments until I have completed the book, but I will say I am impressed with her mindfulness approach. I am just wondering if I can accept her overriding philosophy within a Jungian context. Until later….. launch scheduled for May and occupying almost all my attention.


New Year New Trade

It has been some time since we have done anything to the portfolio. We will buy 75 SPY @ the market open on 21 Jan.

The portfolio is doing really well having side-stepped the latest bout of volatility. We have no plan on getting too constructive on the portfolio. However, given the recent selloff there is some scope for a bounce of some nature to develop.

Reminder: the funds goal is to outperform the S&P500 on a risk adjusted basis.



Sefirot Freestyle Final Performance Report for 2015

For me today is the last day of the year as I write this note at my hotel in Los Angeles before boarding a flight tonight that will cross the dateline and see me miss New Years Eve, i.e. we leave on the 30th and arrive in Sydney on the 1st.

Here is a summary of the Sefirot Freestyle Funds performance since inception on 23 December 2014. The fund has essentially side stepped the volatility of the broader S&P500 and more or less delivered the same nominal performance. For me 2015 was frustrating but I still maintain we are due further dislocations in the market and I intend to be on the sidelines during this time.





Chemical Reaction

I am going to put forward a controversial theory that came to mind.

Working within a neuroscience framework we know that people release hormones like cortisol (related to stress) and serotonin (related to happiness) within a normally distributed range. Then we have some people, call them outliers who either produce too much or too little of these hormones. Think here of your ADHD or extremely nervous trader.

I recall more than a decade ago reading Nobel Laurette Prof Robert Shiller’s book “Irrational Exuberance” where he questions the volatility in the stock market prices, when the dividends driving valuations move much less than the price. His thesis is that there must be more to valuation than simply discounting future dividends. The volatility ingredient in the mix is the emotional context of the trader/investor.

I would like to suggest that perhaps the volatility in the markets is simply an expression of the hormonal chemical reaction in the trading population. Here is a 5yr chart of the VIX (volatility index).