My last post on this site spoke of shorting the Crypto Bitcoin at around 7000, believing then like I do now that we are in a bubble.
This call comes on the back of repeated calls that the bull market in the US major indexes was due a major correction for the past couple of years. In short I have been hopelessly wrong on all my market calls but I will still say that I believe I am correct when highlighting that the markets have moved very far away from fair value which to me is a really good reason for not wanting to invest in something.
I think I need to also learn from this experience that being a value investor is probably an acceptable way of investing long only, but including the short side to take aggressive advantage of what I believe to be over-valued has proven to me once again that this is seriously dangerous, especially if you are going to base your investments to an ideology with religious zeal.
I have learned some lessons…….
The markets are a consistent replay of the past, hidden beneath many disguises. They all however lead back to the same story.
Why I am writing this post now is because I am feeling sick and tired of seeing the easy money some people are making now in the crypto currencies and their offshoots the ICO. I am seeing many idiots (maybe I am the idiot) with no financial experience become the oracles of sensible new age investing with these crypto’s. As I watch more and more people become wealthy beyond their wildest imaginations I become more dispirited but feel helpless as there is nothing I can do about it. I cannot join this party as doing so for me would be making a far greater cardinal sin, i.e. joining the madness. It would be far worse for me to succumb to this irrational behaviour and then fall prey to its lessons. I know there is madness, the madness of crowds playing its part in this current play of human greed. However, I am forced to resign myself to watching the show play out as I know and understand it will from my studies of centuries of economic history.
After all the studying, reading the excesses from a far, removed from the emotional grip of the moment I am less prepared than I thought I would be. I have witnessed probably 3 market mania’s in my lifetime, and in all I have been on the opposing side. The contrarian fighting the mania. This is the first time I have wished to be a part of the mania to some degree. To have seen it and capitalised on it, riding the wave beyond the limits of which I am usually comfortable. But alas I find myself the outsider.
I have come to see myself as quite the fundamentalist in my approach to certain theories of the mind. On the one hand I want to call my behaviour, sloppy. Maybe even lazy. Not willing to see the other side as much as I should be willing.
I feel the need to digress a moment. There is indeed something about my personality that makes me a purest. An idealist. A careless romantic to the belief that in the end stability and equilibrium prevail. I am so resolute and committed to some of these notions that often accepting a greyer more watered down version of these views seems to me a disloyal betrayal to what I hold sacrasanct.
In conclusion I believe I am going to be once again correct, but I believe there are lessons to learn. I believe I place to much identify with being a purest, thrusting my wishes for a world to be more equitable on the markets and believing that unfair excesses are to be slammed, shamed, called to book. Instead of embracing that in a world that displays long term equilibrium it is completely disinterested in equity. In meritocracy. I believe I hold to dear this notion of no free lunch. That this is not possible, or if it is possible that it will come with punishment to those enjoying the freebie.
The markets will behave exactly in this manner for a period of time as markets do not trade in equilibrium most of the time. Rather equality is the anchor which they seek but extreme is the order of the day and the mechanism for its discovery.
In short I need to distant some of my emotions that believe it is wrong to capitalise on inequality, inequity. I believe I am not accepting part of my own shadow that wants to be a party to this orgy of excess.
Lets hope I can write more in 2018 as I have so many more thoughts and ideas I wish to share with myself this year. Indeed going deeper and exploring this shadow might become one of the most profitable growth chapters of my life. Lets go deep…….