I feel hopelessly inadequate to talk about this subject, but I am going to have a go. I am back in work mode proper tomorrow so will continue on my analysis of the global markets and how we go about trading them, for now let’s learn a little more about the name of this site and its meaning to me. For those not into the spiritual esoteric I suggest you give this a miss.

For those who follow the Jewish religion we are given intricate detail how to follow the religion and when to do things; however we are also taught in a more cryptic abstract way, why we do certain things. In the ancient mystical writings of the Kabbalah we are taught in allegorical form how G-d created this world, and how it exists as part of four worlds (emanation, creation, formation, action). Because G-d is infinite and we are finite beings our ability to understand his “ways” is limited and therefore we are forced to make do with allegorical examples to try and comprehend what is meant. Here is a simplistic explanation of the Kabbalistic model of creation and its significance for Sefirot Capital. I need to stress once again this is so simplistic an explanation that it verges on the blasphemous, but I persist simply because even understanding a tiny bit is worth it.

G-d had the ratzon (will) to create a world where people would create tikkun (rectification) i.e. make good triumph over evil through their own free will. With G-d’s endless light Ein Sof  nothing finite can exist within a world of the infinite, so G-d needed his presence to tzimtzum (withdraw) to create space for the finite. Within this reshimu (void) G-d passed a kav (ray) of his Endless Light to form a spiritual world Adam Kadmon (Primordial Man) by way of 10 illuminations or powers called Sefirot. The world of Primordial Man was still too lofty for us to deal with so G-d needed further tzimtzum  (concealment / withdrawl) and the 10 sefirot of Primordial Man became separated further into stand alone vessels and from these sefirot  (vessels) all of reality exists.


In the list below you can see the English definition of each Sefira.





Chesed—Loving Kindness






With that background when a reality exists that is compassionate the world is operating under the dominance of the sefira of Chesed. When we encounter harsh situations we are encountering the dominance of the sefira of Gevurah, the model gets even further complicated with each sefira containing the 10 sefirot and so on. For me Jung’s idea of the Archetypes shares many similarities to the Sefirot and it is the main reason why I chose this name for this site.

The world of the markets is a reality and this reality is governed by the Sefirot / Archetypes, it is up to us at Sefirot Capital to try and understand and identify under which Sefira / Archetype the markets are being influenced and to design our portfolio and our behaviour accordingly. I have no idea what that means in practice, what I do know is that the more whole we become and meet our real Self, the more enlightened we will become with what to do with our trading persona.

There is nothing scientific about what I am saying, I am merely hypothesizing that the markets are an extension of our every day reality, and within this world there is a metaphysical medium of intuitive energy that provides those with the sensitivity to tune into this flow of libido the opportunity to profit from this wisdom.

The Dark Side – Shadow

This is a strange topic to be writing about on the eve of Christmas where the western world is gripped in a mood of good cheer; yet here I am writing about evil. I woke up to the Dow closing above 18,000 for the first time and the S&P500 making new all time highs, and I felt compelled to share some wisdom.

Yes I am bearish the markets at the moment, and yes it is a source of irritation, annoyance and confusion so with that bit of background lets dig a little deeper. In order to do so we need to start with a quote from Jung’s Collective Works:

Unfortunately there can be no doubt that man is, on the whole, less good than he imagines himself or wants to be. Everyone carries a shadow, and the less it is embodied in the individual’s conscious life, the blacker and denser it is. If an inferiority is conscious, one always has a chance to correct it. Furthermore, it is constantly in contact with other interests, so that it is continually subjected to modifications. But if it is repressed and isolated from consciousness, it never gets corrected.

“Psychology and Religion” (1938). In CW 11: Psychology and Religion: West and East. P.131

In layman language, just like the name “shadow” implies the Jungian idea is that each persons psyche develops both positive and negative characteristics with each lived experience. The negative ones embarrass us, and we prefer not to deal with these emotions so we cast them into the shadows, i.e. into our unconscious minds where we try not confront them and try and forget about it.

I am touching on a central Jungian motif, coincidentia oppositorum – unity of opposites, which many dialectical philosophical models work with, but is an idea I am familiar with and is central to the Jewish Kabbalistic approach to creation and existence. The sitra achra means the “other side” that is from the sitra kedusha “side of holiness” and everything in the world can be seen from these polar opposites.

Ok lets get back to the subject of this note, that is the dark side our shadow. It is very important when working with the Jungian model to see psycho-dynamics in terms of energy flow. As we create positive energy so too we equally create negative energy, this is actually a very difficult concept to grasp. Here is an example; I act in a very “kind” way to Dean this creates positive energy, but there is an equal dark “mean” force created in my psyche towards Dean. That is a horrible theory you are probably saying, but that is probably your shadow acting up 😦 .

So you are probably saying assuming you accept this line of thinking – so what? The problem is that when emotions are left unconscious they form a life of their own and this is where we get ourselves into trouble. A typical manifestation of the shadow complex is for it to find expression via projection. The reason why we don’t want to allow projection to play out is due to the completely irrational / random nature of projected behaviour. Here is an example of how this plays out:

Its the holiday season and we live in beautiful Sydney a highly desirable location. Friends contact me and ask if they can stay with us for a few days as they are passing through town. I accept and I am the perfect host. I use every bit of my energy to make sure that our guests have a great time. I am attentive, I am resourceful I am all things good what I am unaware of is I am building shadow material. The guests leave having had the best stay ever, and I am just about to kick up my feet and peace out in quiet watching some cricket, and the missus says, “Mike will you go past the shops and pick up some bagels”. What do I do, I go friggin mad and scream and shout how ungrateful she is and launch into a completely irrational tirade. Do any of you recognize this pattern, I suspect so LOL :).

We have all heard that saying, “the bigger you are the harder you fall”. This is very common with politicians or other people who occupy positions of power. I think of Elliott Spitzer as a classic example of someone who clamped down on crime and prostitution only to fall for this very activity. Or think of religious people perpetrating sexual misconduct, acting precisely against what the religion they represent stands for.

Does this mean we are destined to be ruled by our shadow? No not at all, the secret is to bring our shadow into consciousness. This secret formulae has the potential to diffuse the negative energy. What is even more amazing is that our psyche can be “tricked” through symbolic ritual/activity. Marie Louis von Franz one of Jung’s greatest disciples, used to always recommend to friends and colleagues experiencing hubris to go and take out the trash or some such “lowly” activity to symbolically balance the libido/energy from the shadow.

With many stock indexes at all time highs, it is easy to develop shadow material. It is times like these when markets climb and we profit to fall into the fooled by randomness trap and think it is all us. This shadow material will eventually want to express itself, it may be through excessive risk taking due to our inflated sense of Self or it may manifest in us buying a Porsche that we cannot really afford. Remember the psyche is open to symbolic gestures, if you have benefited from the bullish markets, think of a creative way of bringing the shadow material associated with it to consciousness or less energy potent. Perhaps it may be something as simple as this:

I made 25% in my investment portfolio this year, when I take the market beta into account I actually only added about 2% through my stock picking ability. This is a simple way of acknowledging and diffusing the shadow that likes to think that all 25% was my doing.

Projection (Part 4)

School holidays started 2 days ago, and I have been preaching more than usual how important it is for the kids to put their dishes away and put their clothes in the wash. When I get on my high horse and tell my wife and kids about their untidiness I feel 100% justified in my actions, in fact I think I am near perfect (or do I).

Over the last 24 hrs my wife keeps coming at me with “Preacher” mistakes, in other words the very thing I am demanding from the family I am guilty of to some degree as well. This is a classic example of my “shadow” that I am projecting onto the family. It turns out I am not as perfect as I think I am 😦 and my lecturing to the family about neatness is rather something about myself that I am not too comfortable with, and it has found its expression through projection.

Don’t get me wrong as a parent I have every right to insist on the kids and my wife keeping the house neat and tidy; however the same applies to me! Following a Jungian approach, the first step to wholeness is identifying consciously with the shadow. 

Explain your Relevance

I am writing this note to myself to help align my thinking why I believe this blog has relevance.

  1. I want to increase the amount of posts relating to the macro view of the economic landscape, by this I mean posting statistical checkpoints. One always needs to see the world in context. Over time the consistency and clarity of these posts will improve.
  2. One of my greatest insights, gained through the financial and emotional pain of losing money, is that we are mostly fooled by randomness. Remember correlation does not equal causation, causation is a far deeper dimension than correlation and requires a better understanding of the universal laws and by that I include G-d.
  3. There are axiomatic approaches to economics, the markets, life, ….. which represent asymptotic absolute truths. The time-space of this inner wisdom will not provide readers of this blog with precise forecasts; rather I hope to provide a probable risk framework that will enable readers to better navigate the macro environment.
  4. The markets are driven by people, as Ludwig von Mises called it Praxeology, ” the deductive study of human action based on the fact that humans engage in purposeful behavior”. We want to go further than studying the behaviour and formulating what the consequence of this behaviour is. Human action is driven by the way people think, consciously and unconsciously. We want to go deep into the psyche of the market participants, we want to look at the psyche of the markets itself. We want to see if the system is “sick” and if so we want to be warned. While we may not be able to cure the sickness we can take the necessary precautionary measures to avoid suffering from the contagious effects of the ailment.
  5. This blog is an open dialectic with a multifaceted personality trying to make sense of a complex world, the thoughts may be one sided at times, and my goal as is everyone’s is to achieve Wholeness so hopefully being privy to the raw stream of one persons psychic material will provide readers with some insights about me, the markets, life and yourself. I am also a reader of this blog and draw tremendous benefits from reading my thoughts as they were written at a particular moment in time. Many times I don’t even remember writing them, go figure that one.
  6. Hopefully this blog will also provide some sort of entertainment value. While I am at times tremendously serious and contemplative, other times I am silly and childlike and a lot of fun to be around.

Archetype meets an Australian Cricketer – Phillip Hughes

“Love is a force of destiny whose power reaches from heaven to hell. We must, I think, understand love in this way if we are to do any sort of justice to the problems it involves. They are of immense scope and complexity, not confined to any particular province but covering every aspect of human life.” C.G. Jung, CW 10 para. 198

“Psychologically … the archetype as an image of instinct is a spiritual goal toward which the whole nature of man strives; it is the sea to which all rivers wend their way, the prize which the hero wrests from the fight with the dragon.” C.G. Jung, CW 8

This week Australia came together like no other time I have seen in the 7 years I have lived here; united in the love for a young cricketer Phillip Hughes who died after being hit in the neck by a “bouncer”. Not only has Australia been in mourning but we have witnessed a collective outpouring of love and compassion across the globe. I ask why has this singularly tragic event touched so many and resulted in grown men verbalizing the vulnerable words, “I love you”, as a farewell.  

In the late 17th century an English philosopher John Locke put forward a theory about the human mind. He postulated that, at birth, the mind was a blank slate or tabula rasa and that through each experiential sensation the mind developed. This theory was to find some lasting application amongst later economists and philosophers, Hume and Kant but flew in the face of my boy Plato.   

Plato’s theory of forms or ideas asserts, and I quote from Wikipedia, “that non-material abstract forms, and not the material world of change known to us through sensation, possess the highest and most fundamental kind of reality.” 

In the 20th century C.G. Jung was to build further on Plato’s theory of form in his discovery of the collective unconscious as represented by the archetypal image. In the case of the death of Phillip Hughes this past week, the ancient archetypal form of love has connected with the collective psychic energy of millions of people at home and around the world. One cannot explain this phenomenan in conscious rational terms, this is a far greater force tapping into the collective unconscious sea of thousands of years of civilization.

The reason I bring this up in a letter to traders, is that this seamingly irrational, overpowering force is often expressed in the market place when we experience the archetypal force-field of greed and envy. It is amazing how the great ideas of our intellectual hero’s formulated 100’s and sometimes 1000’s of years ago still play a direct meaningful role in our lives. As King Solomon said, “there is nothing new under the sun.” For those of you interested in this line of thinking, I have started writing a book called, The Market Complex, which is a Jungian approach to analyzing the markets where I go into much greater detail as to how this all works on a practical level and how it can be applied by the market practitioner.