Monthly Archives: October 2014

Is the ‘Dark Enlightenment’ Already Here?

The Grey Enlightenment is a moderate, optimistic offshoot of the ‘Dark Enlightenment’. The differences are explained here. The Grey Enlightenment can be described as neoconservatism and minarchism meets social Darwinism and HBD. It appropriates ideas of supply side economics, monetarism, and free market capitalism with biological determinism and eugenics.

The ‘Dark Enlightenment’, also known as the neo-reactionary movement, is opposed to democracy and egalitarianism and seeks to replace our current system of governance with a monarchy or some autocratic form of rule. But could we already be in the ‘Dark Enlightenment’? Biological determinism is making whatever little democracy America had obsolete. Arguably, America has a caste system stratified by IQ, with the cognitive elite typically residing at the very top. With the exception of some moral decay in pop culture, maybe America, more so than any other country, is closer to attaining the ideals of the ‘Dark Enlightenment’? Socioeconomically, with record high wealth inequality, egalitarianism has been dead for quite awhile, assuming it ever existed.

Biological Determinism Bull Market Rages On

Stocks keep going up, as the economy is fundamentally sound and biological determinism means that those who are cognitively unfit to participate in the post-2008 wealth creation boom have to watch from the sidelines, clinging to their erroneous beliefs that the economy is weak and the market is rigged. This belief gives the left false hope, that the reason why so many are falling between the cracks in what has otherwise been an unending wealth creation boom is because of corruption and other environmental factors – not intelligence, or lack thereof. Dow 20,000 soon. Mastercard, Visa, Ali Baba, Google, and Facebook stock will keep going up. Historians will look back at the post-2008 era as the crossing of the Rubicon of humanity’s transition from a type 0 to a type 1 civilization, eventually culminating in the construction of a Matrix, as well as the development of Strong AI, memory implantation, unified theories of everything, asteroid mining and the colonization of the moon and mars.

Post-QE, The Economy is Still Fundamentally Sound

The news cycle is pretty much moribund, especially now that Ebola is smoldering in Africa, having failed to destroy civilization as the left hoped it would. The fed officially ended QE, a non-event given the fed had been planning this as far back as May 2013. Despite the doom and gloom, QE was a resounding success, boosting stock prices, confidence and economic activity. It’s hard to put exact figures on the numbers, but the economy is better off with it than without QE.

Goldman, to their credit, is backing the republicans, having long ago abandoned support for Obama. Obama is anti-business, and they know it. Thank Bush, Bernanke, and Paulson for the post-2008 slow, but steady economic recovery. Obama is a hardened welfare liberal and that’s all there is to it.

Someone replies

And let me guess: thank Israel for the glorious stability we’ve seen in the Middle East? Also, do you honestly believe the economy is recovered? Most college graduates I know are still either working for chump change or have McJobs. The cost of everything keeps rising. We’re in Weimar.

I hate to be the bearer of good news, but thanks to smart people, the economy is still fundamentally sound. Has he seen the blowout tech earnings? Apple, Facebook, Google, etc etc. Profits & earnings at record highs. Multinationals, biotechnology, and tech are printing cash. Those college grads who cannot find work should major in STEM and learn to code instead of whining about imaginary economic weakness. That’s where the good paying jobs and opportunities are. Web 2.0, Bay Area real estate, and buying stocks on the dips – that’s how people are getting rich in the smartist era.

Biological determinism and social Darwinism means that those who fail to participate in the unending, post-2008 wealth creation boom are failing by virtue of not being smart enough. Instead of biology, the left blames environmental factors such as crony capitalism, the rich, greedy corporations, Congress and other targets. The labor market is becoming bifurcated into one of skilled, good-paying jobs for those who are smart enough to obtain them and low-paying service sector jobs for everyone else. Even for the libs that acknowledge this economic reality, their solutions – which consists of regulation, tax hikes, and raising interest rates – are counterproductive because attacking the most productive members of society and the supply side programs that benefit them is recessionary. If interest rates go up too quickly the economy may enter a recession, and jobs will be lost and wealth will be destroyed.

No, The US Economy Is Not Stuck

From the Washington Post: The terrifying idea that the economy might stay stuck forever just got more terrifying

Shoo the pallbearers away; the US economy is not only not dying or stuck, it’s thriving – especially compared to the rest of the world.

The U.S. economy has fallen, and it can’t get up.

At least that’s the way it seems. That’s because our slump hasn’t really ended, even though the Great Recession officially did more than five years ago. Growth has been low, unemployment is still high, and it’d be even more so if the labor force hadn’t shrunk so much. And all this, remember, has happened despite interest rates being zero the whole time. It’s the opposite of what we would have expected: big crashes are usually followed by big comebacks. So why has this time been different?

Here we see the author committing the fallacy of composition, which is to assume the condition or state of one component (employment) of a dynamic system (the US economy) applies to the entire system. So by the author’s logic, because unemployment is high, therefore the entire economy is weak. But the unemployment rate has fallen to 5.9 percent, the lowest in six years. The single leg upon which the author’s argument bears its weight upon is itself a wobbly one.

Back to the fallacy of composition, excluding the anemic labor market, there are many parts of the economy doing quite well such as:

Foreigners are inundating America’s most prestigious tech companies and institutions of higher learning with applications. Rich foreigners are buying up expensive real estate in New York and Silicon Valley with reckless abandon. So while America, to the left, may seem like the unwanted stepchild, to the rest of the world they can’t get enough of it.

The housing market (as measured by prices), especially in the Silicon Valley, is doing great. With the unending web 2.0 boom, the Bay Area has become the center of the universe.

Stocks are at record highs. Trillions of dollars of wealth has been created in what is greatest bull market in over 100 years.

Profits & earnings at record highs.

Consumer spending at record highs.

Exports at record highs.

STEM

The web 2.0 boom is still going strong. Facebook is now a $200 billion company. Apple and Google are almost worth a trillion dollars combined. Snapchat is worth $10 billion on its way to $30 billion. This doesn’t sound like an economy that’s stuck.

How about wealth inequality? Not a big deal

But this isn’t just a mental problem. Real rates might also be negative, because there’s more supply of lendable funds but less demand for investment.

Isn’t this good news? Lax lending standards to irresponsible, impulsive homeowners was a major contributing factor to the financial problem. We should be celebrating lenders being more reluctant to lend and borrowers being more timid.

And no, America is not deleveraging. This is good news.

And compared to the rest of the world, the American economy is looking pretty good. While America chugs along with 2-3% growth, the entire continent of Europe is pretty much in a borderline recession. Same for Australia, Japan and Russia. Other countries, such as Brazil and Turkey, have more nominal growth – but more inflation to go along with it. And for an economy as large as America’s, 2-3% growth puts us back to rates last seen in the late 90′s and the 2000′s, and no one on the left was complaining about weak growth during end of Clinton’s tenure, that’s for sure.

Thank successful fed policy, thank high-IQ people for innovating, thank the indefatigable US consumer, thank free market capitalism, thank globalization, thank bond holders, thank web 2.0, and last but not least, thank the bank bailouts for America’s economic exceptionalism.

Oil and Gas Prices Due for a Huge Rebound

If history is any guide, the left’s celebration of falling oil & gas prices may be premature. Here’s one such headline proclaiming the ‘end’ of of the oil:

But wasn’t the end supposed to be in 2011 and 2012? What ever happened to that?

The welfare left, in their wanting of crisis and deflation, are interpreting what is a cyclical dip as some sort of harbinger of the end of oil. Oil will surge above 100 again when the dow crosses 19,000 next year, and all this ‘oil is dead’ talk will be for naught. You know you’re a lib when you rejoice over lower prices the sight of rich people losing money.

Note: This is not an endorsement for oil and energy stocks. I would rather own Facebook, Healthcare, and the Nasdaq 100.

Free Backtesting Website

A couple weeks ago came across this free cloud based backtesting service, https://www.quantopian.com

Here’s a sample code of a portfolio which I’m running that is long 60% QQQ (large cap US tech), short 30% foreign markets and short 10% small caps:

def initialize(context):
set_symbol_lookup_date('2010-1-1')
context.stocks = symbols('qqq', 'veu', 'iwm', 'eem', 'iwm')

def handle_data(context, data):
# This will order as many shares as needed to
# achieve the desired portfolio allocation.
# In our case, we end up with 20% allocation for
# one stock and 80% allocation for the other stock.
order_target_percent(context.stocks[0], .60)
order_target_percent(context.stocks[1], -.30)
order_target_percent(context.stocks[2], -.10)
order_target_percent(context.stocks[3], -.00)
order_target_percent(context.stocks[4], -.0)

# Plot portfolio allocations
pv = float(context.portfolio.portfolio_value)
portfolio_allocations = []
for stock in context.stocks:
pos = context.portfolio.positions[stock]
portfolio_allocations.append(
pos.last_sale_price * pos.amount / pv * 100
)

record(perc_stock_0=portfolio_allocations[0],
perc_stock_1=portfolio_allocations[1])

Here’s a sreenshot of the rendered result versus the S&P 500 ETF, SPY:

Neil deGrasse Tyson and Philosophy

The left, including affirmative action’s own astrophysicist Neil deGrasse Tyson, dismisses philosophy as useless. In my post of most and least respected majors, I list philosophy as being useful, along with STEM.

On the surface, philosophy may seem useless, or at least devoid of any practical applications. You cannot build a bridge with philosophy, nor can you develop a life saving treatment for a disease with it. So what good it for? Despite it satisfying a human yearning to understand universal, fundamental ‘truths’ and other abstractions, a degree in philosophy is most useful as a means of signaling that can be used as a ‘stepping stone’ to more prosperous endeavors. By getting a degree in philosophy, generally regarded as hardest of the liberal arts subjects, you are signalling to employers that you are very smart, which will give you a substantive advantage in the hiring process. True, philosophy in itself offers nothing in the way of ‘experience’, but having the degree demonstrates top 1% intellect, critical thinking, and comprehension – skills that are necessary in any job where competence is valued. A philosophy major can thus be trained to perform complicated tasks with relative ease and mastery that even experts without such a difficult degree cannot do.

Let’s say I have a web 2.0 start-up and I need a programmer. If none are available, I would feel confident hiring the philosophy PHD over someone with a useless degree, knowing I could get the philosopher quickly up to speed with some programming tutorials. In essence, the philosophy degree serves as a giant to billboard to the world proclaiming,’Hey, I’m really good at understanding complex, esoteric stuff!’ In the post-2008 economy of hyper-efficiency where the support of labor vastly exceeds the demand, employers more than ever are placing a greater emphasis on talent IQ as opposed to connections, personality and other EQ factors.

Therefore, it is no coincidence the critics of philosophy, such as the liberal Neil deGrasse Tyson, excel at EQ and come up relatively empty handed at IQ. Tyson, who has no advanced published research to his name, is a joke and merely a showman to those who study physics and engineering professionally. Same for Robert Shiller who, despite winning a Nobel, is still a showman who is more popular for his good looks, book sales, and liberalism than economic research. On smart sites such as Reddit and 4chan, philosophy is upheld as sacrosanct like STEM, and there’s evidence a backlash against Tyson is percolating, that will likely culminate in him being relegated to the dustbin of defamed pseudo science ‘popularizers’ like Malcom Gladwell.

Most and Least Respected Majors

IQ is more important than ever, says experts. It seems like STEM and the people who major in it are more important than everyone or anything else. It’s like, ‘You are an engineer? You know physics and can code? Let me kiss your ass.’ I’m not being sarcastic.

Now couldn’t be a better time to be above average, to be smart, to be an economist and to be rich. Programmers, science and scientists are more important than ever.

Stocks will keep going up. People getting richer and smarter than ever.

Besides fundamentals, high-IQ is what is keeping the stock market up. Every time it falls, people remind themselves that America is exceptional, the economy is fundamentally sound, and that we’re in an intellectual Renaissance, and hence buy the dips. For the stock market to go down and stay down, it would require that IQ become less important. As Obama’s approval rating continues to slide, the S&P will surge to 2500 next year in anticipation of complete republican control of all three branches of government and the pro-growth policy that will follow. The anti-intellectual, recession-seeking left wishes there would be a financial crisis so the rich and smart lose money and become less relevant; not gonna happen, sorry liberal chumps. They, the left, want Facebook and Snapchat and Silicon Valley real estate to go down, but prices and valuations will rise forever (or at least for many years to come).

The trading floor, Silicon Valley, Caltech, Snapchat, Instagram, Tinder, the Ivy League, the hard public schools, Reddit, Vice.com, 4chan, and MIT are enclaves of sanity, empiricism, and reality in a world gone mad with political correctness, rejection of biological truisms, and leftist class warfare.

To be an expert, especially in a STEM field, which includes finance and economics, is to be a very important, revered person in the post-2008 era. The same goes for having student loan debt in STEM, or other major deemed useful by the smartest generation. African American studies is an example of a useless major, according to the smartest society that is America. Being rich means you’re very important, but only if the wealth is not spent on lavish amenities. The faux pauper hedge fund manager who wears sandals and dislikes suits is a hero to the smartest generation.

Most respected majors: (completing one of these will make you a god among the smarties and is a ticket to respect, authority, and riches)

Quantitative Finance
Theoretical Physics
Mathematics (the more obscure and difficult, the better)
Computer Science

Respected majors:

Engineering
Non-theoretical Physics
Chemistry
Mathematics (up to around Abstract Algebra)
Biology
Economics
Finance
History
Literature
Philosophy
Psychology
Anthropology
trades such as Law, Medicine, Accounting

Least:

________ studies (Black, Gender, etc)
Child development
Sociology
Journalism
Kinesiology
…pretty much anything with a liberal bias (most humanities), commercialized (MBAs), or niche (Degree in Product Development or Degree in Search Engine Marketing)

Facebook Stock is Going Higher

As Facebook stock makes another record high (in agreement with my predictions) Facebook is now a $200 billion company, on its way to being worth a trillion by the end of the decade.

The left, including the Robert Shiller, sees everything as a bubble or crisis waiting to happen, such as comparing Facebook to Myspace, even though for years they have been proven wrong. Like Google, Facebook is far, far past its fad stage. Teens who get bored with Facebook go instagram, which is also owned by Facebook.

A common retort is that it costs very little money to start a social networking website or an app, and this is often true, but as failed Microsoft, Google, an Facebook competitors can tell you, gaining traction in a saturated market is exceedingly difficult. What ever happened to the Facebook competitor, Ello? After the initial burst of excitement and phoney signups, it already fizzled. The risk of being supplanted by the next big thing is there, but smaller than many think. Look at Microsoft. In the 80′s and 90′s, I imagine coding an operating system was less expensive than building an oil rig, yet many more oil companies have failed than Microsofts.

Facebook should buy Snapchat. After correctly predicting Snapchat would be worth $10 billion, I predict Snapchat will be worth $30-40 billion within the next two years and go public at a valuation of $100 billion or more if no one buys it out. After Snapchat, there are no obvious competitors to Facebook.

Silicon Valley’s billion dollar start-up failures

Another article long on doom and gloom hype and short on evidence. It’s indisputable that small businesses have a high failure rate.

Whether it’s Twitter, Uber, Pinterest, Snapchat, Facebook, Air B&B, all of these hugely valued web 2.0 companies have proven resistant to being fads and keep growing in terms of traffic, revenue, and valuations. It’s not like the early 2000′s when you had many big failures. With the possible exception of Zynga, there have been no notable instances of multi-billion dollar web 2.0 companies failing. Whether it’s the stock market crashing or web 2.0 being a bubble, the crisis seeking left in their pursuit of failure come up empty handed yet again.

Optimism, HBD, and the American Dream

As we’ve written again and again, optimism and HBD should be able to coexist. As Pinker, Matt Ridley, and George Gilder have shown, believing in biological determinism in one form or another doesn’t mean you have to be a doom and gloomer.

Humans evolved to be optimists because we have no choice. Humans, unlike any other animal, have the unique ability to feel regret, and if we didn’t have the ability to brush off past disappointments, the cumulative effects of previous failures would make life unbearable. There would be no civilization.

It’s the libs who are the real pessimists – pessimistic about race and HBD, pessimistic about the world becoming less violent, pessimistic about free markets, American exceptionalism, IQ, rich people, the fed, technology, etc. Historically speaking, the greatest opposition to technological progress has been from the left over fears of environmental degradation, loss of ownership of the means of production, wealth inequality, and job loss. The libs are the biggest critics of Amazon, Google, Facebook, and Apple over things like privacy, the NSA, monopoly power, collusion, and low wages.

I also believe in anti-democracy, but am an optimist about the future, mainly because technological progress and HBD is making what little democracy America ever had obsolete. Eugenics can help solve the entitlement spending problem, and the saved money can be used to give high-IQ people and other useful individuals a basic income. Rapid gains in technology and financialization is widening the wealth gap and creating a caste system ruled by the cognitive elite, and the libs are powerless to stop it.

The left says capitalism and the American dream is dead, but on an Ask Altucher podcast a few days ago, James Altucher mentioned that his roommate in college was a very early investor in Uber, and at Uber’s present valuation of $18 billion, turned his $25,000 of seed capital into a windfall of over a $100 million. It should also be noted that James and his friend both went to Cornell – an elite school, like all Ivy Leagues, that only admits the best and the brightest out of a huge (and growing) applicant pool, compared to, say, no-name U. What this shows that America, despite all the pessimism by the crisis-seeking left, is still a meritocracy where anyone with a good idea and a combination of luck, hard work, and intellect can become obscenely wealthy in a very short period of time. Such overnight success stories whether they be in Uber, Tesla, Facebook, Snapchat, Tinder, Pinterest, or Dropbox wouldn’t be possible if capitalism and the American dream were dead.

It’s comforting for the left to blame rich people, crony capitalism, and other environmental impediments for themselves and others for failing to get ahead, when the cold, discomforting reality is that people fail typically because they aren’t smart enough. True, hard work and some luck are important, but intelligence is necessary. Note how James, also a multimillionaire, and his friend went to Cornel, which agrees with the multitude of data that shows that smart people, especially those who attend elite institutions and major in a STEM field as James did, make more money than everyone else. Even if the degree isn’t used to its full potential, being smart enough to be admitted to the Ivy League and the connections it affords, augers well for success at virtually all aspects of life. So as we can see, the America dream isn’t dead – if you’re smart enough.

In the post-2008 era of hyper-capitalism and stocks always going up, high-IQ is being rewarded more than ever, both in fame and fortune. Five year from now we’ll still be reading the same headlines about record highs for stocks, 0% interest rates forever, low approval ratings for Congress, pain at the pump, college & healthcare still expensive, nosebleed valuations for web 2.0 companies, Bay Area real estate prices through the roof, record wealth inequality, Tesla’s and Apple’s latest phone and car, and so on…

From The Death of the Blue Chip:

In my relatively short time on The Street, I’ve seen several former blue chip stocks disappear or become disgraced to the point of no return. Companies like Woolworth’s and Sears and Eastman Kodak and Xerox and Lucent and MCI – all of which, for a long time, were considered automatics for investors seeking reasonable, reliable returns in evergreen businesses.

There are a handful of notable blue chip failures, but these are few and few between. He’s also conflating the S&P 500 with the Dow Jones. Lucent, MCI, Kodak and Sears – while well known businesses – were never really considered to be blue chips. There have been four or so notable blue chip failures in the past decade: AIG, Bank of America, Citigroup, and GM. However, the Dow Jones in it’s present form won’t have any more failures. One could conceivably have seen how a confusing, over-leveraged company like AIG or Citigroup could fail, but not a companies with simple business models like Walmart or Proctor and Gamble. The people who construct the Dow Jones Industrial Average have gotten so good at picking companies and learning from their failures, there won’t be anymore blue chip disappearances.