Where Does It End?

Where Does It End?
A modest proposal to achieve a "historically correct" America

By Kerry D. Moynihan

There is a difference between right and wrong. It is important to know the difference between right and wrong. And without a doubt, enslaving people is wrong. We should not celebrate that wrong.

And yet, how far can we go in denigrating historical wrongs before we enter the Orwellian world of denying history's existence?

As George Orwell wrote in 1984...

If all others accepted the lie which the Party imposed – if all records told the same tale – then the lie passed into history and became truth. 'Who controls the past' ran the Party slogan, 'controls the future: who controls the present controls the past.'

And as the philosopher George Santayana said, "Those who do not learn history are doomed to repeat it."

A lot of work will have to be done if we decide to eliminate all celebrations of wrong and all memorials to wrongdoers.

So, I propose a thought experiment: If we need to make some changes, then, to be perfectly logical, we need to make all changes.

At the beginning of our nation (though not at the beginning of enslavement) there is George Washington. He held 317 people in bondage.

One American state, 31 counties, 55 cities, towns, and villages, 241 townships, and six major geological features are named after George Washington, as are 12 colleges and universities, nine important public parks, four of the nation's longest bridges, and innumerable avenues, boulevards, streets, roads, and highways.

What shall we rename them?

Ideally, they all should be named after oppressed persons. However, due to the oppression of persons because of their race – and also because of their gender, ethnicity, and sexual orientation – the names of most of the oppressed are lost to us. And the names of some of the oppressed – Carrie Nation, for example – could prove divisive among millennials who object to having their craft beer smashed with a hatchet.

In a gesture to neutrality and fairness, we could start the "Washington" renaming with the first 358-plus words in the dictionary... "A City," "Aardvarkville," "Abackburg," "Abacustown," and so on.

But dictionaries are a social construct of Western civilization's dead white males (such as Noah Webster, who's dead). So maybe an alphabetical approach won't do.

Perhaps we can use a random selection of tattoos from today's young people who are so vigilantly opposed to historical wrongs. For instance, Washington Pass, in the North Cascades mountains of Washington State, could be renamed "This Too Will" Pass, in "Follow Your Dreams" State.

Of course, you could wind up being someplace that didn't have a name at all... a place where you'd need to scroll through Google Maps looking for a hummingbird on someone's butt, instead.

And George Washington is only one small part of the larger problem. Eleven other American presidents, including some of those rated best by historians, owned slaves. Consider:

Thomas Jefferson, James Madison, James Monroe, Andrew Jackson, Martin Van Buren, William Henry Harrison, John Tyler, James K. Polk, Zachary Taylor, Andrew Johnson, and, of all people, Ulysses S. Grant.

Grant owned only one slave, William Jones, and freed him after one year. Despite Grant's desperate need for money at the time, he did not sell Jones. But, still...

Even wise and kindly Benjamin Franklin bought and sold people. Yes, he freed his slaves and he became president of America's first abolitionist society. But, still...

So here is a to-do list (with many, many, many more chores to be added to it):

1. Remove from public sight all references to anyone who ever owned slaves or at any time supported, explicitly or implicitly, the institution of slavery.

The movie The Bridges of Madison County is an easy fix, re-titled Worst Piece of Dreck in Which Meryl Streep and Clint Eastwood Ever Appeared.

But should the name of the lead characters in The Jeffersons disqualify the brilliant comedic work of African-American actors Sherman Hemsley and Isabel Sanford from being shown in reruns?

The capitals of Madison, Wisconsin and Montpelier, Vermont (named after Madison's Montpelier plantation) will need new monikers. I picture a (organic, GMO-free) butter-churning contest to decide which one gets the coveted name of "Cheesehead City." Bet on the muscular Green Bay fans. Montpelier will likely get "Maple Syrup Town."

New York's Madison Avenue will also have to be rechristened. I suggest "Avenue Clogged With Commuter Buses to Westchester." It's unwieldy, but it will remove the offending wig-wearer's name and lend the illusion that beleaguered Mayor Bill de Blasio cares about the largely forgotten, mostly Republican borough.

"The Monroe Doctrine," I suppose, will henceforth go by something on the order of "Doctrine of Yankee Imperialist Interference in the Sovereign Affairs of Latin American Nations, No Matter How Insane Those Sovereign Affairs Get."

John Jay was a Founding Father (a patriarchal and Eurocentric term that needs to be replaced with "Crypto-Colonialist Person Once Considered Significant") and the first Chief (a title insulting to Native Americans) Justice of the United States. So, the John Jay College of Criminal Justice will be renamed for all the people who have been wrongly convicted of crimes, starting with those unfairly arrested using prejudicial "stop and frisk" tactics. It will be a very long name for a college, but America has a very long history of Criminal Injustice.

2. Repurpose public spaces that memorialize ideas and actions that are wrong.

Mount Vernon, Monticello, Montpelier, and the University of Virginia's Jefferson-designed Rotunda and Lawn could be made into "safe spaces" for permanent "antifa" demonstrations. Republicans, Libertarians, and old-fashioned "free speech" liberal Democrats would be forbidden to venture within 10 miles.

Half of Mount Rushmore will be blasted away. Or all of it. Lincoln, early in his political career, made comments that were racist. And Teddy Roosevelt's actions in the Spanish-American War were clearly imperialistic. Maybe the cliff face can be ground smooth, made perfectly vertical, and turned into a climbing wall where people can learn the futility, frustration, and pain of the "American Dream" of "trying to get to the top" by falling off.

The Washington Monument and the Jefferson and Lincoln Memorials are ideal sites for low-incoming housing in a city where capitalist exploitation has made housing prices unaffordable to the homeless. Until the housing is built, these places can serve as squats for activist collectives.

3. Edit the Declaration of Independence to remove the signatures of the 41 (out of 56) signers who owned slaves.

Perhaps their names can be replaced with historically Black names, although this too presents difficulties. According to the 2010 census, some of the most common surnames of respondents who self-identified as Black were Washington, Jefferson, Jackson, and Wilson. (Woodrow Wilson was a notorious racist.)

Or we can replace the 41 slave-owner signatures with the signatures of important historic figures who would have signed but were prevented from doing so by the cultural inequalities of 1776. For an example, I'd name Dolley Madison – who was not only a woman but also a victim of the 18th century's dire lack of children's rights, being only eight at the time – but she also owned slaves later in life.

4. Rebrand any commercial enterprise that contains an offensive name, even if it is unrelated to the offending figure or spelled differently.

Lee Jeans and Lea & Perrins Worcestershire Sauce will become W. E. B. Du Bois Jeans and Sacagawea & Perrins Worcestershire Sauce.

And Robert Lee, the Asian-American ESPN broadcaster who – after the white supremacist riots in Charlottesville – was pulled from announcing the UVA/William and Mary football game because of his name...

That guy shall henceforth use the Chinese characters for he-who-must-not-be-named – R_____ E. L__.

"George Washington" will be removed from 32 parks, schools, and monuments dedicated to George Washington Carver, to avoid confusing him with the slave owner.

Ditto for Booker T. Washington. But Booker T. himself was somewhat soft on Jim Crow segregation, so we'll have to get rid of his first name and middle initial as well. All recordings by the seminal R&B/funk instrumental group Booker T. & the M.G.'s will be credited to the band, "And the M.G.'s."

5. Withdraw from circulation all currency and coins featuring offending figures.

No expense will be spared. The 2017 U.S. Treasury budget for replacing worn-out currency (notes only) is $726 million. By my estimation, the cost to replace all currency and coins defaced (as it were) with portraits of Washington, Jefferson, Lincoln, Hamilton (his family owned slaves), Jackson, Grant, Franklin, et al, will be at least $3 billion.

Because of this high cost and the already dubious value of money issued by the U.S. Treasury, I propose that the pictures on the new U.S. coins and currencies be of endangered species, particularly, the less intelligent and commercially valuable... the Alabama cavefish on the $1 bill and the American burying beetle on the $100 bill, to start.

But cost should not be our main consideration – the government will pay for it.

And the vast amount of money, time, and effort dedicated to achieving the goal of a "historically correct" nation will effectively eliminate unemployment, drive our economy, and increase our tax base.

It could be the biggest economic boon since Obama's "shovel ready" infrastructure stimulus projects. Hundreds of thousands of people will be gainfully employed tearing down street signs, demolishing statues, shredding currency, and the like.

After all, since we're denying history, let's deny economics, too...

If we use economic assumptions that are "right" (Keynesian government spending) rather than "wrong" (Reaganomic government thrift), the way we're using historical assumptions that are "right" (full of nice thoughts about social justice) rather than "wrong" (history as historians recount it)...

Why, we could...

We could "make America great again!"

The market looks shaky

After reviewing the S&P chart more closely again, it seems to me that the market looks quite shaky as of now. Clearly S&P has broken down from its uptrend starting from the March bottom. It has been indeed a fantastic move in the past 3 months with nearly a straight line up. But now, regardless how you slice it, the uptrend is broken to the downside with a negative momentum. Right now, S&P is right above its 50 and 200 DMA (two pinned together), which should be a strong support. So likely it will try to bounce back from that level around 2975ish. How high will it rebound? Likely towards 3100 to 3150 area if a strong bounce. But don't be fooled by even the seemingly strong bounce as its next leg down could be more powerful and severe. Watch its 50/200 DMA carefully! If they cannot be held and pierced through, it will become ugly very quickly!!

Of course, TA is more an art than a science and there is no certainty for sure. So I could be wrong but it will be wise to be at least cautious!!

Fully invested bears

Following yesterday's theme, here is another odd event that may add more signs to the market insanity that can eventually lead to an ultimate top prior to an epic bubble burst.  Something incredible happened this week. The combined market cap of Square, Spotify, Tesla, Zoom, and Shopify just surpassed that of Berkshire Hathaway! Chasing hot stocks to the extreme is always a phenomenon during a bubble. I guess everyone old enough should still remember what the tech bubble had done to the market back in late 90s and early 2000s. Even though we may be no near to that frenzy, we are definitely much closer now to that point with so much reckless chasing FOMO!  

Does this mean now it is the time to dump all the stocks and hide in the sand? Remember, a bubble can be formed and blown larger for a long period of time. No one knows how long it can last although it is a certainty that a bubble will be burst at some point. So it is a tradeoff between being vigilant and still actively investing at the same time. This reminds me of something the famed Morgan Stanley strategist Gerard Minack said once:"The funny thing is there is a disconnect between what investors are saying and what they are doing. No one thinks all the problems the global financial crisis revealed have been healed. But, when you have an equity rally as you've seen for the past four or five years, everybody has had to participate. What you've had are fully invested bears."

Yes, I'm probably a typical "fully invested bear" in some sense. More I see what's going on around the world in terms of the ever increasing debt load and phony money that has been printed/created every minute from the thin air, I'm really scared for the long term financial health of this world. This will certainly not end well. I keep reminding myself of this long term bearish view. On the other hand, I certainly don't know the exact timing when this long lasting burst will come. As such, I don't want to be like an ostrich to bury my head in the sand, pretending nothing is going on in the market. Not at all. So I'm still very active in the market but I'm just cautiously following the trend the market is giving in either direction. So I'm more like a swing trader, in addition to long term investors in quality dividend growth stocks for DRIP. 

So on the short term basis, I'm neither a bull nor a bear, but a swinger. This week is a typical week for my swing trading as I did both short and long trades within days. I think this will probably continue for quite a while as long as the market insanity keeps ongoing! 😎

A history being made again

"A quick word about my betting for next week. I think there is a high chance we may see another mini crash for S&P in the range of 50-100 points down. "  This was what I predicted last weekend and it turned out to be spot one. S&P closed around 3000 today. I think it may still have little down to go probably to 2975ish early next week. 

This is a history making year! We have seen the fastest bear market being formed. Then we are seeing the fastest bull market following. Now the market is making another historical event: an internal divergency that has rarely been seen: S&P moved above its 200 DMA over 3% but less than half of the stocks in the index have managed to climb above their own 200 DMA. In other words, this seemingly quite bullish market has quite few stocks coming along with it! What is more, this is a theme across industries, sectors, and world indexes.

As I said, this is a rare historical event. In the past 30 years, we have only seen once before such kind of dichotomy that happened in the year 2000.  But if we forget about the extreme 3% cutoff but by any amount that S&P was above its 200-day average , and with less than 45% of its members above their averages, then it had happened a couple times more in 2007, and 1999 prior to that. Have you noticed the pattern for this rare event occurrence in terms of timing? Yes, the only three times of the occurrence before were just prior to the historical stock bubble burst. Am I saying we are on the verge of another bubble crash in the same magnitude? Probably not......at least not yet! However, history often rhymes if not repeating it. "What we do know is that periods of rising index prices and high optimism, during markets where relatively few stocks are in long-term uptrends, have a strong tendency to resolve lower in the weeks-to-months ahead."...... a statement from a wiseman that I totally agree with! 

Of course, this does not necessarily mean a huge market crash is imminent but just an early warning sign.  I will share more thoughts in my next blog on this.     

30-years annualized returns for investors

Has the market lost its mind? Of course, we are always told the market is always right. But something indeed really weird is occurring everyday now: This week, for example, CARV has rallied from $2 to $16, and UONE has gone from $2 to $44. There's no news on either company to account for the moves. The only thing that may explain is that most customers of both firms are African-American. As such, the market FOMOs may be thinking that what is happening now in the US must be great for the companies and therefor chasing them to the moon?!👶😳  

Sure from time to time, some people may get lucky by chasing but in general, this kind of reckless investing and trading will not end well. My friend forwarded me this chart which is very interesting and telling. It is the average annualized return by asset class in the past 30 years. If investors in general is also considered as an asset class, then it is scored at the very bottom, with a return even barely beating inflation I believe.

The message? Choose any asset class you like and put your money there without touching it. You have a higher chance to get a much better return over time!

Bull vs Bear case

It is amazing to see the constant fight between bull and bear, which from time to time could be fierce and volatile. I shared an analysis by Lance Robert last week about the view of "overly optimistic", which was consistent with what I had been saying for a while. It turned out to be quite spot on timing wise as the market got a mini crash over 5% early this week. Anyone who was shorting the market late last week should be quite happy for a very nice gain. Then the bull mounted a fierceful fight back. Clearly the battleground for bulls and bears is rather dynamic and unsettling with both cases that can be made. So let me share with you another piece of an analysis by Robert just about that.  I personally find his work is quite thoughtful and insightful. Hope you feel the same!

A quick word about my betting for next week. I think there is a high chance we may see another mini crash for S&P in the range of 50-100 points down. Will see if I'm right about it again!

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The Bull's Case

The bullish case for the market is pretty thin.

1. Hopes are high for a full reopening of the economy
2. A vaccine
3. A rapid return to economic normalcy.
4.  2022 earnings will be sufficiently high enough to justify "current" prices. (Let that sink in – that's two years of ZERO price growth.)
5. The Fed.

The Bear's Case

The bear's built their case on more solid fundamental views.

1. The potential for a second wave of the virus
2. A slower than expected economic recovery
3. A second wave of the virus erodes consumer confidence slowing employment
4. High unemployment weighs on personal consumption
5. Debt defaults and bankruptcies rise more sharply than expected.
6. All of which translates into the sharply reduced earnings and corporate profitability. 

Short-Term Bulls, Longer-Term Bears

From a purely technical perspective, the bulls remain in control for now. As shown below, the market was able to work off some of the short-term overbought condition without a confirmed break below the 200-dma.  Importantly, the correction also held the uptrend line that has been running since the initial gap-up off the March 23rd low.

However, the lower MACD and Price Momentum Oscillator are on clear "sell signals," which suggests risk to the bulls in the short-term. With resistance at Thursday's "gap down" open just slightly above Monday's close, the risk/reward for markets very short-term is poor.

If the market breaks the uptrend line, the 50-dma and the May consolidation range lows will be the next lines in the sand.

It is worth noting that both of the primary "sell signals" remain intact on a WEEKLY basis. Such suggests we may not be through the "bear market" phase just yet. While such doesn't necessarily mean the market will crash, historically returns have been lower with much higher volatility.

On Wednesday, we pointed out the similarities between this year's price action and the price action during the 1929 crash and the rally that followed. Whether or not we have just seen the top of the rally, I believe there will be a top soon and that it will look like this."

A greater fool's game

I saw someone writing this: "Price is important… but we know there's usually a greater fool willing to pay a higher price. What we want to know is how many fools are out there."  

After pondering for a while, I think this is exactly what the stock market is all about. Well, I'm a bit exaggerated here. After all, for the investing/trading driven by the fundamentals or rational TA, we cannot say this. But from time to time when the market loses its mind and presents irrational exuberance, then it truly becomes a Greater Fool's game!

Actually I just took part in it the past week!

Early this week, I decided to speculate on the bankrupt company, Hertz, with a special option setup which involved very little risk but potentially a huge return. I thought that it could be a 10 times return if lucky. Apparently I was acting as a fool in this gambling game. You see, for bankrupt stocks, 99% times shareholders will be wiped out and get nothing back as the liquidation privilege is given to bond holders and most of the time nothing will be left for stock buyers. So betting for a huge return from a bankrupt company may sound like a fool. But when the market loses its mind and a large amount of the market participants behave brainlessly brave in chasing everything, miracles can happen. All my luck needs is the greater fools who are willing to pay higher prices than mine. Indeed my luck did come as greater fools did show up in time in chasing Hertz to the moon! Just within days, Hertz shot up 8 times from when I bought it. I couldn't believe what had happened as it went up so fast. Initially I thought there must be some great news for Hertz that made it revived! But nothing came up. It just kept going up for nothing for a few days till it fell apart again. What a greater fool's game!!

Lesson? Try to be a less fool in the game!

"Buffett is an idiot!"



"Stocks only go up, this is the easiest game I've been part of!" "I'm just printing money," Portnoy said. "Why take profits when every airline goes up 20% every day. Losers take profits. Winners push the chips to the middle... I should be up a billion dollars."

This is the note a trader called Portnoy recently posted (see here). He even went so far to the point calling "Buffett is an idiot"!

I think Buffett was called as like an idiot not once but at least one more time before during the dot.com bubble in late 90s when he refused to buy any tech stocks when they were in a frenzy FOMO. Indeed Buffett looked quite stupid without buying anything as others. I was among those for the FOMO and literally every day I told my wife we could retire very soon as our portfolio went up almost 10% or more every day for quite some time. I also knew some friends who quit their job as they thought they had made so much easy money already and the stock market could support their life forever now

But we all know by now that this was an Epic Signal Of A Blow-Off Top! I lost a house worth of money during the period and my friends quietly came back to find another job later after the bubble finally burst. And suddenly Buffett did not look like an idiot but a wiseman. I guess he has been widely recognized as the investment genius only since then. The same epic blow-off top came again in 2008 and we also know what Buffett had done at that time! He was nearly the only man standing and single-handedly saving the banking system to some extent!

Are we seeing another epic top now? Probably not yet but if we start to see more and more such kind of reckless and mindless brags, we should be prepared for another huge market crash to come soon!

Overly Optimistic

I have share a lot of my own thoughts. Maybe it is also worthwhile to share others' opinion about the current market. Below is excerpted from a post by Lance Roberts Chief Portfolio Strategist/Economist for RIA Advisors. Regardless how you feel about the current market, a second opinion may serve well to put things into perspective.

Just a quick word about the current market sentiment. I have been in dozens of investment chat groups. What I have seen today, oh boy, it is an unbelievable elated mood everywhere I go as the result of the Friday's surprisingly upbeat jobs report and the amazingly strong market uptrend. Everyone is talking about how great they are doing lately and how excited they are to expect further up move to soon see new highs. It is indeed a kind of exuberant euphoria I'd call it, that is rarely seen. Given how many groups I have been in, I think I see a fairly good representation of the general investors' mood at the moment, which is consistent with what this blog is talking about: Overly Optimistic! As a contrarian, I must say I think a good top is forming and we may very soon see a sizable correction, even if not a Mar low testing. This is usually occurring when no one believes the market can go down further. Remember, when the Mar low came, no one at that time believed the market could go up. Now is just the exact opposite sentiment-wise. 

Enjoy the bull market as long as you can but also watch out underneath. The rug could be pulled out suddenly without your prior knowing!!    

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Market Support Deterioration

Such is particularly the case as the market rally to date has been defined by the five largest stocks in the index. Via Goldman Sachs:

"Broader participation in the rally will be needed for the aggregate S&P 500 index to climb meaningfully higher. The modest upside for the largest stocks means the remaining 495 constituents will need to rally to lift the aggregate index."

Overly Optimistic

Lastly, investors remain overly optimistic that corporate earnings and profits, will catch up with elevated asset prices. Historically, such has never been the case, and prices have ultimately "caught down" to fundamental realities.

There is more than a casual relationship between the cumulative growth of the financial market to corporate profits. While deviations can last for a while, eventually, those gaps are filled.

As my colleague Victor Adair at Polar Trading:

"The growing divergence between the 'stock market' and the economy the past couple of months might be a warning flag that Mr. Market is too exuberant. The Presidential election is just over 5-months away with polls showing that Biden may be the next President. The U.S./China tensions have been escalating, and the virus's first wave continues to spread around the globe. However, the 'stock market' continues to be pulled higher by a handful of 'Megacaps.' The late Friday rally after Trump's 'punish China' speech shows 'animal spirits' are alive and well!"

I'm long and short at the same time

The market is unbelievably bullish at the moment. As I said last week, I was expecting S&P going up towards 3100 this week. But apparently I was too "bearish" for this call as it has easily broken through the 3100 level by Wed and today it has topped over 3100! Yes, undeniably, the current trend is going up and it seems there is nothing that can stop it. For that reason, I'm bullish for the near term and trading on the long side for it. At the moment, nearly everything can go up regardless. Just close your eyes and buy and you can make money. Two days ago, I thought to give the broken bankrupted company, Hertz a try for some sort of recovery. Well, it has doubled everyday since then. A kind of insanity only seen at the FOMO stage! 

But on the other hand, the rubber band has been stretched to the far end to be extremely thin at the moment and when it snaps back (it will for sure), it can hurt enormously. In other words, the downside risk here is increasingly high as well. For that, I'm quite bearish in the longer term. So I'm kind of holding two bags at the moment for both directions. As a trader, I'm just trying to ride the trend whichever it intends to go. 

If it happens you are among those who believe we have been out of the woods with a V-shape recovery, let me share with you and remind you what happened during the 2015-2016 time period when the market got corrected. See below which is self-explanatory. Just don't be too complacent as when the tidal wave changes its direction, it can change very fast without early warning!