Category: zerohedge

In the latest bombshell report about the life and background of Nikolas Cruz, the 19-year-old school shooter who murdered 17 people at Marjory Stoneman Douglas High School and wounded more than a dozen more, the Florida Sun Sentinel describes how 5-year-old Cruz found his adoptive father’s dead body, and other traumas he and his younger brother Zachary experienced as children growing up in and around Broward County.

The expansive report was compiled from police and school records, as well as interviews with people who knew Cruz.

Cruz was seemingly troubled from the beginning. By the age of 3, he had been diagnosed with developmental delays. By the time he was 6, he’d suffered the trauma of witnessing his father’s death. By the time he was 16, he had become preoccupied with wars, death and killing, school records reveal. And of course, as he sits in the Broward County main jail, having confessed to 117 premeditated murders, there’s a strong possibility he might face the death penalty.

The Cruzes – Nikolas Cruz’s adoptive parents – married late in life. Lynda Cruz, who succumbed suddenly to pneumonia in November, was 49. Richard was 61. They arranged the adoption of Nikolas through a private attorney, insisting that his birth mother pass drug tests and make regular doctors visits. Soon after Nikolas was born, the same woman got pregnant again with a different man. The Cruzes then took in Nikolas’s half-brother, Zachary. After they adopted the boys, they moved from Long Island to Parkland, where they build their home, which neighbors described as “a beautiful house”

As young children, the two boys had what friends described as a “very close” relationship with their father.

Less than a year later, the same woman got pregnant again. The baby had a different father. Lynda and Roger adopted that boy, Zachary, as well. Their family was complete.

“They had a beautiful house,” said Ben Aaronson, who was close to Lynda and Roger Cruz. The couple had moved from New York and had their five-bedroom, three-bath home built in Parkland, at 6166 Northwest 80th Terrace, county property records show. They had a pool and jacuzzi in the backyard.

“They had a very close relationship with their father,” Aaronson recalled of the boys. Roger Cruz was in marketing and traveled for business. But “when he was home,” Aaronson said, “he was all about his kids. I remember Roger having this entire, like, really extended type jungle gym out back, in the backyard, being built,” he said. “They built another wing to the house, and the kids just had plenty to do.”

A golfer and “suit-and-tie man,” the elder Cruz didn’t own guns, Aaronson said.

…But their lives took the first of several traumatic turns when young Nikolas discovered his father’s dead body in the family den. He was five years old.

“Nikolas came down the hallway and he went to his room, and he was crying. She said, ‘What’s the matter, did Daddy punish you?’ Just as clear as day, he said, ‘Nope. Daddy’s dead.’ ”

Roger Cruz was dead of a heart attack at age 67.

Lynda Cruz sued two heart doctors and won a small settlement for her sons a few years later, court records show.

Lynda was left to raise the two boys alone. As has been previously reported, Nikolas wasn’t an easy child. He had been diagnosed with autism, depression, ADHD and other behavioral disabilities.

Still, his mother doted on him. But his development was clearly stunted. In his late teens, he was still learning to do household chores and laundry.

Family friends described young Nikolas as a “momma’s boy”, adding that she was his only friend. He had trouble making friends and was frequently bullied. His brother told Palm Beach County Sheriff’s deputies last week that “he and his friends, when they were younger, had bullied Nikolas, which he now regrets ever doing.”

During a seven-year period covering much of his adolescence, deputies were called out to his house 39 times.

Cruz never finished high school, and at the time of the shooting he was struggling to get his GED.

He was kicked out of one middle school and transferred to a school with a program for emotionally and behaviorally disturbed children. He was eventually allowed to enroll at Stoneman Douglas. During his first month there, he posted on Instagram that he was planning to shoot up the school.

via Zero Hedge http://ift.tt/2GISSSg Tyler Durden

Authored by Lance Roberts via RealInvestmentAdvice.com,

The recent stock market correction, and subsequent rally, revealed the many mistakes that investors consistently make when managing their money. Emotionally-driven decisions almost always turn out badly and ultimately impair the long-term investment goals individuals are attempting to achieve.

Given that individuals are consistently promised investing in the financial markets is the only way to financial success, it is worthwhile to review the common mistakes most investors make. After all, if investing is “so easy,” why are the majority of American’s so broke?

Let’s dig into the myths, the mistakes and the steps to redemption. 

Financial pundits across the country consistently promote the myth that one simply buys a basket of ETF’s, or individual stocks, and returns will compound at 8, 10 or 12% a year,

Nothing could be further from the truth.

On a nominal basis, it is true that if one bought an index, and held it for 20-years, they would have most likely made money. Unfortunately, making money, and reaching financial goals, are two ENTIRELY different things.

“The chart below shows the difference between two identical accounts. Each started at $100,000, each had $625/month in additions and both were adjusted for inflation and total returns. The purple line shows the amount of money required, inflation-adjusted, to provide a $75,000 per year income to Bob at a 3% yield. The only difference between the two accounts is that one went to “cash” when the S&P 500 broke the 12-month moving average in order to avoid major losses of capital.”

For the majority of Americans, investing has never worked as promised.

The problem, as I have discussed many times previously, is that most individuals cannot manage their own money because of ‘short-termism.’

Despite their inherent belief that they are long-term investors, they are consistently swept up in the short-term movements of the market. Of course, with the media and Wall Street pushing the ‘you are missing it’ mantra as the market rises – who can really blame the average investor ‘panic’ buying market tops and selling out at market bottoms.”

Sy Harding summed this point up in his excellent book “Riding The Bear:”

“No such creature as a buy and hold investor ever emerged from the other side of the subsequent bear market.”

Statistics compiled by Ned Davis Research back up Harding’s assertion. Every time the market declines more than 10% (and “real” bear markets don’t even officially begin until the decline is 20%), mutual funds experienced net outflows of investor money. Fear is a stronger emotion than greed.

The research shows that it doesn’t matter if the bear market lasts less than 3 months (like the 1990 bear) or less than 3 days (like the 1987 bear). People will still sell out, usually at the very bottom, and almost always at a loss.

The only way to avoid the “buy high/sell low” syndrome –  is to avoid owning stocks during bear markets. If you try to ride a bear market out, odds are you’ll fail.

And if you believe that we are in a new era where Central Bankers have eliminated bear market cycles, your next of kin will have my sympathies.

Let’s look at some of the more common trading mistakes to which people are prone. Over the years, I’ve committed every sin on the list at least once and still do on occasion. Why? Because I am human too.

1) Refusing To Take A Loss – Until The Loss Takes You.

When you buy a stock it should be with the expectation that it will go up – otherwise, why would you buy it?. If it goes down instead, you’ve made a mistake in your analysis. Either you’re early, or just plain wrong. It amounts to the same thing.

There is no shame in being wrong, only in STAYING wrong.

This goes to the heart of the familiar adage: “let winners run, cut losers short.”

Nothing will eat into your performance more than carrying a bunch of dogs and their attendant fleas, both in terms of actual losses and in dead, or underperforming, money.

2) The Unrealized Loss

From whence came the idiotic notion that a loss “on paper” isn’t a “real” loss until you actually sell the stock? Or that a profit isn’t a profit until the stock is sold and the money is in the bank? Nonsense!

Your portfolio is worth whatever you can sell it for, at the market, right at this moment. No more. No less.

People are reluctant to sell a loser for a variety of reasons. For some, it’s an ego/pride thing, an inability to admit they’ve made a mistake. That is false pride, and it’s faulty thinking. Your refusal to acknowledge a loss doesn’t make it any less real. Hoping and waiting for a loser to come back and save your fragile pride is just plain stupid.

Realize that your loser may NOT come back. And even if it does, a stock that is down 50% has to put up a 100% gain just to get back to even. Losses are a cost of doing business, a part of the game. If you never have losses, then you are not trading properly.

Take your losses ruthlessly, put them out of mind and don’t look back, and turn your attention to your next trade.

3) More Risk

It is often touted that they more risk you take, the more money you will make. While that is true, it also means the losses are more severe when the tide turns against you.

In portfolio management, the preservation of capital is paramount to long-term success. If you run out of chips the game is over. Most professionals will allocate no more than 2-5% of their total investment capital to any one position. Money management also pertains to your total investment posture. Even when your analysis is overwhelmingly bullish, it never hurts to have at least some cash on hand, even if it earns nothing in a “ZIRP” world.

This gives you liquid cash to buy opportunities and keeps you from having to liquidate a position at an inopportune time to raise cash for the “Murphy Emergency:”

This is the emergency that always occurs when you have the least amount of cash available – (Murphy’s Law #73)

If investors are supposed to “sell high” and “buy low,” such would suggest that as markets become more overbought, overextended, and overvalued, cash levels should rise accordingly. Conversely, as markets decline and become oversold and undervalued, cash levels should decline as equity exposure is increased.

Unfortunately, such has never actually been the case.

4) Bottom Feeding Knife Catchers

Unless you are really adept at technical analysis, and understand market cycles, it’s almost always better to let the stock find its bottom on its own, and then start to nibble. Just because a stock is down a lot doesn’t mean it can’t go down further. In fact, a major multi-point drop is often just the beginning of a larger decline. It’s always satisfying to catch an exact low tick, but when it happens it’s usually by accident. Let stocks and markets bottom and top on their own and limit your efforts to recognizing the fact “soon enough.”

Nobody, and I mean nobody, can consistently nail the bottom tick or top tick. 

5) Averaging Down

Don’t do it. For one thing, you shouldn’t even have the opportunity, as a failing investment should have already been sold long ago.

The only time you should average into any investment is when it is working. If you enter a position on a fundamental or technical thesis, and it begins to work as expected thereby confirming your thesis to be correct, it is generally safe to increase your stake in that position.

6) You Can’t Fight City Hall OR The Trend

Yes, there are stocks that will go up in bear markets and stocks that will go down in bull markets, but it’s usually not worth the effort to hunt for them. The vast majority of stocks, some 80+%, will go with the market flow. And so should you.

It doesn’t make sense to counter trade the prevailing market trend. Don’t try and short stocks in a strong uptrend and don’t own stocks that are in a strong downtrend. Remember, investors don’t speculate – “The Trend Is Your Friend”

7) A Good Company Is Not Necessarily A Good Stock

There are some great companies that are mediocre stocks, and some mediocre companies that have been great stocks over a short time frame. Try not to confuse the two.

While fundamental analysis will identify great companies it doesn’t take into account market, and investor, sentiment. Analyzing price trends, a view of the “herd mentality,” can help in the determination of the “when” to buy a great company which is also a great stock.

8) Technically Trapped

Amateur technicians regularly fall into periods where they tend to favor one or two indicators over all others. No harm in that, so long as the favored indicators are working, and keep on working.

But always be aware of the fact that as market conditions change, so will the efficacy of indicators. Indicators that work well in one type of market may lead you badly astray in another. You have to be aware of what’s working now and what’s not, and be ready to shift when conditions change.

There is no “Holy Grail” indicator that works all the time and in all markets. If you think you’ve found it, get ready to lose money. Instead, take your trading signals from the “accumulation of evidence” among ALL of your indicators, not just one.

9) The Tale Of The Tape

I get a kick out of people who insist that they’re long-term investors, buy a stock, then anxiously ask whether they should bail the first time the stocks drops a point or two. More likely than not, the panic was induced by listening to financial television.

Watching “the tape” can be dangerous. It leads to emotionalism and hasty decisions. Try not to make trading decisions when the market is in session. Do your analysis and make your plan when the market is closed. Turn off the television, get to a quiet place, and then calmly and logically execute your plan.

10) Worried About Taxes

Don’t let tax considerations dictate your decision on whether to sell a stock.  Pay capital gains tax willingly, even joyfully. The only way to avoid paying taxes on a stock trade is to not make any money on the trade.

“If you are paying taxes – you are making money…it’s better than the alternative”

Steps to Redemption

Don’t confuse genius with a bull market. It’s not hard to make money in a roaring bull market. Keeping your gains when the bear comes prowling is the hard part. The market whips all our butts now and then, and that whipping usually comes just when we think we’ve got it all figured out.

Managing risk is the key to survival in the market and ultimately in making money.  Leave the pontificating to the talking heads on television. Focus on managing risk, market cycles and exposure.

STEP 1: Admit there is a problem… The first step in solving any problem is to realize that you have a problem and be willing to take the steps necessary to remedy the situation

STEP 2: You are where you are… It doesn’t matter what your portfolio was in March of 2000, March of 2009 or last Friday.  Your portfolio value is exactly what it is rather it is realized or unrealized.  The loss is already lost and understanding that will help you come to grips with needing to make a change.

STEP 3:  You are not a loser… You made an investment mistake. You lost money. It has happened to every person that has ever invested in the stock market and anyone who says otherwise is a liar!

STEP 4:  Accept responsibility… In order to begin the repair process, you must accept responsibility for your situation. Continue to postpone the inevitable only leads to suffering further consequences of inaction.  

STEP 5:  Understand that markets change… Markets change due to a huge variety of factors from interest rates to currency risks, political events to geo-economic challenges. Does it really make sense to buy and hold a static allocation in a dynamic environment?

The law of change states:  that change will occur and the elements in the environment will adapt or become extinct and that extinction in and of itself is a consequence of change. 

Therefore, even if you are a long-term investor, you have to modify and adapt to an ever-changing environment otherwise, you will become extinct.

STEP 6:  Ask for help… Don’t be afraid to ask or get help – yes, you may pay a little for the service but you will save a lot more in the future from not making costly investment mistakes.

STEP 7:  Make change gradually… Making changes to a portfolio should be done methodically and patiently. Portfolio management is more about “tweaking” performance rather than doing a complete “overhaul.”

STEP 8:  Develop a strategy… A goal-based investment strategy looks at goals like retirement, college funding, new house, etc. and matches investments and investment vehicles in an orderly and designed portfolio to achieve those goals in quantifiable and identifiable destinations. The duration of your portfolio should match the “time” frame to your goals. Building an allocation on 80-year average returns when you have a 15-year retirement goal will likely leave you in a very poor position. 

STEP 9:  Learn it…Live it…Love it… Every move within your investment strategy must have a reason and purpose, otherwise, why do it? Adjustments to the plan, and the investments made, should match performance, time and value horizons. Most importantly, you must be committed to your strategy so that you will not deviate from it in times of emotional duress. 

STEP 10:  Live your life… The whole point of investing in the first place is to ensure a quality of life at some specific point in the future. Therefore, while you work hard to earn your money today, it is important that your portfolio works just as hard to earn your money for tomorrow.

I hope you found this helpful.

via Zero Hedge http://ift.tt/2EZocMs Tyler Durden

An oft-echoed line from the left is “No One Wants To Take Your Guns!”

But as Kurt Schlichter notes, this is another classic lie.

In fact, that’s exactly what liberals want to do. How do we know? They tell us when they think we are not looking – and, with more frequency, when we are. It’s fun when they say they don’t want to take your guns, then say you have to give up your ARs. If your opponent is getting wistful about Australia’s gun confiscation, he wants to take your guns.

Let’s get serious. They all want to take your guns. Why? Two reasons. First, it takes power from the citizenry. Liberals love that. Second, gun rights are important to normal Americans because the fact we maintain arms means we are not mere subjects. We are citizens, with the power to defend our freedom. Liberals hate that we have that dignity; taking our guns would humiliate us, and show us who is boss. They want to disarms us not because of the gun crime – name a liberal who wants to really do something about Chicago as opposed to hassling law-abiding normals – but because they hate us and want to see us submit.

Even the Fredocons are getting into the act, which is no surprise since Never Trumpism is always the first step downward to active liberalism. Pseudocon Bret Stephens demanded that America repeal the Second Amendment in the New York Times in October 2017. Fellow puffcon Ross Douthat simpered something similar, and the Captain Stubing of Conservatism, Bill Kristol, tweeted his concurrence.

In fact, As The Washington Post reports today, there is a group of California cops whose sole job is just that – confiscating your guns.

A broad, bald Tennessean, Special Agent Sam Richardson runs a six-person team of California Justice Department agents who are coming for your guns, but only if you no longer have the legal authority to own one in this state that has tightened firearm laws in increments over the years.

His division is the only law enforcement agency in the country assigned specifically to track down and take guns from felons, the mentally ill and others whose Second Amendment rights have been curtailed in court because of public safety concerns.

Notably, WaPo points out that these are the people who even the National Rifle Association says should not have guns, a statement echoing in the aftermath of the mass shooting at Marjory Stoneman Douglas High School in Parkland, Fla. The program makes California’s gun-control policy perhaps the most aggressive in the nation. A dozen years ago, the state set up a database that flags law enforcement officials when a registered gun owner is convicted of a felony, deemed mentally ill, has received a restraining order or committed one of about 37 qualifying misdemeanors.

The list is known as the Armed Prohibited Persons System, and while it has failed to prevent mass shootings in San Bernardino, Isla Vista and other cities in the state, it has taken tens of thousands of guns out of the hands of people prohibited from having them.

The work of Richardson’s agents is overwhelming, with the number of guns and “prohibiteds” growing faster than the under-resourced teams can take them off the street. So is the ingenuity of those selling guns, and those making guns, and those owning guns, legally or not.

There are 10,226 people on the list statewide. Of those, about 2,000 are in Los Angeles County, a vast urban desert covered by only Richardson’s team and one other.

“All of this takes time and real resources,” said Xavier Becerra (D), California’s attorney general, who said he is requesting more money for the program this year. “As quickly as we get these guns off the street, others are getting guns.”

Not once has a target fired on them, but WaPo reports that they are threatened — some extreme gun rights websites seek to identify them and expose them online — so all except Richardson, who has appeared publicly, spoke to The Washington Post on the condition that only their last names be used .

“We don’t have black helicopters, but we drive black cars and wear black uniforms,” Richardson said. “It plays into the mind-set of some of these people.”

Last year, state Justice Department agents seized 3,999 pistols and long guns, investigating more than 8,500 people in the process. The list has never dipped beneath 10,000 people since its earliest days.

*  *  *

The timing of this ‘promotional’ piece from WaPo is fascinating, coming just a day after The White House said it is considering the idea of using restraining orders to take firearms away from people considered “dangerous” as part of its response to last week’s massacre at a Florida high school, two people familiar with the matter said.

via Zero Hedge http://ift.tt/2CLXV20 Tyler Durden

The last time the US-led coalition fighting ISIS in Syria conducted air and artillery strikes against pro-regime forces in Syria, in the oil-rich Deir Ezzor region, was on Feb. 7, when hundreds of pro-regime fighters were killed, the largest number of “pro-regime” casualties inflicted by the US-led coalition in one attack. The coalition described its action as carried out in “self defense”, while the Syrian state news agency SANA described the action as an “aggression” by the coalition against “popular forces” who were fighting ISIS and the US-backed Syrian Democratic Forces.

In a bombshell update one week later, it was revealed that among the casualties were hundreds of Russian mercenaries working on behalf of the Assad regime, and hired by the Wagner PMC (Private Military Group) – a shadowy organization often referred to as Russia’s answer to Blackwater. Adding to the mystery, is that the Wagner Group is believed to be funded by Yevgeny Prigozhin, a rich businessman close to President Vladimir Putin and also known as “Putin’s Chef.” Prigozhin was recently sanctioned by the US due to his links to the eastern Ukraine separatists.

Unnamed US intelligence sources quoted by the Washington Post said Prigozhin was in close contact with the Kremlin in the run-up to the Feb 7 assault on the Syrian Democratic Forces base in Deir Ezzor region.

According to the unconfirmed report, intercepted communications showed that Prigozhin was also involved in the operational planning with Syrian officials, ahead of the attack. 

Meanwhile, amid unconfirmed reports that more than 100 Russians had been killed, the Kremlin denied that any regular Russian military forces had been involved. It admitted only that there had been “several dozen” Russian casualties, but gave no further details.

Of course, Prigozhin’s name became a fixture in the media in the past two weeks, following the February 16 federal indictment of 13 Russian trolls, including Prigozhin, accusing them of “fraud and deceit for the purpose of interfering with the US political and electoral processes.” The indictment said Prigozhin “spent significant funds” on the group and on the Internet Research Agency, a St Petersburg body that has been nicknamed the “Russian troll factory”.

Prigozhin shrugged off the US charges, saying “Americans are very impressionable people”. “If they want to see the devil, let them see him,” he quipped.

* * *

We reminds readers of this extensive back story because moments ago, Al Jazeera reported that less than three weeks after the Feb. 7 US-coalition attack on Syrian pro-regime forces, among them an dozens of Russian mercenaries, the US-led coalition warplanes struck a Syrian regime unit, once again in the northern Deir Ezzor province.

عاجل | مصادر للجزيرة: طائرة تابعة للتحالف الدولي تستهدف موقعا لقوات النظام شمالي دير الزور

— الجزيرة – عاجل (@AJABreaking) February 26, 2018

 

So far there has been no further information on the number of casualties or any details of the attack. The question, of course, will be whether any more Russian mercenaries were killed in this latest (targeted) attack by the US-coalition, what prompted the US attack, and how the Syrian military acted in response.

Needless to say, if more Russians were killed – whether mercenaries or otherwise – relations between the US and Russia are about to hit a fresh rock bottom.

Developing story.

 

via Zero Hedge http://ift.tt/2CLgVh0 Tyler Durden

Back in October, Apple co-founder Steve Wozniak revealed that he was a huge fan of bitcoin – which he bought back when it was $700 – telling Bitcoin Magazine that it was better than both gold and the dollar, which is “kind of phony”, while bitcoin is “genuine and real.” The burly multi-millionaire also said that he likes bitcoin because “it is based on mathematics.”

“Bitcoins to me was a currency that was not manipulated by the governments. It is mathematical, it is pure, it can’t be altered,” Wozniak has said, explaining also why governments hate it so much.

Wozniak @stevewoz likes bitcoin because it is based on mathematics pic.twitter.com/keanqCxf43

— Finom (@finom_company) October 22, 2017

A few months later, just after Bitcoin hit its all time highs, Wozniak also discovered just how volatile bitcoin was and pulled the cord, bagging a price near the all time high.

“I had bitcoin to experiment with and when it shot up high, I said, ‘I don’t want to become one of those people that watches it, watches it and cares about the number.’ I don’t want that kind of care in my life,” Wozniak says to an audience at the Nordic Business Forum in Sweden on January 24. “Part of my happiness is not to have worries, so I sold it all — just got rid of it — except just enough to still experiment with,” Wozniak said.

To be sure, not a bad experiment: bought at $700 and sold well over 10x higher: the rich get richer, and all that…

Or maybe not.

As Wozniak revealed to India’s Economic Times, in addition to being volatile, bitcoin is also prone to the occasional theft.

“I had seven bitcoins stolen from me through fraud. Somebody bought them from me online through a credit card and they cancelled the credit card payment. It was that easy!”

It was only that easy, Steve, because you agreed to send your bitcoins over the counter to an unknown person, using an unknown credit card, with zero protections, but we digress.

“And it was from a stolen credit card number so you can never get it back,” Wozniak explained further during the Economic Times’ Global Business Summit held in New Delhi.

Still despite the theft, Wozniak – who is worth about $100 million – has no hard feelings: asked about his experience of investing in Bitcoin when they were going at $700 a piece and then selling them for a fortune when the price shot up, Wozniak said that he “did not invest in bitcoins”, but bought them as an experiment.

“I had them so that I could someday travel and not use credit cards, wallets or cash. I could do it all on Bitcoin. I studied which hotels and facilities accepted Bitcoin… it’s still very difficult to do so. I also tried to buy things online and trade Bitcoin online.”

That said, it should be easy to track down where the stolen crypto have gone: “The blockchain identifies who has Bitcoins… that doesn’t mean there can’t be fraud though,” he said.

He’s correct: just ask America’s banks which lost trillions during the financial crisis after years of pent up mortgage fraud, and had to be bailed out by the Fed… a luxury bitcoin investors will never have.

Incidentally, Woz will be happy to know that most credit card issuers will now protect the gullible, and most have banned all credit card transactions involving cryptocurrency.

via Zero Hedge http://ift.tt/2CKlqsv Tyler Durden

Authored by Nassim Nicholas Taleb via Medium.com,

Skin in the Game is another addition to the Incerto, now volume 5; I avoided duplication by referring to where in the Incerto some points were developed such as via negativa or monoculture of forecasters or expert problems. You simply don’t repeat in chapter 23 what was said in chapter 5, but can make reference to it.

Now it so happens that I am in the BS busting category, which includes journalists (especially journalists). And the book is designed to be hated by BS operators who can be book reviewers. I instructed publishers to send the book to only doers, not people who make a verbagiastic living.

Let me say it again. I am intolerant of BS; I suffers no fools except when the BS is harmless.

The Judgment of Cambyses

So far three journalists have, while uninvited, attempted to do a (sort of) hack job: John Gapper (FT), Zoe Williams (Guardian), and Phil Coggan (Economist; yes I am outing him, SITG). The problem however is that they agree with the general message of the book (who doesn’t ?) except in what concerns them, so the best way is to perform some assassination on side points: 1) find what appears to be a “flaw”, 2) use the technique of Sam Harris, i.e. make the author look like a hateful spiteful person who hates everybody simply because he doesn’t like bullshitters. The problem of course is that it is hard to claim I am against all experts, not just the .1% faux experts so they disguize the claim as a he is a “hates everybody” type of fellow.

Also note that the book isn’t about SITG but the weird consequences (modern slavery, looks of surgeons, rationality of survival, religious practices, commercial ethics, Lindy effects, and, mostly, risk taking). You will also notice that given the homework done by journos, the “flaws” happen to be in the beginning, never at the end.

John Gapper (Financial Times)

John Gapper is a nice fellow with whom I sparred on Twitter for the usual reasons, his (justified) frustration over my open disrespect for the general members of hi profession. In all fairness, he finds the book entertaining (though hard to summarize journalistically, which explains the longevity of the Incerto but annoys reviewers) and important. As expected, he writes: “Taleb has again put his finger on a flaw in how society operates, one that has damaging moral and financial results.” But then he continues:

GAPPER: The book’s weakness is that it never satisfactorily addresses the counter-argument to the need for “skin in the game” — that having a stake in an outcome eliminates impartiality and causes conflicts of interest. Judges are not paid according to how many people they send to jail and, more trivially, it would be a bad idea if I were being paid a cut of Taleb’s sales.

On that, Mr Gapper misses twice. The book answers the point twice explicitly. Primo

ME in SITG: “We re- moved the skin in the game of journalists in order to prevent market manipulation, thinking that it would be a net gain to society. The arguments in this book are that the former (market manipulation) and conflicts of interest are more benign than impunity for bad advice. The main reason, we will see, is that in the absence of skin in the game, journalists will imitate, to be safe, the opinion of other journalists, thus creating monoculture and collective mirages.

(Background: in The Black Swan I show a statistical illustration of such monoculture with forecasters without skin-in-the-game cluster on a wrong answers, which is nonrandom: the variance within forecasters is smaller than that between forecasts and out of sample realizations. Too technical for Gapper).

Secundo, he missed the discussion of the corrupt Persian judge Sisamnes: a judge’s skin in the game is in the exquisite symmetry of justice. Skin in the game means consequences when you are wrong as much as when you are right. Being paid simply to jail people is asymmetric and has no penalties (I wonder how he can make such a blatant mistake and fail to realize SITG is about matching disincentives to incentives).

And John Gapper’s skin in the game as a reviewer is in the preservation of symmetry (again, not just incentives): my making him accountable in his review with a review of his review. Gabish?

Philip Coggan (The Economist)

It looks like Phil Coggan liked the book. He was just irritated by it. Fair:

The reader’s experience is rather like being trapped in a cab with a cantankerous and over-opinionated driver.

The point is I had the exact same tone in The Black Swan and in Fooled by Randomness (calling economists charlatans etc.), books he liked. Except that the message did not make him feel uncomfortable then (someone insulting lucky and rich fools give journos a feeling of revenge).

But one contention:

Yet even here Mr Taleb applies different standards to his own arguments and those of others. When he criticises Western politicians for intervening in Libya, he has no skin in the game.

I have extensively discussed the point in Antifragile, in the via negativa section. At length. Should one need intervention “to save the world” or something, one must the price for the failure. And it is a risk: to prevent the excuse of pushing a wrong button. Omission is not symmetric to commission under iatrogenics. The argument of “do something” is carefully plotted against the principle “first do no harm” and SITG is the solution: you own it if you break it. Under such symmetry, I am ready to act.

Sisammes

Zoe Williams (Guardian)

Now, she has a problem. A big problem. A very big problem. Reading comprehension at a high school or perhaps elementary school level.

(…)chief executives and shareholders who want values maximised — people whose skin is very much in the game of driving down wages.

What??? The book explains that skin in the game is not incentives, but disincentives. So I wonder about her own abilities …

You wouldn’t want homicide law to be written by the mother of a murdered child.

Of course, she doesn’t get the very notion of disincentives.

She also makes many, many such mistakes not worth discussing here: doesn’t get the minority rule, knows nothing about helicopters; she practically knows nothing.

*  *  *

We note that Mr. Taleb was not done with the industry’s bullshitters and did not take kindly to Barry Ritholtz’ comments…

“This book is 25% probability theory, 25% classical anecdotes, 25% stating the bleeding obvious, and 25% complete bullshit.”https://t.co/Yis75j4CYH

— Barry Ritholtz (@ritholtz) February 26, 2018

Didn’t I tell you to fuck off?

— Nassim Nicholas Taleb (@nntaleb) February 26, 2018

Seems like a pretty clear rebuttal.

via Zero Hedge http://ift.tt/2ozfAVJ Tyler Durden

While dozens of companies bowed to media pressure over the weekend, many severing ties in part or in whole with the NRA, or simply eliminating long-standing price discounts with the association’s members, among them Avis, Hertz, Delta, United, MetLife and others on Monday, FedEx refused to bend to demands to discriminate against NRA members.

In a press release issued on Monday afternoon, the logistics giant “responded to questions on the National Rifle Association, Gun Safety and Policy.”

In it, FedEx said that while it “opposes assault rifles being in the hands of civilians” and that it “views assault rifles and large capacity magazines as an inherent potential danger to schools, workplaces, and communities when such weapons are misused” therefore supporting “restricting them to the military”, it added that since it is a common carrier and “does not and will not deny service or discriminate against any legal entity regardless of their policy positions or political views” it will not end its discounted rate with the NRA which “is one of hundreds of organizations in our alliances/association Marketing program” as “FedEx has never set or changed rates for any of our millions of customers around the world in response to their politics, beliefs or positions on issues.“

The Fedex statement was met with anger by anti-gun advocates, most notably David Hogg, who urged his followed to “Sell FedEx stock! If they wanna stick with NRA we’ll stick with @usps or @UPS“

Sell FedEx stock! If they wanna stick with NRA we’ll stick with @usps or @UPS

— David Hogg (@davidhogg111) February 26, 2018

 

The NYT’s David Leonhardt also slammed the FedEx decision:

Ending a discount program won’t, in and of itself, save any lives or cause great political damage to the N.R.A. But the FedEx situation has now become something of a test case of the new anti-gun movement. It’s also a test case for whether a major company feels comfortable allying itself with a group that effectively promotes violence.

I’m with the students on this one: I encourage you not to use FedEx so long as it’s comfortable siding with the N.R.A.

End result: FedEx stock closed near session highs, up 1% on the day.

… as conveniently pointed out by some Twitter members:

Narrator;

Fedex stock is up nearly 1% on the day https://t.co/Y5BgHJJsfD

— Wu-Tang Financial (@Wu_Tang_Finance) February 26, 2018

Full FedEx statement below

FedEx Corporation’s positions on the issues of gun policy and safety differ from those of the National Rifle Association (NRA).  FedEx opposes assault rifles being in the hands of civilians.  While we strongly support the constitutional right of U.S. citizens to own firearms subject to appropriate background checks, FedEx views assault rifles and large capacity magazines as an inherent potential danger to schools, workplaces, and communities when such weapons are misused.  We therefore support restricting them to the military.  Most important, FedEx believes urgent action is required at the local, state, and Federal level to protect schools and students from incidents such as the horrific tragedy in Florida on February 14th.

FedEx is a common carrier under Federal law and therefore does not and will not deny service or discriminate against any legal entity regardless of their policy positions or political views.  The NRA is one of hundreds of organizations in our alliances/association Marketing program whose members receive discounted rates for FedEx shipping.  FedEx has never set or changed rates for any of our millions of customers around the world in response to their politics, beliefs or positions on issues.

 

via Zero Hedge http://ift.tt/2CmY0xk Tyler Durden

Less than a month after rapper 50 Cent reportedly declared that he had accidentally amassed an $8 million fortune by holding on to a cache of bitcoins he received back in June 2014, the Queens-born rapper and actor said in sworn testimony that the bitcoins never existed.

According to TMZ and The Blast, the rapper filed a sworn declaration in bankruptcy court saying “[I have] never owned and [do] not now own, a Bitcoin account or any Bitcoins, and to the best of his knowledge, none of his companies had a bitcoin account from 2014 to the present.”

The rapper said he asked his financial advisers to investigate the situation after the US Trustee in his bankruptcy case and other creditors started asking about the coins.

It was widely reported last month that the rapper collected 700 bitcoins via his album sales – an amount that would be worth about $7 million at today’s price.

The documents were obtained by TMZ, which is following 50 Cents jaunt through bankruptcy court. The rapper is being sued by the ex-girlfriend of rival rapper Rick Ross for allegedly leaking a tape showing her having sex with her boyfriend.

Of course, it’s unclear if 50 Cent was being dishonest to begin with – or if he’s just trying to avoid reporting his bitcoin assets.

According to the court documents, 50 Cent said he didn’t feel compelled to deny stories about his bitcoin wealth, saying “as a general matter, so long as a press story is not irreparably damaging to my image or brand, I usually do not feel the need to publicly deny the reporting.”

“This is particularly true when I feel the press report in question is favorable to my image or brand, even if the report is based on a misunderstanding of the facts or contains outright falsehoods.”

However, he did acknowledge that it’s possible some sales of his  album “Animal Ambition” and merchandise may have been paid for in bitcoin, but he said they were converted to US dollars by a third party before he ever saw the money.

The rapper famously earned $100 million from an investment in Vitamin Water – which was eventually sold to Coca-Cola.

The news of 50 Cent’s denial hardly dented a bitcoin rally that carried the pioneering cryptocurrency back above $10,000 on Monday.

In an unrelated development, Deputy Attorney General Rod Rosenstein said the Department of Justice is honing in on criminal uses of cryptocurrencies.

via Zero Hedge http://ift.tt/2FywkEp Tyler Durden

Authored by Daniel Lacalle via DLacalle.com,

The end of the era of cheap money highlights the risk of “Enron-style” bankruptcies in many sectors, including renewable energy. With the path of three rate hikes in the United States in 2018 confirmed by the Federal Reserve and a nervous equity market, the challenges are more evident than ever.

 

The past eight years of massive liquidity and low rates have not helped deleverage, and many companies have used this period to increase imbalances and create complex debt structures. In fact:

• Corporate net debt to EBITDA levels is at record highs. About 20% of US corporates face default if rates rise, according to the IMF.

• The number of zombie companies has risen above pre-crisis levels according to the Bank of International Settlements (BIS).

This is particularly evident in the renewable sector where, even in the years of high liquidity and low rates, bankruptcies soared.

The renewable sector has undergone an absolutely spectacular transformation in the past eight years. Technology advanced, costs fell and global leaders strengthened when their strategy was to develop an energy model. Understanding that disruptive technologies cannot be more leveraged than traditional ones was key. When technology reduces costs and disrupts inflationary models, basing the business on ever-increasing subsidies and higher prices and financing it with massive debt is suicidal.

In the era of cheap money and extreme liquidity, many companies used the “green” subterfuge to implement an extremely leveraged builder-developer model, ignoring demand, costs, and competition. A model whose sole objective was to install for the sake of installing capacity, whether there was a demand or not, and that pursued subsidies while stating that it is very competitive.

Even in a period of falling interest rates and very high liquidity, there have been spectacular bankruptcies, so imagine what can happen when rates rise.

Bankruptcies such as SolarWorld, ET Solar, American Solar, SunEdison, Sungevity, Suniva, Beamreach, Verengo Solar and others did not happen due to lack of support or technology, but due to a bubble-type business model. Increase debt to pay debt, death from excess capacity and working capital amidst unbridled imperialistic growth aspirations. While many companies filled Powerpoint slides with the competitive advantages of lower costs, their business sank due to the impossibility of generating returns above the cost of capital and the evidence of death by building working capital.

If a technology is viable, it does not need subsidies. If it is unviable, no subsidies will change it.

Bankruptcies in the solar sector exceed all those of the inefficient coal and fracking companies combined. This domino of bankruptcies, which includes more than 120 corpses of large companies around the world, was self-inflicted. And now, winter is coming.

Cheap debt is very expensive in the medium term. Integrated conglomerates learned that hard lesson years ago.

But the risk is now greater.

The global renewable sector faces refinancing needs in the next seven to eight years that exceed its entire market capitalization (134 billion euros, Renixx Index).

It is not a problem of technology, it is the addiction to cheap debt and growth for growth sake. And it’s not just a problem in the renewable sector. The combination of lower revenues and increased debt costs is a danger. Cost of debt rises, and cost of equity soars due to higher perceived risk, which in turn can dry up the market for capital increases and refinancing.

It is not just renewables, but it is worth highlighting that energy is -again- the most vulnerable sector due to the cyclical nature of its revenues and the perpetuation of overcapacity of the past eight years.

In 2018, for all sectors, refinancing needs exceed one trillion euros in Europe, Africa, and the Middle East. This figure is doubled if we include China and other markets.

At the same time, the number of zombie companies has skyrocketed in the era of cheap money. What is a zombie company? Those that are not able to pay interest expenses with operating profits.

Not all is bad news. Just as the end of the dotcom bubble gave us better and greater internet service and infrastructure at lower prices, the bankruptcy of the inefficient sectors will give us higher quality services at a lower cost.

The fallacy that “if interest rates rise, we will increase capital” has been dismantled many times in recent years. When debt markets close, equity markets close in tandem.

The next time you are told that companies have to borrow more to grow because rates are low or that increasing debt improves the cost of capital, remember. None of it happens if the business’ repayment capacity disappears with a mere 1% rate increase.

Be ready for the next Enron. Winter has arrived.

via Zero Hedge http://ift.tt/2GIzdlB Tyler Durden

Amid reports that media organizations are tightening their digital paywalls to try and make up for falling advertising revenue, CNN boss Jeff Zucker is calling on Google and Facebook – traditional media’s two biggest competitors for advertising dollars – to help devise a solution to help news organizations monetize content posted on their platforms, according to Variety.

…And with so much attention being paid to media mega-mergers (for example, the proposed merger of AT&T and Time Warner), regulators should also – in Zucker’s opinion – pay closer attention to the power of Google and Facebook. Zucker made these remarks at an industry conference in Spain.

“In a Google and Facebook world, monetization of digital and mobile continues to be more difficult than we would have expected or liked,” Zucker said, Monday, in a keynote address at Mobile World Congress in Barcelona. “I think we need help from the advertising world and from the technology world to find new ways to monetize digital content, otherwise good journalism will go away.”

Zucker referred to Facebook and Google as “monopolies” and that their dominance of advertising markets is “the biggest issue” facing the media industry.

“Everyone is looking at whether these combinations of AT&T and Time Warner or Fox and Disney pass government approval and muster, the fact is nobody for some reason is looking at these monopolies that are Google and Facebook,” Zucker said. “That’s where the government should be looking, and helping to make sure everyone else survives. I think that’s probably the biggest issue facing the growth of journalism in the years ahead.”

Asked what he would call the upcoming TV adaptation of Michael Wolff’s “Fire and Fury”, Zucker responded that he’d call it “Crazy Town,” adding that he’d start the

He added that he’d open the series on election night, showing President Trump and senior players in his campaign grappling with the fact that they were going to defeat Hillary Clinton – an outcome that none of them had anticipated, according to Wolff. 

Of course, Zucker – who has repeatedly clashed with Trump over his network’s adversarial coverage of the White House – said nothing about news networks and their obligation to ensure their coverage is free of partisan bias.

Research firm eMarketer recently estimated that Google and Facebook will account for more than 65% of US digital advertising revenues in 2018, according to the Hill.

 

.@Google and @Facebook combined will account for more than 65% of US digital #ad revenues in 2018, @eMarketer estimates: https://t.co/LSg7oEoFmO pic.twitter.com/2CtHpBpZsC

— eMarketer (@eMarketer) February 23, 2018

 

via Zero Hedge http://ift.tt/2F4Almt Tyler Durden