Project for Philosophical Evaluations of the Economy |
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The most lucrative commodity
Dialog on futures trading between Noah denkt™ and its Alter Ego, first drafted on March 3,
published on March 13, 2009
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Question by Alter Ego of Noah denkt™ (AE): We hardly ever discuss the futures markets, do we?
Answer by Noah denkt™ (Nd): True.
AE: Let me ask you therefore which commodity in your mind promises the highest returns in the future?
Nd: You probably have an opinion about this yourself? What do you think is the most lucrative investment here?
AE: Well, it’s probably either gold or silver.
Nd: Not bad. - We, too, believe that both precious metals will rise significantly in years to come. There is however
one commodity which is even more precious than gold, silver or oil, and which will, therefore, register even higher
gains..
AE: And what is this? Could it be diamonds?
Nd: No, it’s not diamonds either. It is consistency.
AE: Ha! What? What do you mean?
Nd: Well, we believe that there is nothing out there which is more urgent in demand and yet so scarce in supply
than a human behaviour which is both consistent and well founded. And since it is of this quality it will eventually
experience return rates that will be more stupendous than those which will be achieved by any other commodity.
AE: What makes you so sure about this?
Nd: It’s the unquestionable social, political and economic need for such a backbone-driven posture. Just look at
the tremendous community disintegration, the huge leadership challenges or the complex analytical tasks which
an open and free society creates. All these issues will not be effectively dealt with, if there aren’t at least some
human beings who are willing to embrace a well-reasoned consistency that is near suicidal in nature.
AE: Good Golly. What a dramatic scenario!
Nd: So you do not buy that?
AE: Well, apart from the fact that consistency isn’t a commodity and therefore not being traded on the futures
markets it seems pretty exaggerated to me, to paint things in black or white. After all, freedom gains in strength
not from being intransigent but much rather does it thrive precisely because it’s muddling through the issues. Just
look at the wheeling and dealing that went into the US stimulus package. Don’t you think that it is important that
freedom operates on the basis of compromise and that hence, not one side of the argument ever manages to get
its way all along?
Nd: Good point. Do not forget however, that even in a democracy some issues have to be decided without public
meddling. Just think about the WW II invasion in Normandy. It is obvious that you couldn’t have had a televised
debate about its date or the scope of its operation prior to it happening*. In other words, there are issues of
personal responsibility, even in a free and open society that are not negotiable. And it’s here where backbone,
courage, faith and consistency play an indispensable part in the preservation of freedom itself.
AE: Since Noah denkt™ is of the opinion that there isn’t enough backbone, courage and faith around these days
to manage freedom effectively, would you care to give us some examples as to where such a lack of leadership is
evident?
Nd: Sure. Look, for instance, at the fearfulness with which financial markets are responding these days to the
economic news. Don’t you think that their reaction to this is way too jittery. After all, there is a general agreement
in the market that this downward trend will eventually subside, and that some sort of the growth period will
ultimately kick in. Despite that conviction however the majority of investors still prefers to sit on its haunches and
let the tax payer do all the turnaround work.
AE: But their fear isn’t unreasonable, is it? Just think about the renewed need for government intervention in the
AIG case. Think about the HSBC rights issue, or the downgrading of financial companies by the rating agencies.
Doesn’t that signal continued structural weakness in the market?
Nd: Of course, financial companies are weak and may continue to be so for some time to come. But do you truly
believe that companies like GE have such an unhealthy core business that it would be justified for them to loose
another 30 or 50% of their value?
AE: Well, this is not only about GE. This is about the unresolved issue of AIG, Citibank, RBS and others?
Nd: Well, it’s also about Barclays, Wells Fargo and a majority of small regional banks who either have not gotten
burned in the CDS market or who have reported stronger than expected results for the first two months of this
year.
AE: Granted. But still, no one knows what kind of skeletons are still hidden in the balance sheets of financial
companies. And then there is also the negative effect of the initiatives which the Obama administration has
introduced into the market.
Nd: Come on. Under no circumstances and in no market conditions the public will ever know what skeletons are
hidden in the banks’ balance sheet. These organisations are simply too unwieldy and too fashion-driven to ever
be able avoid making tremendous mistakes. And yet their continued structural mishaps do not prevent us from
having an actionable market.
AE: Which would leave us then with the not so helpful interventions that the Obama administration has enacted so
far?
Nd: Yeah, let’s look at that. After all, this is just another Wall Street excuse for not having to have the guts to
confront its own fear.
AE: So you do not believe that the stimulus plan contains too much pork-barrel spending and that the tax hiking
plan is damaging the American entrepreneur?
Nd: Well, both initiatives may not perfect, but they are not near as bad as Wall Street would like to have it. After
all, the tax hikes which have been proposed, will, as far as we understand, not kick in before 2011. So there is
really is no reason to get spooked by them just now. And as far as the stimulus package is concerned, you simply
have to accept that you can never expect anything perfect from the government. After all, its legislative action is
the result of three-party negotiations. And so is only logical that any initiative they pass is watered down
significantly.
AE: In other words, your advice to investors is to stop complaining and do your patriotic duty.
Nd: No, it is: Stop complaining and do what’s right for your portfolio.
AE: But wouldn’t that require continuing to stay on the sidelines, and wait until the market has bottomed out?
Nd: No, what you are referring to is required only if you want to maximise your profits in the short-term. In the long-
term however the opposite is true.
AE: What’s wrong with wanting to maximise profits in the short-term?
Nd: Nothing other than the fact that it was exactly such short-sighted thinking which has brought us into the
current mess in the first place.
AE: So there really is no other remedy than to swallow the uncertainties and insecuritries and do what has to be
done?
Nd: Correct.
AE: So be it then.
Nd: Yes, so be it.
-------------------------
Footnote *: The invasion-analogy is an argument has been stolen from Warren Buffett (see his three-hour interview on CNBC on
March 9).
Dialog on futures trading between Noah denkt™ and its Alter Ego, first drafted on March 3,
published on March 13, 2009
--------------------------------------------------------------------------------------------------------------------------------------
Question by Alter Ego of Noah denkt™ (AE): We hardly ever discuss the futures markets, do we?
Answer by Noah denkt™ (Nd): True.
AE: Let me ask you therefore which commodity in your mind promises the highest returns in the future?
Nd: You probably have an opinion about this yourself? What do you think is the most lucrative investment here?
AE: Well, it’s probably either gold or silver.
Nd: Not bad. - We, too, believe that both precious metals will rise significantly in years to come. There is however
one commodity which is even more precious than gold, silver or oil, and which will, therefore, register even higher
gains..
AE: And what is this? Could it be diamonds?
Nd: No, it’s not diamonds either. It is consistency.
AE: Ha! What? What do you mean?
Nd: Well, we believe that there is nothing out there which is more urgent in demand and yet so scarce in supply
than a human behaviour which is both consistent and well founded. And since it is of this quality it will eventually
experience return rates that will be more stupendous than those which will be achieved by any other commodity.
AE: What makes you so sure about this?
Nd: It’s the unquestionable social, political and economic need for such a backbone-driven posture. Just look at
the tremendous community disintegration, the huge leadership challenges or the complex analytical tasks which
an open and free society creates. All these issues will not be effectively dealt with, if there aren’t at least some
human beings who are willing to embrace a well-reasoned consistency that is near suicidal in nature.
AE: Good Golly. What a dramatic scenario!
Nd: So you do not buy that?
AE: Well, apart from the fact that consistency isn’t a commodity and therefore not being traded on the futures
markets it seems pretty exaggerated to me, to paint things in black or white. After all, freedom gains in strength
not from being intransigent but much rather does it thrive precisely because it’s muddling through the issues. Just
look at the wheeling and dealing that went into the US stimulus package. Don’t you think that it is important that
freedom operates on the basis of compromise and that hence, not one side of the argument ever manages to get
its way all along?
Nd: Good point. Do not forget however, that even in a democracy some issues have to be decided without public
meddling. Just think about the WW II invasion in Normandy. It is obvious that you couldn’t have had a televised
debate about its date or the scope of its operation prior to it happening*. In other words, there are issues of
personal responsibility, even in a free and open society that are not negotiable. And it’s here where backbone,
courage, faith and consistency play an indispensable part in the preservation of freedom itself.
AE: Since Noah denkt™ is of the opinion that there isn’t enough backbone, courage and faith around these days
to manage freedom effectively, would you care to give us some examples as to where such a lack of leadership is
evident?
Nd: Sure. Look, for instance, at the fearfulness with which financial markets are responding these days to the
economic news. Don’t you think that their reaction to this is way too jittery. After all, there is a general agreement
in the market that this downward trend will eventually subside, and that some sort of the growth period will
ultimately kick in. Despite that conviction however the majority of investors still prefers to sit on its haunches and
let the tax payer do all the turnaround work.
AE: But their fear isn’t unreasonable, is it? Just think about the renewed need for government intervention in the
AIG case. Think about the HSBC rights issue, or the downgrading of financial companies by the rating agencies.
Doesn’t that signal continued structural weakness in the market?
Nd: Of course, financial companies are weak and may continue to be so for some time to come. But do you truly
believe that companies like GE have such an unhealthy core business that it would be justified for them to loose
another 30 or 50% of their value?
AE: Well, this is not only about GE. This is about the unresolved issue of AIG, Citibank, RBS and others?
Nd: Well, it’s also about Barclays, Wells Fargo and a majority of small regional banks who either have not gotten
burned in the CDS market or who have reported stronger than expected results for the first two months of this
year.
AE: Granted. But still, no one knows what kind of skeletons are still hidden in the balance sheets of financial
companies. And then there is also the negative effect of the initiatives which the Obama administration has
introduced into the market.
Nd: Come on. Under no circumstances and in no market conditions the public will ever know what skeletons are
hidden in the banks’ balance sheet. These organisations are simply too unwieldy and too fashion-driven to ever
be able avoid making tremendous mistakes. And yet their continued structural mishaps do not prevent us from
having an actionable market.
AE: Which would leave us then with the not so helpful interventions that the Obama administration has enacted so
far?
Nd: Yeah, let’s look at that. After all, this is just another Wall Street excuse for not having to have the guts to
confront its own fear.
AE: So you do not believe that the stimulus plan contains too much pork-barrel spending and that the tax hiking
plan is damaging the American entrepreneur?
Nd: Well, both initiatives may not perfect, but they are not near as bad as Wall Street would like to have it. After
all, the tax hikes which have been proposed, will, as far as we understand, not kick in before 2011. So there is
really is no reason to get spooked by them just now. And as far as the stimulus package is concerned, you simply
have to accept that you can never expect anything perfect from the government. After all, its legislative action is
the result of three-party negotiations. And so is only logical that any initiative they pass is watered down
significantly.
AE: In other words, your advice to investors is to stop complaining and do your patriotic duty.
Nd: No, it is: Stop complaining and do what’s right for your portfolio.
AE: But wouldn’t that require continuing to stay on the sidelines, and wait until the market has bottomed out?
Nd: No, what you are referring to is required only if you want to maximise your profits in the short-term. In the long-
term however the opposite is true.
AE: What’s wrong with wanting to maximise profits in the short-term?
Nd: Nothing other than the fact that it was exactly such short-sighted thinking which has brought us into the
current mess in the first place.
AE: So there really is no other remedy than to swallow the uncertainties and insecuritries and do what has to be
done?
Nd: Correct.
AE: So be it then.
Nd: Yes, so be it.
-------------------------
Footnote *: The invasion-analogy is an argument has been stolen from Warren Buffett (see his three-hour interview on CNBC on
March 9).
| © Landei Selbstverlag, owned by Wilhelm ("Wil") Leonards, Gerolstein, Germany. All rights reserved. Reminder: Noah denkt™ is a project of Wilhelm ("Wil") Leonards and his Landei Selbstverlag (WL & his LSV). Consequently, all rights to the texts that have been published under the Noah denkt™brand name are reserved by WL & his LSV. The commentary and the reasoning that was provided on this page is for informational and/or educational purposes only and it is not intended to provide tax, legal or investment advice. It should therefore not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or any issuer by WL & his LSV or its Noah denkt™ Project. In fact, WL & his LSV encourage the user to understand that he alone is responsible for determining whether any investment, security or strategy is appropriate or suitable for him. And to leave no doubt as to what this means we urge our user to also note our extended Legal Notice. |
| Conflict of Interest Statement with respect to the companies mentioned above Q: Does Wil Leonards hold shares in any of the companies mentioned above? A: No Q: Has Wil Leonards done consulting work for any of the companies mentioned above? A: Not really Q: Do members of Wil Leonards' family hold shares in any of the companies mentioned above? A: No Q: Have members of Wil Leonards' family done consulting work for any of the companies mentioned above? A: No |
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