Friday, August 3, 2018

Making money in an irrational world – Call that a miracle but not rational.

I have a subscription to the Globe and Mail - a left of center news paper that claims to support the Conservatives during elections.  This news paper doesn’t really now where it stands other than that it craves for paper selling headlines.  I also subscribe to the Wall Street Journal which is supposed to represent a business perspective and is definitely leaning right - its American perspective lets me know what Canada’s role in the world truly is – it is apparently not much regardless of being one of the world’s top 10 economies and the U.S. largest trading partner. I also read the National Post as antidote to the Globe, but I find it typically a bit too far to the right. In Albertan terms, I would line it up with the Reform Party. Problem is that it tries to sell on-line subscriptions in such a confusing manner that I have given up getting one. If they go under that serves them right – so much for BUSINESS sense! 

I like columnists such as Margaret Wente and Conrad Black with here and there a smidgen of Rex Murphy. I truly hate columnists like Gary Mason and Ibbitson with his Euro-destructive views. Just reading their opiniated headlines makes me sick of the Denise Balkissoon on one side and Terrence Cocoran or Kelly McParland on the other. Sometimes though, reading those latter two is soothing the climate-change-denier in me. It seems like there is no voice of moderation.  If I think that I am opiniated… but when I read that bunch… and they all tell you the ‘truth’!

Today, I read how Cohen, Trumps ex-lawyer had a verbal contract with the promise of a $10 million payment if he could convince the Donald to back a $5 billion dollar loan for some Nuclear plant. Another story was about how a Journalist faked his own murder in the Ukraine to draw out Russian intelligence which then tries to spin the story by having its agents claim that they really worked for some other Ukraine counter- intelligence agency.  If you get that in real life, who needs Charlize Theron in the movie Atomic Blonde?

Then we have Trudeau and her (😊) environment minister Catherine McKenna with their ‘national’ Carbon Tax aimed at Saskatchewan and now Ontario and add to that for next year, Alberta. You listen to the Liberals and it is going to solve climate change; if you listen to the Conservatives it is a just another tax that damages our competitiveness versus the United States and other countries and with no impact on climate. All these arguments are displayed in the most extreme terms so that it grabs for 30seconds your attention and to sell you news paper thingies.   Business reporting is not much better.

And then we are expected to make based on this sh.t rational investment decisions? I have never read so much news and research in my life but that doesn’t mean I know the truth, if you can define such a thing. Obfuscation! Besides then there remains the question whether all this political and investment bablah really helps making objective decisions?  Especially when you look up from your web browser and see another real world around you.  Does that tree in my backyard even know what is threatening its existence?  I bet it doesn’t even care about climate change nor about TD-bank shares – yet it represents the real world! When hiking in the mountains, do the rivers really know the difference between Justin Trudeau and Andrew Scheer? I don’t think that the mountains couldn’t care less how strong Justin stands up for them and a couple of millennia from now those mountains will still be here but Justin? He is likely gone if not next year then soon there after.

They say your investments must be rational and that the market is responding rationally to the news. By know we know that investors are not rational, and neither are the markets. Short term a voting machine long term a weighing machine?  Look at the price of oil and at the valuation of many Canadian petroleum producers. They are priced today often even lower than in 2016 when oil prices were $26 rather than today's $70.
Is it rational that CNQ’s share price dropped while it reports a 56% increase in cashflow!  And what does the ‘market say’ say according to the news media?   It was ‘dissappointed’ because production was weaker than the forecasted 1.054 million barrels per day versus 1.05 million.  Are you kidding me? A mere 4000 barrels a day difference or 0.4% makes the share price drop by 5% in a matter of days!  4000 barrels is less than the margin of error one can expect in forecasting the production of a company the size of Canadian Natural Resources. You call THAT a rational response?  And Tesla’s pricing is rational?   Oh and now we are doing behavioral psychology to predict market performance? Mankind is truly nuts and it is a wonder I still am making money in that setting. Call that indeed a miracle but do not call it rational.

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