TransOcean: Energy and Intuition
Myers-Brigg claims a set of four traits give a good read on what your personality is not what you want your personality to be. For example, I have been noted for my introspection as well as my extraversion. In truth I don’t have any introspection I just have extraversion. People just think I’m introverted because I don’t talk to them and that may because they lack the social skills to engage with me on topics of my choice and I lack the same to talk to them. You tell someone is extroverted not by their stream-of-consciousness as even introverts can do that, but by the fact the extrovert gets energized by his interactions with people and so enjoys them. Similarly, I don’t really sense and I just use intuition. That is because sensing just gives me misery as I am not sensing that I have the stuff around me that I really need. So instead of impoverished mindsets, I use intuition to tell me what I am going to need to get to the future I want. As for thinking or feeling, or judging or perceiving, I don’t know, I haven’t fully grasped those concepts so I could be either. They say respect is earned in some places. Now I explain all this because energy companies are quite similar and lack personality besides how egregiously they destroy the environment and are sued for it, and their ridiculous spats with poor local indigenous people which they explain as resembling counter insurgency when it really resembles the classic liberal agonizing about abuse of power, but even with half of Myers Brigg, we can analyze one interesting company TransOcean which owns a lot of offshore rigs which they lease to people or otherwise make money from. At the 2008 financial crisis, some hard working seemingly clever guys decided the markets were irrational based on the behavior of this stock as it fell steeply which according to their colleagues was because of something to do with operating leverage as even a little downturn in oil prices could severely damage their business model. That is beyond the pale wrong: operating leverage is taken account in the beta of a stock in the CAPM model based on how the stock has historically reacted to the market, and there can be betas that demonstrate reactivity to every factor. If we go beyond historical sensitivities, we still wouldn’t say a business with high operating leverage would have a stock price that swings more than a business with low operating leverage to the same earnings shock, as then the market wouldn’t be efficient as no one would buy the more volatile businesses until the return is much higher so you get reward for your risk. So in other words if someone says a stock is going down because of operating leverage, you say: “no, the stock is going down because I took more risk and the risk didn’t pan out in my favor according to the stock price but the business may yet succeed and the stock may bounce back.” Now TransOcean did not bounce back and the derivatives traders cried foul and went home to use their millions in bonuses to spread rumors that capitalism doesn’t work to make themselves look good and that led to social fracturing which divided the country and Obama just talked, he didn’t put money behind his words did he? No, it was these exclusively men, and they are known to call themselves “specimens” and joke to each other all day instead of doing any work while asking their coworkers what work they accomplished before they could leave work. That coworker was one of them! He was the quiet American. Meanwhile Canadian at the next desk also wants to go home but now can’t because of these obnoxious cultural bullies infringing on my sovereignty again. Cancel my top secret napalm trading project again because of NORAD? Anyway, these irresponsible traders who are accessible on the lists of Top Traders Monthly: guess what, trading is a team sport in most good places and your trades get managed and approved so that is just like renting the John Hancock Tower apartment to impress some girls in clubs. I was a trader too you don’t see me engage in self-revelry while using quantitative machine trading to destroy the USA economy taking money out of the change distributing socket of printers and running away with the dimes and then claiming they know how it works cause smart people can do math to make money and they take money from less smart people with less math. When you don’t know what you are doing, you have negative edge, don’t trade! Anyway, energy trading is mostly momentum trading and you will hear people in funds say they are less dysfunctional than most Fortune 500 companies and it is a wonder how those companies operate because traders know their companies better than their CEOs do. Yes and I have a bridge to sell you in Brooklyn and some facial products too without discount! Look how much you paid for that compared to some other guy I liked. Now if it is a pretty girl reading this, I will give a discount but for guys like those cowboys straight out of Enron of people, I give “No Refunds” and sell them some junk since that is what they need to prop up prices of all junk while they look to out someone and then that person needs to take the other side of the trade. I wouldn’t say it’s a Den of Thieves though. Just that I don’t want to do business with them as they have given a bad name to all the capitalists around here! Anyway the excuse was that rigs under tight financing conditions–we know rigs take years to build right?–would actually become more dear under a credit crisis and old rigs would be rented out for higher expenses assuming all else equal like we weren’t headed for a Great Depression since those traders sat on their hands and did absolutely nothing except try to make money from buying something cheap and selling it for more money. Of course, oil prices would crater and rigs would be the marginal players to be left out of a new economy based on less oil perhaps based on after peak oil as the economy may never get strong enough to discover enough oil to avoid peak oil for another year. Peak oil is when we reach maximum consumption of oil and then we run out of oil reserves and Cuba is cited as example of what a society would look like: lots of vintage cars being immaculately maintained. I just want to emphasize these people would just lie about the reasons for their trades and their bosses would let them do so, because the bosses were really the ones suggesting the trades by imposing a world view, and so you are sort of just the fall guy to some high level guys gambling with your career. And yet these fall guys put themselves in traders monthly as market wizard wannabes, and keep working for years to climb the ladder so just by their tenure alone they can become heads of desks and pretend like they are making decisions all day when all the decisions are coming from the money massive reserves they sit on and manage, collecting management fees no less, and basically who’s making the decisions? The desk head actually isn’t. All the discretion has been removed as systematic is good, and when things go wrong, we get the fall guy out to see how good he can lie. Energy trading is momentum trading as these commodity prices go in one direction for long periods of time in commodity cycles and you will hear traders say you can’t trade value, growth or momentum because those are factors, and best managed quantitative as if you think you can predict momentum or value or growth, you can go start a fund predicting s&p500 which can take in a lot of money while ordinary strategies can only take so much. Lies through the teeth: trading momentum and value and growth are the only ways to trade beyond other schools we haven’t reached yet; consumer discretionary is like value nice and logical, consumer staples is growth, all about innovation, and I also wrote that global macro piece on buying American railroads because of the relative strength of the Japanese model in Asia compared to the Chinese model in the very long run. It isn’t about predicting quantitative factors of these styles, just like if I know shadowboxing, assassin’s fist, and Muay Thai boxing with all the elbows and clinch and shin kicks, I wouldn’t necessarily go to a ring and bet on all the rigged matches and call it predicting factors of these styles. These people claim to be experts on idiosyncratic risk which we will get to, as idiosyncratic risk is financials which is what actually they are since we must remember they provide a service which is money management. Idiosyncratic risk is actually the error term in quantitative models and they are basically claiming to be the only ones who at least think about what is independent of other factors that may be out of an analyst’s ability to control, but really what analyst can predict things like lawsuits, pricing disruptions and disruptive innovation? If they could, they could go try to predict the Great Depression like the Austrian economists who like me use deductive thinking but really I am no Austrian, I am a Malthusian as I believe poverty is the best teacher of innovation. If someone reaches across World War trench lines to justify his mistakes, we know when someone doesn’t make mistakes we don’t call him a liar, we call him a genius. Genius for covering up their trail of slime with the worst and toxic conspiracies and taboo topics about race and religion so no one can see what they truly are which is they hide nothing: these aren’t traders or even monkeys, if they were on the exchange we could call them speculators as they would be wildly pressing buttons for their Tronchian channels while pretending to shoot down fighter jets in their SR-71 Blackbird, but tell you what, we are home and unhappy with what they did to our country while we were gone as the homefront was fine but the captains of industry turned over the economy not to twenty year old kids, but to crafty old men who are the limited partners in these funds and they abused their position to almost destroy the world as basically these were money managers kiss up kick down, even admitting they get into each other’s face all the time about data collection which isn’t that hard but it is if people change from weekly aggregation to monthly just to change numbers to justify a trade, and they managed no money, they managed relationships with their clients who managed money so it was like a front shop for global organized evil, and we know China’s emergence defines a New World Order because China is so big, so we can say their clients are so patriotic, they live in another country and wish for another life. In short, TransOcean is a wonderful stock as long as the world doesn’t blow up as drillers make money while not being directly exposed to oil prices as if you have some money you shouldn’t put it all in West Texas Intermediate as that is just another way of saying capitalism makes no sense so someone at a desk in a Scottish skirt should own a bunch of barrels of oil in a warehouse just cause he has a cool job cause he is loyal and looks at fundamentals first not for example at common sense first. If the palace is already irrational you say the emperor has no clothes. You don’t make stuff up to justify trades that come from above. Tell you what, the world won’t blow up, as we have cleaned up this mess in subprime 2007 which was basically class warfare as the derivatives at Goldman Sachs let me tell you were very well designed, the users of them unfortunately were evolved from misshapen creatures I burn in my bathroom light as people like me get called having sociopathic tendencies by women of low repute and no medical wisdom, but boy do they sleep with all my friends as I have no self esteem, and my friends sure are the hotshot traders, with friends like the ones I had, what use is evolution as people change they say, and are thus disappointed that I didn’t share their gossip network and look out for each other when tell you what, they may hate sports and teamwork, but I was a real trader too, and like Lady Gaga said “the last card she plays is the one on his heart,” the last card I play is the one that shows it was a good trade: for my atonement I went begging to the government as the traders say of everyone who leaves them, but I went begging for them to send me away to war as otherwise I would be ashamed. That didn’t stop the religious nuts of the guilt camp who don’t understand shame. They tell you fiction is models of the world and should stick to what they are good at which is telling stories. Tell you what, I have destroyed more cells of one kind than of any other and that is usually from our northern border above, as at least my friends who fought alongside me, can’t be outfought, can’t be outmatched, can’t be outrun. These traders who I hope I have humanized by casting as villains are not who you want. You want the portfolio managers. Why would I go to PIMCO to be someone’s assistant when I just did the same job that he answers to? Inefficient labor market too after 2008. It is time for someone to take responsibility for this mess, and it sure isn’t Goldman Sachs who bought mansions in Seattle neighborhoods as that was the only part of the country still growing on the backs of retirees. Republic credits from that world are no good in Seattle anyway. The number one hedge fund in the world in what I consider a fragmented industry is the one that isn’t the best, brightest or biggest or wealthiest: it is the one that makes the most of risk, and tells you what we are, we are the front line, don’t worry we will be fine, this story is just beginning. Shinedown. I say it is safe to invest in energy like TransOcean where you can make a lot of money if the economy goes on a run and we the traders will make sure it does by clearing obstacles to our trading, in society we will replace all your hate with love and your lust with passion. Don’t invest in the oil majors or the natural gas explorers unless you have fundamental knowledge about their relationships which I haven’t provided as they are in complex ecosystem arrangements. Think of the video game Starcraft: minerals are USA dollars, and we collect them from the land itself which is productive because of the earthly things above it. Vespene gas is crude oil complex. Let me explain one thing clearly: the world has one Obama yet everyone wants to be Obama as Alibaba CEO said. The world has one Jesus and his sacrifice was one-time and final. The world has one TransOcean which will go up or down on our upcoming battle. The world has one of you and one of me, and let’s just say a bunch of elves got ticked off in the woods, and now we have elven swordsmen and elven paladins in World of Warcraft in addition to elven archers and elven rangers. What is this video game stylizing? The battle for the energy complex as whether society can efficiently use energy has nothing to do with energy exploration in Alaska, but whether a society like the United States can work, with all its cultural heterogeneity, even if we are not all in it to get rich. I think we can do it. I think United States can outcompete China, and we will leave scapegoat Canada and Mary Magdalene United Kingdom out of this. As look in my eyes you will see staring back at you, elven bloodlust, it’s dark side! As I’m not even Chinese but half the world thinks we automatically inherit class from our parents and that’s because they forgot C++ is crazy plus plus which leads to hyperinflation unless we know object orientation. For you, I will be American but you know elves are French, so if we ever mix up again where I get called someone with an American accent because I don’t seem British, rapier wit is going to skewer British comedy, and we will laugh about it in sangfroid while asking questions like did Renoir have meaning or is he just better than you in every way? It’s okay. In Russia they say the paratrooper is forever betrothed to the sky with white bouquets. The 101st airborne also paratroopers from America is forever betrothed to the haughty hosts of the misty deep who speak Irish with American accent too, and we are tired of anachronisms, tired of fault lines, let’s fight the War on Terror which is about energy which like math keeps us honest as money is real because it buys stuff so it isn’t that real as stuff comes and goes like women talking about Michelangelo, and math is real because we can say math is wrong when it isn’t, and energy is real because you realize back in high school we were out of time because we had enough energy but not enough capital, now we fixed that we have capital, even if it is intellectual capital, but we are out of energy all the time. Once we fix energy we will need to fix that we are out of money all the time. They haven’t broken America as their blood may be in our veins like HIV in our immune system, but so is MINE! From the Lost Boys. I am confident socialism can build healthcare and capitalism can build back what we lost which was our romantic life. It’s mostly about buying girls stuff anyway as if you just show her you are someone she thinks you have airs. But you make something of yourself, and learn that there is nothing better than simplicity but like I think Einstein said, simplicity is not natural and has to be made. Maybe she is still in the game and can’t leave it. That’s called maybe she can’t take calls at her work. But I think it’s time we get back to work, so energy prices can rise again, and that means working with China and fighting terror. I am confident of almost everything but not of the Communist system holding up against terror as we have barely beaten it in New York, Chicago and Boston. I sometimes say I’m the last samurai but only because I wasn’t 101st Airborne in the economy. Handling any weapon at ease and any subject, bluemarine cocked caps are a good look, the American paratrooper is forever betrothed to the spirit of heartache, the land of the Bonnie over the sea.