Wednesday, April 06, 2016

On Selling Short

Oh, roller-skating is exciting,
   and so are volcanoes too.
And a good old-fashioned blizzard
   will put you in a stew;
But of all exciting pastimes,
   or any kind of sport,
There's nothing quite so thrilling
   As the game of Selling Short.

It isn't merely selling
   something which you have got;
It's much more complicated -
   You sell what you have NOT.
And the thing that makes exciting
   (if you don't believe me - try it)
Is that after you have sold it
   You have simply GOT TO buy it.

And so, when you go to buy it,
   If you have to pay the price
Higher than what you sold it for -
   That isn't quite so nice.
And the market is most disobliging -
   Though no one seems to know why -
For it's always down when you HAVE to sell,
   And it's up when you HAVE to buy.

(From Sophronia Tibbs "Stock Market Quotations", published 1926 by John Day & Co.)

Tuesday, March 15, 2016

So Long Pershing Square

Farewell then
Bill Ackman,
"Activist investor".
Whatever
that
means.

You made
a few good trades,
and a couple of friends
along the way
(like Ezra Mirkin,
and some guy you met
in a cab).

You also made
some stinkers,
and a bushelful-o'-enemies -
on The Street,
in Congress,
at the SEC,
and the DOJ
(to name a few).

"Shootin'-The-Moon"
was your
strong-suit,
but
risk-management
was not.

Which is jolly-fine
when it works,
but rather not
when clusterfucked it doesn't.

You wanted fame,
but got Valeant infamy.
Because
it's likely
that you "lost"
more investors' money
than you ever
made. 

Wednesday, February 24, 2016

Upon seeing the miraculous photo of a headset-less Mark Zuckerberg walking through an Oculus Sea, I thought that this post, written in 2012 was just as, if not more apt today than when it was written. All comments most welcome. 

Pleasure Principles


“What will fill the vacuum formerly occupied by religion?”

The most thoughtful, as well as the most memorable wedding gift my spouse and I received in 1993, the year of my first (and only) marriage, was neither the most expensive, nor an object. Rather it was a “Brunch” - that uniquely American invention deplored by Anthony Bourdain in Kitchen Confidential as a reliable though odious route for restaurants to recycle anything and everything left over in their refrigerator and pantry. I learned other useful pointers from Boudrain, (who since parlayed that success into a TV Celebrity status that sufficiently provides for his habits), such as never eat restaurant fish on a Monday, and if you're a foodie and looking for best execution, avoid Fri and Sat evenings like the plague., etc. But I digress. This 'Brunch' was a simple but special affair in that it included the company of [the late] acclaimed author, Chaim Potok, and his lovely wife Adena.

Who is Chaim Potok, you might ask? I'd read several of his novels, independently, following on the heels of those  by Nobelists Saul Bellow and Isaac Bashevis Singer, though before I'd been introduced to works of Philip Roth. All their voices rang true. All chewed upon the clash of the traditional with the modern. All seemingly lamented the loss(es) of what was, even when (reluctantly) accepting the victory of modernity's “progress”. And they all struck some chord within me, each ruminating in their own perspectives and style upon issues still-raw-and-contentious (in my own family), growing up as I did on the generational cusp, and witnessing my parents wrestling with theirs over the same.

I think Potok stands out as his breadth of thought was more encompassing. He was first a Rabbi, then a writer, also a theological academic and philosopher (PhD Penn, Philosophy) as well as a graphic artist, and playwrite, though the arts were his first love and a source of conflict with his own (traditional) parents. His  timeline reflected this same struggle: from indoctrination and orthodox study sliding towards the increasingly secular graphical artist and thinker. He may not have been the superior novelist of the genre shared by the four eminent writers, but he probably was the most eclectic and adept thinker. His experiences were varied: an army Chaplain, a rabbi, a teacher, an editor, writer, an artist). Bellow's and Roth's characters and dialogue might have been more realistic, Potok stretched the boundaries of thought further than the others. Like the great Jewish minds (unlike those of current-day Likud), Potok ruminated thoroughly and saw things not categorically, but nuanced – context within context within context.

Beyond these spartan observations, there is little I can add. We drank coffee, and chatted about our experiences, and about faith. I made no effort to hide my lack thereof, though I couched it in the agnosticism of the empiricist versus certitude of the militant aetheist, which was more useful for friendly discussion than Dawkin's axe-wielding approach. More coffee and cakes, and the conversation drifted from the first to third person, and modernity's impacts upon religion. I noted that religion was useful historically as a means control. Fear of God, his wrath (for the Jews) or Hell (for Christians) were powerful tools. And whether a tool for purposes of control, or more recently as panaceas for the spirit, there is in modernity, I suggested, a gaping hole in the psyche and in one's preoccupation that was previously occupied by religion. “What”, I continued, did he “think might or will replace it???!!?”

He pulled on his whiskers for a long time, looked upwards towards the heavens, and then stared deep into the depths of his half-filled cup before meeting my eyes and saying more categorically than he had about anything to that moment ......”Hedonism”. “Hedonism will fill the void...”, and for the first time, I saw resignation on the face of this otherwise thoughtful optimist. It is the same resignation floor traders must have felt as transactions went "upstairs", or that which strikes value-oriented reversion traders horse-whipped by seemingly less-than-explicable momentum, or an allocator feels when assessing the new normal of what used to be the risk-free rate. It is a distinct feeling that the sense one previously made of the world has been palpably altered, leaving it a less-hospitable place as a result.

Conversation rebounded from the after-effects of this pronouncement, for it was clear he knew that however depressing the prognostication, there was nothing he could do. He could analyse this wave, indeed, he could explain it. But he knew it will be as it inevitably will be. Efforts to change the direction of such a tide would be futile. I understood he was not whining. Nor was he living in the past. As was the case with his literature, he sought first and foremost to understand what was going on around him, and make sense of it, rather than tell us how it should be.

In 2012, it seems ironic, that mired in debt with unemployment rife, that our Grasshopper-like spirits' gaze is, as Potok forecast nearly two decades ago, firmly fixed (and growing) upon hedonism. Not spiritualism or New Age-ism, but full, unbridled "Whatever!" I see it manifested in demagogues pandering "7-Minute Abs" solutions, to problems of marathon proportions. I see it in my eldest's seeming addiction to fatuous social networking, or under the spell of inane traditional media at the cost of reading or doing. I see it in the increasingly stylized beach or ski holidays. I see it in the untempered expectations still being conjured and polished by companies and their Madison Ave agents. I see it in the politicians' promises to restore what Americans' believe is owed to them.   

But is this not natural? Should hedonism be a pejorative?  To the extent it plays a part in fueling expectations and pursuit of a lifestyle for the individual that is unsustainable for the group, then yes. To the extent that it prevents sober or pragmatic evaluation  of what needs or might  be done to pursue even weak-form sustainability, then yes. To the extent it discounts the longer run policy pursuits, for the short-run, then indeed, yes. To the extent it encourages anti-social behaviour to finance parochial hedonism, then yes.  To the extent it fuels near-unprecendented greed at the expense charity yielding a coarser way of life for the benefit of parochial pleasure and the privilege of the yet unborn, then yes, it is a pejorative, and we should lament its expansion in filling the vacuum.

Unlike the Apocalyptors and Tin-Foil Hat Brigade, I do not believe 2012 will be the year of the Return of Barter or Oblivion For Mankind, and while it may even surprise to the upside given the hugely bearish expectations of the market and anti-European shills, I do think it will be an interesting year for observing what happens when hedonistic rubber meets the austere reality of the road ahead of us [all].

Sunday, January 24, 2016

Where are all the Jewish Momentum Traders?

Many would find financial research a curious pursuit. And while most curious financial researchers have their own peculiar or arcane interests, one area of modern finance continues to intrigue and mystify me: "Why are there so few Jewish momentum investors?" Now before the ADL or JDL launch a protes taking issue with this post before giving it a fair read, let me first clarify several points at the risk of spoiling my punchline. First, by way of full disclosure, I have strong affiliations with The Tribe itself (of Abraham that is) - and little to no affiliation with the Church of Serial Correlation (the Cult of Momentum) or The Turtle Traders. Second, despite the fact that I am an unashamed peacenik, frequent critic of Likud and the last two decades of much Israeli policy, I admire many Israeli's such as Amos Oz, Y. Rabin, D. Barenboim and Y. Beilin, the Jewish faith the Jewish faith, and many things The State of Israel has accomplished. This qualified and tepid opinion, however, does NOT - I repeat does NOT - in any way whatsoever make me anti-semitic. Third, and contrary to your suspicions, the accompanying image, as any native from Calgary might tell you, strangely enough has nothing to do with the Star of David, or Momentum. It is in fact a sheriff's badge presumably labelled to express disaffection over the "mess" and chaos their annual rodeo-related Stampede creates. But it does a nice job of visually marrying my seemingly unrelated subjects.

Having dispensed with formalities and belied critics who might impugn my credibility based upon THEIR politics, I will return to subject: the dearth of Jewish momentum traders. This puzzle initially gestated from meditations regarding the relative contribution of nature vs. nurture upon one's political beliefs. Proposing too much nature, it seems, is a contentious thought to some folk as I've discovered, for after espousing it, I've had people look upon me as puzzled and suspicious as if I were Kim Jong-Il doing a Liza Minelli impersonation, even though it's a quite innocuous observation. It goes like this. Based upon keen but anecdotal observation, populations seem to have roughly similar distributions of political archetypes between what one might broadly categorize as "progressive" or "conservative", irrespective of ethnicity, religion, or nationality of the entire population. Whether it's exemplified by Republican or Democrat, Labour or Conservative, Social Democrat or Christian Democrat there seems to be a rough equivalency in the percentages of these divisions in society. This seems to hold even if the specific ideological anchors have different coordinates in the political spectrum in different places. As other personality traits such as optimism and empathy have been shown to be strongly influenced by genetic predisposition, my probably unoriginal hypothesis by way of extension was quite simply: Why not politics? Perhaps everyone is born with a certain greater or lesser predispositon towards progressivity or conservatism, which themselves are possibly based a general affinity towards being receptive of, and embracing change (in the case of the progressive), or being cautious and suspicious of said change (as befits the conservative). The resulting conclusion: people underestimate the role of such genetic predisposition in political belief structures, in general, and in their own idelogical make-up in particular. While I am not an anthropologist nor a sociologist there are many examples of similar less-than-physical pre-disposed traits in relatively consistent proportions across varied populations (e.g. homosexuality). And while learned people who have studied this are not necessarily in agreement as to which competing theory best explains WHY the phenomena exists, there is little disgreement over the existence of the objective phenomena itself. This is NOT meant to disavow or diminish the influence of nurture, or to discount free will of the spirit which both have a role. But it is interesting, if not uncomfortable, to speculate that we may not be as free as we would like to believe.

Teleport now to what was the floor of the CBOT or the CBOE where, mixed amongst the overly-tall brokers and traders, were speculators of many persuasions. Scalpers, market-makers, front-runners, discretionary liquidity providers, strategic traders, trend traders, and counter-trend traders, some disciplined, some emotional some visceral or instinctive. But here too there seems to be similar archetypical personality divisions: that of the "trend-trader" or "counter-trend trader". One can also think of it as momentum-oriented or reversion oriented (or short-premium option traders vs long-premium option traders for our derivative friends). Might not genetic predisposition have a similar role in whether one felt more comfortable "riding a trend" or "or trying to anticipate a reversal"? Or in "buying a breakout" or "fading a pop"?? Or "Buying growth" or "buying value"? After all, these dichotomies are essentially attributable to the inherent optimism vs pessimism, or safety vs. adventuresomeness which we already have good reasons to believe are strongly influenced by nature.

Whether one agrees or not at this point, I hope you'll see a consistency and logic to this thread so far, that, if not probable, is at least plausible. Now comes the puzzle: if the general population consists of some relatively consistent distribution of, for simplicity's sake, "momentum-traders" and "reversion traders", why does there seem to be such an asymmetrical distribution specifically amongst the Jews? It's certainly not for lack of prowess at making money. Trading is in our blood and has been since our days refueling camels at the Judean cross-roads of civilisation. As a tribe, we account for some of the greatest value investors, but we seemingly can't ride a trend. Even Sol Waksal for example, whose company has the ultimate momentum theme - a cure for cancer, felt compelled to trade his position lest it's value be [temporarily] knocked by some petty little FDA concerns about experimental design. Few would argue that we are over-represented in the world of arbitrage, but under-represented amongst the great CTA's. Or that we have a keen eye for spotting and picking up the four-cent nickels, but have more difficulty sticking around to turn $1 dollar in $10. I could be way off base, but I think there is a pattern here. Is it something peculiar to "us" or is there something about momentum? Maybe it's just the "feel of it"? Or maybe it's the risk vs. reward proposition that is intuitively (or objectively) unappetizing? Or perhaps momentum requires something more of the mind or spirit, something that we simply cannot give?

It would be useful at this stage to better define "momentum". Though I am no expert on the subject, it may be helpful to separate it into different categories. One is "naive momentum" which is quite simply using past returns to predict the future direction of returns. "What's gone up will keep going up". What is outperforming will (hopefully) keep outperforming. For academics analyzing the stock market's cross-section of returns, this phenomena is typically viewed as relative in nature, or normalized performance ranks. Through this lens, persistence in relative return has been found to exist for as yet undiscovered and undiscernible reasons, confounding theorists - especially those espousing market efficiency. But the real Momentum-Men (and they ARE men as not a single famous woman springs to mind), are the practitioners that call themselves "trend-followers" and would perceive themselves as more sophisticated and discriminating than the naive crowd. Here, simple moving averages give way to complex pattern matching techniques and endlessly catalogued contingency tables - all integrated systematically to find the holy financial grail which will allow them to distill the real trend that has the higher probability of persisting and thus being the motherlode that will take an ounce of gold that broke out from $454 to the stratospheric price of $5,000/oz (or beyhond!). This is a periodically prerequisite necessary to pay for for all the shakeouts, false starts, and ubiquitous reversals that are the by-product of the financial equivalent of chaos. That a number of practitioners have been reasonably (if not fabulously) successful employing these methods would seem to indicate that one dismisses them at their peril. Yet, others employing quite similar methods have crashed and burned spectacularly. But there is no shame in making (and losing) a fortune, for aside from being an adventure, it generates notoriety. And with such fame (infamy might be more accurate), one can always write a book, or post his musings on a website, or teach others to trade using trend-following techniques (but hopefully a more complete set than they used - one that incorporates counter-measures against periodically going nuclear). But perhaps the most amusing description of something with momentum was by Leif Ericson (on Peter Greenfinch's website) which he posited "was the battle between those with more money than intelligence against those with more intelligence than money.

Indeed, momentum has its uses, and has made some people (particularly brokers and exchanges, as well as some investors and traders) fabulous amounts of money. But it's not for the faint-hearted, and not without large and attendant risks. But that still doesn't answer why Jews are under- or unrepresented here. What's preventing them from joining the search for the leprechaun with real potfulls of gold at the end of the rainbow for the lucky few?

For a start, it seems that being long momentum requires faith. Similar in nature to the good old-fashioned bible-thumping fire-breathing kind. But faith in what? It's difficult to say just what that something is, and theoreticians remain perplexed. One might say it's essentially faith that the future bias of returns will continue to resemble the past. But is this wise or even accurate? It's not a bad bet with respect to things like whether the sun will tomorrow, whether the leaves will turn color this autumn, or whether the government will suddenly feel geneorous and abolish tax. And it's not unreasonable have some more-then-ambivalent confidence in a directonal movement when something is converging towards some probable equilibria. But the odds and thus confidence intuitively diminsh as one moves farther from equilibria (assuming one has a reasonably accurate estimate of probable equilibria). Consequently, risk increases. By contrast, it is "doubt" which comes easy to us Jews. Faith comes much harder. We desire proof. We NEED proof. A Covenant, for example, would work well. As would a burning bush, or some directives or commandments carved in stone. Recall, God had to crack the whip many times before people were convinced. And it took lots of smiting. And even then, there was backsliding. Moses was skeptical at first and took multiple minor demonstrations of transmutation to convince him. And I would guess that when he took his demands to the Pharoah, he probably had his doubts. At least until Pharoah's kingdom was over-run by toads. That was his nature - to doubt.

Maybe we eschew Momentum because we're just contrarians? While it's true that we are always up for a good debate, it is unfair to say that we are contrarians for the sake of it or just for kicks. Having said that, one must remember that we are wary of crowds as historically, when we Jews have seen the crowd coming, it was time to leave. And fast. Over the generations it's become burnished in our minds. But suspicion of the herd is not pathological. When there is sale on, we are the first to queue up and often lead the stampede. No obvious contrarianism there. And one must not forget that the God of the old testament is severe. He can (and often did) take away what he'd bestowed, not to mention the ever-present threat of smiting. Momentum needs time, and these things in combination have always made time an issue for us which, while it makes us good bankers, does put some behavioural boundaries upon our holding period. The old saw "One in the hand is worth more than two in the bush", would take on special meaning if one not might be around to collect.

Jews are studious, value education, and usually pretty rigorous. The faith required of a momentum investor resembles closing one's eyes when taking risk. We are used to and not shy of taking risks, but they are typically calculated risks. Like the risk of taking that "Home Office Deduction" against our income tax. We can do the math. But we disapprove of pure gambles. When was the last time you a saw one of our tribe win a large Pick-6 jackpot?!? Or when was the last time your Jewish friend invited you to go the racetrack, or wager on the greyhounds? We intuitively know lotteries are poor odds. That's why when we went to Vegas, we would rather "be the house" and "be paid" than "pay the house" and be played. When we do go to casinos as a customer its for the free drinks, and not for thrill of trying our luck against the odds. We prefer investment to speculation. At least with an investment, one can estimate probabilities and calculate expected returns. And hedge. Only then do we pray. And when we pray, we pray to God not for "good luck" but rather that the hedge holds.

Without being disparaging, momentum is useful as a discipline for people who have no other. And some form of discipline is better than none. We've an inherent intellectual flexibility which in investment terms is important in order to integrate new information and fight against hard-to-overcome cognitive biases. Maybe that's because we've always been moving and have had to learn the ways of new people and places. Unlike the way many conservative strict-constructionists in America prefer an ossified constitution, or the way fundamentalists of all religious persuasions strictly interpret their religious texts, Jews are constantly re-examining and re-interpreting the meaning of their scripture (amongst other things). Trend-following is a disciplined system that proxies for intelligence-derived flexibility. It dictates change in response to something, even if that something is facile, and often ill-logical, and frequently uneconomic. Our nature results in a demanding need to know "why" and to reach our conclusions by way of intellect, rather than faith. This creates decision flexibility (to react to, or incorporate change) which inhibits belief anchoring without sacrificing understanding.

Or perhaps we're just not optimistic enough to "close our eyes and buy"? It seems that most momentum traders are optimists by nature. Optimistic in their belief market solutions are always better. In conservative republicanism. In low taxes. I would not deny the suggestion that as a people we are not renown for our positivism. Not in art, literature, nor psychiatry. But in finance, optimism is independent of, and should not be confused with, momentum. Sometimes there is good reason to be optimistic about the direction of price movement, and sometimes not. And while I would agree that optimism serves many useful functions in the human struggle for survival, it's been shown by researchers that pessimists perception of objective reality is in fact closer to objective reality. Optimism is an important tool in sports, healing the mind and spirit or achieving personal goals, but it cannot and will not move market prices. Full stop. Objective reality (or at least reasonably accurate perception of reality), on the other hand, is extremely useful and of paramount importance when assessing probabilities, making expected return calculations, or discerning the sign and location of the fat tail..

What is the final take-away? Though untested, and unproven, the asymmetry seems to result from an unusually strong combination of natural predisposition towards progressivity inherent in our genes coupled with a multitude of social nurture factors emanating from our idiosyncratic history, religion and culture, all which reinforce our predilection for value and the counter-trend. This is not to discount the potential contributions momentum can make. But that doesn't mean we have to like it, or for that matter, pursue it, which in aggregate, we apparently don't. After all, no one really "likes" insurance, but we still buy it....


(NB: This was first published in 2005 - well into the last momentum cycle, but nonetheless a few years early in its veiled critique of momentum's popularity amongst investors)

Friday, January 08, 2016

Financial Psalm 11

Financial Psalm 11

In FANG we take refuge.
    How then can one say to investors:
    “Flee like a rat on a sinking ship?"
For look, the Pessimists bend their bows;
    And Shorts set their arrows against the strings
to shoot from the shadows
    at the heart of the momentumous(1) uptrend.
When the foundations are being shaken,
    and all the Lord's investment styles fail,
    what can righteous investors do?”
FANG is in the holy temple;
    FANG sits on the heavenly throne.
FANG observes everyone on earth;
    their algorithms and adware examine them.
And there are no others who compare.
FANG examines the righteous,
    but for those who are short or who love privacy,
    FANG hates them with a passion.
On the wicked doubters, FANG will rally,
    burning their portfolios and relative performance;
    and redemption of the wrong kind will be their lot.
For FANG is righteous and holy, and you will not be
    cast from the Garden of Affluence for following.
    FANG loves monopoly; and dominion over all,
    and the upright will share their growth.

1 - momentumous is the archaic biblical reference for momentum

Wednesday, November 04, 2015

Bear Market in Integrity Continues (Late 2015 edition)

Things, people, and/or ideas believed to have integrity, now seemingly compromised...(the second third  fourth latest updated and expanded version). The bear market in integrity continues unrelentingly…2015 edition.

Volkswagen
Porsche
Audi
Fantasy Sports
Theranos
Mt Gox
Lufthansa
NFL Football Air-Pressure
Bill Cosby
Pot Noodles
Michel Platini
"Kids Company" Charity
Student Loans
Rabobank
US Secret Service
Energy MLPs
Glastonbury
Tesco
Whole Foods Market
Bruce Jenner
American Police Conduct
Rachel Dolezal
Airbags
Red Meat


SCOTUS
Jimmy Savile (tnx Anon)
Rolf Harris (tnx Anon)
US Veterans Administration
The Red Cross
CPI
Justin Bieber
Abenomics
CPS
The London Gold Fix
Chris Christie


Snooker
Intrade
US Govt Agency Data Release
The UK National Health Service
Swiss Train Safety
Nick Clegg
IM Confidentiality 
Austerity
BBC Management & Oversight
SSL
Risk Parity
Whistleblowing
Segregated Customer Accounts
Investment Consultants
Bloomberg Privacy
Dark Pools
Intrade
London FX PM Closing Prices
Meredith Whitney


Reinhart & Rogoff
Gold
Jérôme Cahuzac
Japanese Yen
Jamie Dimon/JP Morgan
Bitcoin
Banca Monte dei Paschi di Siena 
LULU
IKEA Meatballs



Wen Jiabao as "Humble Servant of The People
Lance Armstrong
Top Ten Lists
NYSE
Facebook
Austerity as an Economic Panacea
Harvard Students' Academic Honesty
BLS Statistics
Cyclical Recovery
Book Reviews
Strong Computer Passwords
Toyota
'Organic' Food
Money Velocity
Patents
Undecided Voters
Hospitals
The Food Pyramid
Purity of '.999 Fine Gold Bars
Penn State Football
"Top of the Pops" 
Fareed Zakaria
The "risk-free" rate
LIBOR as a Benchmark
Public Sector Pensions
HFT as a Beneficial Provider of liquidity
Diversifying properties of Hedge Fund's
Einstein's Theory of Special Relativity 
Celtic Rangers
Macroeconomic Forecasts
John Paulson
FRB Open Market Operations
Standardized Educational Testing
Swiss National Bank
A Relaxing Cruise
WTI as Oil Benchmark 
Olympus Corp.
TEPCO
Payment Protection Insurance
DSK
HM Revenue & Customs
Sony Playstation Network
Google
Privacy
Social Mobility
Actuarial Return Assumptions for Pension Funds
Marmite
Ryan Giggs
Acupuncture
USA Govt AAA
France   AAA
Voicemail
Boob Jobs
Snooker
David Einhorn
Nuclear Power
Deepwater Drilling
Tiger Woods
Professional Cricket
Sumo
Professional Cycling
High-Frequency Trading
Professional Baseball
FIFA
Professional Tennis
Municipal Bond Underwriting
The Catholic Church 
Track & Field Athletics
NCAA Sports
US Congress
UK Parliament
Analyst Research
Credit Ratings
Banks
Newtonian Physics
The Stock Market
The Food Pyramid
Incentive Stock Options
Reinsurance Brokerage 
Lou Dobbs
The Mortgage-Backed Securities Market
Hedge Funds
Social Security
Government Balance Sheets
Tooth Fairy

Errr ummm Professional Wrestling is starting to look good by comparison - at least it makes no pretensions to be anything other than it is. What's left?

Monday, October 05, 2015

Giving The People What They Want


We live in a golden age of near-exponential knowledge-growth and consolidation in general, and more particularly, as it relates to drug discovery. That said, while Moore's Law incessantly drives down the cost semiconductors and related electronic equipment, and algorithmic software innovations are on the cusp of driving down the cost of much previously-expensive financial intermediation, healthcare, medicine, and pharmaceuticals specifically appear to marching in the opposite direction. This is as true for the eye-popping costs of newly-discovered and recently-approved medicines that may be weakly palliative, new drugs novelly treating rare diseases, or improving upon existing treatments to, as carpet-bagging scums Martin Shkreli and Valeant have brought to the public's attention, gaming a system easily gamed in order to take the insured population by the ankles, hold them upside-down and vigorously shake them until each and every penny, nickel, dime and $100 notes is loosened and falls from their pockets. It stinks, and it is disappointing to have seen Wall Street's best and brightest enthusiastically jump on the bandwagon and bankroll (as they did with Bill Erbey), so odious an arbitrage.

As a result, gobs, and gobs, (and gobs!) of money have been thrown at nearly anyone mining the drug-discovery coalface. Many are ostensibly genius-caliber scientists with attendant leadership skills and huge personal ambition. Future generations may thank them. But any leisurely walk through the woods of (listed) industry cannot help but anecdotally marvel at the sheer number of endeavors funded and floated, most of which will, inevitably be worth nothing to their equity investors. VCs may have exited, managers will have collected meaningful salary and bonus (and sold shares), investment bankers will have extracted their dues, but the ordinary biotech miner-forty-niner, ever wishful of scoring a Celgene or Pharmacyclics, will, if history is the judge, be rather more disappointed.

Noticing that my skepticism is getting ahead of me, I will tell you that I believe there is much to admire here. It – the “can-do” attitude, the lack of fear of failure, the willingness to pursue dreams – is the stuff that got us to the moon, and will cure cancer. But it's also the stuff that gave us Ory Weihs (who's made a small fortune getting paid rounding up on-line punters and delivering them to on-line gambling sites), Bernie Ebbers, and Enron and a list of contrapreneurs too long for this post.

Back when I was a boy (camera pans and zooms on to grizzled redneck with long white whiskers in blue overalls, in a rocking chair on the porch of a rural cabin, dragonflies buzzin' and banjos pickin'), there were practical limitations on floating wild-eyed out-of-the-money longshots. Minimum revenue thresholds, an operating history, the presence of profits, were prerequisites on most of the main bourses. Some was regulatory, some was due to scars burnished on popular wisdom from the 20s and subsequent crash. This never stopped people losing money in stocks, but it seemed to help limit the most egregious opportunism outside the ever-present bucketshops. Importantly, this meant companies were funded and often stayed private for much longer, until they came good with some revenue, and some profitable trading history, or less fortunately, had their plugs pulled by their (former) sponsors. It also meant that "professionals" were in charge of the investment process (FWIW). Sure, there self-described polymaths who were out of their league and blinded by the science and a sweet tongue, but there were also many highly-informed specialists, separating wheat and chaff, who carefully chaperoned the growth and magnificent contributions of the flagships.

“Netscape” changed that forever. Netscape was the Klondike-find that transformed and fueled the lust for exponential growth stocks as lottery tickets in the national imagination. And what The People want, The People get (with a bit of help from investment bankers, stockbrokers, and all variety of charlatans). The wanted The Internet, they got the internet. They wanted fiberlightwaveoptics, they got it NT, AVNX, JDSU at 11-digit valuations. They wanted Merchant Energy, and so the trucks arrived. Solar? Errr ummm ignominiously, obtained. Black gold? Granted and presently vomitting all over the west, Bakken, and Marcellus. Nothing, it seems, cures high prices and the hunger that fuels it, like high prices.

And so, here we are, today, with Biotech, present for decades – both blue-chip investment grade and the speculative garden variety, but never in as full-bloom as witnessed in 2015. Every investor with a stock portfolio seemingly has some biotech spec in their portfolio. Some research rocket-fuel, some drug-discovery beta. How many times have you heard your friends' regret about dumping Incyte @$5 (now $125/shr) or "taking profits" in Regeneron in 2011 after it doubled to $40 (now $475). Even my brother-in-law, a conservative stock-broker with income-oriented clients has taken to sexing-up their dossiers portfolios with exotic galloping  biotech  I've never even heard of. This is a reliable tell-tale (his clients are still suffering indigestion on their  MLPs). Apparently, the only thing worse than buyer's regret, is seller's regret, or, as it happens, not buying at all.

Cynics may question my motives for writing this. They may accuse me of being sore “to have missed out”. But for the record, let me say that I've lost money with the best of them, falling prey to most behavioural flaws underpinning investors losses, and really I just wish I could contribute more to this great wave (and shorting stock hardly rates as a worthy societal contribution). So instead, I've decided to help future biotech scions (and their bankers) by helping them conjure names for their future empires. Some may scoff at this effort, but so numerous are the listed companies that finding a suitable name is always challenging and may soon become a major problem.

You see, Biotech naming is a Scrabble-players fantasy. There are Improbable combinations of X's, Y's, Z's, and V's creating a realm of high-scoring naming possibilities, only a portion of which will seduce investors, and demonstrate just how uncreative HF managers are in their own choice of names.

(1) To start, choose a place name, favorite latin description of a vital organ or disease, or just a mainstream biological or life-science chemical term you might remember from high-school. (Tip: If using a place name, try to coin one evocative of health (Portland?) and avoid the rust-belt (Buffalo BioScience or Detroit DermoGenetics just sounds wrong!). (Tip: If using initials, use no more than 3; avoid word-images,  use only consonants,and  try to evoke something vaguely familiar)

(Sample terms: ) Cell, Bio, Epi Pro
(Sample Places: Portland, Cascade, Ranier, Olympic, Redwood, Eureka)
(Sample initials: RTW; QBZ, STP)

(2) Insert dazzling cool-sounding but ultimately generic biological or laboratory term.
(Tip: Use at LEAST one, but stringing two or three together works well too. Parsimony is not your friend when trying to seduce the punters.
(Tip: Capitalize the second and third term as well for important and lasting effect)
(Tip: Keep your Latin  dictionary handy if you get stuck)

(Sample Dazzlers: Epi, Med, Bio, Cryo, Derma,Gen, Gene, Ogics, Pharma, Mune, Immune, Med, Sys, Exis,Oral, Tryx, Tech, Onco, Cardio, Viro, Fibro, Zyme

(3) Finish it off with an appropriate bookend to seal it. Pay close attention to the alliteration. It should roll off the tongue so when investors are bragging about their latest Biotech investment, they won't feel inferior to their friends.
(Common Closers: Labs, Therapeutics. Research, Pharmaceuticals, BioPharma, Science
(Tip: If economical in stage 1 and 2, do not hesitate to choose a double-barreled ending. Like the English upper-class, there is some benefit to conveying superiority in your name choice)

(4) Putting it all together: Just do it. It's fun! Try a few and see if you can create investors' next ten-bagger!  Here goes....

FibroZyme Therapies
CryoDerma Oncopharmaceutical
ViroGenoLogics
Epitryx BioLabs
Eureka ViroImmune Bioscience
Medexis OncoScience Labs
Dermologic Drug Discovery
Vespasian Gene Therapeutics
BioCryoSys Pharma
BioCardial Research

(enough for this this week....!)