Author Archives: danijel

Thoughts on value

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I watched a video today where some average young people were shown watches of various brands, and they tried to guess the price. More often than not, they would be wrong by several orders of magnitude – for instance, estimating a Paul Newman Daytona as something in a $800 magnitude, while the actual price is $250000.

That made me think: are they ignorant, or are we often duped into believing that paying extreme amounts is reasonable, for things that aren’t worth that much money in any reasonable frame of reference? I used to live in a world where mechanical watches were the norm, and it used to be that a watch would justify its higher price by accuracy, durability and actual features, and “brand” was just something that would make you recognise things that were well made. Today, the concept of “brand” is detached from every possible objective criterion of quality, and a brand like Seiko or Citizen can produce a watch that is objectively better by every single metric, compared to top tier luxury watch brands, and yet they are perceived as “mass market junk” that cannot possibly command the price of the “quality” brands. The madness goes so far that actual metrics, such as accuracy, are seen as irrelevant, or even as a property of low-tier watches. I’m not necessarily even talking about quartz watches – for instance, ETA coaxial movement designed for the Omega brand, with a silicon hairspring and non-magnetic properties, is technically speaking the best mechanical watch movement ever made, and yet this somehow doesn’t have anything to do with the price of the watch. Omega Aqua Terra coaxial is seen as a mid-range watch, while some Rolex or Patek that is an order of magnitude less accurate, and also infinitely less resistant to magnetic fields, can command ten times greater price, or more. This is obviously beyond all reason, so why would anyone be surprised that normal people, who didn’t memorise the expensive brands so that they could tell what should be expensive, can’t tell based on the actual features of a watch? If the actual reality is that a technically superior watch can be a thousand times less expensive than a limited-series “haute horlogerie” brand watch, then you can’t really come up with a reasonable estimate of the price based on the inspection of the features of the actual device, which is another way of saying that the price is based on bullshit.

This made me think further, and I remembered a similar video where someone was asking people on the street how much do they think a gold coin was worth, and I think most of them would rather take a $5 candy bar than a $500 coin, or something like that. It makes you wonder how well we would fare if we had to trade gold and silver for goods and services in some post-apocaliptic scenario. If I showed a Krugerrand to random people, how many would understand that this thing costs $1900? After all, it’s just a coin, and coins are perceived as something of low value today. As for gold, most people never saw gold in person, except in insignificant amounts used in jewelery. Any estimate of value would probably be wildly off.

I can’t really blame them – I was shocked to learn how much an ounce of Rhodium was. I know that it’s a Platinum-group metal, and I expected the price of Rhodium to be comparable to that of Platinum, but it is not. It was – up until 2020, when the price went off exponentially for some reason I won’t even pretend to understand because it’s probably something to do with some industry or another, and it’s now in the order of magnitude of 20000 USD/oz, which is about ten times more than gold, and 16 times more than Platinum.

One conclusion is that our intuitive sense of intrinsic value can be wildly off. Supply and demand as a measure of value can produce very weird valuations where, at least temporarily, complete garbage can appear to be precious, and otherwise precious things can be valued as garbage. More often than not, market valuations are a measure of human greed and fear, rather than intrinsic value. Also, people tend to value things that other people value; when they see that something is commonly perceived as precious, they will usually adjust their sense of value to match. That’s not the case just with watches or precious metals; it extends everywhere.

In any case, it’s a very interesting line of thought.

Lights off, but buy a Tesla

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The EU is implementing new 2016-2019 laws, designed to “save energy”, among other things by turning off the lights in businesses overnight. To quote a site that commented on it:

“The European Commission’s snappily-titled “Ecodesign Working Plan 2016 – 2019” will require all light fixtures and accessories sold after September 2020 to meet improved efficiency targets. In the previous version of the rules, studio and theatre lighting was exempt from the targets, as long as the lights designed for this purpose were not used domestically. But this exemption has now gone missing.”

 

Basically, replace all the tungsten filament light sources with LED because nature and ecology and electricity is precious, but we are supposed to believe their propaganda about switching our ICE cars to electric. Let’s all buy electric cars, because electricity is green and abundant, and fossil fuels are evil.

If you believe they won’t pass a law restricting private ownership and use of electric cars, being the worst “pollutants” and “waste” of energy as soon as people transition to them, you obviously haven’t been paying attention.

My take on r/WallStreetBets

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There’s been lots going on regarding r/WallStreetBets and I’ve been paying attention, of course. Let’s summarize.

r/WallStreetBets is a Reddit group where traders evaluate investment options. The opinions on who they actually are, are divided, but it is my opinion that at least a percentage of them are professionals: expert traders who do this for a living, some of whom used to work for Wall St. hedge funds, investment banks etc. I’ve seen media portrayal of r/WallStreetBets as a band of disenfranchised millennials who are trading with welfare money out of their moms’ basements, and this image is very misleading. The part of them being millennials might be true, but think Elon Musk. Some of those people could invest 10M USD just for shits and giggles. I’ve seen reports of some players using 640M USD. Those are not what you would expect to see if you trusted the “main stream” media, were you by some chance foolish enough to do so. No. The top 1% percent or so of r/WallStreetBets are basically super-wealthy people who habitually invest in the stock market, and have a very large portfolio, and a comparatively small amount they can gamble away on questionable things.

One of those questionable things is investing in shares of failed or deeply distressed companies, where the Wall St. professionals, namely the hedge funds, are betting on them going belly-up in the very recent future, and are invested in short-selling their shares, which basically means “borrowing” shares now, to be paid at a later date at the price as it is on that date, and selling them now, at the current price. If the price goes down as expected, they sell expensive, buy cheaper and pocket the difference. In cases where they are betting that the company will declare bankruptcy before they need to purchase the shares, they gamble by “borrowing” more shares than there actually are in existence; one such case was “caught” by the r/WallStreetBets analysts, who found out that the shares of GameStop are shorted at a record rate of 140% of total shares in existence, which means the hedge funds who were betting heavily on the company going belly-up in the short term could be caught with their pants down if the price of the shares happened to be driven up by, let’s say, record demand from a huge number of Internet traders from r/WallStreetBets. Initially, it was seen as an opportunity to make money, because the investment funds will be forced to buy the shares at higher prices to close their short positions, but very quickly it evolved into “payback time, bitches”, because those hedge funds apparently have many things to account for, such as people’s homes being foreclosed, or people’s businesses struggling because all the credit money circulates in the upper echelons of Wall St., never trickling down into the actual economy, and they are seen as someone with a deep insider connection with any sitting government, because they finance politicians from both parties, and so the government keeps bailing them out whenever their gambles fail to pay off. This was seen as a “let’s see you get out of this” situation, and that is when large groups of young/disenfranchised people started gambling on GameStop shares with money they couldn’t afford to lose, basically throwing their livelihoods on the line in an attempt to damage the “system” they perceived as inherently oppressive.

At some point the GameStop shares jumped from the initial $17.25 to $483, but later fell down to $225. It is my opinion that this will be hugely profitable for those who bought below $100 and sold above $400, but I also expect the short-sellers to have bailed themselves out quite early, and then used the momentum to make money out of it, and the millions of amateur traders who came to the party too late, and those who naively hold on to the stock for too long, will be left with the bag, even poorer than they were before. This just can’t end well for the majority of investors because the fundamentals of GameStop aren’t good enough to justify anything even approaching this astronomic valuation. What needs to be seen is whether the hedge funds that were caught with their pants down already closed their short positions accepting a limited loss, because if that is so, remaining in GameStop shares might actually help the hedge funds recuperate their previous losses. The ability of professionals to out-manoeuvre hysterical mobs who think in memes and emotions should not be underestimated. r/WallStreetBets movement can basically execute only one manoeuvre at the time, because if they try to introduce complexity, they disperse, and, although the “leaders” of the movement are highly competent and intelligent, the mob they are guiding has huge inertia, measured in days, in a job where seconds can make all the difference. It is therefore my opinion that it is quite possible for the movement to produce real and significant effects, but it is also almost certain that most of them will incur heavy losses.

There was talk about r/WallStreetBets trying to influence the silver market, silver being the most “shorted” thing in existence today. As a result, the silver prices spiked and the retail sellers of physical silver sold out their inventory within a day. People on r/WallStreetBets concluded that the idea must come from the hedge funds themselves, who are trying to disperse the attack on GameStop, but I would not be so sure. In fact, I think r/WallStreetBets “short squeeze” of GameStop seems to have given some very smart people an idea, because it is known in the precious metals market that the prices of silver and gold are being artificially suppressed for a very long time, and the supply side hasn’t really recovered from the shortages that became visible around April last year. Also, Tesla is really ramping up their car production, and they need significant amounts of silver to put each of those cars on the road. r/WallStreetBets might actually have very little to do with the rising prices of silver and gold, because I expected those to rise before GameStop was even a thing, for completely unrelated reasons, having everything to do with the fundamentals. Sure, I wouldn’t mind someone accelerating the process, but I certainly don’t rely on that alone.

My opinion on gold and silver is known, as is the fact that I’m heavily invested in gold, and to a much lesser degree in silver, because I expect the financial system to be restructured with gold as one of the main pillars of currency, together with real-estate mortgages and sovereign bonds. For that to happen, the price of gold will have to go up by an order of magnitude, and I don’t know what silver will do. Also, I expect the real-estate prices to collapse, because they are currently maintained at this level by artificial means. The entire system – governments, banks, stock market, businesses – is presently stretched beyond the expected breaking point and the only thing keeping it together is a combination of inertia and unwarranted optimism. This overextended rubber band will break, and when it does, I don’t want to be anywhere near. I see this stock market madness of inflating certain shares far beyond their fundamentals as a symptom of desperation, and historically it is a precursor to the collapse.

Sure, there is good money to be made in this phase, if you’re positioned well, you know what you’re doing and are willing to gamble, but my assessment is that when this thing starts to unravel, huge amounts of money will start collapsing into precious metals as the only remaining safe haven, and I want to be there already when that happens. The only reason why we haven’t had hyperinflation in the Eurodollar zone already is because all of the money is basically locked in the upper echelons of finance and business, none of it trickling down to the masses, so basically the wealthy have so much cash they can’t decide what to spend it on, and the masses are starved for basic liquidity and fundamentally disenfranchised. Also, the system is so hyper-regulated, it is almost impossible to do business at all. If you think this can end well, I have a piece of real estate on the Moon to sell you.

Hardware upgrades

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Every time I write an article about how I don’t need a new computer because my old one works just fine, you know what’s going to happen next. 🙂

I basically concluded that I’m spending too much mental energy arguing with myself that I don’t need to spend money on new computers despite the fact that most of my gear is 4-5 years old and old computers are neither fast nor reliable, and for someone like myself who does basically everything with computers, it’s not the best idea to keep the old stuff for too long, because it increases the probability of random failure, so preventative maintenance in form of replacing the workhorse machines every 5 years at max is simply a reasonable thing to do.

So, I got both a new laptop and a desktop upgrade kit; I upgraded the desktop to Ryzen 5900X with 64GB of RAM, and I got a new M1 Macbook Air. The desktop thing is obvious – I basically replaced the motherboard, which was actually producing issues with sound going mute for a second every now and then, which must be a USB issue since my sound works through s Schiit Modi 3 DAC connected via USB, and not the built-in audio. The issue went away with motherboard change. I also got rid of the DDR3 RAM, which was running at 1600MHz, and I got a high end CPU. Basically, in most things I do it conformed to my predictions – it’s no faster in normal desktop use than my old system, but Lightroom runs significantly faster, and I actually use 44GB of RAM under serious load, so 64GB is not overkill.

As for the laptop, the 15” Mac was not the best match for my usage case (too big and awkwardly shaped for writing books/articles in my lap), so I bought an Asus Zenbook ultralight a couple of years ago, because the new Air had shit keyboard and shit CPU, and it cost significantly more, but the screen and battery on the Zenbook were sub-par, and I prefer Mac OS on the laptop, so I got the new Apple Silicon Air now, which is fast, has great keyboard, touchpad and screen, and the battery life is better than anything I could imagine existing on a laptop. I managed to compile the GNU tools I needed in Macports, and unless I need a dedicated portable Lightroom machine later on, I’m done with hardware now and I can go back to blissfully ignoring it into the foreseeable future. Basically, I replaced both my old laptops with a single new one, except for Lightroom on a vacation, where the 15” Macbook pro will continue to be used, due to bigger screen and more RAM, which make it a superior photo editing machine. The new Air has sufficient resources for everything other than Lightroom, which is a specialized task that requires so much more resources it just makes no sense to try and cram it all into an ultraportable, especially since the screen size is one of the main limitations, and for everything else that I do the Air is as fast as the new Ryzen desktop.

Chaos

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I was thinking about chaos for quite a while during the last few months, and I talked about it a lot in person with several people, but I never got around to actually writing an article, so it’s about time I remedied that.

When people think about chaos, they usually fall into two groups. The first group imagines chaos in terms of putting a frog into the blender and pressing the “bzzt” button. Basically, you have a frog that’s an orderly organized system, you introduce randomizing force into the system and you get a frog milkshake: a disorderly, chaotic system. It doesn’t improve the frog, in any case. The second group imagines chaos in terms of what Von Clausewitz would call “the fog of war” – you have too many forces interacting, and the slightest variations in the initial conditions can produce vastly different outcomes. An example of such a system is weather, and this is the reason why it’s impossible to make a good weather forecast even with the best computers; the weather is a chaotic system with a very large number of variables, and it would be bad even if it had far less variables.

Based on those two examples, it’s obvious that chaos isn’t seen as a good thing; it’s either a non-intelligent, random application of forces that either kills you or makes a terrible destructive mess, or it clouds your ability to understand complex systems and predict the future. In both cases, order is the opposite of chaos, and is preferable.

In religious philosophy, chaos is usually seen as the opposite of logos, which is an order-inducing, intelligent spiritual force identified with God. In this imagery, chaos is seen as satanic destruction, or a Dionysian force at best, along the lines of drunken debauchery and madness, opposed by the Apollonian force of reason, order and self-possessed approach to life. Again, chaos is seen as a bad thing, and its opposite as a good thing. Similar imagery exists in Hinduism, where Kali is the force of chaos, and Shiva is a force of yoga – control, self-possession and transcendence.

But all of that might merely reflect the human desire for control and predictability in a world that doesn’t necessarily care whether they live or die.

If we step away from the human perspective for a while, and think from a position of self-realization of brahman, we see that I Am beyond name or form. I Am the totality of existence, reality, consciousness and bliss. I Am beyond limitations and duality, in Me there is no up different from down, no left different from right, and light is not defined through contrast with darkness.

In short, God is Chaos. God is the ultimate reality that is unbound by limitation of any kind, the limitless potential that is and can be anything, and this world is its polar opposite – it’s defined through limitations, through rules, through contrast; essentially, the more you have of this world, the more you have obstacles to God, because God is freedom, and freedom doesn’t work well if you have all those rules and limitations in the way. You can try to manifest God in this world by intuitively following a path where God is more present – usually through greater consciousness, reality and loving-kindness, but that is to God what a reflection of the Moon on a clear body of water is to the Moon. When you look at things this way, this world of Order is basically telling God that He can’t be both A and NOT A at once, it’s trying to limit things and impose order in ways that are inherently incompatible with the very nature of God. Suddenly, this no longer looks like a juxtaposition between the Dionysian chaos and the Apollonian order; rather, it looks like a juxtaposition between creative freedom and rule-based fascism, where order is not a good thing. What if the chaos of God doesn’t shred the frog in the blender; what if it shreds your limitations, your inability to get past blaming yourself for your sins in some static frame of mind where you oscillate between fucking up and self-destruction? What if chaos of God allows you to see many apparently contradictory sides of a situation, to see yourself as both the villain and the victim, and simultaneously as the transcendental, higher reality that is within both, and yet untouched by either, except as the eternal witness of space, time, name and form? What if this holy, transcendental chaos is the only thing that can save you from the quagmire of order, from the infernal rules that demand a pound of flesh for transgressions that arise naturally in the environment that is inherently opposed to the nature of God? That’s the other way of looking at Shiva – He is not an Apollonian deity of order, He is the destroyer of limitations in a dance of Chaos, God as the freedom from limitations that make this world appear real to the deluded.

What if the only way to know true freedom is to embrace Chaos in a dance that defies limitation, that defies static principles and ideas, that allows song to become a bird to become light that is beyond, and up and down are meaningless; what if we need to stop thinking in terms of fruit in a bowl on a table, where all three are distinct and separate, and embrace the idea that the entire scene is rendered and exists only as a structure in a computer’s memory, or, to be quite specific, within the mind of God? You can think of things as distinct and separate all you want, but all those distinct and separate things you perceive on your monitor start looking very similar when you inspect your computer’s memory with a hex editor, and yes, up and down are meaningless.