Archive for the ‘Future’ Category

Don’t Take My Word For It

Saturday, March 6th, 2010

In John Mauldin’s most recent letter, he had these wise words (among others) to offer…

I queried several venture capitalists, who see literally thousands and thousands of business proposals. While lots of people are working on it, they are aware of nothing on the near horizon. Water may be my #1 concern about the future. It is an intractable problem and one that must be solved. There is Microsoft- or Google-type wealth awaiting the team that creates an inexpensive way to purify water. Water management will be a major issue in the future. There are those who think we will go to war over oil or energy in the future. I rather doubt it. Water rights are going to be the issue that will divide nations and peoples unless we can find new technologies to create cheap supplies of fresh water and move it to where it is needed.

The Biggest Opportunity Right Now

Monday, May 25th, 2009

…is the downside in US Debt.

I want to make sure everybody I know, who wants to learn, understands how bond duration and intrest rate risk combined with the current economic storm…is creating a dramatic climax and great opportunity out of the last 27 year bull market in fixed income products sold by the US Government.

lambo

So…if you start learning about the market on your own, and are curious about the derivative products available…just let me know, feel free to e-mail.

Getting Really Long Oil, Really Really Soon

Tuesday, May 5th, 2009

It’s days away, maybe a week, depends on what the dollar does. But I think…since…

…the volatility of oil has collapsed:

and since the curve is also collapsing…

I feel it is likely a smart time to buy at least half as much 2012 crude oil call verticals, as I ever plan on owning. I’ll save half my powder, for when my position gets cut in half. Crossing fingers I get the chance to.

What if Oil hasn’t bottomed?

Sunday, April 12th, 2009

Consider for a moment, hypothetically that the recent spike in oil brought just enough investment to solar and oil both, that combined with the supply side of oil, and solar R&D…could solar potentially be ready to breach a tipping point, towards grid parity?

Could expensive energy be behind us?

Look up the history, on how the internet got so cheap.  Recall: an investment boom of people looking to catch the trend, without enough demand (at the time), sent many of the hard assets the investors put money into back to the banks.  The banks sold assets off for $0.10 on the dollar, to new investors who gave away the service until economies of scale kicked in.

What if the ceiling is now $65, on the price of oil?

What will that do to the growth of civilization? Demand for commodities? Water? Technology?  What if energy isn’t the bottled neck that stops our growth?

What if economies of scale make our planet more effecient, as the population doubles quicker and quicker?

What if space, physical square footage, is the finite resource we one day value the highest?

If we hit 200 people / Km squared, assuming that’s where space will start to become a problem, that will mean ~30B people. 80 years of 1.9% population growth and we’re there.

So, what will it be, energy? water? both? or space?

Update: I started playing with the world usage stats, from 1993…from Wikipedia:

Arable land: 13.13%[6]
Permanent crops: 4.71%[6]
Permanent pastures: 26%
Forests and woodland: 32%
Urban areas: 1.5%
Other: 30%

I don’t know how it totals to 107%, so for argument sake, lets just say Other is 26%, because the data doesn’t show a “rural” area, and lets set permanent pastures to 23%.  Both of these assumptions, are likely more conservative…for my argument I’m about to make. So, we have:

Arable land: 13.13%[6]
Permanent crops: 4.71%[6]
Permanent pastures: 23%
Forests and woodland: 32%
Urban areas: 1.5%
Other: 26%

Redefining the 26% and 32% (58% total) as “free and ready to turn into effecient crops or efficient cities at the drop of a hat”, then  58% of the planet left to violate, and turn into crops.  So, if we did that, it would take 2.4x the current population to use up all the land, using the ratios we currently use.  That means 3.6% of the land will need to house 16.3B people, or living conditions of 3000 people per Km squared of urban land or ~109 people per square Km of land, footprint wise.

50 years, at 1.8% population growth, and we’re there. Huh. And, I’d say, my asumptions were very conservative.  100% of the land, isn’t livable nor farmable…sooo…shit, should I be buying farm land instead of oil? Screw dollars, gold, education…real stores of wealth will be in memories and real-estate.

UPDATE:Implied Volatility of Gold, Post Treasury Bid

Sunday, March 22nd, 2009

We saw a surge in the implied volatility of gold, after the FOMC announcements on Wednesday. 

 Implied Volatility of Gold

(click to enlarge)

FWIW, I’m thinking now is a good time to dump my life savings into 2010 and 2011, bull call spreads on GLD, GVX, amongst other things…talk me out of it.

UPDATE. I wrote this post around 4:30 on sunday.  I realized, again, nobody online plots the historic implied volatility of oil and gold.  So, I added it to http://www.curvingfutures.com, and by 9:30 PM, I was finished parsing the CBOE data and plotting it.  Fun, fun.  Check out the Implied volatility page here.

Protected: Change for the better…

Sunday, February 8th, 2009

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Path of the Planet

Saturday, January 3rd, 2009

This post will come as no surprise to Engineers who have studied controls, or to others like Nate Hagens and Gregor Macdonald.  But, looking at the earth like a multi-variable-non-linear system, with feedback loops designed to keep her in equilibrium, have been struck by the equivalent of a delta function it has never felt before.

Population

See, when engineers go to model a problem, in order to create forecasts they use an impulse, or a step function, then measure the response.  For linear systems, these responses are additive.  That is, to create a forecast for what would happen if there were two impulses, you can simply add the two responses together.  This gets extremly math intensive, and “convoluted” would be the best appropriate pun, but what happens to some systems is – instability.  Unstable systems don’t have the appropriate feedback necessary for the system to find an equilibrium, or they have feedback that overshoots, only to cause overshoot in the other direction.

Applying this to earth, in a crude qualitative way, what you get is things like supply and demand problems, extreme weather and extinction…because natural systems, will attempt to find equilibrium.  Anyway, below is the basic mathematical template that instability often embodies.  My theory is that between the law of large numbers, a growing population, and information continuing to flow faster – this is the path we’re on…I can’t prove it, but there are many signs that oil, water, and other variables will follow a more complicated path, but one like this:

Path

There is no Spoon

Sunday, August 17th, 2008

Any heavy internet user, who likes thinking about humanity, will thoroughly enjoy this clip. Promise.

Of course the title of this post…is a subtle refrence to the greatest movie of all time. This TED talk, reminded me of it…just a little.

Predicting Prediction Markets to Succeed!

Saturday, July 19th, 2008

I was listening to an audio version of the economist, when I had to drop what I was doing when I heard them mention Prediction Markets. A quick google search pointed me to intrade.com. Very cool. People bid on contracts that expire at either 100 or 0.  It’s a market for a betting pool as to the outcome of any event.

Check this out:


Now I’m no expert, but get long Obama, get long McCain that seems like a 3% yield arbitrage. One of them is going to win.

Stock Market participants are more likely to dig these insights:

Prediction Markets

I took the data from their “probability of a US recession in ‘08″, made a moving average, then took a derivative and smoothed that out too, then mapped it to the S&P.

It’s interesting to observe the causality get weaker as the contract gets closer to expiring.

Check out the earlier surges in the derivative, they appropriatly correlate, a bit at least, to the market then a reversal in the derivative means a local max or min – in some cases – in the S&P…it’s a stretch.

How do I get long Prediction Markets? I want to invest, in the actual exchange. What a cool system, I am enthusiastic about it’s growth and want to see it succeed.

Developers & Desal

Monday, June 23rd, 2008

If you think I’m making up the problem of water scarcity, or you think it’s a problem for places far far away, or it’s just another hippy trend that isn’t real – talk to the developers in California who have piles of wood stacked up that they can’t turn into houses because the state won’t approve “will-serve” letters. In other words, the state can’t promise they will serve fresh water. Trust me, the state has no motive to stop economic growth like this.

Desalination is the process by which most of the world will likely turn to, as they need fresh water. Not too many investments open to the retail investor, yet. But eyes are open, and ideas are rampant.

I already own Hyflux. And I’ll likely buy a little ERII if I can get it for anywhere near $6 upon the ipo.

But thinking outside the box here, I’d like to own the names selling the membranes, and doing the chlorination & dechlorination, or pH neutralization. My favorite idea on how to invest in desal is buy the guys handelling/channeling the brine. The brine is the salt the facilities need to deal with. Usually it means dumping it back in the ocean, which, on a conservation of mass basis looks okay, but studies have shown clouds of shrimp dieing and discoloration of beaches. Of course, less unique, you could own the names selling oil-less pumps. That seems easy.

Check out this facility in Cypress:

Cypress Desal

Check out this bore in Australia:

Huge Bore

It’s what’s used to drill horizontal holes for the brine. Link to Source.

SimpleDesal

Thinking Outside the Box: Rising Oil & Frozen Juice.

Sunday, June 15th, 2008

As oil rises, and urbanization trends continue, I’m thinking about what might happen.  Shipping rates go up – duh.  So, I think sales and margins will improve for concentrated solutions, where the competition selling finished products will be squeezed.

Eg. Canned frozen juice vs the 2L of ready to drink stuff.  If you have to ship 2L, you’ll pay more to ship a very comparable product.

…just thinking out loud…likely many have thought about this already…it just hit me today.

Alliance of Compassion & Enlightened Self Interest

Saturday, May 31st, 2008

Put me down on the ‘ambassador’ list. How can we give credible hope to the bottom billion? Alliance of Compassion & Enlightened Self Interest. Watch this until the end, think hard about the Nokia advertisement at the end, and have a good weekend!

What the HEK? A Chinese Water Bottler, Blank Checks

Friday, May 23rd, 2008

So, ‘Blank Check’ Company, Heckmann Corp. (HEK) recently announced they bought a Water Bottling company in China. I’m like – wow – what a great business to be in right now. Probably a scam. The chart exploded this morning. Some heavy money traded the shares north of $8.50, then it pulled back to ‘pre-publicized’ levels of $8.25. I figure 1. What a scam, these guys are investing in a likely trend/shell company, which their brother in law probably owned. If it is legit, it’s likely a great investment – anybody in charge of a ‘blank check’ likely knows what they are doing. If their crooks – no way did they go to all that trouble for the shares to peak at $8. If they aren’t crooks, same holds. So since it went back to pre-publicized levels, I bought a few shares at $8.2799. I especially liked the fact that I could consume everything in current circulation, in english, in less than an hour. It has just become my smallest holding, my biggest gamble, and most un-researched purchase. According to Lindzon, due diligence if for underperformers, lets see if he’s right. I’m literally gambling with ~1.5% of my portfolio…so blow on the dice for me…I know it’s wrong…and I’d never do this with other peoples money.

Plus, the downside shouldn’t be worse than the lows during the chart where the company was just a blank check. That’s $7.22. Soooo…yaaah. D