Monday, January 24, 2011

GLD is a Buy

GLD was a buy at the close today at a little over $130/share. It is a good time to add more to the portfolio. Of course, it could be a losing play, but I'm betting that it isn't. The charting system I use during bull markets doesn't predict absolute bottoms or absolute tops. Any system that claims absolute insight in market timing is a lie.

But, my system gets in the neighborhood. Six months ago I bought more GLD at $118/share. It ended up going lower to about $113 over the next week or two. Today that dollar difference doesn't seem like a big deal. I could be wrong but I don't think it will make much difference this time either.

GLD reached an oversold condition on all three of my primary indicators today. The Slow Stochastics was below 10 (at 6.89), the RSI was below 50 (at 35.1), and the MACD was negative (at -0.98). This is the soup I have always used to determine entry points in a bull market. So, this marks a buying opportunity for GLD, even as hedge funds and others are dumping it.

SLV, which I made a resolution to watch more closely this year, also gave the same three signals (at 7.27, 34.7, and -0.29, respectively). So, now might be a good time to add to my holdings there as well. I'm going to wait on that one a bit though - to see if the MACD will go slightly lower on SLV. I'm just not as confident (or foolish) about it as I am about GLD.

The last time I bought GLD the market sort of meandered for a couple of months before resuming its upward course. This is typical of bull market conditions when the bull is correcting and taking a rest. It is also, unfortunately, precisely how things look when the bear has taken hold and pausing before more downward momentum. Oversold or just the bear resting? No one knows. That is why this kind of stuff is not for the faint at heart.

According to a Dow Theory interpretation of things, GLD is still a great value. That is the most important point. GLD closed at $70 on Nov 12, 2008. That is the most recent lowest low. GLD closed at $139.11 on Dec. 6, 2010. That is the most recent highest high. The 50% Principle would require GLD to break through the mid-point, roughly $105, to turn bearish. At $105 I would have still made money overall but I would have lost money on my last two buys.

The other consideration here is the 200-day Moving Average. The last time GLD touched this average was January 22, 2009 - almost exactly two years ago. This is a long time and all market moves, bullish and bearish, eventually come back toward the 200-day MA. Currently, the average is about $125, which is a key area of support for GLD. Dow Theory considers all action above the 200-day MA as bullish. So, for now the trend remains solid according to Dow Theory. There's always a chance GLD will test the average. In fact, it is high time that it did so. As with my last buy, GLD could drift $5-$6 lower. I'm prepared for that. Such a move might even set up a further buy opportunity.

When I consider the only way (short of defaulting) to manage
the enormous burden of public debt in the US is to inflate our way out of it, I have to believe the long-term trend remains bullish for gold as the Fed continues to struggle with deflation and attempt to lower the perceived "weight" of the debt through inflation.

I've posted a lot about the economy and my personal investing throughout this blog. Managing my future retirement is a rather large priority for me now, after all. So, today I thought instead of blogging about things I have already done I'd blog about something as it actually happens. It might give the reader some sense of the uncertainty about whether I just lost a bunch of money today or whether it will grow. As I post this blog no one truly knows what will happen. It is a best guess.

Meanwhile, the Dow closed at 11,980.52,
a new high for the rally. Things are looking very bullish for stocks, the exact opposite of silver and gold today. So, I certainly seem rather foolish, refusing to buy the stronger stock action while betting on the weaker commodities. Maybe I ought to have my head examined.

By contrast, if you look at the chart today for DIAs (the Dow ETF) you will find that the three important ratings in my charting scheme are at 87.69, 78.35, and +1.13, respectively. Generally speaking, the Slow Stochastics rarely reach 90, the RSI rarely exceeds 75, while the MACD reached 1.52 on October 14, 2010. So, yeah, the markets could go higher but
they are severely overbought and due for a correction.

This is a very interesting time, with stocks and commodities largely in opposition to each other. For the short-term anyway there are
corrections in order. Stocks should go down, commodities up. But, no one pays any attention to my charts except for me. It's probably better that way.

Saturday, January 22, 2011

The Morris Theorem and Beyond

Ian Morris presents an entertaining, informative, and in some ways provocative interpretation of the past several millennia of human history, recent stuff in the grand scheme of things. I finished his new book on the subject last week. It is well worth the read even though I don’t agree with Professor Morris on some key points.

His metaphysical narrative can be simplistically summarized as follows: the driving force in human history is the unique capacity for the social development of our species. Chiefly, our species has adapted and mastered its environment through “the Morris Theorem”. Morris writes: “Greedy, lazy, and frightened people seek their own preferred balance among being comfortable, working as little as possible, and being safe.” (page 28)

In conjunction with these three forces in human history there must be mixed other hyper-factors beyond the effects of direct social development; namely, famine, migration, disease, and climate change. These factors, working chaotically but sometimes simultaneously, essentially transform the physical “geography” (Morris’ term) in which social development takes place on Earth.

From this distilled perspective there is much to admire and commend. Certainly, history can be viewed in this way, though it is obviously a prejudiced perspective filled with its own easily accepted assumptions about truth. In this way it is most like every human perspective on Being. Nevertheless, I find what Morris has to say thought-provoking.

As we saw in my January 9 post, Morris believes all these factors (plus Genghis Khan) blended together to change the human geography of China just at the critical time when it was about to express the First Industrial Revolution. Instead, Chinese social development was stunted for a few centuries and the “backward” West eventually experienced the Revolution, resulting in the world’s first global consumer culture about 1750. London was the center of the human universe.

The tale is a fascinating one for me, based largely on archeological and written evidence. Morris doesn’t offer much in the way of interpretation beyond what I mention above. The actual unfolding of events, of moments of famine, disease, climate change, and migration as humanity continued to rise to higher levels of greed, fear and laziness are more or less historical facts. You might not agree with the way Morris frames events but all these events did happen. He mentions the near simultaneous spread of Christianity in the West mirrored by China’s adoption of Buddhism, for example. This happened.

Among these forces and facts, the one that perhaps surprised me most was the frequency of climate change over the last 12,000 years and, in particular, the last 3,000 years or so. The climate rarely stays steady for more than 6 or 7 centuries at most. Change is not slow nor is it rare. This is, perhaps, a paradigm changing fact for me in consideration of global warming, though we are currently experiencing greater global warmth than at any time in the last 1,000 years. Climate variability happens frequently though it seems both slow and rare among a given series of human generations.

The other thing that grabbed me about this book was its conclusion. For years I have had an interest in something called The Singularity. I was motivated to study and apply some longevity techniques over the last 12 years or so of my life because of an intense faith I recently held that The Singularity would occur in my old age. Morris puts the date all over the place but 2045 is one year thrown around. I have seen some guesses are as early as 2030. Unfortunately, I now consider these predictions too optimistic, if The Singularity is even possible. Obviously this is just a faith. Nevertheless, I’ll continue with my longevity approach to health. What harm can it do? Maybe I still believe.

I will be 86 in 2045, if I can live that long. I hope to be in reasonably decent health (but for the inevitable aches and pains and other minor deteriorations perhaps) with a sound mind. But that’s a crap shoot, obviously. My grandparents and their parents mostly died in their late-eighties. There were some exceptions. The ones that managed to live longer had unclear minds toward the end, so perhaps that is my fate too. I’m doing the best I can. At any rate, should The Singularity occur then I want to have slowed down my aging process as much as possible. So, my memories and experiences can be uploaded into a digital housing. At that point I will have entered a posthuman world.

This sounds like science fiction, but there is a tremendous amont of actual science devoted to The Singularity. Whether it happens or not, however, I was shocked to find Morris writing about it as one possible future course for humanity. This book is academically written and its approach is far more traditional than some of its “fringe” perspectives might suggest. But, in the end, Morris goes for the extremes and that makes him provoking and entertaining in that regard.

The book contrasts the possibility of The Singularity with Nightfall, so named after a great short story by Isaac Asimov. Nightfall is “a cataclysm that overwhelms all responses, destroying civilization and hurling humanity back to square one.” (page 577) Morris mentions our still very real capacity for nuclear self-destruction as an example. But, equally, the human capacity for war in general is an argument for Nightfall. What if al Qaeda had the bomb?

Personally, I think this futuristic prognosis is too limited. Morris offers us either a wonder-world where the forces of trans-humanity take our species to the next level of evolution. Or, the fundamental demise of civilization as we know it. Sure, either of these is possible and there are strong cases to be made for both. But, as with most things, it seems to me the most likely scenario is a muddling through of our problems and an inability of science to reach its potential.

Which is why I’m afraid I won’t live to see The Singularity.

In fact, Morris notes throughout the book that humankind has “bumped” its head against some invisible ceiling in social development numerous times in the last five thousand years. Why he fails to ponder this possibility in the context of the present and future is a mystery to me. Nevertheless, he boldly states: “We are approaching the greatest discontinuity in history.” (page 592) In this regard I believe he is correct, though obviously this perspective has its prejudiced nature. I am as prejudiced as Morris on this point.

“...the next forty years will be the most important in history.” (page 608) Once again, I agree. But then, I guess you could have said that about any 25-100 year span of history back when it was the Now. There are “most important” aspects to every level of human social development; our present experience is not unique in that fact. But, of course, for the first time we as a species have the power to affect vast matters of global implications. That has been the case only recently. Cro-Magnons did not dent the globe much.

This global nature of human expression on Earth as a species has transformed itself many times through past generations. Morris shows this through his “social development” perspective. A major transformation occurred around 1750 in London. London was the largest city of a new type of social development on Earth. A “new class” of people was growing in London, much to the dislike of the aristocracy. Ordinary persons of great entrepreneurial spirit were emerging through business growth and success.

“Consumer culture” has always existed. Morris shows this through the trading habits of human cultures, particularly after they adopted sea exploration, which is more of a western thing than and eastern thing. This is a fundamental reason why China’s social development practically ceased for awhile (“Nightfall”) before advancing again. But, in London it was a new, truly global human force. It was (and is) so complex that it could survive almost any migration or disease or famine or, hopefully, climate change.

Most nations of the Earth organize themselves in a western way economically. According to Morris, China’s social development will surpass America’s at some point in the near future; within the next century, almost certainly. But, when that happens it will be an economic measurement. This is a prejudice of the perspective. When China’s manufacturing and service productivity exceeds that of the United States it will mark the day America becomes the next Great Britain, a former global power with a strong navy. Great Britain was perhaps the first instance of this in history. America will be the second. Even the great Spanish, Portuguese, and Ming Empires were not genuinely global given that they were not driven by vigorous modern industries.

Among the what-ifs of the book, Morris discusses how the Industrial Revolution almost originated in France instead of England. But, as it turned out, the British got the jump by a few decades before the French fully adopted the social transformation into their culture. The difference of a few decades was significant.

Due the fact the British had the most powerful navy on Earth, British industry became the first gigantic global business forces in history. Feeding our instincts for “consumer culture” and, in turn, transforming humanity in terms of social development. Our modern consumer culture (based, once more, according to Morris, on greed and laziness and fear) is more diverse and reaches geographically farther than any in the past. It can withstand almost any Nightfall scenario, as far as I can see. So, I guess I’m a muddling optimist, an agnostic of The Singularity. But hopeful.

This idea illustriates how the book stimulates me. When you come down to it this is why I prefer fact to fiction, biography to characterization. Physical historic human experience interests me more than the human imagination, though – of course – our imagination is our most honest intimacy of Being. But, this is an honesty that sometimes cheats and deceives because it knows itself and wishes to Be seen in a certain way. I guess the imagination is more prejudiced than the collective silence of historical facts, though we often perceive facts dimly.

Physical history (archeology and geology), however, doesn’t deceive very well. It may, as I say, be interpreted many ways but the evidence that is batted back and forth is real. It actually happened and, therefore, is completely honest with us if we can but fix a read on it. There is a force to this and Morris captures the force that history speaks so clearly. Morris writes a worthy successor to Jared Diamond’s brilliant Guns, Germs, and Steel, another book I highly recommend. We cannot deny the existence of historical forces nor trivialize their importance. History is equal to any (and every) human intimacy and it fascinates my own.

Sunday, January 16, 2011

My Gaming Table

My wargame table is situated beside my study area.

Years ago Jennifer and I lived more modestly. An evolution was necessitated in my wargaming hobby while we occupied a very small basement apartment. We lived there about four years. This was when all my wargaming was board wargaming. The digital assistants and PC wargames didn’t exist yet. Typically, I placed my wargames under a thin sheet of Plexiglas to keep them steady and flat.

At the time we had two cats. Whenever I play any board wargame, it usually remains set up for several weeks, if not months. In our first house, I kept my games behind a shut door so the cats wouldn’t go waltzing across the game map(s) and mess up all of my carefully positioned pieces and markers. Cats being cats, that happened accidentally a couple of times anyway.

But, when we landed in the basement apartment, not only was it impossible to keep the cats away but we really didn’t have the space to accommodate my wargames. Bummer.

Out of necessity, Jennifer’s dad (who enjoys wood-working projects anyway) and I put together an anti-kitty cat wargame table top that could also double as a regular, serviceable table. I still use it today even though we have a lot more space and we haven’t owned a cat in about 15 years.

The table is square and made out of a sheet of three-quarter inch oak plywood cut in half, rough 4 feet by 4 feet in size. The bottom half is cut slightly smaller than the top half. The bottom is fortified with thick slats riveted at regular intervals to make it steady. The slats are set such that I can stack many game pieces on top of one another and it still will not touch the top when it is placed. The top is finished, edged, sanded several times. The whole thing is stained. It took Jennifer’s dad and myself two or three weekends to finish this table.

The table's edge was designed to allow for stacking of game pieces even when the top is placed over the map. Notice the decorative plug covering the hole we drilled to rivet the sides to the bottom piece of plywood. We also etched a line down the middle of each side piece for decorative purposes. Finally, I gave the table a dark stain.

The table’s anti-cat surface allows Jennifer to spread out paperwork from her business (home office a few feet away upstairs) now and then, or to serve us in other temporary table needs. I often fold laundry on it. We wrapped some Christmas presents on it this year. But, I can remove the two sturdy top panels and a complete wargame (up to two standard maps in size) is waiting to be played underneath.

Since last summer, I’ve been playing
Clash of Arms’ Monmouth game. This is a fairly complex rules system, but it affords a colorful and very realistic depiction of this battle from American Revolution (one of George Washington’s finest hours). Game play represents such things as formations, leadership, morale, terrain effects, firepower, melee, disorder, and casualties. Playing the game teaches me a great deal not only about the battle concerned but also about how wars were fought during time period depicted. This is true of any wargame I play, as I have posted before, be it a printed game or digital version or an actual PC game.

The general situation in my game. The British rearguard has driven the lesser organized Americans across the battle field and has most of them trying to form a line, though shaken at the moment, behind a hedgerow that offers favorable terrain advantages. American reinforcements are marching in column on the road toward the battleline.

Generals Henry Clinton and Charles Cornwallis prepare to continue the British advance in the mid-afternoon, before the Americans can fully recover. Notice the green kilted Scottish regiment positioned at the bottom of the pic, awaiting orders. The green coated Queen's Rangers regiment rests from earlier combat in the safety of woods on the British right flank.

The Battle of Monmouth is not one of history’s better known affairs. But, being a small battle, it allows me to play this complex game system (originally designed for the much larger battles of the Seven Years’ War – of these I own Leuthen, Frederick the Great’s finest victory) with relative ease. There are fewer cavalry units, for example. The cavalry rules slow the game down, so having them come into play less often speeds things up. And fewer game pieces overall makes for faster play.

George Washington has arrived (he does not start the game on the map) and is rallying his troops with his good command ratings. Notice General marquis de LaFayette on the American left (photo's right). His small command is organized and ready to defend.

Not that speed has anything to do with my approach to my gaming hobby. As I said, I started Monmouth last summer. Most of my gaming takes place on my computer in the digital format of these printed games (that way I can have multiple games going simultaneously whereas I only have a table for one game at a time). But, I must admit, there’s no aesthetic substitute for setting up a wargame map (my table is designed for two such maps, my favorite board wargames are published with two or more maps) and playing it out on a table. It is the difference between computer chess and playing with a nicely crafted wooden chess set in your hands.

In the case of the Monmouth game, the aesthetics are of a superior nature. Most wargames are far better published today than they were when I first entered the hobby in my teens. The graphics and quality is noticeably distinctive in some games. Clash of Arms generally puts out some of the most colorful games available. So, not only do these games entertain in play and inform in terms of the history they simulate, but they can often be darn near works of art.

The Revolutionary Era is a great time to depict. There were standard uniforms, but many fighting units still sported their own colors. This was more common in the American army, of course, since it was the poorer equipped of the two. Notice the variations in General Nathanael Greene's division in the scan on the left. The British infantry are more or less carbon copies of each other. If nothing else this makes viewing the battlefield easier for commanders. But, still, the British Queen's Rangers are dressed in white and green, while the Scottish guys are wearing read coast with green kelts. In this way it makes the Battles in the Age of Reason Series and its forerunner, the La Bataille Age of Napoleon Series, a tad more difficult to play. Most wargames have common colors for each warring side to make it easier for the player to determine ally from foe.

Clash of Arms is committed to representing the historically accurate differences in uniform colors, even down to the strap and belt level. For me, this breaths a certain spirit into the game play that makes it more entertaining for me. Still, it’s sometimes a challenge to tell Continental blue from British blue (actually Hessian, the British haired a lot of mercenaries for the American Revolution).

I think such attention to historical detail in a wargame is a work of art, though few can appreciate it due to the weirdness of the geeky hobby. “So, you move little pieces around and roll dice and play general? Uh huh.” Yes, I am a nerd.

General Cornwallis's First Division of the British Army. He has good command ratings (on the flip side of his playing piece) to reflect the fact that, even though he later lost his army (and thus the war) at Yorktown, he was still a very competent commander. You can see the Scottish kilts along with the blue uniforms of some Hessian mercenaries. Cannon units are in standard blue coats as well.

My game table has been with us a long time now. I think it looks nice and manly, even worthy of a good wargame hiding underneath as the rest of my functional life entombs it there. I still use a 1/8 inch Plexiglas sheet to keep the maps flat, custom cut to the table, of course.

Manifest of the British Army.

Manifest of the American Army.

Please note: When I write “wargame” I mean “strategy simulation of actual history." This is obviously not first-person-shooter type computer games like Fallout 3 and Call to Duty. My daughter plays those games and I find them only mildly entertaining, often mindless, like meditation by surrendering your Being to game instincts. Strategy wargames, by contrast, are highly rational, only vaguely intuitive, with lots of mental calculations to weigh before game decisions are played.

Tuesday, January 11, 2011


This is the chart for GLD since October 2010. It could signal an impending bearish reversal. It could be just working off an extended overbought condition. Since I hold a lot of it and am doing nothing I guess I'm betting in the long-term the latter will be the case. This chart was created at

Well, I won't get to blog this date many times in my life. I wasn't around the last time this happened, in 1911. Maybe I'll be around in 2111. Long odds on that one though.

Another snow day, er, work day at home. The roads were still pretty slick this morning so I figured I would go in about 10-ish. But, I wasn't going anywhere until somebody else told me I wouldn't be alone when I got there. Our support department transferred all lines to various cell phones and decided to work from their numerous homes. That tipped the president's hand and he gave a Rah-Rah email about "Let's make the most of this time" and "we'll be open for business as usual tomorrow." Sure.

It is suppose to get down to 17 tonight with 15-20 mph gusts. This is what my dad calls an "arctic blast." It got up to about 36 today and there was a lot of melting before the wind gusts started about 4 pm. All the wetness on the roads will freeze tonight and everything will be a jolly sheet of ice before dawn tomorrow. Expect me to be late.

I spent time today on the phone with my marketing coordinator, the president, two salesmen, and my other employees. We got a couple of collateral material projects rolling and I was involved in settling a data storage issue with one of our clients. Typical stuff mixed in with the usual emails and voice messages. Only one walk with the dogs today. I drove my daughter over to my parents for a change of pace. We played Rummikub when she got back. I worked out on my elliptical afterwards. It was too windy, cold, and wet to actually go for a run.

No mail now for two days. So much for the old postal motto.

The chart at the top of this post shows GLD trapped in a trading range. Triple Tops is what they call this pattern. In pure chart reading theory that's a sign of a pending reversal. My guess (bet, hope, prayer, whatever) is it will be short-lived if it comes. The MACD finally turned negative yesterday and remained slightly so today. That's good. The last time it was negative was back on August 12 last year (the last time I added to my holdings was July 2 at $118). That's a long rally and it was past time for a rest. The fact that gold was up today while the key indicators (including the Slow Stochastics and the RSI) worked off an overbought condition is a sign of strength or at least resistance to downward pressure.

GLD settled today right at the 50-day moving average. So we'll see what happens next. No one knows. One investment advisory letter with 45 years experience called it quits with his most recent issue. Harry Schultz went out by saying "Wake me up at $2,400 gold." I'll drink to that.

My daughter posted this pic on Facebook today. She took it late yesterday morning when the snow was still a wonderland without ice. This male Cardinal seemed to be more publicity hound than bird.

Monday, January 10, 2011

Snow Day

Jennifer's Caddy in front of our house today.

We got a little over 4 inches of snow early this morning. It fell after midnight and I was actually a little surprised to see so much of it this morning at 6:45. I waited around for awhile, drank coffee, and logged into work. Not much out there. One of my employees phoned to say she would be late today. Her voice message was in my email.

I waited until it was daylight enough then walked down my driveway to the road. The snow was powdery, made a nice dry crunch, and was easy to walk in. Its texture was such that you couldn't make much of a snowman. It was deep enough to cover my boots. They got about 6 inches of snow just ten miles or so north of us. As I walked down the drive I noticed that it was completely, totally, and utterly quiet. There was no wind, no motors, no dogs, nothing. Stillness. I could see my breath.

The road was slushy but drive-able. I ate breakfast, changed into my old-fashioned overalls and let my old Subaru warm up awhile. I figured I'd give everyone a smile at work today wearing my old-timer's attire. I made my lunch and packed up and drove into work about 9am. I knew from the internet there would not be any more snow for awhile but there might be some freezing rain in the late-afternoon.

I don’t know what the hell I was thinking. The major highway that runs about 2 miles from my house hardly had anyone on it, mostly arrogant four-wheel drives but a few regular trucks too. No Subarus though. The highway was very slippery from the packed snow. Maintenance crews had obviously been out but there was still stretches of several hundred yards of solid white packed snow to drive on. My car shifted numerous times but I made it through with the trusty front-wheel drive and constant 25 MPH. I drove the whole way in without anyone behind me until I got closer to the middle of town.

Not a human soul was at work when I got there. This was about 9:30 am and I pulled into a pristine snow covered parking lot. Not a mark on it. It was beautiful even though I was being stupid for having driven this far to see it. I called my boss, the president of the company, on my cell.

He told me he had been checking some things on his large farm before coming in to work. But, he had slipped and fallen once when getting out of his truck. He lives much further out and on a less maintained road. He said they had gotten a couple of more inches than at my house. Anyway, he sure as hell wasn’t coming it. “It’s probably going to be worse in the morning,” I aloud and he agreed, especially if we got much ice later.

I returned home uneventfully, taking my time. But, when I got back I couldn’t get the 1991 station wagon up the driveway. I kept spinning out about one-third of the way up. The grade was just a bit too steep and the snow too thick. So, I parked the car off to the side at the end of the driveway and walked up, carrying my routine jug of filtered water that I drink every day at work. It sloshed in solitude. The sight of Jennifer’s car covered in snow against the backdrop of my house was gorgeous. I stopped for a second, felt less stupid for the moment, and enjoyed the view all around. It was about 10:15.

I worked from home. I called all my employees and checked on them. One lives in Chattanooga and said she got about 8 inches with snow still falling there. I told her to not worry about trying to come in tomorrow. We have a meeting planned with one of the partners but it will have to be rescheduled. I shot out a couple of proposals to account managers. I reviewed voicemails and send a few emails with various attachments. I spoke to our project manager about uploading more accounts to the database.

But, mostly I took short walks with the dogs. Talked to family on the phone. Kept checking the internet regularly to see if we were going to get much ice. We didn’t, thankfully. Later in the afternoon my daughter taught Jennifer and I her version of dominoes. We played on a set Jennifer owned years before we married. We have never played a game with it before though I used to set them up in little spirals and other patterns when my daughter was a child and knock them over for her.

Today, I learned I really suck at dominoes. My first match or set or whatever you call it when you play three games in a series ended rather disastrously for me. I scored 99 to Jennifer’s 25 and my daughter won with 12. Several more games brought no better result. She thinks she’s something now, beating her parents so soundly.

Night came and the snow had melted just a bit in the late afternoon as the temperatures hovered right at freezing. You could hear the water dripping down the spillways of the gutters. What was a fine powder this morning became just a thin sheet of ice with tightly packed snow underneath. Instead of striding through it you had to pound it with your boots to walk. Just a mess, yet so wonderful earlier, before I stupidly drove into work on an obvious snow day, before being humilitated in my first attempt at dominoes.

We don’t get much snow around here (I've gone years without seeing snow, before starting this blog). It turns us all into elves when we do though. The snow is magic. It isn't the regular, routine part of winter that piles up on the side of the roads and turns black as the cold weeks go by. No way. Around here snow is still a novelty that finds the youthful places hiding in your heart.

My Subaru was a real trooper out there in the snow with those big, bad hemi trucks and their four-wheel drives. It got me to work when it didn't have to and never complained. It got me back home too. The tread marks you see are from my presistent attempts to get up my driveway.

Sunday, January 9, 2011

The Great Mongol Horde

About 60,000 years ago human beings were migrating out of Africa and discovering the landmass of the Earth. They (we) fanned out into India and China and the Middle East and the Mediterranean Sea. They did not move too far north, except for a few probes by groups of people. One such probe crossed a frozen wasteland now known as the Bering Sea and came into the Americas. But, that group (or collection of groups), like most of humanity left in deeper Africa, didn’t account for much of world history until more recent times.

The peoples that most affected humanity and the Earth centered themselves in the aforementioned four geographic areas of the landmass. In these places the first great civilizations rose and fell for thousands of years as agricultural prowess evolved along with such things as canal building and wall construction for fortified cities and large temples and palaces.

Such things as war, famine, disease, climate change (more specifically climate change within the context of geography) combined to affect human things like the growth of commerce and the social development of these peoples over the course of the last 12,000 years. It is the story of these last 12,000 years that Ian Morris attempts to tell and theorize about in a book I am currently reading by him entitled Why the West Rules – For Now.

I am a little over halfway through the book and Morris has me on the edge of my seat with this fascinating look at history. I just finished the chapter in part containing 4-5 pages regarding the Mongol Empire around 1200 to 1300. In the grand scheme of time, the Mongols warrant about that many pages compared with everything else Morris is talking about. So, this post is about a very minor point he covers in the course of his work.

In the West, the Roman Empire has fallen, though the Byzantine Empire still remains to its memory. All major powers are at war with each other and none of them is very great in size or wealth. Occasionally, Europe rallies enough cohesion to attack the Muslims who have a growing empire of their own and control Jerusalem. The city exchanges hands several times through the decades in horrific fighting.

Meanwhile, in China the city of Kaifeng stands as the industrial giant of the Earth. Over one million humans live there making it the most populous and wealthiest place on Earth. Vast stretches of forests have been wiped out trying to both house and feed the people as well as support the first mass industry on Earth, prodigious iron works far beyond the scope of anything in Europe. With wood becoming scarce from the regional denuding, the Chinese discover they can heat their factories with coal. A huge mining industry, unlike anything in the West, develops. China is on the verge of the First Industrial Revolution.

Suddenly, disease and famine strike China. Large sections of the population die. Internal conflict leads to a split in the empire between its northern and southern sections. But still, industrialization progresses, albeit at a slower pace. There is vast economic potential. The rivers and coastlines swell with gigantic merchant ships carrying all sorts of commercial cargo and large crews of hundreds of men. China is the greatest power on Earth.

Then, Genghis Khan comes out of Mongolia (of all places) and damn near conquers the entire globe in his lifetime. Morris calls Genghis “history’s greatest conqueror” and “the most brilliant of all nomad chiefs.”

He integrated “city-dwelling engineers into his cavalry armies so well that he could storm any fortification as easily as he could defeat any army. He plundered his way from the Pacific to the Volga…so far as we can tell, he intended to steal everything, drive the peasants off the land, and convert the whole of northern China into winter pastures for his tough steppeland ponies. In 1215 he destroyed more than ninety cities, leaving Beijing burning for a month.

“When Genghis Khan died in 1227 his son Ogodei had replaced him as the Great Khan, but Genghis’s grandsons had immediately started maneuvering to see who would succeed Ogodei. Some of them, worried that letting Ogodei conquer China would put too much power in his hands and would favor his son in the succession struggle, pressured the minor Mongol chiefs to back a gigantic raid in the far west instead. In 1237 they got their way, and the main Mongol hordes abruptly wheeled westward.” (pp. 389-391)

Morris doesn’t point it out but this saved southern China from the Mongol threat. “The Mongols overwhelmed the massed knights of Germany and Hungary and probed as far as Vienna. But then – just as suddenly as they had abandoned China – they departed, turning their ponies around and herding their prisoners off into Inner Asia. The whole point of the European raid had been to influence succession to the khanate, and so when Ogodei died on December 11, 1241, Europe abruptly lost all significance.” (page 391)

Europe was a backward wilderness to these nomadic warriors of history's sudden, largest empire. They urgently returned to civilization in China to work out the politics of Mongolian power.

“When the Mongols did look west again, they sensibly chose a richer target, the Muslim core. It took them just two weeks to breach Baghdad’s walls in 1258. They left the last of the caliphs without food or water for three days, then threw him into a pile of gold and told him to eat it. When he did not, he and his heirs were rolled into rugs and trampled to death.” (page 391) The Mongols did not blink an eye. They wiped out all life young and old in countless villages, towns and dozens of cities. It was nothing to them. They took all, life and wealth. They conquered all “without judgment” as Marlon Brando's character ponders the minds of the Viet Cong in Apocalypse Now.

This reflects a hardness almost unimaginable and certainly unacceptable to our squeamish enlightened, progressive, and postmodern sensibilities. The Mongols were the Klingons of Earth and far more interesting, even though I enjoy Star Trek. History, for me, is more interesting than fiction though I appreciate good fiction. The Mongols turned back East just in time as far as the West was concerned.

“Because they did not sack Cairo it remained the West’s biggest and richest city, and because they did not invade western Europe, Venice and Genoa remained the West’s greatest commercial centers. The Mongols definitely abandoned their Western wars when one more khan died and his successor, Khubilai,…finally determined to finish off China. This was the hardest war the Mongols had ever fought, and the most destructive. It took a five-year siege of the great fortress Xiangyang to break Chinese resistance…” (page 302) Along with famine and epidemic, the Mongols brought down the great social culture of China. The Industrial Revolution would begin some 400 years later in the West not the East.

Morris’s book clearly shows that Genghis Khan’s karma contributed to China’s industrial regression at the same time that his grandsons destroyed much of eastern Europe and western Asia. But where the Mongols did not pillage allowed Europe to develop faster socially. Before long, by assimilating Chinese industrial culture and all the social infrastructure and knowledge to make such a culture grow, Europe was able to close the gap with the more advanced Chinese world.

Genghis Khan and the Mongol Empire have interested me for years. His feat would be impossible today. As head of what we now call a superpower he’d be labeled the anti-Christ, a ruthless dictator who makes Hitler seem childish, a monster of a human being. But, of course, his Being was entirely human. We can be monsters as much as anything else.

Last year I read the first volume of a well-researched historical fiction trilogy about Genghis Khan’s life by Conn Iggulden. I have the second volume and will probably buy the third when it comes out in mass paperback this year. I understand the next two books are as well received has the first one so I look forward to completing this epic, historic journey in novelized format. It is a story that rivals any tale Tolkien invented and surpasses most of them.

Genghis strikes me as certainly one of the very few extraordinary human beings, singular and remarkable, that define the possibilities of what being human is. You might not like the definition he provides, but I submit it is as fundamental as anything, historically speaking, about human Being. (Cambodia, Rwanda, Bosnia, and Afghanistan [by both sides] come to mind in more recent times.) Genghis was an extremist like Einstein or Buddha or Beethoven; each extreme with their particular style of genius. The spectrum of human possibility is diverse indeed, especially when you look across the millennia of history as Ian Morris does in this fascinating book.

But what happens after the Mongol Empire, like all before it, faded in power? I’m still reading…

Thursday, January 6, 2011

Great Eighths

Note: Picking up where I left off last July with my series on Great Symphonies. I plan four more posts in the series counting this one. But, I don’t necessarily intend to finish them on a monthly basis. There’s no hurry.

When it comes to Great Eighth Symphonies one towers among all other contenders. The “Unfinished” Symphony (1822) by Franz Schubert is one of the great musical wonders of the world. Schubert is certainly one of the greatest composers to ever live, so it seems surprising that I have not mentioned him before now. His lively Fifth Symphony was in contention back when I posted on at subject last May. But, ultimately it didn’t win out over the other tough competitors I chose to include. Schubert composed a great deal of chamber music that I enjoy, particularly trios, several marvelous string quartets, and the famous “Trout” Quintet.

Schubert wrote his Great Eighth when he was only 25 years old. It is simply mind-blowing (and a tribute to his commanding talent) that he produced so much memorable music in his tragically short lifetime. The symphony’s title comes from the fact that it only has two movements, rather than the traditional four. He composed the brief beginnings of a third movement but nothing more. It is a mystery why he only completed two movements; especially since he went on to compose another symphony and some of his best chamber works during the six years after working on his Eighth. But then, the symphony solidly stands as it is. So, perhaps he simply decided nothing more was truly needed.

The first movement begins solemnly enough with basses and cellos tempered with a bittersweet melody by oboe and clarinet. The winds chime in as a tranquil atmosphere pervades the piece. At times the movement is heartrendingly beautiful, at times there is turbulence and storm, always returning to the poignant, emotional thread that so forcefully runs throughout the movement. A pre-Wagnerian layering of the string section pitted against itself, supported by the rest of the orchestra, is quite evident.

While the first movement presents a marvelous contrast of quiet reflection and forceful agitation, the second movement offers a virtually uninterrupted, delicate beauty. The symphony leaves behind all hint of conflict and presents an idyllic, pastoral character that contains as much confidence and strength as it does utterly satisfying calm. Indeed, it is difficult to imagine how Schubert could have improved upon these two movements. They are a fine example of symphonic excellence.

Bruckner completed his Great Eighth late in his life in 1886. As with many of his symphonies, this is an extended work, lasting almost 90 minutes. It begins with in a perplexed fashion, full of restless energy. The second movement, a scherzo, is almost folksy in nature, strong but with a completely different energy, sort of confident without being exactly lively.

The final two movements of the work are its best, each well over 25 minutes long. The third movement, an adagio, is one of the longest and most expressive symphonic movements Bruckner ever composed; with deep melodies featuring cellos and tubas. The fourth movement is meant to be played “freely but not fast.” There are three or four major themes developed during its course, building to a triumphant, unified, almost jubilant conclusion that recalls bits and pieces of each of the previous three movements. This was the last symphony Bruckner would finish in his lifetime.

No composer was perhaps more affected and produced more thoughtful music during the course of World War Two than Shostakovich. I blogged about my admiration for his “Leningrad” Symphony last July. He followed that with a Great Eighth entitled “Stalingrad” after that seminal battle on the Eastern Front in 1942-43. Unlike his prior symphony, however, the Stalingrad work is more unconventional, not catering to any specific militarism or patriotism. Compared with his body of work up to this time, Shostakovich’s Great Eighth comes off as very subtle.

The extended first movement takes up almost half the symphony. At times it reminds me of some of the strongest sections of Shostakovich’s Great Fifth. It begins slowly then builds relentlessly through several climaxes. The short second movement is rather macabre, perhaps representing the twisted, inglorious horrors of modern warfare.

The next three movements are all performed without interruption. The third movement is a driving, pounding collision of contentious chords. The fourth, a Largo, calms things down after a crashing transition and offers the melancholy hopefulness so familiar to Shostakovich’s music. The finale is not what one might expect. There is no triumphant victory here, no inspiration to drive forward the “Great Patriotic War” to a successful conclusion. The end comes quietly, almost with a whimper. It is easy to see how this work, meant equally as a testament to the horror of war and to the oppression of Soviet life, was frowned upon by communist bosses at the time of its premier.

Mahler’s Eight Symphony (1910) can be classified as great in a couple of respects. First of all it is ambitious in size, requiring a heavily fortified orchestra, two mixed choirs, a children’s choir, and eight soloists. Little wonder this Great Eighth was dubbed “Symphony of a Thousand.” At times it certainly sounds that way. With that much sonic potential contained in a concert hall you are bound to end up with something that sounds grand.

It is also great as a composition, even though it is one of my least favorite Mahler symphonies. The reason I don’t care for it as much as other compositions is that this Great Eighth (in spite of the massive instrumentation) is predominantly a vocal work, more so than any other symphony we have considered thus far. It is too operatic for my tastes. Nevertheless, the composition has several moments of brilliance.

Even though, like an opera, there are numerous pieces to the composition, the symphony is essentially in two parts. The first part uses an ancient Latin text incorporated by the Roman Catholic Church. It alternates between ennobled outbursts by the chorus’ and expressive solo performances. The music itself serves as the “spirit” for the text’s presentation, the ethereal accompaniment of the vocal material’s manifestation.

The second part of this Great Eighth is even more dramatic. It is clear that Mahler intends this as a forceful affirmation of life. Once again, various choruses’ alternate with various soloists to convey the earthy context for this motivational music. The complexity is what is most noteworthy here. Mahler continually presents new elements then weaves them more tightly together into a multifarious whole. It builds to a climax that seems to promise the divine power of cosmic love to eternity itself. Mahler has made this statement before but never with so much musical prowess at his command. An impressive feat, if a tad too operatic for me.

Philip Glass normally sends me running down the street screaming manically. I know he is considered one of the greatest minimalist composers, and one of the greatest American composers, of our time. But, unlike John Adams, who I much prefer, Glass has not integrated his mastery of minimalism with broader influences of contemporary classical music. While I admire a few scattered works here and there, Glass rarely impresses me; more often than not he simply turns me off. But, his Great Eighth Symphony is a striking exception for me. It remains pure to its minimalist foundations, yet it does so in a way that inspires rather than hypnotizes or revolts with endless repetitions.

Composed in 2006, it is the most recent symphony considered in this series thus far. It is noteworthy not only because it is an impressive orchestral composition but also because, in a time when composers have largely shunned the traditional form of composing symphonies (they much prefer concertos or odd symphonic pieces), Glass has managed to compose eight symphonies to the exclusion of almost any other active composer today.

The centerpiece of this wonderful symphony is the massive, comparatively complex and richly layered first movement. I knew the moment I heard this that it was different, more enduring than most anything I had heard from Glass in many years. If there is a weakness here it lies in the fact that the first movement is so domineering and well-constructed it leaves the second and third movements as rather anti-climatic. Nevertheless, I heartily recommend this work to anyone who thinks there is no good classical music being composed today. Certainly, this is an outstanding contemporary symphony.

Saturday, January 1, 2011

Gold, Regrets, and Some of My Resolutions

From at the close of business yesterday. Gold and Silver did fine. Stocks had a good year too.

My GLD and SLV positions did very well in 2010. Gold itself began the year right at $1100/ounce and ended over $1400, a record at both ends. Jennifer and I bought SLV awhile back, though it is but a quarter of our overall GLD position. Naturally, I wish I had more. One New Year’s resolution is to watch SLV more closely in 2011. Another entry point might present itself. About half of our position is in cash and, unfortunately, I was wrong about the stock markets in 2010.

The Dow (+11%), the NASDAQ (+17%), and the S&P (+13%) all preformed decently while word of improving unemployment claims, other positive economic news, and Ben Bernanke’s fiscal policy lifted the markets beginning in September. I have to admit I think Bernanke is wrong – you cannot generate wealth by essentially printing more money and growing the public debt - but you can’t argue that he’s been right at least short-term throughout the Great Recession, which is technically over without, perhaps, ever fully expressing itself.

I sold my DIAs in late 2009 at $104 for an 8-9% gain. Unimpressive. By late April 2010 they would have been worth $114, a much more impressive 19% gain. But, by July they were valued at $97, only 1% over my last, original purchase. The market was going nowhere and I felt I made the right choice in selling.

But in September the Bernanke Effect with QE2 began to take hold, apparently. The European Community also started coming to grips with its sovereign debt issues, despite social turmoil in Greece and France. The markets liked the influx of massive amounts of liquidity into the monetary systems and various signs of economic recovery, albeit a slow one. DIAs ended 2010 at $115 with most indicators pointing higher.

At the end of 2009 I thought that 2010 would be a blah, even negative year economically. But, thanks to everybody’s short-term optimism on the long-term folly of QE2, among several positive changes in the economic picture, I could have made another 11%. Instead, being in cash, that part of my portfolio lost maybe 3% due the value of the dollar. Not a huge amount and more than offset by what gains I did make, but not a smart investment either. I thought cash would be king again in 2010 as it was in 2008. It wasn’t.

Nevertheless, I hesitate to invest in this market at this time. Some predict solid new highs in 2011. Indeed, according to Dow Theory, in November 2010 the Dow and the Transports reached new highs for the rally and confirmed further upward momentum. It seems very strange to hold an economic theory so dear but not follow its own advice as I have with gold and at times in the previous decade with stocks.

But, here’s where Dow Theory finds controversy among its own adherents. Most Dow Theorists believe that the action of the Dow and the Transports trumps all other considerations in signally bearish or bullish action. But, more conservative, traditional Dow Theorists, like Richard Russell, whose newsletter I have subscribed to online since 2002 when he first convinced me to get into gold, believe there is a more important factor.

Russell clearly believes the action of the markets is of paramount importance. But, according to him, the original writings of Charles H. Dow (which were mostly letters and editorials, Dow never actually wrote his “theory” as a structured argument) indicated that values surpasses even market action in judging when one should invest. The making of money is all in the time of buying, Russell often says. Just because market action is positive doesn’t mean there is more upside than downside potential. That potential has to do with values not action.

Russell believes that stocks are overvalued. He says the price-to-earnings ratio indicates stock prices are out of line with actual corporate performance. He discounts the market action and says, whereas gold is undervalued and still a good buy, stocks are overvalued and more risky.

While such guidance has steered my own investment behavior it is nevertheless a fact that Russell missed calling this most recent rally whether it is a short-lived thing or not. It just goes to show you that when it comes to economics no one knows.

So, as the new year comes in I pause to look at my own recent financial history. Since 2007 I have avoided taking any BIG loses and my portfolio is larger today than in 2007, which is something many people probably can’t say, it is also true that I was too timid in 2010 and lost money by not keeping and adding to my 2009 position of DIAs.

It would have been nice to have remained in DIAs, or to have seen the rally for what it was and transfer a larger amount of cash into DIAs as Dow Theorist Jack Schannep advised. I could have probably made a good chunk of change. There are no shortages of investment mistakes or missed opportunities in my past, regardless of the advice I study.

But, I try not to sweat the small stuff. The fact is I have made money since 2007. It gets tougher to make money these days so you have to forgive yourself and remain patient and plan to improve as best you can. This isn’t the late-1990’s when I first started playing the markets and feeling the curious power that comes from using money (rather than labor) to make more money.

I still labor, however. Marketing a small company is also tougher than it used to be. What was successful for my market in the past no longer works; the market has changed so I must find new ways and means. Work takes up more time and personal attention than I want it to. I bring it home too much mentally. I get angry about work. So, another New Year’s resolution is to focus upon that anger and deal with it. Managers in their 50’s die from heart attacks every day it seems because of how their commitment to capitalism and consumerism affects their intimate stress and capacity for greater things. I don’t want that to be me.

Jennifer and I are on the path to where we want to be financially at retirement, but late in our working lives the world is changing and conspiring against our plans. The next year or two looks promising but beyond that Jennifer’s whole field, group health insurance, is completely uncertain. For a long time in 2010 this affected her emotionally. Her successful world is being undermined by the very man we both voted for as president. I guess you can’t say we voted with our pocketbooks.

In my situation, my boss is budgeting for a 200% increase in sales in 2011. I think this is absurd, but I haven’t told him that. I have merely pointed out a few things I think we can do. But, at some point in the coming weeks, I know his frustration will rise, and he will become more frantic, spontaneous, and difficult. This will force me to adapt quickly as I have in the past and try to make his changing plans happen, at least in terms of leads and prospects. The actual closing of the deals, thankfully, is not my responsibility. But, that doesn’t mean the overall tension does not affect me. It does.

I find myself on this rainy New Year’s Day considering the value of all that. My family gets health coverage because of my job. I get a nice salary. Which we live off of, essentially saving the bulk of Jennifer’s income. Looking at it from a practical standpoint we are exactly where we want to be in our early 50’s with a daughter, a country house with fields and forest, and all the multitude of consumer stuff that particularly my daughter enjoys.

Does practicality come into conflict with living a more contemplative life? Obviously. There is a balance, hopefully, in there somewhere. I’m looking for it. It stumble on it in momentary Nows and I cherish those Nows. But, the deeper, wider collection of Nows spread out in Time over the course of the passing of the hours and days brings the dictatorial aspects of practicality into question.

Clint spent New Year’s Eve with us. My daughter, myself, Clint and Jennifer watched Dick Clark’s (an incredible stroke recovery story in spite of the fact the man is not his former self) New Year’s Rockin' Eve. We did the countdown along with Dick. My daughter was on the phone with her boyfriend. At zero I kissed her, she giggled into the phone, for a moment she was my sweet little girl again instead of the attitudinal teenager. Then I kissed Jennifer and even Clint.

At Times Square, where Jennifer and my daughter had been on a visit just about three weeks ago, it was a madhouse of joy and celebration. I sipped the last of our second bottle of champagne from my flute. I went out on my porch in the dark. There were the cracks and pops of fireworks in the distance. A faint shout or two from neighbors over a half mile away. I took a deep breath. I was not angry. Maybe I can build on that.