Sunday, December 27, 2009

Hyman Minsky

In academic circles Hyman Minsky is now regarded as the great exalted savant of economics, but it wasn't always this way. "Many of Minsky's colleagues regarded his 'financial-instability hypothesis' which he first developed in the nineteen-sixties, as radical, if not crackpot.", writes John Cassidy in a February 4th, 2008 article in The New Yorker entitled 'The Minsky Moment'. You can find a lot of information about Minsky's "financial-instability hypothesis" on the Internet and specifically at Wikipedia, but Robert Barbera sums it up best in his book The Cost of Capitalism: "Minsky's thesis can be explained in two sentences. A long period of healthy growth convinces people to take bigger and bigger risks. When a great many people have made risky bets, small disappointment can have devastating consequences." Barbera also explains the culmination of these consequences: "When you own risky assets that are falling in value you need cash, you have to start selling your good risky assets. If everyone does this at the same time, the price of good risky assets begins to fall, and soon it looks like all risky assets are bad assets. That is the Minsky moment.".

If we delve further into Minsky's 'financial-instability hypothesis' Wikipedia states: "Minsky argued that a key mechanism that pushes an economy towards crisis is the accumulation of debt. He identified 3 types of borrowers that contribute the the accumulation of insolvent debt: Hedge Borrowers; Speculative Borrowers; and Ponzi Borrowers. The 'hedge borrower' can make debt payments from current cash flows from investments. For the 'speculative borrower', the cash flow from investments can service the debt, i.e., cover the interest due, but the borrower must regularly rollover or re-borrow the principal. The 'Ponzi borrower' borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with cash flows from investments; only the appreciating value can keep the Ponzi borrower afloat.". We were inundated with Ponzi borrowers at the height of the real estate bubble, both on the individual and institutional level, and this cut the legs out from under the stock market.

There is currently a paradigm shift in academic economic cliques because of the success of the TARP program which not only raises doubts about the conservative free-market economic theories, but also brings back Keynesian postulates. As I wrote in the last posting of this blog, Minsky amalgamates supply-side and demand-side schools of thought and brings economic thinking to a new level. There is a sea change going on and we on Main Street may not be aware of it yet, but those within the inner circles of Wall Street are surely conscious of the influence this has on our portfolios. As is, the smart money piled into the market right at the bottom in March and the little guy, or individual investor, stayed in cash or invested in bonds and in effect, was left holding the bag, although this was a good year for bonds, but nothing like the action in the market. Now that the market has rallied over 60%, individual investors will probably begin buying stocks only to have the market implode again once the government stimulus money runs out. And this is a big part of Minsky's hypothesis, that market collapses are inevitable and part of a healthy economic scenario only to be propped up by a big dose of government intervention.

To gather the material that enabled me to put together this posting I read The Cost of Capitalism by Robert Barbera and thought the book wasn't quite up to snuff. I expected more from Mr. Barbera because he is a good economist and I thought the book took a roundabout way of making his points, plus, some of the interior chapters were laborious when discussing the history of free-market economics since the late 1970's. There is an awful lot about Hyman Minsky in The Cost of Capitalism, but it doesn't warrant the outlay of almost $30 for the price of admission when a simple trip to Wikipedia or a search for Minsky on Google should do the trick. However, it should be noted that although Minsky is not currently part of the mainstream nomenclature or will he ever be, as an investor, you should be aware of his theories because they do effect your profits.

Sunday, December 20, 2009

How Markets Fail

Two weeks ago The Economist published a list of their four best finance books of 2009 and two of them piqued my interest, Too Big To Fail by Andrew Ross Sorkin and How Markets Fail by John Cassidy. Both books have been getting rave reviews in the financial press so I ordered them on Amazon and finished How Markets Fail early this morning. Boy was I disappointed. I hope Too Big To Fail is better because I just slogged through 350 pages of some of the most tedious writing I've come across this year. At the outset of the book Mr. Cassidy states he didn't want it to read like a text book, but I'm afraid this is exactly what he's done. This is not to say the book has no value because I did learn a lot from it, but it would appeal to a much broader audience if it didn't drag on for so long.

How Markets Fail is divided into three sections: the history of Utopian economics, the history of realistic economics and the inflation of the housing bubble and its implosion. In the history of Utopian economics, Mr. Cassidy gives a brief, but detailed chronology of free-market economic theory dating back to Adam Smith and culminating with the Chicago School led by Milton Friedman. The second part of the book is the history of realistic economics and how this branch of economic thinking refutes some, but not all of the doctrines of the supply-siders. John Maynard Keynes, behavioral finance and Hyman Minsky are all highlighted in this section and this is where Cassidy falls short. He devotes a chapter to Minsky when he should have extrapolated more about him because at the end of the book, Minsky turns out to to be dead on with his theory of meshing both the free-market and Keynesian schools of thought. The final 150 pages is devoted to the 2008-2009 real estate crash and this has been overdone by too many authors, so let's get back to Minsky.

As Cassidy writes: "Minsky advanced the view that free market capitalism is inherently unstable, and that the primary source of this instability is the irresponsible actions of bankers, traders, and other financial types. Should government fail to regulate the financial sector effectively, Minsky warned, it would be subject to periodic blowups, some of which could plunge the entire economy into lengthy recessions.". I first heard about Hyman Minsky in an interview on CNBC with Paul McCulley, the Chief Investment Officer at PIMCO, and had no idea about why he was so enthusiastic about him. This is partly to do to the fact that Minsky is not a very well know economist, but he is getting there. Like Mr. Cassidy summarizes: "Perhaps the biggest lesson we have learned is one Hyman Minsky taught us as far back as the 1980's: Wall Street needs taming. On an individual level, banks, investment banks and other financial companies provide essential services. Taken together, however, their self-interested actions have created and amplified economic disturbances, largely through the use of leverage and excessive accumulation of risk.".

In fact, Cassidy blames the Great Recession of 2008 on Alan Greenspan and his free market cronies because: "The notion of financial markets as rational and self-correcting mechanisms is an invention of the past forty years.". In the conclusion of How Markets Fail, Cassidy pontificates: "If Ronald Reagan, instead of appointing Greenspan to the Fed in 1987, had talked Paul Volker into staying another four or eight years, things would have turned out differently...When historians come to write about the 'Greenspan Bubbles,' they will do so with good cause: more than any other individual, the former Fed chairman is responsible for letting the hogs run wild." How Markets Fail hits the bullseye in citing Greenspan and the supply-siders for the Panic of 2008 and also whetted my appetite for more information about Minsky, but never really sated me, so next on the docket is something more substantial. There should be a place for a book like this, like in the hands of hardcore economics students, but for the average investor, you should really skip this one.

Friday, December 18, 2009

A Wing and a Prayer

As the markets have moved sideways and consolidated the past month, my portfolio has limped along with them losing roughly 35% since mid July, but treading water since October. I try to remain objective about my leveraged short positions, but sometimes I get lost in the current euphoria of a 60% run-up since early March and doubt my myself, but that's only to be expected. For every Meredith Whitney or Bill Gross in their bearish predictions, there are plenty of bulls to take the opposite side of the trade. Where this market will go is anybody's guess.

This morning I read the Carnegie Management Group Hotline which is free to anybody with an Internet connection. They do have stock and ETF recommendations, but you must be a premium subscriber to access that. For my purposes, just reading what they had to say today was good enough for me. The hotline said: "The media and the market 'experts' would like for us to believe that the economy has bottomed and the next bull market is underway. That is simply not possible. Dividend yields are near all-time lows. The S&P 500 P/E ratio for reported earnings is an astronomical 140--the highest level in recorded history according to Standard & Poor's.". I have read on some blogs that the P/E for the S&P 500 is near 140, but I've never seen it in writing from an accredited source. I checked the S&P Web site and they have the 2009 P/E at 88 which is sky high. Where they got the 140 from, I don't know, but it was probably in the way that they read the data and calculated it. In any event, the P/E ratio is well above it's historical norm and things tend to revert to the mean. This doesn't imply that it can't go higher, just that it's going to go lower at some point.

The Carnegie Management Group Hotline also had some more interesting data: "Every decade, the markets face a grave three-year you remember:

The recession and bear market of 1920, 1921, and 1922?
The recession and bear market of 1930, 1931, and 1932?
The recession and bear market of 1940 and 1941?
The recession and bear market of 1950, 1951, and 1952?
The recession and bear market of 1960, 1961, and 1962?
The recession and bear market of 1970, 1971, and 1972?
The recession and bear market of 1980, 1981, and 1982?
The recession and bear market of 1990, 1991, and 1992?
The recession and bear market of 2000, 2001, and 2002?"

Just because there is a pattern here, does not mean that the pattern will repeat itself, but there is a precedent. If this piece of information is worth anything, 2010 and 2011 could mean tough times ahead which would be great for my ETF allocations. However, I remind myself of what Warren Buffett said: "Beware of past-performance 'proofs' in finance: If history books were the key to riches, the Forbes 400 would consist of librarians.". For some reason, Warren Buffett always sobers me up.

Tuesday, December 15, 2009

Big Brother

In my last posting I discussed confirmation bias, which according to Wikipedia is "a tendency for people to confirm their preconceptions or hypotheses, independently of whether or not they are true.". I sometimes ask myself how much I've fallen for the stock market's doom and gloom scenario and if indeed I do tend to confirm my preconceptions by reading only those authors that fit my hypothesis of a double dip recession or worse. The problem with the books I read is that bear market meltdowns are about the only subjects available in the economic sections of your local booksellers these days, either at the mall or in cyberspace. However, I did find one this past week that is very upbeat in its outlook on the economy and that book is It's Not as Bad as You Think by Brian Wesbury. Wesbury has very impressive credentials in that the Wall Street Journal named him the nation's number one U.S. economic forecaster in 2001, and USA Today ranked him as one of the nation's top 10 forecasters in 2004. I've seen Mr. Wesbury numerous times on CNBC so I took a flier on his book and I'm glad that I did.

Wesbury never comes out and states that he's from the Austrian School of economics, only a supply-sider, but clearly his roots are there. He quotes Ludwig von Mises and Joseph Schumpeter numerous times and I found it ironic that in the past month I've read three authors that are from the Austrian School or highly influenced by it and all three have different outlooks on the market: Charles Goyette in The Dollar Meltdown believes we are headed for hyperinflation and depression, Robert Prechter in Conquer the Crash sees depression and deflation while Wesbury is very positive and has an outlook of growth for the next 18 months. In fact, Wesbury is so positive on the economy, he thinks the Dow Jones Industrial Average can rise above 14,000 in a few years time.

The implosion of the financial markets the last two years has been referred to as 'Depression 2.0' and 'The Great Recession' in the popular press, but Wesbury calls it "The Panic of 2008". A common theme throughout It's Not as Bad as You Think is that government intervention is to blame for the cratering of the markets. As Wesbury states in the beginning of the book: "What caused the crisis to spread and turn into a full-blown panic was mark-to-market accounting.". According the Wikipedia, "mark-to-market or fair value accounting refers to the accounting standards of assigning a value to a position held in a financial instrument based on the current fair market price for the instrument or similar instruments.". Mark-to-market accounting standards were reinstated by the government at the outset of the financial crisis. They hadn't been in use since the Great Depression of the 1930's. When the stock market started to rally in March of 2009, mark-to-market accounting standards were altered and Wesbury believes this is no coincidence.

Could mark-to-market accounting standards be the cause of the collapse in the financial system? Of course it could be a contributing factor, but I do not believe it is the sole reason for the panic. Wesbury takes a hard stance in his beliefs and writes: "To be absolutely, 100 percent clear, I do not believe that greed, capitalism, high levels of debt, subprime loans, credit default swaps, derivatives, criminal activity, or leverage were the root problems that caused the panic of 2008.". This is where he and I differ. Wall Street always seems to be gaming the system and I feel it was no different this time. Bankers took a lot of speculative risks and used predatory lending practices. Some banks were leveraged 40:1. Wesbury also writes about the panic: "...the interconnected nature of the financial system began to crack.". He is absolutely correct with that one. We needed government intervention in the Fall of 2008. We were on the cusp of global contagion and financial collapse.

I liked It's Not as Bad as You Think. I didn't agree with anything Mr. Wesbury said, but it was well written and gave me pause to think about my current short positions. Although the author backed up his arguments with clear and concise documentation, it didn't sway me to change my mind about my portfolio allocations. To me, the short-term damage has already been done to The Ithaca Experiment. The subtitle for the book is Why Capitalism Trumps Fear and the Economy Will Thrive and I do agree with him that capitalism will survive and the economy will prosper, but not for a few years.

Sunday, December 13, 2009

The January Effect

According to Jeffery and Yale Hirsch who publish the Stock Trader's Almanac 2010, the January Effect now starts in mid December based on data going back to 1979. If you are not familiar with the January Effect, it is a Wall Street term that states small cap stocks outperform big cap stocks from January until June and the launch date is now around December 15th. Since we are nearing that date and because I have a sizable stake in small caps with the Direxion Small Cap Bear 3X Shares (TZA), I wanted to bring it to your attention. In the two months that I have owned the Direxion Small Cap Bear 3X Shares (TZA), the ETF is down 30 cents or 2.61% and if history proves correct, it may take another hit here in the short-term. However, the January Effect does not always materialize as small cap stocks underperformed large cap stocks in January 1982, 1987, 1989, 1990 and 2008, but it is a pretty good indicator as Jeremy Siegel writes in Stocks for the Long Run. This does not mean that small caps won't go down in January if the market goes down. It just means that small caps will do better than the larger cap securities the majority of the time.

The January Effect is sometimes confused with the January Barometer, but they are not the same. To give a definition of the January Barometer, I will use the Wikepedia free encyclopedia: "The January Barometer is the hypothesis that stock market performance in January predicts the performance of the rest of the year...Historically if the S&P 500 goes up in January, the trend will follow the rest of the year. Conversely if the S&P 500 falls in January, then it will fall for the rest of the year. Since 1969 this trend has been repeated 32 of a possible 39 times.". Ken Fisher in The Only Three Questions That Count calls the January Barometer a myth and "remains wholly unsubstantiated", but this is just his interpretation of the data which is always a problem with investing. You never know who is right when it comes down to data crunching because of confirmation bias. Ken Fisher defines confirmation bias as: "cognitive error causing investors to seek evidence confirming their preset notions and reject contradictory evidence.".

Another Wall Street phenomenon that will supercharge your holdings in the short-term this time of year is the Santa Claus rally otherwise known as the "December Effect". This is a rise in stocks the last week of the year, between Christmas and New Year. Because I am not a trader, I generally don't pay attention to these things, but they will move the needle in your portfolio. I am currently down 43% in the ProShares Ultra Short S&P 500 Exchange Traded Fund (SDS) and this Chris Kringle flurry surely won't do much for my ego if history repeats itself, but as I've been stating right along since the beginning of this blog, we are long overdue for a correction. If the market corrects 15%-20%, I'm back to square one, but that's just wishful thinking right now. You may be wondering how far I will let my losses run in the ProShares Ultra Short S&P 500 Exchange Traded Fund (SDS). Well, indefinitely. It is always best to go with your convictions and since this is a leveraged ETF, it can go up just as fast as it went down.

Friday, December 11, 2009

Blood From a Stone

Back in 2002-2007, terms like prime, subprime, Alt-A, option ARMs, jumbo prime and second liens became part of the mainstream verbiage as middle class citizens started flipping houses like degenerate gamblers. 2008 was not a pretty picture for the hot real estate money and speculators started singing a different tune as the entire financial system teetered on the edge of the abyss. More Mortgage Meltdown by Whitney Tilson and Glenn Tongue explains the build-up, implosion and future scenarios of the domestic housing situation along with the ramifications on the economy as a whole. The book is divided into two parts, the first half covering the housing bubble and the second half a series of case studies on different companies and how to evaluate them for investing purposes through the eyes of a value investor.

Tilson and Tongue demonstrate that although subprime loans were the brunt of much populist anger after the housing bubble burst, they only accounted for 20% of all mortgages issued at the peak of the bubble, and it is the other 80% of mortgages we really have to worry about now. The height of the real estate frenzy was in 2006 and since subprime loans reset after 2 years, they were the catalyst for the collapse in 2008. However, the equally toxic Alt-A and option ARMs reset after five years so in 2010, we will begin to feel the effects of another round of defaulting mortgages and these defaults will continue until 2012. In essence, we are in the eye of the hurricane right now, the calm before the storm.

More Mortgage Meltdown was published in May of 2009, three months after the market lows reached in March and although the authors didn't predict the current surge in security prices, they do acknowledge that stock prices are cheap at the time of publication: "Based on data from Yale economist Robert Shiller, U.S. stocks on March 3, 2009, were trading at a cyclical price-earnings (P/E) ratio of 12.3, their lowest level since 1986 and well below their historical average dating back to 1870, of 16.3. (The cyclical P/E compares stock prices to average earnings over the past ten years in an attempt to smooth out booms and busts.)". Well, that was in May and now it's December and Barron's reports that the P/E for the S&P 500 is 85 after a 9 month run up. We are in nose bleed territory where valuations are concerned and this market is ready to roll over like Beethoven. In fact, at the time of printing Tilson and Tongue argue that "the cyclical P/E ratio, while below its historical average, is well above previous bear market lows of 6 - meaning stocks could almost get cut in half again.".

I have been reading Whitney Tilson's column he writes with John Heins in Kiplinger's for a couple of years now and have always enjoyed his long-term value investing perspective in a market where traders live in the moment. I also enjoyed it in this book, but all in all, I was disappointed in More Mortgage Meltdown. Granted, the first half of the book was brimming with valuable statistics and insights on the housing crisis, but the second half of the book wasn't up to par. The last 150 pages of the book is filled with case studies on individual stocks to both the long and the short side and I thought that these studies were too technical for the beginning investor. For the experienced investor, the case studies were not that interesting and tended to get tedious which bogged down a potentially good book.

Tuesday, December 8, 2009

Value Line

I have been reading Value Line for twenty years now and have been a subscriber of their service for the past decade. From the late 1980's to late 1990's, I didn't have enough money for the subscription and would go to the public library to read their reports and because most libraries carry Value Line, that option is still there for you, too. If you are not familiar with Value Line, it is a collection of research reports on 1,700 companies that are updated on a quarterly basis. Peter Lynch calls it "the next best thing to having your own private security analyst.". Warren Buffett says of Value Line: "I don't know any other system that's as good.". In his book One Up on Wall Street, Peter Lynch gives a pretty good description of what Value Line can do for you: "Value Line is easier to read than a balance sheet...It tells you about cash and debt, summarizes the long-term record so you can see what happened during the last recession, whether earnings are on the upswing, whether dividends have always been paid, etc. Finally, it rates companies on a simple scale of 1 to 5, giving you a rough idea of a company's ability to withstand adversity.".

Since the early 1930's Value Line has been publishing their research reports and they read like Cliff Notes combining the company's 10-K , 10-Qs and sell side analyst reports all bundled up in one nice package. Companies are broken up into industry segments like pharmaceuticals, biotechnology and medical devices and industry reports are updated quarterly along with the individual security summaries. Although I am currently investing in ETFs, I read the reports religiously to keep my watch lists updated in anticipation of getting back into the market at some juncture in the future.

Value Line enabled me to make a considerable amount of money before and after the dot com bust of the late 1990's and if you are interested in sampling some of their products, just go to their Web site and you will be able to download free Value Line reports of all 30 stocks in the Dow Jones Industrial Average. However, I want to state explicitly that although I made some serious coin with them, I also lost a considerable amount in the short run, too, because they didn't predict the dot com bust or the current real estate fiasco. Value Line is very good at giving approximate price appreciations for five year stretches, but they are not good market timers. As a long-term investor I have stuck with them because you can't fly on one wing. I need somebody to shine a light for me.

Sometimes Value Line gets a knock that they concentrate too much on the larger cap Blue Chip stocks, but that's a fallacy. Yes, they do review a large selection of Blue Chips, but they also have a sizable offering of mid cap and small cap stocks in their main investment survey. If you are interested in mid and small cap stocks, Value Line also has a service called The Value Line Small and Mid Cap Edition, but I don't recommend buying this because they don't provide enough research in these reports. What The Value Line Small and Mid Cap Edition gives you for a considerable sum, you can obtain on Yahoo Finance for free. If you are a short-term trader and are interested in the smaller high fliers, Value Line may not be your best bet, but Investor's Business Daily will do the trick.

Sunday, December 6, 2009

Storming the Gate

CNBC's Matt Nesto recently reported the latest acronym to hit Wall Street is DOG: dollar, oil, gold - these are the main subjects in Charles Goyette's new book The Dollar Meltdown along with his strong stance on the end of the American Empire. Like Robert Prechter who I wrote about a few weeks ago, Goyette is a disciple of Ludwig von Mises and the Austrian School of economics, but with a gaping philosophical difference. Prechter believes we are headed for a depression and will be in a deflationary period while Goyette presumes we are heading for hyperinflation and the end of the world as we know it with the collapse of the worldwide system of fiat currency. Not only does Goyette assume a return to the gold standard once the current financial system implodes, but also seeks to abolish the Federal Reserve and world's Central Banks.

This annihilation of the World Order is coming sooner than later according to Goyette and he strongly encourages investors to liquidate their holdings in dollars and stocks and bonds and invest in gold bullion, silver coins, oil ETFs and commodity ETFs. He talks specifically about Ludwig von Mises' dictum of "the crack-up boom" when people realize their paper money isn't worth anything and the price of gold can triple or quadruple within days or weeks. Even at today's spot price of gold at roughly $1,200 an ounce, Goyette believes it is still undervalued when you take history into consideration and it would have to climb to $2,500 an ounce in inflation adjusted terms to reach the price it obtained a generation ago. His solution is to purchase a core position in physical gold bullion coins, preferably the U.S. Gold Eagle, the Canadian Maple Leaf or South African Krugerrand.

I agree with Goyette that as Americans, we have accumulated too much debt on both personal and governmental levels and maybe you should keep some gold coins in your safe to bribe the guards at the border, but that's about as far as it goes. Most of the ideas in the book could have been written by the Al-Qaeada public relations department because quite frankly, he doesn't discuss the societal ramifications of what would happen if indeed we went into hyperinflation and the world economy collapsed. If what Goyette says is true and does pan out, there will be no winners and believe me, you won't be able to keep your gold. There will be martial law and if the government doesn't confiscate your bullion, then some band of marauders will take it from you by force.

Besides the accumulation of gold (silver coins, too), The Dollar Meltdown suggests appropriating a large portion of you finances in commodity ETFs, specifically oil and agriculture. The problem with this thesis is that if there is a collapse of the financial system, most brokerage houses and banks will probably go bust too, making your investments worthless. If you believe in the apocalyptic future, it's better to stock up with gold bullion and a cache of arms. We live in the era of the Jetsons, not the Flintstones, and to suggest going back to a finacial system that was utilized over one hundred years ago is not the answer to our problems.

Tuesday, December 1, 2009

Out of the Past

Back in the late 1920's Fred Schwed was a Wall Street stock broker and left the business after the crash in 1929. In 1940, ten years after his exodus, he wrote Where Are the Customers' Yachts? about his experiences in the market. The book has gone through numerous reprints and editions and is endorsed by the likes of Michael Bloomberg, Jason Zweig, Michael Lewis and Jane Bryant Quinn, all glowing about Schwed's keen market insight and humorous prose. After 70 years, it's tough for an investing book to hold up, but this one seems to pass the test of time by not only being funny, but by talking about the specifics of the market in more of a general overview.

Where Are the Customers' Yachts? touches upon some of the age old investment topics such as options, short selling, technical analysis and investment trusts (mutual funds). It is ironic that the same problems that haunt the market today were prevalent generations ago. According to Schwed, options are confusing and unprofitable, mutual funds don't make money the majority of the time, technical analysis is unreliable and short sellers are to blame for everything wrong in the market, or at least that is the public sentiment. Sound familiar?

This past weekend in Investor's Business Daily there was an article about the evolution of financial applications available for the iPhone and Blackberry offered by some of the discount brokers. Now you can trade stocks, get price alerts and receive up to the minute articles and press releases on your favorite securities while on the go. In Fred Schwed's day traders stared at the trans-lux during trading hours for price movements and volume spikes, usually on the floor of the exchange or in a broker's office. You can be anywhere and be a trader now.

I'm no Luddite and a big fan of smartphones, but the portfolio churn you'll experience by paying too much attention to the day to day market fluctuations can't be good for your profits. Even Fred Schwed made comments on the perils of trading too much in Where Are the Customers' Yachts? and cautioned that the only parties that consistently make money in the market are the brokers with their commissions. Schwed also warned about bear raiders with their pump and dump schemes, statisticians with their misleading charts and graphs and economists who speak a lot and say absolutely nothing. Except for the computers and smartphones, it sounds like we are back in the 1930's again, doesn't it?

I've written ad nauseam about the poor performance of The Ithaca Experiment portfolio the past two months and will continue to do so for the foreseeable future. In actuality, the past two months my profits and losses have been in a stalemate, it's the two months before I began writing that took the largest losses. The reason that I include these losses in the blog is that it's where I started tracking the investments and I want to keep these posts honest and transparent. It would not be fair to me or you readers if I fudged the books. A geo-political event or a long overdue correction and I'm back in the ballgame. I may be in a standing eight count, but I'm not ready to throw in the towel yet.