#12 Who Cares
#12 Who Cares
More knowledge does not necessary lead to better results
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CHEAT SHEET
(You can print this out at work to follow along.)
Bitcoin was unable to hold above $40,000 a physiological barrier being a large round number. If we do see more of a pull back this week expect the price to retest support at $35,967. The weekly bias is still bullish. If the price can break the daily resistance of $39,992 we expect to see a test of the monthly resistance at $41,722.
Note - (9:31am @haal69k) - Bitcoin and Ethereum are showing signs of strength. We are already at daily resistance before this publication goes out. If these resistance levels are broken except the weekly resistances to be tested : $43,571 and $2953.
Today’s News
BSV - Bitcoin SV (A Bitcoin rip-off that’s supposed to “fix” Bitcoin) suffered a massive 51% attacked. These types of attacks are improbable against Bitcoin due to the size and security of it’s network compared to alternate Bitcoins like Bitcoin Cash and Bitcoin SV.
Popsicle Finance Hacked - Unlike BSV that is breaking Bitcoin’s security in a money grab to confuse investors new to crypto. Popsicle Finance is creating cutting edge products that come with known risks. Even though it’s smart contracts were audited hackers were still able to find an exploit. Again! Bitcoin is the only battled tested crypto with a promise of absolute security. All other crypto (including ETH) has a much higher risk of a software exploit. The Bitcoin source code is public and has been under review for 12 years. No new project will ever match that because time is on Bitcoin’s side now.
ETH 2.0 Launch - At some time today the Ethereum London upgrade will go live. Will this be good or bad for Ethereum? We are about to find out!
From The Desk of Boomer
I’m a big Talking Heads fan, and love the song “Crosseyed and Painless.” It’s got big implications for trading and the role of information in successful trading or investing if you prefer. I got news for all of the, “I’m an investor not a trader types”. All financial transactions are merely the transfer of risk, and trading usually means a shorter time frame but it’s the same thing.
Here are some of the lyrics:
Facts are simple and facts are straight
Facts are lazy and facts are late
Facts all come with points of view
Facts don't do what I want them to
Facts just twist the truth around
Facts continue to change their shape
And my favorite: Facts are useless in emergencies
Facts are stubborn things. Facts can be a Foot Gun. Knowledge can be an edge, but knowledge does not always come from facts.
The Edge
There is ample evidence that more information does not enhance your investment performance. Hedge funds rarely beat the SPX, and mutual funds almost never do; so much so they had to invent an entire new index so they could advertise that their funds were…less bad than the other ones called “the Lipper index.”
Both hedge funds and mutual funds employ huge teams of data crunchers. They spend countless hours analyzing companies’ market data, and therefore, if information itself amplified returns then their performance would be considerably higher. Even more dubious is the value of Bloomberg terminals. Given that every trader has one, it, by definition, cannot provide you with an edge. To paying 20-30k per terminal to not gain an edge—that’s a hellova a business model. They look really cool though.
We converted our multi-strat fund after a decade and a half into a family office and just trade for our own account now. Specifically, I do. When we managed outside $, I banned news from the office. I think that was why we did so well. I didn’t ban information, but I didn’t think then and don’t now that there is any edge to be obtained by trading on the same thing everyone else has. At Foot Guns, we have a resource that no one else has—the coding knowledge that Haal69k possesses combined with my macro trading experience. Crypto moves so fast that to be one step ahead you have to have that level of knowledge. And the stuff he is spitting out for premium subscribers is not like anything else I’ve experienced. A how to Defi explainer that does not suck or confuse. Villy, our retail guy on the team was able to do it.
The Yen
Which brings us to story time with Boomer. So it was late in 2011. For Global Macro, we were rare currency traders, preferring stock index futures and commodities. I saw a clip where Ray Dalio was talking the yen. The only thing worse than Ray Dalio’s scientology hand book, is people who are not Ray Dalio quoting from Ray Dalios scientology hand book. The USD.JPY cross looked like this:
A lot of Macro Funds spend a ton of time and effort to predict the behavior of central bank action. It is my experience though, that central banks are not as powerful as people perceive them to be and meddling in the markets usually has the opposite effect of that which was intended. One of my PMs said to me, well, you know the Japanese Central bank has…and he just trailed off. I could understand the frustration on his face. He had an undeniable fact he thought would help the team, he shared it with his boss, and his boss just won’t listen. He brought it up a few days later. And again. Finally, I went to his screen and said that (pointing to USD.JPY)—that’s going up. 4x leverage exit at 110, 100% allocation... and here’s what happened:
The PM had one heck of a bonus for the next two years. And our fund did, well, we were on the right side of a lot of things (mostly after I realized the idiots at “zerohedge” were flipped signals in 2010 we just faded their thoughts for 5 straight years—what a gift they were).
Backwards - The Big Short?
Here’s the thing though…I thought we were going long the Yen. We were in fact shorting it…I’m sure Ray Dalio had all the information in the world and all the smartest minds one could assemble dutifully scrutinizing every statement from the central bankers at the BOJ. But I had something far more powerful—a case of mild dislexia and limited information.
One of the biggest Foot Guns out there is this:
“If I just have more information I will win,” or even worse, finding facts that support your view—fact shopping. Bitcoin Maxi’s have their fact shopping in the form of the “on chain” metrics. The behavior of the UTXOs of bitcoin wallets, they say, can be used to predict the future of the price. Here’s the thing: trading in bitcoin accounts for 10% of the quoted 24 hour volume—90% of it is a weird derivative called a perpetual swap. The amount of leverage in these “perpetual swap swamps” is insane.
You reach a certain point in your career in finance when you realize no one has the answers. Some people can sustain winning, most cannot, many who cannot are given perverse rewards, but very little of it is driven by information.
The day it dawns on you that everyone is just guessing—sure, making informed guesses, but guesses nevertheless is a day you wont forget.
Oh, btw, I won a charity auction where I got to meet David Byrne, lead singer of the Talking Heads, and I asked him about the lyrics in his songs, and he said lyrics are meaningless. Guess I was fact shopping too.
Please share with any crypto junkies or crypto noobs you think would enjoy our content: