[This is an open discussion, there is no conclusion.]
In every universe known to man, "smart money" wins because smart money is *what moves** the markets, not in words like the news or politicians, but in actual mass, worth, mathematical impact. It's a machine, sort of a hydra, so many heads they might as well be hair. I don't know who said that the kinetics of smart money are basically gravity in the universe of *valuation. Not just stock markets, valuation entirely, because the very idea of value tends to be subjective like that. It's gravity, it's everywhere, it pulls every atom in the universe. There's no "counter" force, it doesn't exist. There's no "shield" either, it just is. Smart money moves, like this guy f---s: rule of the universe, or rather convention because we say so, which is one of the main points here.
That's why you never defy smart money, if you know where it stands (that's the hard part, and no it's not a "secret"). That would be the equivalent of jumping over a cliff to prove something (spoile... oh come on.). That's why contrarians still hedge, on the side of caution. That's why people still buy houses or gold or invest in education even at the worst of depressions —if they can, after they feed themselves. That's why governments know they can pile debt like there's no tomorrow because effectively, if smart money says "there's no tomorrow" then the sun don't shine that day and it's all there is to it. Netflix still rolls as usual (arguably more, even). That's why wages can't rise too high but bonuses will.
It's the ultimate absurdity of it all: we can say just about anything like kids do in games, and it happens. We just seldom do, not really, not like that. End wars? Done. End hunger? Done. End disease? Nope, nobody can do that, so collectively saying so doesn't matter. We can vaccinate, but then it's a conspiracy to sell Windows. This absurd insight is one of magnitude, not a generalization that mankind could do wonders by wishful thinking, make magical unicorns self-multiply every 2 hours (that's not absurd but nonsensical).
But neither wars nor hunger will end, today or tomorrow, because we won't say so, not really, not like that. Because it's still absurd, even if it's not nonsensical, if it has meaning.
So let's revel on what we said already, what we have right now. It's already quite a lot, when you stop and ponder versus anyone just a century ago and forever before. And let's push the envelope where it matters, baby steps.
World finance is a big non-zero sum game, it's literally the blood of modern times, because we say so, and until we make it otherwise (for instance back to a zero-sum game, where your loss is definitely the only way to my win), and shoot everybody else in the foot and heart, like madmen. I'm all for positive pacific revolutions, whether occupying the 1% of bitcoins in Spring for global healthcare or whatever. But don't fight smart money. Don't think anyone can wish gravity away like it's some sort of choice, like it's anyone decision. It's not, not really, not like that.
Lean into it. Learn to appreciate what it means to have smart money versus every single last century in history for the real masses of people (because an alternative world without smart money but without the past is unknown as of yet). You find it awful that it keeps some parts of the world in poverty, but it's so much more complex. It's by definition not a first-world problem and can't be wished away by first-world solutions. Scholars can't solve this one from the comfort of an office in Penn because they're not over there changing behaviors.
On the field, it's people like you and me just taking the money because they can, just because we say so. Spend a month, a year in Africa, in Asia, and not just the fancy cities. See the life of "you's", there, relatively. See why things are the way they are, and how they could be much worse, and how it's not all related to some wall in some street whether German or American. Removing the blood system for everyone on Earth would be a critical suicide case of "this is why we can't have nice things", because some would have drunk the blood when they were not supposed to (see how all the common imagery fits nicely together? Not me, not my doing, for truth is built-in language so often...)
Responsibilities must be enforced however, individually as in any organization, and that is a topic for this century due to inter-dependency.
In principle, smart money is everything but "people": smart money never was "someone" or "someone-s". It's a collective, like the invisible hand of Adam Smith, but less magic, many more hands, and one shady legal persona nonetheless. And hands do transfers of money... yes, that drift (implicitely so, to keep it civil below). Smart money is why this world can breathe even when it physically can't, as 60% of the world's population is at home and yet the world still keeps happening to a shockingly good extent (all things considered). At any other time in history, it would not have been an option (it is still not, as we speak, in many countries, because people would simply starve in weeks), and that is a testament of some economic might, that I want to consider globally as a species (think less geopolitics and more Kardashiev/Sagan in this perspetive), whatever we politically feel about it, whatever we'd say in a debate of "should we and how?", this episode 2020 is definitely a major feat of the human race.
And that was in urgency. Now give it 10 years, and if we do any sort of decent preparation, in terms of infrastructure and knowledge, we could pretty much operate the world while most of us work from home, given the level of technical progress we've achieved. This was the promise of mechanization and machinery all along, right? To be able to just press a button? And wherever that button is, post-internet? (self-censored bad javascript joke)
But this event is also proof that some of the richest countries on Earth right now "can't have too many nice things" because their economy is profiled in such a way that does not allow for it, even if (some of) their life depended on it (quite literally so I'm afraid). It's a choice, at the very least, to continue in that direction, or not, and the reasons, the hierarchy of values that defines each of us individual and collectively, is much wider than this topic. But "smart money" will be right about it however, because smart money is what will make "it" happen, whatever it [the next new world] happens to be. You don't want to be on the wrong side of that, it's a bit of a historical fork.
You also should know that in consumerism, voting with a wallet is what ultimately drives smart money;
that in investing your wallet has 100× more impact on your values regarding the world and moving needles;
and that in post-internet times your very behavior online is part of that equation as the human kind gets abstracted in big data. Whether your behavior (bots/AI of tomorrow) or your browser history (rest assured that sentiment is meaningful however, it's normal to visit things we have negative feeling about, know thy enemy and all that). The world is nothing but what we make of it, online or not.
Now to address the elephant in any room with "smart money".
There never was any formal conspiracy, it's all an informal convergence of interests, no more no less. (not a cataclysm yet, no joke either). Face it, Adam Smith won that battle, because the thing is now so massive and so complex that nobody has a god damn switch to really move it at will (those who do are regulated but in the grander scheme of things... nobody can give ±100% to the S&P over the next 10 years, nobody has that kind of power anymore even as a collective. Kings are truly gone). The invisible hand was a self-fulfilling prophecy, is all.
It's a form of collective agreement (true, though distorted) quite special to our modern era. It's sensible because it empirically prevents upheaval, promotes growth, progress and stability, within the context of its existence (no way to affirm this would be true in all external conditions). We learned however that it's important to promote a system that doesn't generate as much inequity, that's apparently the only real cataclysmic part everyone and their mother should be worried about (because it tends to be proven in other sciences that it decreases life expectancy globally, and a slew of other social problems do worse).
Smart money is all these things, and more. You may have a specific definition today— I'm eager to read some in the commentary —but smart money is a more general idea that predates and outlasts most particular historical snapshots we use to describe it (cue rolling eyes on claims that "it's all because the Fed" or this person did this thing with gold... it matters, a lot in the short-term, don't miskate my words; but it matters not when you try to navigate this historical period versus other historical periods, not knowing what this one actually is but in hindsight, thus the ultimate significance of events).
You don't know that gold will triple in the next 8 years and 10× before 2040.
You don't know that my predictions are as good as my love for science-fiction (definitely lacking and I blame time). Our knowledge will always be partial, so it's sane to focus on what we know. Smart money knows:
-
Reforms will be needed fast before more dire circumstances remove the "business as usual" card from the hands of decision-makers (it will happen, whether a really bad virus, a war, natural catastrophe, terrorism.. still 80+ years to go for this century, we've not completed 20% so far). So we have 6-12 years to do the job give or take, and the best will be there by 2023.
-
UBI is basically the conclusion of the Tobin tax that never was, and seems like a decent approach to me (but muh opinion, who cares), if it can be indexed to the financials of its region (fact however, inflation is the big enemy of redistribution, more so than otherwise). I have no idea what smart money thinks, no one does remember, but it's already what European countries do in monetary mass redistributed /GDP per persona, only framed in a much more "universal" fin/math way indeed.
-
Pushing on virtualization and "remoting" humans to increase worldwide collaboration is also a great avenue of improvement (for quality of life, anti-fragility of society, etc) that's been demonstrated as totally feasible within 5 years or so. Collaterally automating big logistics/production centers with non-biologicals (robots, self-sanitizing buildings, etc) is a strong path to a few decades of economic prosperity as we transform infrastructure and eliminate all menial jobs of the 20th century and transition to the next paradigm. Not what I intend to discuss here, it's another topic, but it's really just the right part of the S-curve for this domain now 80 years in the making (see, again, sci-fi for references, if Boston Dynamics isn't enough).
So, smart money. Talking to you know, whether a cog, a hair in the machine, or more figures than my hand has fingers happening to read by. Know what you built, others before you, previous versions of the machine; and know what's left to do, find the best makers of that, and invest on.
The rest of us, the "less smart" I guess, it's pop-corn time for the next decade. Please mind the reapers though, they announce fortunes to be made but tend to leave a lasting mark if you touch one. Happy r/investing.
Signed: not your financial advisor
(but I had moved almost all-in cash before the pandemic hit, so I guess I'm not that un-smart after all, I suppose I'm not alone sitting this one out. Such is my skin in the game if you want to weigh this view, as I'm really not just talking). Speaking of which, gotta head back to work. Hope this was at least an entertaining read to whoever made it this far... | edit: typos+clarifs
No comments:
Post a Comment