...for whom the bell tolls...

No man is an Iland, intire of it selfe; every man is a peece of the Continent, a part of the maine; if a Clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were, as well as if a Mannor of thy friends or of thine owne were; any mans death diminishes me, because I am involved in Mankinde;
And therefore never send to know for whom the bell tolls; It tolls for thee.
John Donne, Meditation XVII, 1624
 

They say that no-one rings a bell at market tops or bottoms.  I'm beginning to think that this may not be completely accurate.

That said, my white crash-alert flag of surrender is well and truly tattered.  Its been buffeted and trampled on so firmly by a huge bull run, that I've been tempted to take it down, and admit I was wrong.

But then along comes Alibaba.  My saviour!

Shares in Alibaba rose 36% on the first day of trading; therefore its P/E is 61.  And lest we forget, those shares are not really holdings in the underlying company, but are actually holdings in a "variable interest entity".  Understand that?  Nor me!  But basically, the Chinese government has disallowed overseas shareholders from holding proper shares.  To cap it all, governance has been questionable, with Jack Ma, Alibaba's founder, allegedly pulling a fast one in 2010 with Alipay.

Have we entered the "irrational exuberance" stage of the bull?  Maybe.  When the retail investor starts piling in we'll know for sure.  Whether this is the start point, only hindsight will tell.  An investor has three options, go long (buy), go short (sell), be out (sit in cash or near-cash holdings).

I'm keeping the latter topped up.  What goes up, also comes down.  When it comes down, that's when opportunities present themselves.

Was Scotland's independence referendum rigged?

Well, was it?

Was Scotland's independence referendum rigged?  I dunno.  And I dare say never shall.

But I observe the following:

• In order to create a 10% majority in an 85% turnout, there must have been one heck of a lot of rigging, and that wouldn't have been easy to cover up.

• Conspiracy theorists always abound.  However, the "evidence" that seems to be circulating, including video, seems to merely highlight incompetence and minor cock-up rather than conspiracy.  I don't suppose there has been a flawless count in the history of elections, anywhere.

I would not deny, however, that the powers in Brussels did not wish to see a "yes" majority.  I also agree that the separatist movements in Scotland and elsewhere are bolstered by the authoritarian attitudes and money-hunting of centralist power-thirsty politicians.  Since these politicians aren't going to change their ways, the protests against them, all leading to separatist trends throughout Europe, will continue.  I also agree that things could get nasty, especially when the inevitable economic down-turn comes around again.

But let's not forget, as I said before, the SNP are socialists, and socialism doesn't work.  Whatever you think of Alex Salmond, what he said when he announced his resignation is right; now is the time to make the Westminster politicians stick to their promises made just before the 18th of September.  Maybe, just maybe Scotland can progress towards its own brand of capitalism, reduce socialism, all without secession and the inevitable medium term turbulence and bust that that would have condemned its people to endure.

I was struck by what a nineteen year old apprentice welder working in Dundee, earning not much more than the minimum wage, told his Mum before he voted: "Why would I want to swap a stuck-up politician from London with one from Edinburgh?  There must be a better way - I'm voting 'no'."

Enough said.

Scotland's indepencence vote - a civil "war"

I voted "no" to independence yesterday, 18th September.  But not because I don't think Scotland could be independent.  Here's why:

I've said it again and again over the last few years: There is no reason why Scotland should not be independent.  There are plenty of examples worldwide of small and prosperous nations - Switzerland, Singapore to name but two.  But the Scottish Nationalist Party is socialist; indeed, I believe it harbours communists.  One of its most famous communists was the poet Hugh MacDiarmid who wrote some wonderful poetry in the Scots language (not Gaelic), and I believe quite a number of the Scottish Nationalist Party (SNP) have quietly continued to adhere to his views.

I know of no instance of a socialist society that has also been prosperous in the long term.  Arguably the greatest thinker and economist of any time from any part of the world, a Scot, Adam Smith, born in Kirkcaldy, lived Edinburgh, said that profitable societies work due to the "invisible hand" of commerce being allowed to operate freely.  In a nutshell, we all do what we need and want to do, and by and by everything humanity needs and desires is produced, developed, designed, implemented.  This is Capitalism.  It seems to me that this is largely how the USA worked up till the turn in the 1990's, with a few hiccups along the way.  Its what made her a superpower.

Socialists, on the other hand, meddle, fudge, build ever bigger government (the US is now in a socialist trend - Obamacare, for example), get into more and more debt, build ever bigger government to hunt down ever more money to pay for their experiments - a vicious circle.  It doesn't work.  The Englishman, Thomas Paine, probably the most enlightened revolutionary who ever lived said, "Society in every state (of being) is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one...".  With his support and writings, George Washington roused and inspired a rabble of cold, wet and hungry farmers to stand up to the biggest empire the world had known up to that time, and kick it out!  Good riddance!  Paine was and is right!

I voted against the intolerable evil of big, socialist government - not against the idea of independence per se.

So why do I say that Scotland is now in a civil "war"?  Simply this; nearly half of the population seems to want one thing (55%), the other half the opposite (45%).  Or that's what they think.  I really don't believe most Scots have drawn the distinction I have between Socialism and bigger government on the one hand, and prosperity with independence on the other.  There will be a price to pay for this, and Alex Salmond and the SNP will be blamed by history for the troubles to come.  However, the SNP is really only symptomatic of a greater trend; the loss of confidence in governments across much of the world, and the backlash against the corruptness of it all.

There will be a reckoning.  Investors will struggle to find safety for capital, let alone a return.  The situation will only favour traders, but a good many of them will loose their shirts, too.

Can I take heart from the fact that the overall turnout to vote was a staggeringly high 85%?  Are Scots democrats?  Or, as some commentators have said, did they really just vote for their pensions and self-interest?  I really don't know, but they couldn't be blamed for it.  But I do know that how it plays out won't be predictable or especially pleasant.

How depressing.

What's GDP - really?

"...lies, damned lies, and statistics."

Wikipeadia (so it must be correct!) says,

The term was popularised in the United States by Mark Twain (among others), who attributed it to the 19th-century British Prime Minister Benjamin Disraeli (1804–1881): "There are three kinds of lies: lies, damned lies, and statistics." However, the phrase is not found in any of Disraeli's works and the earliest known appearances were years after his death. Other coiners have therefore been proposed, and the phrase is often attributed to Twain himself.

So, why am I using the above quotation to describe GDP  (Gross Domestic Product).  Well, consider this:

I cut your lawn.  In return, you mow my lawn.  No monetary payment is made.  No effect on GDP.

I cut your lawn - you pay me £1. You mow my lawn - I pay you £1. The GDP goes up. The more transactions per person per year, the greater the GDP of a country.  But neither of us is wealthier.  The transaction left us exactly where we were, but the statisticians employed by government can rejoice!  GDP went up!

What is GDP really measuring?  Increased productivity, or output, or profit?  You tell me; I really don't know!