Dem Ol’ Big Blues

It’s good to know what you’re up against. In 1996 Blue went up against Kasparov. Kasparov swept but Blue won one game. Blue won the first game, but Kasparov learned. !n 1997 the rematch Blue had been learning too. Blue won in the 6th game in 19 moves. Blue had 256 processors and considered 200 million positions per second, analyzed the probabilities and settled on most probable and contingencies. The papers estimate Kasparov had the power to adequately analyze 2 deep probabilities.

Kasparov described the computer in game 2 as “playing like a god for one moment” and he seemed to be spiritually as well as intellectually defeated. After game 5 he felt the match was already over. He said “I am a human being, when I see something well beyond my understanding, I am afraid.”

Chess is ranked on a ELO scale. 100 = a 64% probability of winning. 200 = 75.8%, 300 = 85.3%. Kasparov was ranked at 2851 and the current human, Carlsen is ranked at 2882 a 31 point improvement in 23 years. The current leading chess computer is ranked at 3496, 614 points better than Carlsen.

Wall street is geared to make money. Casino’s are geared to make money. Casino’s choose games that are, over a population of players are guaranteed to pay them for their trouble. Wall street is no different. Financial television is no different. If you think you’re going to kick big Blue’s ass (or the current reigning chess computer called STOCKFISH) with a simple little diddy of save half, invest in low cost mutual funds, have a nice life, you will be fish food. Interesting that chess computers compete amongst themselves and interesting a chess computer is named STOCKFISH.

You think we are in a V recovery? The above map is how much world countries have indebted themselves in response to COVID. First is the tiny little country of Singapore. Second is the really huge country of the United States. The US was running a debt to GDP of about 105% just marginally over the point where increasing debt has a multiplier on economic output. Now we’re talking 130% well inot the territory where increased spending causes a decrease in economic activity.

What’s all that debt buying us? Zombie companies. Companies that should go out of business remain in business through bailout, which increases debt, which increases economic drag.

In the mean time something like 25% of the trading volume (aka increased volume and volatility) today is from new retail accounts opened by people plowing their \$600/wk government check into speculation, like Hertz. What the hell may as well invest in a real zombie.

My BTC and GLD is kicking butt!! Wait a minute, the DXY is down. GLD and DXY have about a -.97% inverse correlation meaning my GLD is effectively shorting the DXY so gold hasn’t so much increased in value as the DXY has decreased. A decreasing DXY = inflation somewhere in our reality. In my case it’s in GLD and BTC and meat. But the Q’s Mr Natural what about the Q’s?? Every day in every way they get better and better, until they don’t. Why do you think the US is darkest of blue in the above map yet the QQQ’s have high returns? With a 50+M unemployment and bank profits down 38% it certainly isn’t because of economic activity. Seems like Q’s might be up because of video game activity from 25M new retail accounts.

Be very clear you are playing against STOCKFISH and STOCKFISH is made of silicon. STOCKFISH like the virus has no arms and no legs. The virus has one goal, to reach maximum entropy in the environment. A computer algo like a stock market version of STOCKFISH has but one goal, to separate you from your money. What was it old Kasparov said? “It was like playing a god for one moment.” He came into that tournament expecting to win.

My favorite saying: you either live in the truth or the volatility will painfully take you there.