Requiem to a Medical Career 1981-2021

Today is the last day I will be a licensed physician. Tomorrow I will be a civilian. Today is the first day of my 69th year as well. I’ve been “retired” since 2017 so my ability to obtain malpractice has already expired (except by locums route) so today is a formality anyway. None the less I do about 50 CME a year because, just because, and I will continue in that. It’s so damn easy to obtain CME these days and I can focus on my interest instead of my specialty. Medicine is at once incredibly full of shit and incredibly interesting.

I came to Medicine in an unlikely fashion. My training had been in Neuroscience, Chemistry, Engineering, and Biophysics. After grad school I settled on Engineering, working as a communications engineering consultant and as a educator at a community college. I had zero interest in Medicine and considered the pre-meds assholes, Part of the way I put myself through school was tutoring inorganic and organic, math and physics to pretentious pre-meds who couldn’t be bothered to learn the subjects, “just tell me what’s going to be on the test man”, so I did. I was poor, had 2 other jobs and it helped pay the rent plus I learned the subject matter REALLY well. See one, do one, teach 100.

My Biophysics interest was on stroke evolution. We discovered a previously undiscovered wave form in the injured brain that was ipsilateral hemisphere specific but also had a contralateral component. This allowed us to map the progression if a stroke. It turns out the injury is not all at once but stepwise additive, so stroke outcomes are the integral of a bunch of discrete mini-injuries that typically occur over 24 to 48 hours. My hope was to develop a tool where pharmacologic intervention could arrest stroke evolution, but to do that kind of research requires access to a rat colony and access costs money and no one is breaking the iron grip grant reviewers have on each others money. You pay the guy this year who will be reviewing your research funding next year. The CT scan was just being developed in those days and you could charge a lot for a 5 minute CT, so though promising my research would never breach the energy barrier necessary to be born into clinical use. One feature was I leaned neuro-anatomy cold.

I hooked up with a woman who needed more money that an engineer, college teacher could make, so I sat down 5 years out of University and spent 9 months studying for the MCAT. I scored in the top 1% nationally. All of that tutoring I did virtually guaranteed me a seat. I got accepted and the woman split for Cali anyway, so I was single, debt free, had enough money in the bank to pay for my medical education (until the inflation of the early 80’s hit) so I moved to Chicago and acquired the distinctive odor of the anatomy lab. I was older than my “fellows” and very aggressive in learning Medicine and being properly aggressive in a seasoned way gets you opportunities. I had a good time in Medical school. Such opportunity. The information was voluminous but so what? I had plenty of time to master stuff. I let the faculty mold me as they would without resistance. It was their goal to make me a physician. It was my goal to become a physician.

In 1986 after my internship year, I became a licensed physician. I was a real Denison of the ICU, any ICU. Burns, medical, surgical, neuro, CCU, pediatrics, neonatal. Our hospital did 16 open hearts a day and I spent a lot of time in post-op hearts. It was my first rotation internship year, and running the post op vents in all of the surgical sub-specialty ICU’s with 30 hours on, 18 off every 2 days was my first 3 months of residency. It was intense but the guys who ran that aspect of the Anesthesia service liked my work and they were critical to the Anesthesia “machine” that served the hospital, so I was able to do stuff pretty quickly. The chief of ICU team was boarded in Medicine Cardiology Anesthesiology and Critical Care. so access to him was very useful. Together we tried to develop a new kind of balloon pump that worked on the principals of a machine gun trying to develop resonance in the aorta. What I wound up proving was the circuit could not be resonated, and I proved why it can’t be resonated and I learned a ton about the biophysics of cardiovascular physiology in the process.

The great inflation of 1980’s hit me in Med school, so my 4 years expected savings were wiped out in 2 years. I’ve actually experienced inflation and it’s consequence. I decided I wouldn’t go 400K in debt in 1983 dollars on 21% interest loans, so I joined the Navy and got the sweetest of deals. They paid for my final 2 years and I owed them 2 years. I made about $700/mo as an Ensign beside tuition books and all that. Since Anesthesia was a prized specialty I was allowed to float till I competed residency and then it was anchors aweigh for 2 years as a Lt in USN MC. My duty station choices were Guantanamo, Memphis or Orlando so I wound up in FL, got a FL license and did some moonlighting. Somehow the Navy decided I knew something about pain medicine and ORL is a world class airport so I started getting pain consults from all 5 branches sending patients TDY to me from all over the SE US. YIKES! Pain medicine in the service is tricky because there are certain things that absolutely can’t be prescribed or the service member looses their rating and therefore their career. Pain was a fledgling sub-specialty in those days. Implantable devices were still a few years away. I am so grateful I was able to boot strap myself into pain, it became a large part of my subsequent career.

I was called up for Desert Storm but never made it to the transport because the war lasted 100 hours. It was nearly time for me to go anyway. After I got out I became a locums doc, and my wife and I traveled around to various beach communities for a couple years so I could learn the business ropes of Anesthesia. Nothing like going to a distressed group to learn the cracks, failures and egomania. I moved to my present town as a fee for service solo practitioner on a tip from a locums job. We were forced to become a group by the hospital so I became a group owner. I also started a pain practice on the side, became director of the same day center, and after 18 years left the hospital for a free standing SDSC 2 miles down the road and ran that practice and did pain. I quit at age 65 to get my long term tax picture in order, plus it was no longer fun. It’s time to go when you’ve had your fill. Gruber, Emmanuel, Obamacare and the bean counters broke Medicine. Grueling comes from the word Gruel, a thin porridge often fed to slaves. Medicine is now a “grueling”. When I was doing 30/18 in residency it was intense, but you could see the progress of your work. Some people died, most lived to tell the tale. Today the medicine is the same but the work is double which means the relative rate of return is less than half. Still it’s bittersweet to let it all go. I get 10 locum offers a week, but it’s not worth it.

SDR

Lemme see just put a little bit every week in a 60/40 cheap index mutual funds for 30 years and you’ll be rich, rich I tell ya. Rich in what currency, what reserve status and what inflation regimen?

What The Hell Is a Fractal?

Benoit Mandelbrot is one of the Fathers of fractal geometry and the geometry of nature. Geometry is a systematic means to meter the Geo aka measure the world especially using scalable relationships and integrals.

Here is an example using similar triangles.

I especially like the last comment that the relationship between triangles changes as the sun roars across the heaven because shadow accuracy is dependent on the position of the sun. The point being the triangle of the tree and it’s shadow contains a fixed ratio of information which can be unpacked to provide specific answers to specific problems. That’s what a fractal is. It a way to formally describe similarity, or disprove similarity. If you used a 2 yard stick at the 5ft point the triangles would be completely dissimilar but move the 2 yard stick to the 10 ft point on the shadow and similarity has returned.

Here is a fractal view of volatility. It looks like smoke from a candle. It’s subdivided into 3 parts

The first part

describes flow in a laminar way. The profile is Gaussian:

Laminar flow is controlled by a boundary that exists around the column, the outside vectors experience more friction than the inside and so a Gaussian profile develops.

The second:

Here you see the boundary envelope begin to decay. The column becomes wavy and irregular and finally circular around an axis perpendicular to the column. The column now instead of being described by Gaussian math is described by angular math.

The third:

The flow is now at the very base around 2 axis and starts to become very complex, disorganized and translated.

Financially for me this picture represents volatility regimens in the market. The first is low volatility. Here things have low volatility and excellent predictability. A volatility measure between 5 and 15 might represent assets in low highly predictable vol. Since things are predictable bets tend to pay off. You might compare this vol to the weather between dead calm and mild summer storm. Shelters are all made to provide safety in this regimen. The second is higher vol between 15 and 30. Here vol is much less predictable and much more energetic. The circular flow is like the eye of a hurricane and the damage it can cause can test the stability of a roof. Recall the equation for kinetic energy is ke=1/2mv^2 so the energy is second order exponential. The third regimen is like a tornado. It simply destroys what it touches. If your butt is hanging in the breeze soon enough you have no butt.

You make money in region 1 You can easily loose in 2 and you are playing with fire in 3

This is a fractal similar sets describing quite well variant phenomena The kinetic energy concept (which is the integral of velocity and the second integral of acceleration) pretty well describes the controlling math. It goes from point to line to plane to volume in terms of complexity.

Easy Peazy Wall Street Squeezy

I’ve been enjoying the antics of the Robin Hoodies, tear hedge funds a new one. It’s a sign the world has changed and creative destruction is in the air.

1. The Setup

Last year the government response to unemployment was to issue checks. Here a check, there a check, everywhere a check check. The casinos are closed, the sports books are closed. Dave Portnoy doesn’t have anything to talk about. A company set up day trading for the little guy. The company is called Robinhood, as the fable goes take from the rich and give to the poor. Suddenly these new Millennial traders were making daily book trading QQQ and HERTZ (HTZ now HTZGQ). Hertz had gone bankrupt a fallen victim of the pandemic. The Robinhoodies didn’t care. They kept trading HTZ as if it was alive. To make money all you have to do is buy low and sell high. So although a dead cat the hoodies just kept bouncing that SOB pulling nickels off of each bounce.

Compounding is an interesting thing. Let’s say you buy HTZ for a buck and sell it for a buck fifteen (15% return). The next time you buy low you have $1.15 to invest and if it pops another.15 cents you have $1.32. 15 cents again, 1.52. Trading is free. The government is sending you $600 per week. It doesn’t take very long to make a PILE of cash bouncing the dead cat playing with the houses money. 600/wk at 15% per week and 600 additional added each week is 170K in 26 weeks. It’s the houses money being played with a bunch of gamblers and gamers. Robinhood has 20 million accounts and represents 20% of the daily market volume.

2. Revenge of the ants:

Gamers hone their skills by playing games and sharing strategies. Boomers “invest” meaning they park their cash in some instrument with a scalper like Vanguard, sit around and philosophize about 5% yearly return while the gamers are looking at 350K/yr return on their government checks of a compounded $600/wk. With their skills honed and an open network established on Reedit the ants set about to loot hedge funds. Options contracts are contracts. You don’t buy an equity you buy a time value decaying promise. There is a winner and a looser. If I buy June IBM calls the option means I can buy IBM stock in June for the price I negotiated earlier. If IBM goes up more than my option I will exercise my option and then sell at the higher price. If IBM doesn’t pan out with a higher price I won’t exercise the option and loose the money I paid to buy the option. The option was sold to me by an IBM stock holder so it’s a bet between me and him about the future price of IBM. If IBM is 150 and I buy a call option for $10 and IBM goes to $170 at the call the stock holder gets $160 (150 +10) for his IBM and I get a $170 share of IBM or I can just sell the 170 share and pocket $10. The option cost me $10 and if exercised as described I make back $10. If IBM went to 180 I’d make $10 dollars for 100% profit on the trade less short term cap gains. Short sellers have the other side. Their option is a put, a bet that IBM will go down. If IBM is 150 and they pay 10$ for the put and IBM goes down to i40 the put gives me sell 140 dollar IBM to someone for a 150 price and I make back my $10. If IBM drops to 130 I make an extra 10 for 100% profit. If IBM goes 150 and above you loose $10

A boatload of synchronized and coordinated hoodies can drive a stock price where ever they want in a thinly traded market. Because it’s supply and demand low supply and high demand will shoot up the price dramatically. If you’re short and you’ve sold a put it means when the piper is paid at expiration you have to come up with shares to settle your contract. If you sold a 150 IBM put and IBM goes to 300 you have to buy 300 IBM and sell it for 150 and loose the difference less what you were paid for the option. This is called a short squeeze. I buy a low cost option and force the market to the moon then buy the stock at the option price and then sell the stock at a big profit.

In a thin market it can be done and was done with Gamestop and several other thinly traded stocks. All of this amounts to levered bets on the underlying, like a game, and Millennials are good at games. It worked so well Robinhood closed down trading on Gamestop tp protect Wall Street. I expect they will be sued 10 ways to Sunday for protecting Wall Street over the little guy. Should be interesting how ol lunch bucket Joe responds to the little guy getting screwed.

The nugget to glean from this networks matter. They change the “game”. The Bayesian odds shifted from a rigged wall street game to a bunch of unaffiliated little guys who rose up to loot the bastards. A network that represents 20% of market volume is a network to be reckoned with. If the network set up a PAC then it would REALLY matter because that network would become the new AFLCIO in terms of political clout. $5 a month from 20M peeps is 1.2 billion per year. If the government tries to shut it down, who’s the Nazi? Not the Donald, he’s hiding out in FL. BTC and Ethereum are also money based networks. Suppose the contracts move from an exchange to a decentralized network with a standard verifiable contract that trades in Ether instead of dollars. I could trade by VPN from a Hong Kong address in a non exchange way and there wouldn’t be a Robinhood to pull the plug on the money machine. Networks matter. Maybe not to geezers earning 5% while Vanguard rips them off but to those interested in playing the game. Networks matter to the geezers as well but they don’t even know it. If you own a mutual fund you own an instrument that has a similar risk to manipulated Gamestop because the price becomes disconnected from value. At one point Gamestop became the MOST VALUABLE stock in the Russel. If you own VTWO you own Gamestop. Game stop is one stock. Suppose 100 stocks in the Russel become part of a basket of network trades. How does the government respond to that? Mutual funds are not indexes. They are derivatives and susceptible to risk distortion through network means.

If you think you’re going to rely on a 60/40 to get you through, that’s last century thinking.

BTC in a Roth?

I’d love to have some BTC in a Roth. It’s difficult to custody alternative assets in a Roth. It all has to be done just exactly right and it’s certainly not set up for trading. Hedgeye has a new BTC trading product which provides buy and sell signals on BTC, GBTC the Grayscale BTC Trust and MSTR which is another stock that owns a LOT of BTC.

GBTC is my experimental candidate. I seems to track BTC directionally with about 60 to 75% of the volatility. Today BTC is up 14% and GBTC is up 9%. The advantage of GBTC is I CAN own it in a Roth, so I can buy and sell without tax consequence and trading is free at Fido. The Hedgeye product gives me enough information to judge when to trade. The product gives a daily risk range channel which allows you to make outcome weighted bets with a high probability of success. The bets allow for when selling has high probability of payoff and when buying has a high probability of payoff.

The result is a tool to compound your money. Say the top end of the BTC range is 40K and the bottom is 33k. If BTC hits 33k BUY as BTC approaches 40k start selling 25 bp at a time. So if I had 100K invested I would sell 25bp of each incremental move up maybe starting at 37K. 33K to 40K is a 21% move so I might pull out 2 K on the way to 40K at 40K (or what ever the new top of the range is) I would be all out and wait for the next bottom end to be reached. This time I may have 107K (100K + 7K profit) to invest and so my investment compounds with every cycle and I’m constantly booking profits preparing for buying at the next low. It’s really only worth doing this in a Roth. Completely different approach that buy and hold and hope.

2021 Prognostication

Paul Pal from Real Vision released his 2021 prognosis into Youtube. Definitely worth the 34 minutes. Real v predicted jobs numbers were off by 350% meaning the government got it wrong by 4.5x. It was 1st week Jan so likely the liquidation has started in small business. I read the NEJM article on the Pfizer vax, 95% effective with 2 doses spaced @ 3 weeks at reducing deaths. Doesn’t say a damn thing about reducing morbidity. I read an article out of Wuhan that claimed 75% of virus survivors have some kind of ongoing morbidity. Another article out of Europe claiming viral immunity is reduced in 52% of people recovered from infection 6 mos post infection. I heard Biden admin was considering ordering 1 dose instead of 2 in order to jab twice as many with half as much. I have no idea if that’s true but I also have no idea what happens to efficacy with a 1 jab solution. I read an article where a hospital CEO was preparing for a surge of deaths because of inadequate infrastructure to support the sick. This doesn’t sound like happy days are here again by summer to me.

Japan, Europe, US, and China still face a demographic economic disaster as my generation retires. Retirement by definition is deflationary. Money printer go brrrrr won’t cause retirees to spend money. If anything it will cause them to save money. Money printing is asymptotically tachyphilactic. I’ve read studies that it takes a 1.5 to 2 x increase over the previous brrrrr to get an effect. In places like Iran Egypt Africa and India the population is young and not adverse to families which is fertile ground to create a middle class and middle class stimulates economic growth and commerce. There is a reason when you call some tech company customer service is in India. You may hate the experience but the guy who picks up the phone gets relatively well paid and he/she will buy a couch or car with that dough.

Many are predicting a bad second half. The drumbeat is loud enough further investing at this time gives me pause. The volatility of Apple Google Amazon IBM VIX are all up double digits reminiscent of early 2020. The greed index is at 70% so fear is the next most likely cycle move. The higher greed goes the more likely fear follows. Commodities are exhibiting volatility decreases

BTC is down 2.71% for the day, but up 11.3% for the week and 89% for the month. ETH down 1.78 for the day, up 3.7% for the week and 93% for the month.

Let’s see what Mr. Pal says:

A Little Ditty ‘Bout Log Regression

Humans don’t do exponential very well. Humans do linear well. Humans experience exponential all the time however since nature runs on exponential. If you get in your car and go from 8 m/s to 16 m/s and your car weighs 1000kg your kinetic energy goes from 32KJ to 128KJ double the speed 2^2 x the energy. Another example is the growth of the virus. We look at the death counter shake our heads and say WTF happened!

When we look at Crypto prices we look at variable exponential growth with variable growth oscillating in and out of bubble territory. By doing a log plot on Y axis growth v X axis time and looking for a smooth fit to the data to some formula y = b*log (x) + a you generate a log regression curve and by adjusting b and a the curve fits the data. Below is a video that describes how this is done and looks at time of the X axis v non bubble growth on the Y. The argument is ETH is 5 years behind BTC in its adoption and is just coming into the second cycle peak while BTC is coming into its third cycle peak. It’s from this kind of analysis that 500K BTC is derived.

I was listening to Raul Pal and instead of charting exponential growth against time he charted against the time it took to various amounts of account addresses. Account address expansion is Metcalf’s law. As the addresses expand the network increases in complexity.

When he did that fit, BTC and ETH were tracking exactly meaning the growth in ETH will follow the same complexity path as BTC just offset by 5 years time. Is it true? I don’t know. It is a way to think about exponential growth v a variable that may not be time, but may just be be functionally related to time in some way.

Beats hell out of standing there staring at a screen saying WTF, while non linear reality unfolds before your glazed over doe eyes. I think understanding this stuff at least at the flavor level has merit even if it’s only based on probability and Bayesian inference. For example I’ve noticed BTC and ETH don’t accelerate in time with each other. When BTC is accelerating ETH goes sideways or down and when BTC goes sideways ETH tends to explode. I think this is the basis of the diversity and risk reduction provided by owning both assets. I think the diversity is not structural but behavioral.

BTC at present is preferred. When it’s moving trading is deferred to BTC and ETH and the other alt’s go dormant. When BTC goes sideways money flows to ETH which causes it to explode because things are exponential. When BTC moves again ETH goes sideways. This effectively provides diversity and tends to reduce risk in the overall portfolio. Eventually the 2 assets will perform different economic functions and diversity will be derived on that but I think in this nascent crypto soup of barely understood assets it’s buy the FOMO that drives diversity enough to create an efficient frontier.

What Blows Up BTC?

Every time I get into an investment the very first thing I do is figure out how to get out. Once you buy the risk you have to decide when to sell the risk. Risk is the actual thing we trade. If we buy the risk low, our next task is to try and figure out when/how to sell that risk high, or at least to sell it at a small loss.

The Bogglehead philosophy is BUY. Every month BUY. If the market goes up 100% regardless of cost BUY more risk. If the market drops 50% BUY more risk. The Bogglehead philosophy presumes a constant rightward and upward growth curve. It’s the ultimate in recency bias. The BTC game at present is asymmetric exponential growth.

People and youtube is full of blue curve mania. Will BTC go to 250K, 500K 1000K? 10,000K? Right mow BTC is running on a Bogglehead dominant philosophy. Just keep buying more and more risk and ignore reality. BTC will eventually become a red curve dominant reality. As institutions buy in they will not buy risk at any price. They will manage risk because that’s how they make money. Managing risk means some BTC actually gets sold at various points like quarterly rebalancing. At some point, a well defined well known point (when the second derivative of the red curve goes negative) the growth starts to slow. It still grows but at a slower rate. At that point the exponential growth party is over. At that point the cost of your risk goes way up.

When that point happens I don’t have a clue, but that red graph is how things will play out for BTC. Institutional adoption because they actually manage risk will force growth to be managed also which means the volatility of the asset will be dramatically reduced. It means the rate of growth drops, the asset goes from being underpriced to correctly priced and the price growth due to asymmetry vanishes.

ETH OTOH isn’t relying on asymmetric growth to create it’s value but it’s ability to do work. It’s protocol will make it into a super secure and super efficient means of transaction and therefore a low friction secure platform upon which to do business. Right now there is a bunch of friction built into transactions. Everybody is skimming points. ETH eliminates “the everybody” and so the transaction occurs between node A and Node B. The transaction is transparent and permanent and secure. Because of a high degree of reliability ETH contracts They eventually will become the basis for credit, leverage and derivative trading IMHO.

BTC’s feature is it doesn’t belong to anybody but you. It’s open source and apolitical. ETH’s feature is it will cost more to steal anything than the value in what you can secure in the theft. I’ve seen credible professionals (not swinging dick youtubers) do log regression analysis ranging from 400K to 1.2M per BTC occurring in 1 to 5 years. So if those values are correct and you have say 10 coins take 1 off the table at 400K. Take another off the table at 500K another at 600K. That leaves 7 coins and 1.5M in cash. I would continue to sell coins till I have 5 left. As the value goes up the asymmetric return goes down and the sky’s the limit becomes limited. Once half the value has been extracted, half the risk is also extracted. BTC can be used to generate interest. Right now as much as 8%. The remaining 5 would then go into generating interest. This plan or some similar variant. In the end it’s not how much money you make, it’s about how much risk you hold.

BTC is NOT an American phenomena. It is a global phenom. It’s traded 24/7. It does not respect American holidays. Lately the volatility has been occurring in the middle of the night aka in the middle of the Asian day. Americans and American financial media tends to have a very parochial understanding of “markets”. BTC doesn’t care about the QQQ’s or a bunch of anti-fa dressed up like buffalo storming the Capitol to take a bunch of selfies.

Crypto 2021

At Thanksgiving I wrote an article urging the adoption of some long term crypto strategy based on an asymmetric exponential probability of gain. Since Thanksgiving my BTC has increases 300%, and 900% for the year. I bought some Ethereum in April for for $100 and today it’s worth $1100. Th market cap of the crypto space has grown from just over 300B to just under 1T. I’ve had some 6 and 7 bagger investments in the past but they never grow this fast. Typically it’s a 5 to 10 year horizon. Early this morning there was a dip. Prices fell from $33,666 to $27,900 and have regained $32,327 in about 14hours. That tells you the demand is monstrous. A 17% correction was erased in a hand full of hours.

I recently saw a you tube video claiming if you own just 1 BTC you are in a group of 808,000 people in the world and if you own as little as 0.22 you will exists in the top 1% of BTC holders forever because the # of BTC is capped. 0.22 BTC is about $7260. If you want a 100K/yr retirement for 30 years you need about 15 BTC At todays prices that’s $495K. Pretty cheap retirement to purchase.

BTC and Ethereum constitute an efficient frontier. The least risk BTC:ETH portfolio is 74:26. I hold these roughly in the 75:25 proportion and have seen the fruit of diversification in my own portfolio. I keep seeing predictions based in 2SD regression lines that put BTC at 1M/coin in 5 years based on Flow models. It’s statistically possible but I think something like 20%/yr compounded is more realistic.

Here is a vid on some stats

Real Vision Power Shares

Real Vision is allowing “powershares” up to 5 shares per month on my plus account. In order to share I need an email address. This I’m sure will generate a “special offer” to join real vision but in the meantime I’ll send you the share curated by me from behind the paywall to view. I’ll try to chose videos by professionals who give their unvarnished rants apart from the typical Wall Street sales boiler plate. i’m not sure how many “close friends” I can accommodate, but I’m not a well read blog so likely I can get 25 on the list. So if you want some behind the paywall curated content drop me an email addr in the chat and I’ll cut and paste you into the cue.