Fortino Samano

Very little is known about Fortino Samano other than that he was a leader of rebel forces during the Mexican Revolution. This photo was taken moments before he was executed by Federal authorities in 1916. After finishing his cigar he chose to hang a white handkerchief from his left breast pocket, giving the firing squad something to aim at. Refusing a blindfold he then removed his hat and stood up straight with his shoulders back. In his very last moment he watched the bullets leave the barrels before feeling them enter his heart. He may well be the coolest person to have ever lived.

President Super Shredder

In the 1991 film Teenage Mutant Ninja Turtles II: The Secret of the Ooze the four heroes face off against their arch enemy Shredder inside a packed nightclub. Vanilla Ice is up on stage improvising Ninja Rap while Shredder is attacking to kill. The turtles improvise also and overload the speaker system, causing Shredder to be blasted though the wall of the club by a sound wave and out into the docks behind the building. They assume he's gone for good. 

For two terms George W Bush was not only unable to understand complex situations he also deferred a lot of his decision making to someone else, Vice President Dick Cheney. After the Republicans lost to Obama liberal voters sighed relief because now there was this thoughtful learned individual in the White House who could pour over documents like an executive scholar. This was the new norm. This was the future. Wrong.

As the ninja turtles are busy congratulating themselves they fail to see that the evil shredder is not dead - he's actually just swigging mutation ooze. Suddenly he reappears from nowhere bigger and sharper than before. Ranting and swinging his blade armour against the pillars that are holding up the dock he's standing under.

SHREDDER

Arghhhhhhh!

DONATELO

The last vial of ooze. He must have taken all of it.

LEONARDO

It's a Super Shredder!

People thought the GOP was dead when Obama won in 2008. But no. They just went away, digesting a strange cultural ooze of social media and collective ADHD. In 2016 the mutant Trump emerged as a grotesque thrash of name calling and know-nothingness. His political genome was so distorted that he defied understanding, to the point that no one knew how to defeat him. The mutation included is the worst of Bush but more so. The same but super. Trump's decision maker is Steven Bannon, a mutant Dick Cheney (the ooze actually allowed him to grow thick hair and no longer needs glasses). At least Cheney was elected. Bannon is an unknown entity who appears to have a Rasputin like power over President Trump, controlling him with dark arts psychology. The Donald probably doesn't even understand what's triggering his uncontrolled outbursts of anger and frustration. He sees late night comedians as bullies teasing him. So he throws tantrums on twitter and runs away to his safe space at Mar-a-Largo. In order to cope he watches Jean Claude Van Damn movies on Air Force One, fast forwarding ahead to the fight scenes. Genuinely struggling with texts more than a few sentences long he does not read the executive orders he signs. Instead he scribbles his magic marker IMPACT font signature across the parchment then shows it off to everyone in the Oval Office like a kid that's just picked a massive booger from his nose.

Right before it all comes crashing down Leonardo tries to debate Shredder mid paroxysm. 

LEONARDO

Shredder, you've got to listen to reason. You're gonna destroy us all!

SHREDDER

(heavy breathing)

Then so be it!

In the movie the turtles survive by jumping into the Hudson River just in time. The movie is fictional

Financial Markets are Stories We Tell Ourselves

The US stock indices are climbing to all time highs, with the Dow Jones punching towards 19,000. It’s an event that is not monocausal. It’s a complicated story. Which is the point. It’s a story. Because financial markets are stories about economic fundamentals.

 David Tuckett

David Tuckett

Professor David Tuckett is a psychoanalysis at University College London.  He has devoted a considerable portion of his career to studying how emotions effect market prices. He argues that most economists underemphasise the critical component of human psychology in financial markets. In general terms, there are two primal emotions that drive markets up and down.  Excitement about gains and fear about loses. But it goes further.

The world is so complicated that it can never be fully understood. Which is a scary thought if dwelled upon. Information ambiguity. Which bits of information to pay attention to and which bits to just ignore. Finding the signal in the noise. Beyond being confusing and daunting it's actually so emotionally stressful that participants need to create a narrative thread, something that strings different pieces of information together, in order to take any kind of action.  If they don't create stories then they will be acting on pure emotion.  Excitement or fear. 

If the available information includes falling Iron Ore prices market participants might begin to formulate a story where the Chinese economy is slowing down.  If the Google Pixel smartphone is expected to become a growing hit a story where the future price of Coltan increases becomes believable. 

Although based of economic fundamentals, stories about market prices are just that, just stories. Sometimes they are accurate and sometimes they are not. This is why financial markets are far more unstable than the economic fundamentals. The underlying fundamentals don’t change that quickly but the stories about them can totally change in just one afternoon. 

 George Soros

George Soros

Uber rich fund manager and philosopher George Soros talks about something that he calls ‘reflexivity.’  Reflexivity is an economic theory as well as a social theory. It refers to a circular relationship between cause and effect.  A reflexive relationship is bidirectional with both cause and the effect affecting one another in a relationship is which neither can be assigned as causes or effects.  It’s confusing but it is real. 

Basically, and to give an example, if the story is that property prices in a Sydney are going to go up because that’s 'just what always happens' to real estate values in Australia’s biggest cities, then that story first causes the prices to go up. Those new higher prices then forms part of the new story that pushes prices higher again.  It acts almost like a self-fulfilling prophecy.  The new increased prices reinforce the original story that prices go up and create an even stronger story that prices will keep going up. It's a reinforcing loop. All the while, the economic fundamentals that should cause property valuations to increase are not ringing true.

At their core, financial markets are really just unstable information. Market participants arbitrate what the stories are at the moment. Whatever stories the market as a whole is adopting at any given moment will be reflected in the price. It's a never ending story but right now tale is that the US stock market is going up. It’s a compelling narrative.  But like all great sagas, at some point there will be a twist.