JCL Blog


Literally without precedent.  The financial models that brought down our economy (and still could) were incapable of managing events that were without precedent.  The quants call these black swans because mathematically the conditions that created them were impossible to model despite the fact that they do exist.  And we can all see them.  Time and again we allow these super smart people to convince each other that black swans cannot exist.  After convincing each other they eventually convince everyone else and presto the bubble is born.  

There is at least one unprecedented financial event every ten years and more non financial ones.  The discovery of the new world, the invention of the telephone, penicillin, the airplane, and the computer - all unprecedented. The collapse of the ruble, the dot com bust, the mortgage bubble - all unprecedented.

The next one will be unprecedented too and those guys will look at us again and say who could have predicted this?

What if we could convince these big brains to focus on solving real problems instead of finding new ways to game the financial system for personal gain? 

Step one?  Stop giving them our money to invest. 

Step two? Don't bail them out.

We fly because the airlines don't profit from our death (and the FAA helps a little).  We should not put our money into the hands of people that make even more money when they crash the market.

If we all start buying t bills we could take our debt back from the Chinese and put the wall street parasites out of business.

We can't do that you say.  We will lose too much money.  T bills pay less than 1 point and historically the market returns 15.  Well, try this portfolio allocation:  one quarter in each treasuries, residential real estate (your home - maybe even without a mortgage), foreign stocks, and start ups.  You can do all of this without the aid of anyone on wall street.  If enough of us do it those Wall Street guys would really start looking for an answer to their credibility problem. 

If we don't do it, then we deserve to get wiped out during the next unprecedented event - which even I know will happen before 2020.