I Still Know How...

"Confessions of a Riverboat Gambler." The art of playing Poker is to do with at least two variables and one constant. Firstly, it concerns the performances of other human beings and that is a variable factor. Secondly, it concerns one's own skill at judging a weak hand from a stronger one – and that too is a variable, because being human one's own fineness of judgement must be accepted to fluctuate within ranges and, moreover, it is possible that one also learns more and more over time and therefore becomes continuously relatively better at this element of the game. Therefore in any given game and at any given time of play, these two variable factors can offer at best a 'general expectation' value as to logical outcome. In layman's terms we carelessly explain these relationships in terms of 'chance' or 'luck.' There is chance and luck involved, but there is also such a thing as mathematical tendencies. There is a leaning towards one particular likely event outcome (let's say, 'success') or another ('failure').

But the factor that is most regularly forgotten about as to its relevance and bearing on real outcomes, is that of the stake that is to be played for. Risk is the chance of an outcome times the consequences thereof.

And that is a very important thing to remember. If one could play for a million-dollar outcome, using a tiny bet, multiplied by ascending levels of skill and judgement, one could keep doing it a long time without much personal financial damage. Then, if one could do it with a mathematical leaning towards the possibility of success, this becomes the arena and context in which a professional risk-taker will seek to operate.

This understanding makes investing in stockmarkets of today, not rational to the professional. In spite of all the hooha from large fund managers and the supposed 'wow' factor of the sizes of money they bet, and for all the worth of the credentials they are said to have, the relative outcomes played for are small by ratio. And that automatically eliminates these people from the class of true professional. In the nearest national stock exchange located to where I presently reside, whilst dividends actually paid are very weak, the price times earnings multiple for the top 20 stocks is an average of 8:1. And this approximates the historical lowest ever ratio. Unless the national domestic Money Supply setting is adjusted to increase, one could in the first place certainly not invest for dividends on an annual basis, and nor could one envisage the prospects for capital gains.

But underlying the broad equities and bond exchanges – which is to do with a previously fashionable financialisation of business syndrome – real business goes on. Everyone from accountants to the financial media and governments and their central banks as well as retail banks too, all claim loudly that the levels of activity are lower than during past times, and even that a possible deflationary spiral is afoot. And that of course, is the difference between the professional and the parasites. Parasites must keep their hosts dependently weakened or at least in a permanent state of sufficient enfeeblement so that they cannot rid themselves of those parasites or run away from them. I like therefore that image of the losing gamblers, bust gamblers, or crooked gamblers, being thrown into the murky river as the riverboat wends inexorably onward towards its ultimate destiny of the final shoot-out scene... Stealth in avoiding being seen at all by the parasites is a key. A million dollars must be at stake for the winning. You must play in the game of the financially strong. If you intend to have the winning hand, and you are a professional, you must play the longest odds, not the shortest odds. In other words, you must take on what others think is the worst chance, not the best chance, and be granted the greatest odds. There is a miasma of true mystery about people like me. Because there will always remain some element of doubt in observers' minds as to whether we just guessed right, calculated correctly – or had some other form of inside knowledge. Winning at gambling as a professional, is a magician's trick. That is to say, it involves some magic being achieved. That much I will confess, though only as an entertainment...

Calvin J. Bear

Something You Can Believe In

I played a casino once using a thing called The Reverse Labouchere. Basically, you bet both sides of an even odds-paying roll or spin or throw in ascending and descending units of One. For example: five dollars on Black, five dollars on Red. Black wins, you bet six dollars on Black, four on Red. And so on as the game proceeds. Get it?

You can go on for ages without doing any dough unless Zero comes up lots of times. If you get a run of one colour or the other (going on the Red/Black example) you can pretty much clean up. Anyway, the House noticed what was going on and changed the rules and you have never been able to bet in units of One on an even money outcome ever since.

The moral of this story is that the House doesn't ever play fair and it changes the rules when it starts to lose and knows it is also going to continue to lose.

Same way as New York and Chicago have upped the margin sizes for futures contracts on Precious Metals just now. I see a lot of people talking about the end of the PM bull market. About a 'crash' in Precious Metals... Okay. Maybe. But then why would they feel they had to change the usual rules? Time will tell I guess but it seems mighty strange to me. Meanwhile, sure, all the margin longs are liquidating. Doesn't mean there's a crash though. Means the margin longs are having to liquidate.

Well, you can't believe in the House. You can't believe in the government. You can't believe in Bernanke. You can't believe in Geithner. And they're trying hard to get you not to believe in gold or silver.

I still believe in a lot of things: Louboutins for smart women, A flame-grilled steak, Fast Eddie Felson... A good red wine. I believe a Philly Lawyer can talk a river run straight. And that's going uphill against the downflow of the prevailing current.

Calvin J. Bear

Modern Stockbrokers versus Olden Days Ones

Are you a modern stockbroker? You don't know anything about stockbroking!

I met J. Paul Getty on the steps outside the front of Raffles Hotel in Singapore when I was 10 years old – 1968. Have I told this story before? Probably...

When I read his book “As I See It” almost twenty years later I couldn't get why my father claimed not to have liked Getty. Getty I recall caused quite a stir when, following introductions to the Sultan's education fund from Shell Far East and Burma Oil executives, the Getty organisation donated US$50 (and $15 personally from Getty himself) to the Malayan government education and library reconstruction fund accompanied with a letter saying how proud his organisation was to have been able to sponsor the fund and that were it to sponsor every meritorious applicant that approached his organisation every year he would go rapidly broke. My father I know thought it was something of an insult, but I had my doubts he was reading things correctly, and later on I thought Getty was being as generous as he could possibly have been given all of the surrounding circumstances.

People want, some need, and lots seek, – money, all the time.

Standard stockbrokers promote this myth about themselves that they raise money and capital for new enterprise and development and research. They don't. Getty would have told you that and in the latter part of his life, he was the world's richest man and was in a position to know so categorically. Worse still, he recounts the story of how the only broker who ever assisted him was E. F. Hutton, who, during the Depression, at least held onto his 'nearly worthless' stock and stuck it 'in the bottom drawer' instead of selling it all up like they mostly all always do. And by this act of consideration Getty was not as severely damaged as he otherwise might have been and was thereby enabled to find a way through.

I tell these kinds of stories because there is much I would like to contribute about raising cash (something I have done a little of) for capital ventures today. Much I am probably not permitted to say, unless asked. I come from an old school. And you would have read me say as much a few times here already and on another board I participate on. Certainly it was well past troubled times, but I was raised to some extent in the Tiffin Room of the Raffles Hotel and in the E & O alongside the remnants of the pre-War luminaries and their children. I lived and breathed with the family remnants of the legendary Sarkies Brothers and the people from out of the Sassoon stockbroking firm. These were real business-people and real money people.

I don't think I'm merely being nostalgic about this: there is something different about the finance business today compared to the past of which I am familiar. And I am talking strictly about the character and style and personalities of the people themselves. Money is never boring. I don't find money boring... It is though if you stick it under the mattress all the time!

; )

Calvin J. Bear

Gold! Gold!

Present-day trust issues over money...

Back in the Eighties I knew as a reasonably familiar personal acquiantance, Australia's now most-famous gold prospector Mark Creasy. I knew him through a small band of crazy sharemarket dabblers from the State Fire Brigade, known locally among stockbrokers simply as 'the fire-ees.'

Mark Creasy was considered a brilliant geo by those who knew him even back then. Creasy has by today already made history but will in all possibility go down in history as indeed Australia's greatest legitimate gold prospector. There is a lot about gold prospecting that is not at all well-known and even though the internet provides a good resource that pulls together the wisdom of old hands and careful science and solid university study, there are reasons why only a few special types end up making either the great discoveries still left to be made, or find a steady enough set of patch locations to realise the potential that is all the same definitely still there.

Another of the people I knew back then – and I knew this guy very well – was the electronics engineer who successfully developed the modern Pulse Induction Gold Detector (of course, the device can detect other metals too...) I handed out a few dollars to help him develop the technology but frankly, like quite a few other things I invested in, the basic end market was not there given that the gold price was and had been stuck in the doldrums between $250 and $370-ish for years.

And to be honest I just didn't like the way listed mining companies in those days were doing business and what their ethics were in terms of shareholder's rights. The P.I. device was being hawked around a few local mining companies and for me the whole thing suggested a certain inevitability about loss of control of intellectual property. The fact the technology survives as one of a number of favoured current prospecting instruments is testament to its real usefulness and I'm pleased for that.

My own view is that one cannot rely only on technology but must have the active human brainpower driving it. You need the Mark Creasys.

I have an idle pet fancy that as the gold price rises and people begin again to tour the various gold prospecting grounds, the function of the internet could have a role for those who do not care to brave 50 degree outback temperatures and endless road and sand-track miles and field rations and so on.

But the problem appears to focus on whether or not some stranger can trust some other stranger to hand in any gold nuggets or gold flakes or gold dust to the person who commissioned them to go out and do the laborious field work. And in spite of data logging and telemetry and wireless satellite webcams there is always this element of doubt that stops people from handing over say a hundred bucks to join in a gold prospecting expedition fund and then to just lay back watching through the internet webcams some dilligent students bleep-bleeping their White's goldmasters across the laterite topsoils to acquire a retirement nugget for them.

The vision though, is enticing to me. And so I've got together three listed public companies and one private one, to stump up a hundred thousand dollars in listed shares to underwrite the involvement – as I see it – of a number of private armchair explorers spread around the whole globe who would stick in a few dollars to see if the kids can come up with a few nuggets. So the propositon basically is that an armchair explorer/prospector buys a stake for a hundred dollars (or fifty or whatever) and if there is no gold found or not enough, they get a return anyway via the listed shares that they can sell on the market. As far as any discoveries go, 40 per cent of the nuggets will go to the buying-in stakeholder, 40 per cent to the underwriting companies, and 20 per cent to the people actually doing the physical work. And this seems to me to be a way to fairly split things so that there is little incentive for thieving discovered gold. The field workers could also be handpicked by the companies so that professional judgements are made as to high ethical standards, and many modern-era audits and processes adopted to limit the pocketing of discovered gold – which of course in any case would be illegal and subject to criminal prosecution and likely restitution orders.

I wonder if anyone out there thinks this is as exciting a proposition as I do? (That's the inventor of a British-built robotic detector in the pic, btw...)

There is a lot of highly-prospective gold bearing ground out there in Australia and people I think fail to realise that new methods and technologies definitely can find what older methods definitely will have missed – and that even though the technologies have been available for a number of years, no one really went looking when the price languished around the low to mid hundreds of dollars, in spite of what people assume might have been the case with mining companies.

At $2,000 an ounce the thing is very feasible. But at $5,000 an ounce you'll kick yourself you didn't do it! Will it get to $5,000? Oh yes most certainly it will; the amount of time you hand-wring and negate this idea in your mind because you have doubt and fear and anxiety about money – when it offers the only real liquid thing in town – is multiplied exponentially when it comes to dealing in bits of paper vended by banks or even governments these days.

Certainly contact me if you find yourself interested in any of this: interdeq@iinet.net.au

Best, Calvin J. Bear

Drinking wine, entertaining women, and rescuing old buildings

Okay I don't remember who said that. But it was some important person. Or it should have been.

Old buildings are important in ways that are regularly unobserved by far too many of us. When cities fail to retain some pockets of run down, less than salubrious buildings, the economic spectrum changes inside that city. Old buildings often attract only meagre rental rates – but this has the consequence of maintaining the presence of rare types of start-ups, students, minority special interest endeavours and a flow of humans who in spite of other factors contribute economically to surrounding businesses and to transport and other services. Apart from structural architectural real archival meaning, old buildings preserve a social continuity that without which, cities have only a theoretical and 'experimental' form of social and economic foundation. Old buildings create employment at basic levels in ways that new buildings only create vast gulfs of unemployment on account themselves thereof, and old buildings provide and maintain social and economic bridges between one mature business cycle and a nascent one. Today's worldwide property market problems are expressions of a mindless and over-excited – and ultimately a mistaken – obsession of making money from property 'development.' And property 'development' is quite different to the philosophy of architecture. That is my own view. I always remember the phrase delivered by Woody Harrelson in that movie with Demi Moore, which quotes the architect Louis Kahn: “every brick aspires to be something... ...more.”

Every woman of potential greatness secretly aspires to something... ...more. And that too is my own view coming from the perspective of a man who likes, at least conceptually, to believe that he might rescue old buildings. And also find some space in which to drink wine too. All these things are very difficult to achieve in a fine balance.

One can see the possibility that much is missed out on when society fails to preserve its temples of the mind, and its figures of the recent past, and its social and cultural memory and artefacts.

Alas I no longer have the books belonging to my father written by his favourite writer of the english language – Sir Arthur Quiller-Couch. For if I did, I would much more vigorously stuff down the throats of today's long-heads, that (again in my own view) Eton was never, the pinnacle of an english education to those of the genuine aristocracy, but rather, a place to send the second sons of money who could hold no deep thoughts in their head and were better off tying vines and slogging through mud and carrying out orders explicity. Quiller-Couch went to Clifton House. And so did W.O. Bentley.

Who today knows that much about Quiller-Couch? Who knows that much about Gertude Bell...?

Fancy that though, for Gertrude Bell finds an excellent excellent space in the wikepedia. And may I say just this, it would be hard to find a more accurate and more truly inside intelligencer of all things Al Qaeda and politically Arabic than the wikepedia entry for Ms. Bell.

Far be it from me to suggest that Oxonians wrote the Koran. One of my uncle's best friends was a certain Leslie Charles Bower-Yin, of whom it was told in my family that he himself really penned but perhaps two books concerning the adventures of the pulp literary legend The Saint. And far be it from me to suggest that Oxonians also penned the rest of that series! But reading what you can today of Bowyer-Yin, might give you an impression of what goes on in writing and publishing and the marketing thereof.

I do recommend looking at the Wikepedia entry on Gertrude Bell. She was my father's aunt. One of three quite illustrious aunts in fact. Ah for the past!

(Bell is at the extreme left of the hand-tinted old pic)

And yes 'W.O. Bentley' created those British cars. Here's a pic of today's model:

Best, Calvin J. Bear.