Meanwhile, back at the headquarters of my for profit think tank, I read George’s book today, The Crash of 2008 and What It Means. If you are interested in his view of the inter-market relationships and forces that were in place during the banking collapse last year, I recommend it. He traded actively during 2008, and he lays out the thought process(es) behind his positioning. He is a decent critic of himself in that he admits to many mistakes. He ended 2008 “modestly higher”, which he considers an accomplishment in a “period of almost universal wealth destruction.”

He candidly admits to missing the largest part of the crash, “Although I am an experienced short seller, I got caught several times, and in the end I largely missed the biggest downdraft, which came in October and November.”

He also talks to being slow to recognize the trend reversal (strength) in the dollar, causing him to give back profits. “Eventually I understood that the strength of the dollar was due not to people choosing to hold dollars but to their inability to maintain or roll over their dollar obligations. In a very real sense, the strength of the dollar, like the fever associated with sickness, was a measure of the disruption of the financial system.”

While the collapse was decently predicted, the rush to the dollar caught most off guard. Most traders–even the ones that made a killing being short the mortgage and mortgage related markets–would agree: it was surprising that the risk aversion trade became buying the dollar–the currency at the center of the collapse.

Green Energy

As the housing bubble that led to the collapse of 2008 deflates, another is being built. The massive investment in cleaner, more efficient distribution of energy is the next great growth industry. I invest heavily in energy. It is, after all, the mother of all markets. I’ll end with my favorite line of the book:

“Nothing is quite as profitable as investing in an early-stage bubble.”

And the beat goes on.

In the future (past), society began to re-asses the utility of being online. The internet (as we know it) develops in a series of cycles. In time, we learn that during certain cycles, it becomes more valuable to utilize the internet to hide oneself as opposed to promote oneself (inversion).
-Mister Volatility

After a conference call with my assistant, Tonya, I am still uncertain if I own any preferred shares of Twitter. Trading public markets is like venture capital with one caveat—timeframe. Venture investors trade over periods of years. Mister Volatility (that’s me) invests in ventures himself and has, from time to time, lent money to VC firms to participate in their arbitrage. Private equity is a longer timeframe trade. In public market trading there is sufficient liquidity on smaller timeframes (scales), down to the millisecond. These micro scales present results to the exponential–so I must build models to trade them. The liquidity cycle of Venture Capital is much longer. Given the variance in timeframes my investment focus is dual: Private equity on in the longer frame and public (liquid) markets on the shorter.

I do not own any direct shares of Twitter—but it is possible that I own some through a fund. The reason Tonya doesn’t know is because she doesn’t know everything about me. If there is one imperative I can impart about assistants, even the great ones, it is this: keep some secrets.

Anyway, what I am saying is that I want to buy shares of Twitter, even if I already own some. If I already have some, I’d like more. I understand there are shares for sale at Sharepost.com, and I instructed Tonya to take care of it. Unfortunately, she said the website will not accept my registration because The Tinker Factory does not release it’s physical addresses, and an address is required. Therefore, if anyone is interested in selling me shares, please come by the office sooner rather than later. I am an internet analyst after all, and my analysis reveals that the market cap of Twitter will surpass that of Google. In fact, it will be the second largest company in the world (as measured by market cap). We will talk about the first largest company in the world later, but I’ll give you a hint: think automated distribution and green energy. (But don’t limit yourself to the typical definition of clean and efficient power. Might not “green energy” refer to banking–some money is green and banking is about moving money, which requires energy!)

Perhaps someone will be in touch soon to sell me some shares. No matter, I am going to build some companies over the next couple of weeks that I’ll sell to Twitter for stock as opposed to cash.

And the beat goes on.

In evening news, Deborah Ball of The Wall Street Journal reports on the crackdown of tax evasion in Switzerland, especially in relation to Europe.

While most attention has been focused on the US probe of Swiss tax havens, more attention should be paid to Europe’s relationship with Switzerland, according to the story.

“Americans have made up no more than 5% of Switzerland’s $1.8 trillion offshore-banking business.”

“Now, in the wake of the American crackdown, and Switzerland’s cooperation, an exodus of European money is under way. According to consulting group McKinsey & Co., Western European money makes up 51% of legacy assets in Switzerland, but only about a third of new money.”

“According to KPMG, as much as 80% of the Europeans’ money in Switzerland is undeclared. In all, KPMG reckons that tax evasion could represent up to 25% of Switzerland’s total private-banking market.”

“It’s a big mistake to say this is an American issue,” says Philip Marcovici, a Zurich partner at law firm Baker & McKenzie. “The Europeans are right around the corner.”

“To be sure, the demise of the tax-dodging business is akin to a melting ice cube, and the speed at which it dissolves will depend on how aggressive European governments — whose rhetoric in clamping down on tax deadbeats has exceeded real action — will be. No other government has been as aggressive as the U.S. has in putting up demands that the Swiss hand over names of suspected tax dodgers.”

Meanwhile, back at the office, I am convinced the internet is here to stay and is not going out of style anytime soon. As this profound thought struck me earlier today, I decided to have a call with my collaborators. They all agreed with my assessment. Then we shared some news of interest. I walked away with the following:

Some good info out of Fast Money today:

–Tim Seymour sees diversification away from US dollar to continue. He thinks the Dollar sees 75 before it sees 78. I agree that 75 is an important support level. If it breaks down further from here, It should find support at 75.

– Re: Google (GOOG) earnings this week. Upgrades around the table into the number after the bell Thursday. Analyst Christa Quarles from Weisel gave Google a $620 target. Joe T. mentions pay per click stabilization an important metric.

–Analyst Berger-former analyst at INTC, then Wedbush Morgan–thinks Intel goes higher after the number tomorrow afternoon because of “double reverse psychology.” My opinion: INTC is a tough call into earnings. My indicators say it peaked as it hit a high of $28.65 both today and August 28th. Demand leading up to today’s high has been much weaker than demand was leading up to the August 28th high, according to my calculations. That said, I appreciate the concept of “double reverse psychology,” and it’s potential ramifications.

–Doug Kass is the most bearish he has been and he nailed the bottom in March. The hot hand is the hot hand. Life works in streaks. Doug’s voice should be a loud alarm. After all: there were very few bulls in March. I was not. My notes from the march era are right here on these pages. I nailed the short in 2008, but I was not bullish in March. It was tough to nail the market both ways.

–There was a segment on Fast Money called “Double Down.” It’s good to see some coverage of money management as it pertains to trading. Along with position sizing, money management is an extremely misunderstood topic. It is good to see the media covering some aspect(s) of it.

In addition, I also note:

Robert Prechter

Prechter is bearish. He is the other hot hand. Kass called the fundamentals, Prechter called the technicals. Both of them are bearish here.

Whitney Cuts Goldman

As I reported earlier, Meredith Whitney Advisors cut Goldman Sachs (GS) to neutral from buy and removed the price target on the stock–it was $186. Meridith Made a huge call last Q–that Goldman would profoundly beat street numbers. She was right. Another hot hand. Take note.

Goldman on Asian Steel Sector

Analysts at Goldman Sachs (GS) raised the Asian Steel sector to Maximum Bullish. I read an extensive note by the analyst which I agree with. Most importantly, he notes to pay attention to Japanese steel names. As Asia moves to a more steel intensive economy, the position of China as a steel exporter may be reduced, creating demand shortfalls that will be filled by other regional players such as Japan. JFE and POSCO were raised to Conviction Buy. Nippon Steel, Kobe Steel and Hyundia Steel raised to Buy. Also speaks to current investor apathy. I think this will prove a great call.

Citi on Precious Metals

Analysts at Citi made comments on the European Mining sector. They remain positive. They also gave targets for precious metals: Spot gold to $1,025 in three months and at $1,050 in 6 to 12 months. Spot silver to trade at $17/oz in next three months; at $17.80/oz in 6 to 12 months.

UK Inflation Data

The UK September Inflation data is due in a few minutes at 4:30AM EST (8:30 GMT).

And the beat goes on.

Alexandria Real Estate Equities, Inc. Reports Exercise of Over-Allotment Option by Underwriters.

The underwriters (Barclays Capital, Credit Suisse and UBS Investment Bank) acted as joint bookrunning managers of the offering of 4 million shares of common stock. By fully exercising their over-allotment option to purchase an additional 600,000 shares, the net proceeds are approximately $235 million, after payment of underwriting discounts and commissions.

Some buyers some sellers and the middlemen. That’s a market.

Press Release