What Worked in Japan Last Year

For Top 10% MF Rank Stocks
Country = Japan
|   ROIC < 0.61
|   |   ROIC Quality < 5.49 : 0 (66.76/27.17) [36.51/11.17]
|   |   ROIC Quality >= 5.49
|   |   |   MF Rank < 1865 : 1 (43.24/7.41) [25.49/10.66]
|   |   |   MF Rank >= 1865 : 0 (4/0) [2/0]
|   ROIC >= 0.61
|   |   Net Current Asset Value < 0.12 : 1 (2/0) [1/0]
|   |   Net Current Asset Value >= 0.12 : 0 (21/1) [11/3]

Magic Formula Investing worked better when the above conditions were applied.

• ROIC Quality = 5 year average Return on Invested Capital (ROIC) / Standard Deviation of the 5 year ROIC.
• Return on Invested Capital (ROIC) = Trailing 12 month EBIT / ((Current assets – Current liabilities) + Net Fixed Assets)

I picked the leaf where ROIC was less than 0.61 but ROIC quality was higher than 5.49.

Using LLMs in Cryptography and more importantly in Steganography

There are various creative ways to use LLMs in Cryptography and Steganography (hiding of text)

LLMs are ideal mimic functions which imitate English text produced by a human being

Therefore by hiding the message in the seed and temperature of the LLM one can hide messages in otherwise innocuous sounding English text which doesn’t sound encrypted but contains a hidden seed.

So for example you can use amateur radio to transmit encrypted data by hiding it inside a large piece of plain text. Sure amateur radio doesn’t allow encrypted communications but there is no way to prove that your communications are encrypted. It can sound like someone discussing the weather.

How to cross the Rubicon

You are supposed to cross it

Not fish in it.

Fishing in the Rubicon (especially on January 6th) requires a permit. And you will go to jail if you try.

Where as crossing the Rubicon doesn’t require a permit if you manage to win.

Everybody wants to be on the winning team.

It is a desire more fundamental than ideology.

That is why revolutions have a minimum threshold to cross before they become legitimate and popular.

Anything less and nobody will support your revolution.

So to be successful and safe, Revolutions cannot be a Minimum Viable Product.

Revolutions have to be a Maximally Viable and Monopolistic Product from which there is no alternative.

It is an offer than you cannot refuse.

Value Investing

Even rotten groceries are cheap. So beware of just going by cheapness (Price to X ratios where X is Earnings, Book, FCF, Sales etc.). A lot of cheap things on the market deserve to be cheap because they are shit.

If you add another criteria to cheapness like momentum (e.g. did it go up last year?), or quality (e.g. return on X, shareholder yield, FCF yield etc.), you will find that the resulting set of stocks are better but there will be many posers in that list also e.g. companies without enough cash flow to cover debt, interest, and dividend, and high debt companies. There will be posers who dilute their shares to pay for all this. Then there shady actors here who have high non-cash earnings, insider selling, large one-off items (e.g. parent company selling something to child company etc.)

The final criteria I am experimenting with are loose NCAV thresholds, Capex to PPE, Sales to Assets, Dividend Growth for 10 years, etc. I know there is some juice here, but it is too early to tell.

Taguchi method might be able to improve on back-propagation

Nobody Superpower 2020

Globalization and free trade can still work

• if one country is not exporting their local currency by creating perpetual local deficits to keep the global trade well oiled and well financed, and
• if everything is not made in one country and exported from there

But I guess we are not ready for that yet. True decentralization of assets and liabilities eludes us.

Oil backs US military backs the USD

US refineries (total) only store about 40 million gallons of military-grade jet fuel at any given time, or about 36,400 flight hours for an F/A-18E/F Super Hornet launched from an aircraft carrier.

For 40 x -18’s per carrier, this is about 910 flight hours. A carrier holds roughly 3 million gallons of fuel for its wing, about 68 flight hours per bird.

Now consider that a notional mixed complement of 20 x F-35’s and 20 X F-15EX’s operating out of Kadena AFB would consume about 62,400 gallons per hour combined. Thus, just a single carrier wing and a single AFB wing’s complement of fighters (80 combined) theoretically all operating at once would drink 106,400 gal/hr.

So…

The net stores of military jet fuel immediately available from US refiners above the global contingency supplies managed by the Defense Logistics Agency at any time represents about 375 net flight hours for one carrier and one air wing…less than 16 days of high intensity air operations by far fewer assets than the US would throw into an all-out theater conflict in the Pacific Rim.

DLA Energy ended FY2022 with 1.68 billion gallons of on hand inventory of jet fuel to serve the entire DOD combined inventory of 14,000+ aviation assets – cargo, fighter, rotary wing, bombers, drones, tankers, and recon.

Which begs the question: How fast would two theaters of conflict burn through all contingency supplies of fuel? And what does DOD do when the well runs dry?

Gold is flowing from West to East

Shanghai Gold Exchange physical Gold premiums (vs the West) has dropped from around 6% to 1.5% This is while the Gold price at the West rose from around $1830 to $2000

Western Gold price rose to meet the price of actual physical Gold in China. China’s pricing of physical Gold is the real price of Gold.

Even though we might not see the actual paper trail, physical Gold is flowing from West to East at an accelerating rate every time the West slams the price of paper Gold.

Magic Mushrooms and the assassination of President Kennedy

We will always be Idiran

Ian M Banks novels are about The Culture vs The Idirans. The Culture is a attractive western liberal utopia which seeks to assimilate everything by making everything optional and pleasure inducing, and The Idirans is a type of Hindu-Arabic-Han society which ascribes status regardless of choices, and there is suffering. There is a war between the the two, and 0.8 trillion people die.

We will never be The Culture, because of peak cheap energy, and peak cheap materials. Without an energy productivity miracle we will constantly be Idiran deep within our own wannabe Culture territory.

The West will try and fail to create the Culture just like the communists tried and failed to create the Communist Utopia.