Bitcoin: the World’s Largest Pump and Dump in History. Who Knew?

Posted on April 26, 2018 | Leave a comment

The clues and facts add up. Let’s sit and think for a minute:

In what rational universe could someone simply issue electronic scrip — or just announce that they intend to — and create, out of the blue, billions of dollars of value?

Bitcoin tangent

Did you guys notice something really interesting? The financial guys that really love bitcoin are some of the guys that either blew up or closed funds due to poor performance. The two most prominent fund manager bitcoin boosters are like that. It almost feels like they are so happy to have found their Hail Mary pass. And the most prominent guys that have good performance and didn’t blow up tend to be the guys that don’t like bitcoin and think it’s stupid, a bubble or whatever.

Think about that for a second. Oh, and that former hedge fund guy, after bitcoin plunged put his new bitcoin hedge fund on hold (buying high and selling low?). Now wonder he didn’t do well with his hedge fund; if you’re going to be making decisions based on short term volatility like that, you are bound to get whipsawed and lose money.

This is interesting because we can never really understand and know everything. But it is useful to know who you can listen to and who you should ignore. Sometimes, this saves a lot of time! From http://brooklyninvestor.blogspot.com/

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Monday, April 30, 2018
Warren Buffett: Bitcoin is Gambling Not Investing

In an exclusive interview with Yahoo Finance in Omaha, Neb., leading up to Berkshire Hathaway’s annual shareholder meeting, which will be held om May 5, Buffett laid out his latest thinking on cryptocurrency investing. He nailed it.

“There’s two kinds of items that people buy
and think they’re investing,” he says. “One really is investing and the other isn’t.” Bitcoin, he says, isn’t.

“If you buy something like a farm, an apartment house, or an interest in a business… You can do that on a private basis… And it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now, if you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.”

When you buy cryptocurrency, Buffett continues, “You aren’t investing when you do that. You’re speculating. There’s nothing wrong with it. If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.”

Buffett’s point is that the assets he lists such as a farm, an apartment house, etc., generate income. Bitcoin does not.

I would add there is another type of asset people hold and that is money. As Ludwig von Mises taught us, money is the most liquid good and people hold because of this liquidity. They know they can instantly exchange it, at a fairly stable price, nearly anywhere for goods and services.

This is where Bitcoin and other cryptocurrencies fail in the money category. They are from an instrument at present that can be exchanged for any good or service and they are far from stable in price. Many people who have purchased Bitcoin over the last 6 months have lost as much as 50% of their purchasing power. That is not a stable asset, not even when compared to the U.S. dollar which is run by the Federal Reserve in crony reckless fashion.

Moreover, the idea of a world where a cryptocurrency is the world’s medium of exchange is a frightening notion. It is quite simply a remarkable way for government to track all transactions and prohibit transactions in specific books and other goods that it doesn’t want individuals to buy.

The idea that the government can’t track Bitcoin is a delusion view held by Bitcoin fanboys.

The Intercept recently reported:
Classified documents provided by whistleblower Edward Snowden show that the National Security Agency indeed worked urgently to target bitcoin users around the world — and wielded at least one mysterious source of information to “help track down senders and receivers of Bitcoins,” according to a top-secret passage in an internal NSA report dating to March 2013. The data source appears to have leveraged the NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents.
Although the agency was interested in surveilling some competing cryptocurrencies, “Bitcoin is #1 priority,” a March 15, 2013 internal NSA report stated.
-Robert Wenzel

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What is money Bastiat?  If you understand money, then the Bitcoin Scam becomes obvious.

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Bitcoin is the greatest scam in history
It’s a colossal pump-and-dump scheme, the likes of which the world has never seen.

By Bill Harris Apr 24, 2018

Okay, I’ll say it: Bitcoin is a scam.

In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen. In a pump-and-dump game, promoters “pump” up the price of a security creating a speculative frenzy, then “dump” some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds. Ernst & Young estimates that 10 percent of the money raised for initial coin offerings has been stolen.

The losers are ill-informed buyers caught up in the spiral of greed. The result is a massive transfer of wealth from ordinary families to internet promoters. And “massive” is a massive understatement — 1,500 different cryptocurrencies now register over $300 billion of “value.”

It helps to understand that a bitcoin has no value at all.

Promoters claim cryptocurrency is valuable as

(1) a means of payment

Bitcoins are accepted almost nowhere, and some cryptocurrencies nowhere at all. Even where accepted, a currency whose value can swing 10 percent or more in a single day is useless as a means of payment.

2. Store of Value.

Extreme price volatility also makes bitcoin undesirable as a store of value. And the storehouses — the cryptocurrency trading exchanges — are far less reliable and trustworthy than ordinary banks and brokers.

3. Thing in Itself.

A bitcoin has no intrinsic value. It only has value if people think other people will buy it for a higher price — the Greater Fool theory.

Some cryptocurrencies, like Sweatcoin, which is redeemable for workout gear, are the equivalent of online coupons or frequent flier points — a purpose better served by simple promo codes than complex encryption. Indeed, for the vast majority of uses, bitcoin has no role. Dollars, pounds, euros, yen and renminbi are better means of payment, stores of value and things in themselves.

Cryptocurrency is best-suited for one use: Criminal activity. Because transactions can be anonymous — law enforcement cannot easily trace who buys and sells — its use is dominated by illegal endeavors. Most heavy users of bitcoin are criminals, such as Silk Road and WannaCry ransomware. Too many bitcoin exchanges have experienced spectacular heists, such as NiceHash and Coincheck, or outright fraud, such as Mt. Gox and Bitfunder. Way too many Initial Coin Offerings are scams — 418 of the 902 ICOs in 2017 have already failed.

Hackers are getting into the act. It’s estimated that 90 percent of all remote hacking is now focused on bitcoin theft by commandeering other people’s computers to mine coins.

Even ordinary buyers are flouting the law. Tax law requires that every sale of cryptocurrency be recorded as a capital gain or loss and, of course, most bitcoin sellers fail to do so. The IRS recently ordered one major exchange to produce records of every significant transaction.

And yet, a prominent Silicon Valley promoter of bitcoin proclaims that “Bitcoin is going to transform society … Bitcoin’s been very resilient. It stayed alive during a very difficult time when there was the Silk Road mess, when Mt. Gox stole all that Bitcoin …” He argues the criminal activity shows that bitcoin is strong. I’d say it shows that bitcoin is used for criminal activity.
In what rational universe could someone simply issue electronic scrip — or just announce that they intend to — and create, out of the blue, billions of dollars of value?

Bitcoin transactions are sometimes promoted as instant and nearly free, but they’re often relatively slow and expensive. It takes about an hour for a bitcoin transaction to be confirmed, and the bitcoin system is limited to five transactions per second. MasterCard can process 38,000 per second. Transferring $100 from one person to another costs about $6 using a cryptocurrency exchange, and well less than $1 using an electronic check.
Bitcoin is absurdly wasteful of natural resources. Because it is so compute-intensive, it takes as much electricity to create a single bitcoin — a process called “mining” — as it does to power an average American household for two years. If bitcoin were used for a large portion of the world’s commerce (which won’t happen), it would consume a very large portion of the world’s electricity, diverting scarce power from useful purposes.

In what rational universe could someone simply issue electronic scrip — or just announce that they intend to — and create, out of the blue, billions of dollars of value? It makes no sense.

All of this would be a comic sideshow if innocent people weren’t at risk. But ordinary people are investing some of their life savings in cryptocurrency. One stock brokerage is encouraging its customers to purchase bitcoin for their retirement accounts!

It’s the job of the SEC and other regulators to protect ordinary investors from misleading and fraudulent schemes. It’s time we gave them the legislative authority to do their job.

William H. Harris Jr. is the founder of Personal Capital Corporation, a digital wealth management firm that provides personal financial software and investment services, where he sits on the board of directors.

Read full article here: https://www.recode.net/2018/4/24/17275202/bitcoin-scam-cryptocurrency-mining-pump-dump-fraud-ico-value

COUNTER-ARGUMENT:  https://www.forbes.com/sites/ktorpey/2018/04/24/founding-paypal-ceo-bill-harris-says-bitcoin-is-a-scam-heres-why-hes-wrong/2/#2d9379a166b9

Where have we seen this type of behavior before?

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UPDATE: Friday April 27th 2018

Read: http://thecharlieton.com/whitney-tilson-why-the-hell-didnt-i-listen-to-charlie-munger/

Lesson be humble about what you attempt.

Below is an email from Whitney Tilson from Kase Learning announcing his:

Program Guide-Kase Learning Short Selling Conference-May 3,__ 2018

Attached is the program guide, which includes an agenda for the day and bios of all of the speakers. Registration and continental breakfast begin at 7:15am, the first speaker is at 8:15am, there are morning, lunch and afternoon breaks, and the last speaker ends at 4:15pm, followed by a networking cocktail reception until 7:00pm. The NYAC is on the corner of Central Park South and Seventh Avenue, and it has a dress code – no jeans, shorts, sneakers or t-shirts.

This full-day event is the first of its kind dedicated solely to short selling and will feature 22 of the world’s top practitioners who will share their wisdom, lessons learned, and best, actionable short ideas. I’ve seen many of the speakers’ presentations and they’re awesome! Companies that will be pitched include Tesla, Disney, Kraft-Heinz and Stericycle, plus internet ad fraud and gold.

The idea for the conference is rooted in the fact that this long bull market has inflicted absolute carnage on short sellers, and even seasoned veterans are throwing in the towel. This capitulation, however, combined with the increasing level of overvaluation, complacency, hype and even fraud in our markets, spells opportunity for courageous investors, so there is no better time for this conference.

Reporters from all of the major media outlets will be there, and CNBC is covering it as well. I was on their Halftime Report yesterday discussing the conference: www.cnbc.com/video/2018/04/26/kases-whitney-tilson-talks-the-art-and-pain-of-short-selling.html. I also just published the fourth, final (and my favorite) article in a series I’ve written entitled Lessons from 15 Years of Short Selling: https://seekingalpha.com/article/4166837-lessons-15-years-short-selling-veterans-advice

I’d be grateful if you’d help spread the word about the conference among your friends and colleagues, and wanted to pass along a special offer: when they register at http://bit.ly/Shortconf, they can use my friends and family discount code, FF20, to save 20% ($600) off the current rate.

I look forward to seeing you next week!

Sincerely yours,

Whitney Tilson
Founder & CEO
Kase Learning, LLC
5 W. 86th St., #5E
New York, NY 10024
(646) 258-0687
WTilson@KaseLearning.com

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Speculation during the Great Crash of 1929

Posted on April 20, 2018 | 2 comments

https://www.theatlantic.com/magazine/archive/1931/04/whirlwinds-of-speculation/307112/?utm_source=twb

This 1931 article written in the aftermath of the Great Crash of October 1929 and in the teeth of the Great Depression illustrates the pattern of human emotions in the boom/bust cycle. This should be read alongside Murray Rothbard’s excellent work, America’s Great Depression which analyzes in detail the causes of the depression.

But can speculation be fettered? Are we dealing with human emotions which defy control? Certainly, we cannot fetter speculation by our naïve American tendency immediately to enact a law. Making short selling—a that bête noire of the amateur economist—a crime or attempting to forbid speculation in securities by imposing a heavy tax upon the resale of stock recently purchased, would obviously be impractical as well as futile in a democratic state. So, too, an effort to distort and distend the functions of the Federal Reserve System, by charging it with the power and duty to ration supplies of credit to the stock market, would be an unworkable and paternalistic venture.

A Great Depression_Rothbard

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EVERYTHING You need to understand Markets

Posted on April 12, 2018 | 8 comments

Hedge Fund Question:

You are being interviewed by Ackman while the CNBC TV scrolls in the background. Suddenly at trader screams that Valeant is getting hit–THERE ARE more sellers than buyers!   Ugly.

A technical analyst runs into the office yelling that he accidently read the chart upside down–Valeant is a SELL!

Ackman turns to you with a worried expression and asks you to confirm or deny the trader’s statement. What do you say?  You will be thrown from the 20th floor if you get this one wrong.

A SERIOUS QUESTION:

Is there one price or two prices at any one time in the marketplace?  A transaction occurs at one price but what determines which of the two prices at any one time?

 

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Buffett at his Best

Posted on April 11, 2018 | 2 comments

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Posted in Free Courses, Investing Gurus

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The “Hunger Games” Economy: The FOUR

Posted on April 9, 2018 | 2 comments

Those four companies touch our lives whether we want them to or not.  How did those four firms amass so much power and what does that imply for our futures? 52% of Americans have Amazon Prime while 51% go to church.  You may know of these firms, but you and I probably vastly underestimate them, especially Amazon.

Whether you invest in those companies, you need to understand their effect on other industries.  How is value created and destroyed in the digital age?  While Amazon grows other retailers are barely treading water.  Amazon’s cost of capital is vastly lower than its competitors.

GM has 215,000 employees with a market cap per employee of $231,000 while Facebook has 17,048 employees with a market cap of $20.5 million pr employee. We are in a “Hunger Games” economy. Page 268: “We have a perception of these large companies that they must be creating a lot of jobs, but in fact they have a small number of high-paying jobs, and everybody else is fighting over the scraps.  America is on pace to be home to 3 million lords and 350 million serfs.  Again, it has never been easier to be a billionaire, but never been harder to be a millionaire.”

 

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Joel Greenblatt on Valuing Stocks; Is College Worth It?

Posted on April 2, 2018 | 2 comments

The Value of College Goldman report (Click)

Alternatives to College

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Joel Greenblatt on Valuing Stocks

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Posted in Free Courses, Valuation Techniques

Tilson/Tongue Hedge Fund Boot Camp

Posted on March 13, 2018 | 9 comments

FREE CLASS in New York City

Whitney Tilson through www.kaselearning.com will be teaching value investing and hedge fund entrepreneurship to the next generation of investors. His programs are aimed at experienced investors and are very hands-on, so they aren’t cheap ($1,500-$2,000/day), but for beginners, he is offering a free two-hour seminar, An Introduction to Value Investing, in midtown NYC (57th and 7th) on Wed., April 4th from 5:30-7:30pm, followed by a cocktail hour. If you’d like to come, just email wtilson@kaselearning.com  and Whitney will send you details.

Investing and Hedge Fund/Entrepreneurship “Boot Camp” And other Courses.

I attended Whitney Tilson’s and Glenn Tongue’s February 6th – 8th Boot Camp.  I was initially skeptical but pleasantly surprised.

Overall, I was impressed with the learning materials, the organization, and most importantly, the participants who attended.  Whitney and Glenn were brutally honest and forthright in showing the rise and fall of their business.  One can know the lessons of Munger, Buffett, Graham, and behavioral finance but still fall into a pit.  Our main enemy is likely to be ourselves. There were many lessons taught, but my promise of confidentiality prevents me from giving details.   The course would not be appropriate for a rank beginner, but for an entrepreneur who wishes to launch their own fund.

The main value–besides the lessons taught–would be to cultivate relationships with the participants including Whitney and Glenn.   I wouldn’t go to Whitney to help you get a job, but if you do a rigorous analysis of a company, I am sure Whitney or Glenn could give you honest feedback.  And if they liked your work, they might suggest how you could reach a larger audience.  Also, your classmates could help.  The opportunity to build strong relationships with knowledgeable investors and hedge fund managers would be invaluable for someone beginning their fund.

Each day was ten hours long with meals and cocktails afterwards, so you had plenty of opportunity to develop relationships.

60% of the course was how to improve as an investor, 20% life lessons, and 20% how to build your hedge fund.

See details here:

Upcoming dates are April 29th to May 1st
and June 12th through 14th.

There are other courses available as well.

See http://www.kaselearning.com/

Make sure you receive at least a 10% discount on the course or other courses by using “CSI10“ when you register.

If you want details on my experience of the course and what you might expect, please don’t hesitate to email me at aldridge56@aol.com with BOOT CAMP in the subject line.   I will be happy to discuss with you.

Here are my notes of the comments from the other attendees:

“Regarding last week, I was super impressed by the material.  I liked the practical nature of the lessons they taught – a lot of courses exist that cover investing philosophy, but this was unique in its applicability to a start-up manager like myself.”

“The main lesson I learned from the course was to keep it simple.  Look for the easy investments.”

“I actually really liked the emphasis on short selling, because it tends to be one of the great struggles of hedge funds that need to be long & short to justify the carry but have difficulty executing on compelling short ideas in the midst of a bull market.”

“I would have liked more on portfolio construction because that is what I am struggling with. Ditto for risk management and small funds. Things I loved – the interaction of our group, the LL case, the mea culpas of what Whitney and Glenn did right and wrong.”

All the participants told me that they both enjoyed the boot camp and found it useful in developing their fund.

 
Future Boot Camps

Whitney solicited feedback each day, therefore, Whitney and Glenn should improve their course offerings.

I give a thumbs-up.  To learn more about the boot camp/Kase Learning programs you can go to www.kaselearning.com.

Also, view a video

Update:

I will periodically update information on Kase Capital for interested readers.  If you learn anything from reading this post it should be to KNOW THYSELF!   The market is an expensive place to find out.  John Chew

The hedge fund founder explains why his fund was “sucking the joy” out of his life — and why he’s turning its failure into a teachable moment.

By Michelle Celarier
March 20, 2018

https://www.institutionalinvestor.com/article/b17f19gwp3595r/the-last-days-of-whitney-tilson’s-kase-capital

Whitney Tilson’s Facebook friends surely thought he was on top of the world last summer.Photo after photo posted on the social media site tells the story of a rich, exciting life: There’s Tilson watching whales off the coast of Iceland. Next, he’s on the canals of Amsterdam with his wife and daughter. Just a few days later, he’s checking out Lenin’s tomb in Moscow. Last August he even climbed to the top of the famed Eiger mountain in the Swiss Bernese Alps, photographing every step of the arduous journey.

But to hear Tilson talk today, the reality was grim. After 18 years in the hedge fund business, his firm — Kase Capital Management — was losing money, and Tilson found himself dipping into hissavings to keep it afloat.

“I had lost my passion for the game,” Tilson confided in a two-hour, soul-searching interview about the events that led him to shut down his hedge fund last September. After gaining 184 percent, net — when the broader market was up only 3 percent — during the first 11 and a half years of his hedge fund’s existence, Tilson’s returns had been floundering. Since 2010, Tilson says, he trailed the Standard & Poor’s 500 stock index, and in 2017 he had lost almost 9 percent on the year by the time he shut down his fund. “In an ironic twist, I always built my firm to survive the worst storm, but it was a nine ­year bull market — complacency and sunshine — that took me out.”

Tilson is one of several veteran hedge fund managers, including Eton Park Capital Management’s Eric Mindich, Hutchin Hill Capital’s Neil Chriss, Eclectica Asset Management’s Hugh Hendry, and Blue Ridge Capital’s John Griffin, who called it quits in 2017. Small hedge funds come and go with great regularity, but the inability of the industry’s stars to profit as the stock market soared to new heights has raised questions about the viability of the model. Tilson was a much smaller player than the others — at his peak he managed only $200 million — but his experiences are a window into the headwinds that have faced these former masters of the universe.

What distinguishes Tilson from many of his peers is his willingness to talk about the long, excruciating road down. “It’s hard, after seven years at sucking at something, to wake up and tap-dance to work. So, I found myself getting distracted. I wasn’t physically getting out of shape; it was the opposite. I was going and climbing mountains. This one part of my life, I was miserable at; I was having no success. It’s hard to have the self-discipline to focus all your attention like a laser, and all your spare time on a particular part of your life in which you’re getting so much negative reinforcement.”

Last year, as his fund’s losses began to mount, Tilson says, “I didn’t feel like I could look my investors in the eye and say, “˜Look, I’m losing you money, but I’m not doing anything else, 18 hours a day that I’m awake, the only thing I am doing is trying to turn performance around.’ ” The vacation photos notwithstanding, Tilson says he even felt guilty attending his daughter’s soccer games. “My hedge fund was sucking all the joy out of my life.”

Tilson’s introspection is uncommon for those in the hedge fund business, where self­confidence and salesmanship are as important to success as any investing prowess. As Tilson readily admits, managers cannot afford to be frank while they are going through turmoil, lest they further hurt their business — and their investors. “The last thing you want to do is air your dirty laundry. That will further shake the confidence of your investors.”

But there’s another reason for Tilson’s uncommon openness: His experiences, both positive and negative, have led him to create a whole new business, turning Kase Capital into Kase Learning (Kase stands for the first letters of the names of Tilson’s wife and three daughters). From a small conference room at the New York Athletic Club, Tilson has started teaching the perils and profits of investing in general — and running a hedge fund specifically — to aspiring youngsters who don’t come out of big seeding platforms like Julian Robertson’s Tiger Management or a multibillion-dollar hedge fund.

“Unless you are the lucky 1 percent who has the chance of learning in an apprenticeship, how are you supposed to learn how to do this?” Tilson says. “Nobody teaches the next generation. There is not one business school on the planet that teaches anything really usable to starting up your own hedge fund.

“It’s so rare to talk to a manager who is injected with truth serum, isn’t it?” he asks as he details his long bumpy journey through hedge fund land. “But I don’t give a crap anymore.”

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Stoic Philosophy as seen through Shawshank Redemption; Hickey

Posted on March 9, 2018 | 1 comment

Short then is the time which every man lives, and small the nook of the earth where he lives; and even this only continues by a succession of poor human beings, who will very soon die, and who know not even themselves, much less him who died long ago. — Marcus Aurelius.

What upsets people is not things in themselves but their judgments about the things. -Epictetus.

The goal is not to eliminate or repress the emotions to become devoid of feeling, the goal is to attach the right judgments to them.  We can find happiness, love, and beauty without desiring more than is within our control. We can enjoy music so long as we do not wish for it never to end. We can enjoy a cold drink in the sun if we do not at the same time wish for it never to pass.  –Seneca.

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The end of cheap debt means more bankruptcies https://mises.org/wire/end-cheap-debt-will-bring-wave-bankruptcies

A Technology Investor Turns Bullish Gold and The Miners (Fred Hickey of High-Tech Strategist)

Actually, Fred is a V E R Y L O N G – T E R M Investor in gold.

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Arbitrage! Primero Mining and First Majestic

Posted on March 6, 2018 | 1 comment

Mark Twain once said: “A gold mine is a hole in the ground with a liar standing on top of it.”  I think mining is more like a rusty, leaky bucket that you need to pour capital so as to keep the bucket filled.

A better description: mining is a capital intensive business that must be constantly replenishing its depleting reserves which are hard to find much less extract economically.

However, if you buy Primero Mining (PPPMF) say this morning 9:40 AM at 18 cents you will receive 0.03325 shares of First Majestic Silver (AG) that you short at $6.00, for example.   For each share of Primero bought at 18 cents allows you to own ($0.18/.03325) a proportional share of First Majestic at $5.41.  The difference between your short sale of First Majestic at $6 and 5.41 is ($6 – 5.41)/5.41 is about 10.9%.

Or the short sale of $6 of First Majestic converts at 0.0335 into a share price of Primero Mining of ($6 x 0.03325) or $0.1995.   The difference between the 18 cents that you paid for Primero and 19.95 cents received upon the closing of the transaction is (1.95 cents/ 18 cents) or 10.8%. The deal should close within the next twenty days.   The annual return if the deal closes in the next 10 to 20 days is over 100%.  March 13th is Primero’s shareholder meeting to approve the deal.

I believe there is a 98% chance of the deal going through thanks to all three parties benefiting. Wheaton precious metals’ (WPM) stream was restructured so there is now an economic mine and opportunity for WPM to receive cash flow. Primero shareholders are no longer faced with bankruptcy, and First Majestic has the money and the expertise to handle underground mining to expand their reserves and cash flows.  https://www.gurufocus.com/forum/read.php?10,622803,622803,report=1

Also, the proxy advisor has given the go ahead for the MARCH 13th meeting.  http://www.primeromining.com/English/investors/news/press-release-details/2018/Leading-Independent-Proxy-Advisory-Firms-Recommend-Primero-Shareholders-Vote-in-Favour-of-Proposed-Arrangement/default.aspx

If the deal would fall through, then let’s imagine your 18 cents is now worth $0 (PPPMF probably drops to 5 cents, but let’s be cruel) and AG spikes up 50 cents. On the deal announcement, AG fell 30 cents. Every dollar in PPPMF goes to $0 and every short dollar in AG loses about 10%.  A 2% chance of the deal not closing causes a loss of $1.10 for every dollar invested–which means an expected loss of 2.2 cents vs. making about 10 cents to 11 cents on each dollar invested in the arbitrage.  I have an expected value of about 8 to 9 cents on each dollar invested in this arbitrage within the next month.  Not bad considering my alternatives today.

See below 

Mexico-focused company First Majestic Silver has signed a definitive arrangement agreement to acquire all of the issued and outstanding common shares of Primero Mining for $320m.

Under the agreement, every Primero shareholder will receive 0.03325 First Majestic common shares in exchange for one Primero common unit.

Primero owns the San Dimas silver-gold mine in the Mexican state of Durango.
Primero has identified more than 120 epithermal veins with exploration potentiality throughout its production history.

In parallel with the deal, First Majestic has entered separate agreements with Wheaton Precious Metals International (WPM) to terminate the existing silver streaming interest at the San Dimas mine.

You can use Google Alerts to send to your email notices of buyouts, mergers, etc. Then do your homework.  These tiny, obscure deals are out there.

This is NOT a recommendation for you to do this arbitrage, but follow the logic or the lack thereof.   

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Posted in Risk Management, Search Strategies

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The Falling Marginal Productivity of Debt

Posted on March 1, 2018 | 1 comment

However, we can look at how much additional GDP is added for each newly-borrowed dollar. This is called marginal productivity of debt. This shows a clear picture, a secular decline over many decades. To produce this graph, take change in GDP divided by change in debt.

I encourage you to read: https://monetary-metals.com/falling-productivity-of-debt-gold-and-silver-report-15-oct-2017/

Add to the above this concerning article on the lack of US savings:

https://www.project-syndicate.org/commentary/america-low-saving-rate-weak-fundamentals-by-stephen-s-roach-2018-02

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