GEMESYS Research

AI-Models: MPM and 7s. (See TWO charts further down on this page) Markets stable. We remain long, all-in.
[Mar 28, 2024 update: Our AI called it again successfully again. See charts below.] [Mar. 19, 2024 update: I've posted updated results of our statistical AI efforts in charts down the page]

The "Research Log" button has - the research log! You can follow our Perilous Experiments.

With the research log, and our videos, You can follow our Perilous Experiments! Remember: "Vita Brevis, Ars Longa, Ocassio Praeceps, Experimentum Periculosum & Iudicium Difficile." (Trans: Life is short, Mastering the Art takes a Long Time, Opportunity is Fleeting and Falls Away Easily, Experimentation is Dangerous, and Judgement is Difficult.)

Page down to page-bottom, to see our forecasts from our AI, for one of our main holdings. The AI works better than the humans, which is why AI is so popular. Humans are bad investors. They sell at the lows, and buy at the tops. The AI-driven model can do the opposite, since it has no emotions. Simple as that, it is. [Update: New Projection as of March 19st, 2024 - page down to view]

More changes. This is our custom-built Python/NumPy based backpropagating neural-network, fabricated using the matrix-math features of Python (works in both 2.7 and 3.x versions), and here shows now a 5000-epoch training run, with completely different dataset. Graphics show messy training that climbs with poro-poro (raining-down) drop-falls. Although the model trains in a messy way, sliding far off the optimum curve, it holds, and trains effectively. We can now get 80% accuracy, using an economically restricted network, and retraining batchs allow overall accuracy to track around 70%, which is good. And we can replicate the results - it is not just due to fortunate initial random weight assignments. (Click image to expand, ESC to exit (or click a hidden X at top right corner of image to close it)).

The results shown for neural-networks are different datasets. This data is important, and is a tad more harshly random. With our custom NN's, we can read and write the trained weights, adjust network learning-rate as training epochs evolve, and check-point and re-start training with different parameters, to enhance fit-accuracy. This allows batched-training, so that we are less likely to train to noise.

Our custom neural-net uses a home-built variant of backpropagation - still training to a sum-squared loss reduction strategy (as opposed to minimizing cross-entropy), and the thing is working well. The image above shows it training to 80% accuracy on our messy dataset. We can push it to over 90%, but then evaluation dataset predictive accuracy falls below the 50% level.

We train and save and retrain with previous data, and now have a semi-production set of weights that give a 55% accuracy across the sets. Trying to integrate this into our picture of the world. We have not done any trading yet from any of this. We grow concerned that a major re-pricing event is being set up. There is just too much that is going too wrong, too quickly. It looks like years 1974 and 2007 in a nasty amalgam. Yield curves are inverted in USA, US dollar is too strong for global health, too many are holding too much debt, and governments would be bankrupt if their finances were private-sector evaluated. As governments, they can just print currency (via computer-driven forms of open-market operations), and inflation ticks up. Average new car price in USA is $47,338, which is roughly $65,200 Canadian. My father bought a 1972 Pontiac LeMans for $3500 in 1972, which was a nice-but-average V8 car. This implies over the last 52 years, and actual inflation rate of 5.75% annually. ( 3,500 * (1.0575 ** 52yrs) = 3,500 * 18.31 = 64,085.)

The true long-run inflation rate is - roughly - greater than 5%. It't at *least* 5%, we suspect. Expecting to be able to force it down to below 5%, by setting short rates to 5%, is just plain crazy. Rates will need 7% to 8% or higher, to lower inflation. In 1979-82, it took rates of over 20% to bring the out-of-control inflation under control. Many businesses were destroyed, the economy in Canada collapsed and I know, because I was job-hunting. There were - literally - no jobs advertised as available. It was a curious time.

With the debt levels our governments have now, 8% rates will break their funding schemes, and probably break their financial structures in curious ways. Current tax takes will not cover the required financing costs of existing and newly rolled-over debt, so new debt will be taken on.

We worry about this. The 2007-2009 "financial crisis" was caused by folks who took out "liar-loans" being unable to service their debt-costs, once the teaser-rates on their mortgages reset (after two years) from 5% to 11% and so on. And by bogus "Lehman Liar" financial statements showing phantom cash on 30-times leveraged US financial-centre investment firms packaging CDO's and CDS's that were backstopped by "bbb" (below investment-grade) crap-bonds that were not likely to be fully repaid.

What scares my little business, is that, this time, it is the governments themselves that are over-leveraged badly. They (historically, typically) fix this problem first by having a bunch of stupid, horrible destructive wars, and then by trashing the values of ALL their collective curriencies. The banks go "phut". And so do all your financial assets.

Everyone can dig deep into their family histories, and find someone who got the "phut" treatment from some financial assets.

My father had shares in "Investors Overseas Services". Bogus. Went to zero. I had some shares of First Republic Bank. "Phut". (Taken over by the FDIC. Shareholders wiped out.)

What happens when it happens to the entire economy? To the money itself? Is this possible, now in our modern age? Unclear. Maybe, I think rationally. My nasty "Inner Trader" says: "You fucking moron. It can't NOT happen. Examine history, and then try to tell me I'm wrong." I actually don't like him. I keep him around, because he makes me money, and keeps me from getting killed by bad people. "Crazy" has it's benefits... :)

Full Disclosure: We STILL remain long and all-in on our bank stocks, telecoms and the mining shares also. Holding onto the Bank shares, has proved to be a less-than-optimal choice. Their performance this year, has been pretty awful. We expected them to recover, and they now seem to be doing so. Curious times, with war, economic uncertainty, bad leaders, and magical technology.

Click on the Research log-entry button for more notes on our "Dismal-Science" view of things.

GEMESYS Ltd. Research & Consulting: We Live in Truth, Offer Enlightenment and if your projects and plans are in trouble, we can help you Change the Program!. Make new choices while you still have freedom of action. Do not wait until your option sets collapse into terminal singularities. Act while you still can.

GEMESYS Ltd Research - *Fiat Lux*

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[Apr 22, 2024 - Update] This equity in question that we track with our AI, acrossed the $70 level and then turned south. I'll post the charts when I get some time. Our AI projected the turn south, before it happened, but we did not change our position. Probably an error. We are concerned about this market. Yield curve remains inverted, inflation remains high. Taxes are being increased, and war is on the horizon of many nations now.

This is not to be considered an exercise in investment advice. Make your own decisions, please.

(Full Disclosure: We remain long, all-in, on Canadian bank equities. We view that they represent significant value, especially considering the very stretched valuations in US equities.)

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[ Apr. 22 2024 update: ] Model pointed to and market reached 70, model turned down before 70 was reached, and correctly forecast a turn. I did not believe it likely, and the turn was intense, from 70 to 63 level. Market changed, inflation came in hot, and rate-reductions pushed out to Sept-Oct. timeframe. US-election looks to be very strange - neither guy is really wanted - folks will likely hold their noses and vote for Trump, who will be likely checkmated by some force we cannot predict - we just expect it to happen. If RFK Jr. is correct, then the CIA might target & remove Trump, which is not good. Israeli mass-murder campaign in Gaza is out of control, and the Biden-Administration actions do not seem rational. They are critical, but funding Israel with weapons that enable mass-murder. We view this action as quite honestly, insane. Ukraine needs weapons for honest defense. Israel is just killing kids and girls because it is drunk on hate. This bodes badly for the future. I'll post what the models did when I get some time.

The forecast (green line) is now reflecting the possibility of a sustained upturn in share-price.

Full Disclosure: We still remain long and effectively "All-In" on our bank stocks, as dividends are being paid, earnings are reasonable, and operational risks appear to be *MORE* than adequately managed and reserved for.

This information is not "Security or Trading Advice". It is simply an honest reporting of our research efforts.
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The difficulty of seeing the forest, for the trees, always remains... The field beyond the forest, yields. But the forest is an attractive nest of chaotic action, held in a fine ecological-orbital balance by the forces of destruction, and re-birth. If you look closely, a small maple tree, with yellow-orange leaves, which are being shed for winter, is visible in the lower-right of this image. In time, if left to nature, these trees with leaves, which are shed in Autumn, and re-created in the Spring, will replace and displace this grove of spruce-trees. But if I keep the deciduous trees cut back, and work to protect the spruce, I can keep this grove intact, and it will grow, and I can enjoy the green spruce branches in deep, cold winter.

Nature is *not* to be left to operate randomly. Our job is to manage and manipulate it, and encourage the natural outcome we wish to have take place. Left to it's own, nature simply kills everything. Humans need to understand this basic biological truth. Our job is to make nature serve us. We must not become confused, and invert this key requirement.