AI-Models: MPM and 7s. (See TWO charts further down on this page) Markets ugly but stable and we remain long, all-in.
[Most Recent Update: Feb. 2, 2024 ]

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.


These are two images of the sum-of-squared errors in an experimental neural-network training process. The first chart on upper left, shows the first 1000 epochs, while the second chart, lower right, shows the training action, with the first 1000 epoch results dropped from the front of the NN Loss vector. The second chart would just be a flat line along almost zero, on the scale of the first chart, but scaled for the training action from 1001 to 4000 epochs, one can see that the training action progresses. The neural-network training process is interesting, in that even in fine-detail, it can be seen to continue effectively. (Click image to expand, ESC to exit (or click a hidden X at top right corner of image to close it)).



War, Come With Me Now...

We are entering into a time of conflict, which looks to be accelerating. We suspect it will get weird, dangerous, and nasty - and we know this, because it is already happening. In Canada, we have the worst Federal government in my lifetime, which is going some, since I have seen some really goshdarn bad governments - from both the inside and the outside. There is little to be done, since our democracy-models in this age of "everybody-has-a-government-TV-studio-in-their-pocket", means the "race-to-the-bottom" has essentially reached it's conclusion. We are here. The Bytes are Dancing with the Ever Circling Skeletal Family. Everyone from George Orwell to David Bowie told us clearly about "1984", which has begun to arrive, even though we have made it to 2024. Calandar time and political time, do not always sychronize.

Perhaps World War III will just be a minor distraction, as we continue on our long downslope to dangerous times. Could be worse: The death-toll in Gaza is now: over 24,000 people (according to Al Jazeera), with more than HALF of these being females and kids. How can America justify helping Israel do this, without expecting that old fashioned KARMA will bring this model of conflict resolution to dear old USA, at some point? Our political people are curious folks with so little imagination, it would seem. Biden threatens us all with F-16's, and ridicules those who have AR-15's. But an F-16 is very expensive, and needs a lot of maintenance. Whereas an AR-15 just needs a stick, some oily cloth, a few boxes of cartridges, and a group of lads that are "networked"... ("Mad as hell, and not gonna take it anymore") Remember how the movie "Network" ended? Howard's ratings fell, IIRC.

What is to be the outcome? We cannot say. But the future is uncertain, and it has infinite variance, as well.

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 expect them to recover, and in the meantimes, we are getting 6 to 7 percent (on our shruken capital, truth be told, yes.) Basically, the buy-and-hold model is sub-optimal, but if holdings "quality" is maintained, then one's portfolio should at least not go to zero. But we have seen many so-called "quality" stocks, track to zero. Examples include: General Motors, Nortel, Royal Trust, Laidlaw, CMGI, Lehman Brothers, Credit Suisse (almost zero), First Republic Bank, and many other historical examples (the "high-quality" banks of the 1920's that disappeared in the 1930's, and the railroad stocks of the 1920's that traded at pennies on the dollar, in the 1930's). The world of investing is basically "chemin de fer" - (a French card came, once popular in Monte Carlo.)

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


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[ Feb. 2 2024 update: ] The Models again called it well. BNS trading in the 62's, when as economists, we expected the shares to be repriced higher, at least into the 70's, due to dividend level ($1.06/shr/qtr), safety of Canadian banks which are closely and monthly monitored by macroprudential regulator (OSFI), new executive team under Scott Thompson, the new CEO, and general improvement in North and South American economies. But our AI technical model here was correct (share price turned lower) and our economic analysis counted for naught. This is - again - a powerful vindication of this pure demand-supply AI-driven analytic approach.

[ Jan. 8 2024 M-Model's Projection ] This is the forecast our M-model created for the BNS share price, as of close on January 8, 2024. The forecast - prepared using a mechanical AI algorithm, has now swung down. We thought this was crazy, and did not act on this AI-driven signal. The AI was right - the banks are unwinding fast today - as of Jan. 11, 2024. It's shocking, really. The December inflation number was known by all, I had thought. Crazy behaviour, it seems to us. The AI was right, and myself, as a rational economist - was wrong. Simple as that.

Below, is the chart for the higher-frequency 7s model which also now points down. We said earlier that we expected a turn from the lower levels, and this has now happened. The AI's are actually quite remarkable, and do a disturbingly good job of forecasting, as they are driven entirely by the market action, and nothing else. They do not get confused or worried, or fearful. :)

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.) But lets be clear. We appear to have been goddamn wrong. This is the simple truth.


(Click on any Image to expand it, ESC to exit image-expansion.)

[ Feb. 2 2024 update: ] The Models again called it well. This 7s Model matched the M-model. BNS is trading in the 62's, when as economists, we expected the shares to be repriced higher, at least into the 70's, due to the attractive dividend level ($1.06/shr/qtr), the safety of Canadian banks which are closely and monthly monitored by macroprudential regulator (OSFI), a new executive team under Scott Thompson, the new CEO, and general improvement in North and South American economies. But our AI technical model was correct (share price turned lower) and our economic analysis counted for naught. This is - again - a powerful vindication of this pure demand-supply AI-driven analytic approach.

[ Jan. 8th, 2024 7s Model's Projection ] This is the 7s Model forecast for our testbed security (BNS), which we hold in a couple of portfolios. This model is a variation with very minor difference from the MPM primary model. It dials up - slightly - the "frequency" of the process the program tries to capture from the data.

This forecast (green line) swung to pointing down.. We did NOT believe this to be sensible, and we did NOT sell our postions. The AI was right, and our rational economist's view was wrong. Simple as that.

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.

It would wise for the Canadian Banking Sector to reduce headcount costs, and focus more directly on shareholder returns. We believe this awareness will eventually become evident to private-sector bankers, as well.

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.