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Wednesday, February 12, 2014

Who's the chump at the table?

There's an old saw that says if you're looking around the poker table trying to figure the chump - then it's you.

When you gamble in the risk markets - the stock market, the bond market, the currency markets the commodity markets, you're sitting at the table with traders from Goldman Sachs, JP Morgan, Barclay's, the Bank of China, and a dozen enormous hedge funds that aren't even pretending to be banks.

Guess who's the chump at that table?

But there's a whole other market out there for real things with real values.  Coins.  Medals.  Greek and Roman Sculpture.  Rare Books.  Historical Documents.   Chinese Porcelain.  Gems.  Memorabilia.  Rare recordings.  Furniture.  Prototypes.  Wine.  Hand woven silk carpets.  Automobiles. 

You know Crackpot Stuff you see on Antique Roadshow.  And in weird auction catalogs.

And it all seems so - esoteric.

But the thing is, if you are a person with interests other than who's screwing who on reality television, chances are you might know quite a bit about some area of history, of art, of invention. 

Some area that makes you something of an amateur expert.  Some area where you can look around the table and recognize that you actually know quite a bit more than a few of the chumps staring back at you.  Especially those chumps from the big banks who are sitting at that table too, thinking that because they understand gambling in the risk markets, they must understand everything on earth.

And if you know a little something, you can study hard, a learn a whole hell of a lot more.

And if you're smart, right now, that's the best place in the world to put your money.

Yeah, sure, it's not diverse.  And there's no yield.

But in a world of absolute correlation with negative real rates forever, it's not functionally less diversified and has the same non-yield as  a "diversified portfolio" put together by the shark at the banks who's looking at you like he's looking at a prize chump.

Your choice.

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