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Thoughts from the mountains. More Travel tips. Quant trading.

Greetings from Interlaken, Switzerland. I took the day off. Biking in the mountains with Michael who’s 40 years younger is exhausting.

Mr. Market seems confused. He days strongly down, e.g. Friday. And days strongly up – like yesterday (Monday).

+ Every stock is overpriced – at least by historical measures.

+ Earnings are beating in three quarters of the S&P 500 but not by much.

+ I can’t find a sector with exploding earnings – AI and biotech, maybe.

So, where now? I have a new idea:

We caught a funicular – 65% incline — to Harder Kulm. It started raining, then hailing, then double rainbows.

Our Swiss trip was paid for. All I  had to do was to scoop up the buckets of gold.

The picture of the double rainbows wasn’t as good as the single one. That’s Interlaken – so called because it’s between two lakes.

More of Harry’s travel tips

+ Get your hotel’s front desk to put your devices — laptop and phone — on the Internet.

+ Windows will often turn your Wi-Fi off — for no reason. Turn it on by going to PC Settings and type “Turn on.”

+ Very few hotels in Europe have air conditioning. Today mine does, but won’t go colder than 20 degrees, which is allegedly 68. Solution: Ask housekeeping for fans.

+ When traveling, the only decent meal of the day is the morning’s buffet. You can easily skip lunch and dinner, or find local pizza. Don’t be bullied into eating too much. Your tummy will feel it.

+ I always order three more pillows and two bars of real soap.

+ Michael loves Mulvad VPN. With it you can watch YouTubeTV from outside the U.S. He’s paying $5 a month. He loves Mulvad’s privacy.

+ Drink. Drink. Drink. I’m cramping up. Water helps. Coffee doesn’t.

+ I repeat: This is the only gadget worth taking to Europe.

China is not doing well

+ The bulk of its growth has been state-funded real estate development. That got overbuilt. Now zillions of Chinese are sitting with worthless deposits on unfinished and unbuilt apartments.

+ President Xi really believes he can manage the Chinese economy better than a billion intelligent, creative, motivated Chinese people can. He’s nuts. You and I don’t want any part of China.

+ Chinese financial markets are a mess — no one wants to invest there (least of all me). Hence the incentives to grow a company, go IPO and get rich have been removed. Worse, interference by the government does not contribute to your “quiet” life.

+ Everyone and their uncle are leaving China — including creative Hong Kong people and the American companies that make stuff in China.

+ Kids in China studied hard, went to school, to get a decent job, to improve their life styles. Today, the Economist wrote “China also responded to the deteriorating job market by suspending publication of its youth unemployment figures. The jobless rate among urban youth had increased sharply to 21.3% in June. Many suspected it would rise again in July. China’s distinctive response to bad economic news includes failing to report it.”


What’s with quant trading?

A nice reader called Bruce sent me an article from Vanity Fair, eight years ago:

Michael Lewis Reflects on His Book Flash Boys, a Year After It Shook Wall Street to Its Core.

By the time I met my characters they’d already spent several years trying to answer those questions. In the end they figured out that the complexity, though it may have arisen innocently enough, served the interest of financial intermediaries rather than the investors and corporations the market is meant to serve. It had enabled a massive amount of predatory trading and had institutionalized a systemic and totally unnecessary unfairness in the market and, in the bargain, rendered it less stable and more prone to flash crashes and outages and other unhappy events. …

The Financial Industry Regulatory Authority announced it had opened 170 cases into “abusive algorithms,” and also filed a complaint against a brokerage firm called Wedbush Securities for allowing its high-frequency-trading customers from January 2008 through August 2013 “to flood U.S. exchanges with thousands of potentially manipulative wash trades and other potentially manipulative trades, including manipulative layering and spoofing.” (In a “wash trade,” a trader acts as both buyer and seller of a stock, to create the illusion of volume. “Layering” and “spoofing” are off-market orders designed to trick the rest of the market into thinking there are buyers or sellers of a stock waiting in the wings, in an attempt to nudge the stock price one way or the other.) In 2009, Wedbush traded on average 13 percent of all shares on NASDAQ. The S.E.C. eventually fined the firm for the violations, and Wedbush admitted wrongdoing. The S.E.C. also fined a high-frequency-trading firm called Athena Capital Research for using “a sophisticated algorithm” by which “Athena manipulated the closing prices of thousands of NASDAQ-listed stocks over a six-month period” (an offense which, if committed by human beings on a trading floor instead of by computers in a data center, would have gotten those human beings banned from the industry, at the very least).

For the full article, click here. 

I don’t know how much of this stuff is still going on or if I’m being hurt by it.  I use Fidelity. I asked Google:

Q: How does Fidelity make money if trades are free?
A: Fidelity makes money by charging its clients fees for the management of accounts and other services. Despite being one of the largest no-commission brokers, Fidelity doesn’t use the payment-for-order flow model used by so many of its peers like Charles Schwab, TD Ameritrade, and Robinhood.18 Aug 2022.

Somehow this reminds me of Switzerland

Instant divorce

My hotel is selling these for $10.

The bell actually clangs. If I brought one home, Susan would throw it (and me) out.

See you soon. Harry Newton