Long Optimism

by Johnny Debacle

Game Over it is NotThanksgiving at its core is about two things. First, killing the Indians with pox blankets and the strong anglo-saxon desire for rapine. Second, being able to give thanks for the things that you do have. As such, these things continue to be my frame.

In the current climate, where doom and gloom lurk in the hearts of men and irrationality and obliviousness continue to lurk in the hearts of women, we think it’s time to go Long Long. And by that, it’s time to long optimism. It’s cheap right now for three specific reasons:

  1. If you have seen Aliens then you know things could be worse. Much worse. I mean, as far as I know, no squidlike xenomorph has attached itself to any person or corporation’s head, fed eggs down its throat leading to the birth of a larger more aggressive homicidal xenomorph which has acid for blood. Yet that is exactly what has currently been priced into the market. We are comfortable putting a stake out there and saying no such xenomorph event is likely to actually happen.
  2. People are still alive, we expect them to continue to be interested in living and will probably at some point buy things again to aid their desire to survive and procreate; things like iPhones and bottle service. This is pretty reliable cause to be optimistic about optimism as, apparently, this has been happening for 200,000 consecutive years or so. We expect people to still live, to still do things to survive and perhaps maintain a living standard above that of the dark ages. No matter what happens in the next six months, barring a xenomorph situation, this is likely to still be true even if Goldman Sachs is not long for this world.
  3. We are at, or past, Peak Roubini. I found him to be interesting and a great resource for many years and he had a certain measure of prescience. Good for him. But at the end of the day, he is just another Euro Prof looking to dip his wick in coeds and suffers from a huge case of the over-exposed. Again good for him. But at this point, I would not be surprised to see NBC come back with a reality show called Dr. Doom and features Roubini flailing Trump over and over again with some sort of Italian leather-whip thing while sipping mimosas. There is a bubble in former bubble callers.

Recommendation: We are optimistic about optimism because it’s just incredibly cheap. Perspective will cause a mean reversion to “Glass-Half-Half-Full” from “Glass-Half-Empty” which would yield a “division by zero” return over a 3 year investment horizon.

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  1. american bandersnatch
    December 2nd, 2008 | 12:13 pm

    Aliens didn’t seem that bad. Who wouldn’t want to be rocking high-tech weaponry with that hot Spanish/Jewish chick?

  2. December 2nd, 2008 | 12:16 pm

    She was an “illegal” alien. Different kind dude.

  3. December 2nd, 2008 | 1:58 pm

    I recently read Collapse – rather, the first couple paragraphs of an article about it – anyway, leverage wasn’t mentioned, so we should be cool.

    But extrapolating from vikings on Greenland, Iceland is farked.

  4. December 2nd, 2008 | 11:28 pm

    While I share your general optimism re: optimism, I’ve been hard pressed to find an optimal entry point.

    That, and the DIV/0 expected value for the return has really been fucking with my models like a negative return did for Moody’s.

    Not cool mang, not cool.

  5. TB
    December 3rd, 2008 | 7:55 am

    The xenomorph event is unlikely to happen. Just the same way it was unlikely that CDOs would all default, Lehman Bros would go bust and my CFA studies would turn out to be of some practical use*. But all of these did happen. Black swans dude, black swans.

    *The bow with ciricullum books they sent me (uninvited) for Level II forms an excellent footrest.

  6. ab
    December 3rd, 2008 | 8:38 am

    I share your view that this is an excellent time to go long optimism. Luckily, I’ve found an appropriate fund manager: Barack Obama.

    He shares the view that optimism is undervalued right now, and he’s also filled with ideas of how to invest my money during the recession.

  7. Pleb
    December 3rd, 2008 | 1:31 pm

    doom and gloom lurk in the hearts of men

    I think you meant to say “dumb and gloom.” I’ve made the same typo myself.

    irrationality and obliviousness continue to lurk in the hearts of women

    Y’know why cars have so many cupholders? Because the number of cupholders is often a determinative factor in which car a woman purchases. Why do you think minivans can seat 7, but comfortably serve 18? Trust me on this – I’m the guy who drives a sports car that has an optional $500 center console between the seats, that she had to have, which is now stuffed with… I don’t know. It’s like somebody emptied the garbage basket at the Clinique counter at Macy’s into the thing.

    Hope, BTW, is this gal who works at the soup kitchen who might better have been named Charity, or perhaps Sloth. Change is what will be left in our pockets after the bailout(s)(es)(es).

  8. Bondtrader
    December 3rd, 2008 | 9:37 pm

    Hey, I’ve been looking for an entry point into some of those co-eds that Prof Roubini is after as well.

  9. December 4th, 2008 | 5:52 pm

    @ Bondtrader

    Go in for the backdoor entry, real deep, not very liquid though…

  10. flopsom
    December 5th, 2008 | 5:05 am

    @ bondtrader

    ballers dont aim for chicks that drink out of platic cups.

  11. December 5th, 2008 | 9:31 pm

    i think sam’s ruminations on cuppy cakes best mirror my own disturbing feelings on los at the moment. appreciate the pick me up.

    lev1 tomorrow morning with 40 hrs of study. short me right in the mouth.

  12. lumpen
    December 11th, 2008 | 2:46 pm

    Potential for improved returns under a glass half-half-full scenario if the glass is full of Iceland glacier water.


    Long optimism, especially when coupled with manager-marked assets in a frozen market.