Musings Report #17 4-27-13 Present Shock
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Present Shock: When Everything Happens Now
This is the title of media/technology/society critic Douglas Rushkoff's new book, and it consciously plays off the influential 1970 book by Alvin Toffler, Future Shock. In Rushkoff's view, we've reached that future: the speed of change and the demands of the present are disorienting us in profound ways.
We all know what stress feels like: it often causes our view to narrow to the present stressor, and we lose perspective and the ability to "make sense" of anything beyond managing the immediate situation. Present shock may be a background source of chronic stress.
Rushkoff identifies five symptoms of present shock:
1. Narrative collapse - the loss of linear stories and their replacement with both crass reality programming and post-narrative shows like The Simpsons.
2. Digiphrenia – digitally provoked mental chaos as technology lets us be in more than one place at any one moment.
3. Overwinding – trying to squish huge timescales into much smaller ones, for example, packing a year’s worth of retail sales expectations into a single Black Friday event.
4. Fractalnoia – making sense of our world entirely in the present tense, by drawing connections between things with weak causal relationships, for example Big Data, which excels at identifying correlations but is utterly incapable of identifying cause amidst the correlations.
5. Apocalypto – the intolerance for presentism leads us to fantasize a grand finale, the cultural equivalent of a "market-clearing event."
As Janet Maslin of the New York Times wrote in her review: "How do we shield ourselves from distraction, or gravitate to what really matters?"
Studies have shown that our innate ability to remember people and identify their relationships with others is limited to around 100 people--the size of a village or a combat company. We undoubtedly have similar innate limitations on how many channels of input we can absorb.
Web pundit Clay Shirky calls this "filter failure," his term for information overload. Our filters become overloaded and we lose the ability to "make sense" of what's going on around us.
As the phenomenologists discovered in the 20th century, our basic coping mechanism is to separate the world (i.e. inputs) into three basic categories: the focal point, the immediate foreground and the deep background. Being unable to sort out which input belongs in the three spaces leads to disorientation and poor decisions.
The parallels between filter failure and stress are not coincidental, and we can handle filter failure and present shock the same way we handle stress: limit inputs and make a concerted effort to reorient our awareness and context, what some call "be still and know."
Another troubling parallel to present shock is addiction. People now respond to texts, emails, alerts and phone calls like rats in the proverbial cage with the lever that releases another tab of cocaine: they over-stimulate themselves to death but are incapable of restraining their impulse for more.
The "obvious" solution is to turn off inputs as a way of restoring our ability to live in a present without novelty and distraction. This is akin to withdrawal from a powerful opiate, and so we should not be surprised that there are now treatment facilities for kids who need to detox from digital inputs.
How long can we go without checking our phone and inbox? Minutes? Hours? Days? I purposefully turn off email and indeed all digital input for hours and days throughout the year.
The amusing sidebar to this very provocative and timely book is that I was offered a digital review copy, but my efforts to retrieve it were entirely fruitless, as it required establishing a "free.kindle.com" email account within my Kindle "personal content management" page and a bunch of other steps. Arrggh....
No, thanks. I'll just buy a hard copy. After 29 years of dealing with digital technologies, the yield on fooling around with complex interfaces and instructions has diminished to near-zero. If I can't figure it out in a few minutes, then it isn't worth any further investment of time and sanity.
On the other hand, if it is easy to set up, then its intrinsic limitations are merely masked.
Market Musings
So gold drops $220 one week and bounces back $100+ in the next week: from $1,540 to $1,321 to $1,460. What changed in the fundamentals of gold in the past few weeks? Nothing, as far as I can tell. Regardless of the causes, this is what makes trading (or more quaintly, investing) so interesting.
As for the general market, I have opened a short position via puts on the S&P 500. It feels toppy and heavy here, and am guessing the probabilities favor a decline of some sort, perhaps from 1,582 back to 1,538, or perhaps to 1,500. I expect another rebound from those levels that will either reach a new nominal high as the indicators diverge negatively, or perhaps we get a double top.
The general economy may be considerably less healthy and profitable than generally presented. Consider this quote from a message board:
"I am an Engineer with 30+ years of market and tech experience. I am here to tell you that this is the worst month that I have seen in 30 years. BAR NONE!!! Management is freaking out. Forecasts are being missed by quantum margins."
Hmm. Perhaps this is an outlier, perhaps it is a bellwether. Complacency and margin debt are at highs, evidence of a top, not a bottom.
The best thing that happened to me this week
For me, trading stocks and options is both a very challenging game and a form of self-mastery, for it is never the market's fault we lose money, it is our own mistakes and emotions that cause losses. As a result, I limit my trading to relatively modest sums and I don't list any actual trades I might enter, for fear someone might be foolish enough to follow me into a risky trade.
It's not just picking the right opportunity, it's buying at the right moment and selling at the right moment. All we're doing is playing with probabilities; there are no certainties, and whatever set of rules you choose to follow will be proven inadequate unless the rules are constantly evolving.
Last Friday I bought 5 call options on a tech stock I follow, FFIV, because the probabilities favored a rise of some sort. I bought the options when FFIV was $72.50, and to my surprise it popped up to $80 at the open this Thursday. I sold within the first few minutes, for I have learned to take a profit when one is offered. There is no certainty, so you act on what you know in the present.
That trade netted 170%, about $1,500. It's rare when something exceeds one's expectations, but it's always a nice surprise when it does. FFIV ended up closing around $74.50, so selling immediately turned out to be the optimum decision. Even if it had run to $90, I would not regret selling: in trading, it's better to act on what you know than on what you hope.
Money is a way to keep track of the game, but it isn't the only one. Did you master your emotions or let them control you? That's the higher-order score in the trading game. Nonetheless, it was nice to score an unexpected win in a tough game.
From Left Field
"Today, more than 20 years after Japan’s bubble burst, youth unemployment is higher than ever. Japanese companies have all but stopped hiring regular employees, and most young job-seekers must choose between an unstable job and no job at all. In 1992, 80 percent of young Japanese workers had regular jobs. By 2006, half were temps."
"Don't judge each day by the harvest you reap, but by the seeds you plant." Robert Louis Stevenson
Thanks for reading--
charles
