Memoirs from the Butte: Part Deux
May peace be with you!
Spent the last year Rocky Mountain way
Couldn't get much higher
Out to pasture think it's safe to say
Time to open fire
(please click here for the first part of this article)
We awoke on Saturday morning and made our way towards the Center for the Arts. The coffee was hot, the pastries were fresh and the mood in the Butte was pure excitement. Minyans were now soaking up the vibe while enjoying the fresh mountain air and easy flowing conversation. We set the bar pretty high the day before and folks were ready for the meat of the line-up.
David Miller, who had to stand after the softball spanking we endured the day before, started the show with his presentation on the death of the blockbuster drug. After an informative walk through the basic definitions, he spoke of the changes in biotechnology and the rebirth of "personalized" medicine. His conclusions of slower sales growth in big cap pharma (off-patent issues) and the eventual need for them to partner with biotechs was intriguing. The learned process of cancer treatment applications and real-time evolvements, however, was the topic that clearly struck a chord with those in attendance.
The incomparable Rich Gula then took the mic and shared some of his considerable wisdom. I'm not sure that Minyans realize the depth of his knowledge, but it was evident to those of us fortunate enough to enjoy his company. He discussed historical market perspectives and shared stories of his experiences with Elmer. It was truly fascinating to hear, first hand, the evolvement of our fabled Fed chief. I have two words for our bespeckled buddy: "Scrap steel."
Professor Succo stepped to the podium and shared his views on hedge funds and their role in the marketplace. While there is an outsized amount of funds floating around (many of which don't manage their risk properly), John believes that they've replaced the market making function that is supposed to be provided by broker/dealers. He then moved on to the topic of linearity (or lack thereof) and offered insights on how to incorporate that into our trading perspective.
After a short break, Scotto stepped up and gave a tremendous tutorial on market behavior. His thesis is that there is no successful model for understanding the governance of asset prices. He introduced his model of a "self-organizing complex system" (swarm intelligence) and made a strong case that asset markets are "governed by a collective intelligence largely imperceptible to individual participants that produce a self-similar, non-random pattern with a basis in phi." It was extremely thought provoking and intellectually challenging for one and all.
I took the baton around eleven and walked through my trading approach while offering humble thoughts on the state of the union. We spoke of identifying a suitable time horizon and then mapped out where we are with each leg (metric) under the trading table. I spent some extra time discussing the "stagflation vs. deflation" debate as well as the "stealth bear" that is the U.S. dollar. Most folks simply don't realize that the basis of their assets has been steadily eroding since the beginning of 2002 ($1 then is worth .73 today).
After a hearty discussion during the Q&A, we broke from the Center of the Arts like school kids at recess. Minyan Eric Knight took a group towards the river for a rafting trip, others hopped back on their bikes and still others kicked back with a cheeseburger and fat tire (that would be me). The presentations were in the rear-view mirror and the rest of the weekend was on cruise control. I took a deep breath and declared victory.
That's when the hail storm began.
I've never seen golf balls made of ice before but the freak of nature that is Colorado weather was in a mood. The pelting was intense but as we edged through the afternoon and towards the Minyan picnic, the clouds gave way and Ruby smiled with sunshine. We couldn't have ordered better weather by the time we cracked open our first Pabst (Scotto's call) and each Minyan, VIP badges proudly hanging around their neck, added energy to the atmosphere.
I don't often allow myself moments of gratitude--it's the curse of the over-achiever and the root cause of my hypocrisy. Still, with Mt. Crested Butte behind us and laughter in the air, it was clear that the Minyan dynamic had shifted. I had "seen" this in my mind's eye for almost three years but it was different now, almost tangible. I walked down the street, took a deep breath and smiled to nobody in particular.
And somewhere in foothills of Colorado, five little critters were smiling right back at me.
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