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Five Things You Need to Know: Minyanville Oracle Index


Minyanville's Oracle Index re-weighted, unbalanced.


Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:

"Oh Oracle, we pray to receive thy wisdom and guidance, that it deliver us from our epic journey; beset on all sides by villains yet vanquished, battles yet fought, ships for now unbroken upon the rocks of unknown lands. Tell us, oh Oracle, what should be the fate that awaits us?"
- Unidentified self-described huge oracle fan, circa. 1929

If there is one thing that can truthfully be said to have endured the inexorable progress of time, it is this: Everybody loves a good oracle!

In ancient Greece, no self-respecting warrior would have dreamed of making an important economic decision, or brutal and unprovoked cross-border invasion, without first consulting an oracle. If the King of Thebes had only listened to his oracle, perhaps he could have avoided being viciously murdered by his own son, Oedipus, who would later go on to sleep with his own mother before scratching his eyes out. At the very least, he might have decided against naming his son Oedipus.

What is it about an oracle that inspires such awe and reverence? Could it be the fancy robes they wear? No, it could not. Instead, it is their ability to see and predict the future!

People who can accurately predict the future tend to freak other people out. Especially people who have trouble remembering things that have already happened! Like you, we at Minyanville are among those totally freaked out by people who can predict the future, so we have something in common. Who knew? The oracle knew, that's who.

Last year, while pretending to do science, we constructed what we call the Minyanville Oracle Index. The Minyanville Oracle Index is a capitalization-weighted* (see chart below) basket of 10 oracles that were carefully selected from among the 10 oracles that immediately came to mind.

Thanks to the Minyanville Oracle Index, traders and investors will one day be able to accurately predict the future of a basket of oracles who are themselves predicting the future. This could theoretically allow an investor or trader to potentially predict the future of the future itself!

Friends, what if I told you that not only could you know the future in advance, but you could also know the future of the future even before those who already know the future? Would you consider that to be an advantage in today's highly competitive marketplace? I should think so. In fact, thanks to the Minyanville Oracle Index, I don't just think so, I know so. Moreover, several minutes ago before I even wrote that last sentence I knew that I would know so! And I knew that I would know that too! Yes, I even knew that. And that too. I know! Whatever.

The most famous oracle of all time, and the largest weighting in the Minyanville Oracle Index, is the Oracle at Delphi, who carries a 28% weighting.

Oracle at Delphi - Pythia

Dating back to 1400 B.C. the Oracle at Delphi, known as Pythia, lived in a shrine around a sacred spring near the foot of Mount Parnassus. People traveled from all over Greece to ask the Oracle at Delphi questions.

The Greeks considered the Delphic Oracle to be the center of the world. This is probably due to the fact that no one at the time thought to ask her if she really was located at the center of the world, because if they had thought to ask , "Hey, are you located at the center of the world?", she of course would have replied, "No!" Why would she have replied No? Because she is an Oracle, jackass, and so naturally she would have known the answer to such a simple question right away. Moreover, the question "Hey, are you located at the center of the world?" is not even about the future. It's about location, which exists outside of time and space in what is called Real Estate. But I digress.

One funny thing about oracles: The bigger they are, the harder they fall. Several years ago scientists discovered that the Oracle at Delphi sat above a fault line running east to west.

That would be no big deal, except for the fact that the location above the fault line meant the oracle's trance-like behavior was simply the result of constantly inhaling ethylene gas produced from below the surface of the earth. That too would be no big deal, except inhaling ethylene gas produces a narcotic effect.

Turns out that what the oracle meant by "predicting the future," was "sitting around in a temple-like shrine all day getting high and saying weird stuff." It's a long way down from the top.

Minyanville Oracle Index
* By "capitalization-weighted," we mean random.

Reconstituted and Rebalanced Minyanville Oracle Index

In addition to the Oracle at Delphi, the Minyanville Oracle Index consists of 9 other components. Below are the reconstituted and rebalanced components of the Minyanville Oracle Index:

1. Oracle at Delphi
It would be awesome if the Oracle at Delphi really looked like this!

Instead of this...

2. Oracle of Air
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"Ladies and gentlemen, if I say that I am a wind man, you will agree."
T. Boone Pickens
Former oil man turns air man in effort to collect royalty check every time wind blows.

3. Oracle of Singapore

Jim Rogers
Nailed commodities boom, moved to Singapore, but continues to have questionable bow tie affectation.

4. Oracle of Omaha

Warren Buffet, 9% weighting
Berkshire chief's fund struggling, but he still has that classic oracle pose.

5. Oracle of Pimco

Bill Gross, Managing Director, Pimco
Gross has taken some heat for his 2002 Dow 5,000 prediction, but he's a bond guy, what do you expect? Meanwhile, he continues to show an uncanny ability to predict which way his massive Pimco bets will move the market.

6. Oracle of Book Tours

Alan Greenspan
Former Fed Head, author of "Age of Turbulence," is now a consultant helping hedge funds navigate turbulence he created; also, ubiquitous spokesperson for books he has written, predictions he has made.

7. Oracle of Bond Insurers

Bill Ackman, Pershing Square Capital
Ackman tangles with MBIA (MBI) and Ambac (ABK) because their business models "don't make sense." MBI and ABK focus their efforts on tangling with Ackman, mostly because they have nothing else to do given the fact their business models don't make sense.

8. Oracle of Poker Tables

David Einhorn, Greenlight Capital
Successfully pressed short side on Allied Capital (ALD), took down $650 large in World Series of Poker, now taking on Lehman Brothers (LEH).

9. Oracle of Anti-Oracles

Nassim Nicholas Taleb, author
Taleb, author of "The Black Swan," famously dislikes "oracles," yet plays one so well.

10. Oracle of Oracle (ORCL)

Larry Ellison, CEO Oracle
We just like to say Oracle of Oracle.

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No positions in stocks mentioned.

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