Feast or Famine

“
Page 1 of 6 November 2015 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.
The author does not provide investment advice. In order to use reproduce or convey the material herein,
in any way, written agreement must be obtained from the author or its agent Architypes Inc.
StockTakers Limited is an Alberta corporation providing information on “likeables” equities.
StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.
Man Bites Man: Feast or Famine
Equities trading above our benchmark Risk Price (SF) are those liked by investors, as two of
three continue to price rise due to investors’ preference. These equities we call “likeables.” They
are revealed by their rise above Risk Price, our metric that investors must know to defend their
capital1
. Risk Price lets investors measure where their capital is in markets and defend it.
It seems so ordinary, a few heads of wild brome rye grain with hard kernels of low nutrition for
us, but they are at the base of the human story in economics. Ten thousand years ago ancient
einkorn wheat with higher nutrition apparently enabled
for us humans our revolution in organized use of the
land converting our earning our living from hunting and
gathering the irregular bounty of nature. In the narrow
highland plains of springs situate between both Tigris
and Euphrates started the anthropocene age of our
current dominance on the planet where in our sole
interests we now have modified 40% of the planet to
serve our species unique food needs. In a poor season
the ancient farmers found they harvested as few as three kernels for one planted after drought,
bird, insect, windblown and disease losses leading to famine.
In good seasons we might gain seven kernels for each one planted, but this was our beginning.
That ratio of possible outcomes earned became our hope for a better return as income from our
output of effort in planting each season. We made our deal with the elements in mystical
offerings hopeful of that income. That ratio also defined the earliest rates of interest for the loan
of seed grain, even in poor years to return the favour of borrowed seed we needed to make our
investing partner whole again by returning the same amount as we had borrowed. In poor years
at harvest we were bound by social norms to give back even in that least crop year risking famine
for ourselves as for whom we had borrowed. Both creditor and debtor shared interest in a good
harvest that the debtor be raised to regain his wealth in the community. There was eusocial value
in such collaboration early society required of us all.
That repayment required in such meagre crop years could be a third of our harvest in order to
make our trading partner whole. For our creditor to require more than his share made whole was
deemed usury. In good harvest seasons that making whole apportion creditor ‘interest’ would be
seventh share of our harvest, 14%, due at harvest festival. That rate evidently held through
Sumerian to Chaldean Babylonia. The Romans confirmed the 1% per month ratio, 12.68% pa, as
the upper legal limit though most often 4% was the operative term. Slowly as grain hybridization
took hold and better farming practices were learned the yield would become the current 21 to one
ratio of harvest from grain sown, and still improving. Just this harvest year the world record for
wheat yield was shattered2
by 5% more (@ 16.5t/ha) than set last year half way around the
world.
"there is risk in what you do not or cannot know." Thomas Tooke, 1844
"for the value of money is also perishable." Jean-Baptiste Say , 1803

“
The deeper part of this story is we invested in wheat in our fundamental ambition and hope of
return greater than our effort, acquiring an income. Intrinsically we believe there should be more
than a zero-sum game to build our lives. Many times the zero is very real, but not generally. We
know empirically ecology produces renewal of its bounty, so long as we do not kill that
messenger. We need to believe and uphold Pandora’s hope we grew up on. Hope is often our
inspiration. But we know success depends on hard work to achieve our hopes.
Achieving more than zero-sum is how we can reward those who believe with us in our hope and
then help us for their fair shared interest in helping our hope of success be achieved. Their grain,
treasure or helping hand bets on and leverages our efforts. Zero-sum thinking implies there is a
fixed supply, no innovation, no advantage, no increase and no inflation but our species has bet its
very survival on our social collaboration to ensure there is more possible than we can achieve on
our own. That is the underlying winning argument in creating the legal framework for the limited
(public) liability corporation after nearly a century of prior debate.
That we can achieve more by acting together in allocating scarce resources is the foundation of
capitalism, stripped of political conflations. This notion fundamentally defines us, as we are
finding that such altruism is part of even our biology and brain development. Just, “beware the
thieving cousins,” says Edmund Wilson, which restates ‘moral hazard’ as Adam Smith’s saw it
in the Agency Problem, your agent feasting to your famine. Uriah Heap is amygdaline.
Ultimately in permission to create the fictitious person of the modern corporation we rely our
rule of law is sufficient to the task of our protection from the smirking Moot Turtle’s,
Adumbrations, Subductions, Mystifications and Derisions claiming implausible denials as facts,
while the goods have disappeared. Weakening those rules efficacy is constant, parlous attack on
underwriting social liability for the avatar corporation rogue pinching the harvest.
So, whenever we succeed, gain more than our needs, we face that frontier. How do we keep our
feast and prepare for time of famine. We risk and invest, like our neighbour with seed grain
hopeful of return, and pray with our debtor “be there no cankered grain, no locusts,” fairly
sharing in the outcome as social norms governed interest tithes and tribute paid.
Our society has evolved beyond biblical norms. Greater return than the ongoing erosion of taxes
and inflation over time would be good, or we lose the value of our treasure. Now as in ancient
times an “investment” whether it be in seeds, bonds, equities or other properties, is just and only
the “purchase of risk” in exchange for our treasure. The risk is that we might not get our money
back when we need it or that we might not get a rate of return as income that exceeds the rate of
inflation and taxes which is just another way of wittling our treasure. Inflation has averaged 4.5%
over my adult life, which even long term bonds do not provide, only half that rate right now3
.
The financial industry based in its agents’ strenuous learning of economics’ more arcane
conventions provides the most common and prevailing investment strategies that broadcast
trillions of our treasured dollars in pension plans, endowment and trust funds, bonds, loans,

“
mortgages, debt swaps and other instruments all of which are in the business of attaching their
assumptions of risk to your treasure. All of which conventions of risk do not work in service to
us investors, none of it does. The reality is these epicyclicals of investment dogma are dominated
by the Euclidian arithmetic on two dimensional pairings of balance sheet entries, none of which
embraces the dynamics of the business process in stasis supposed captured there. Economics is
rife with the problem of isolated variable pairs standing for the whole and asserting the model is
an achievement of science for its semblance. Like is not as.
Not all businesses are alike, of the same class even. There are known differences or distinctions
of their business, and some forms of business enterprise are very uncommon, even unique.
However they do all process credit and debt doing so each as a time dependent variable and in
various forms; know what they own, as distinct from what they owe and what is owed to them;
what is used, wearing and new infrastructure to its process.
Under GAAP rules of accounting there are discretional variations of application in statements of
income and balance sheets. Has such a number of common variables active concurrently with
more or less vigour at any interval of the business in process4
be represented with robust
sufficiency in a single slice of time as a quarter end report for legal required public scrutiny? Can
there be? Not without mathematics up to the task, even isolated bits of planar calculus mashed
together cannot usefully describe.
The mathematics of 2 dimensions is millennia long and infinitesimals leading to calculus now
more than 400 years. The mathematics of Non-Euclidian 3-dimensions was finally available just
150 years ago (before Walras brought arithmetic into economics). On that base, Minkowski
fourth-dimensional (Einstein later used to formulize spacetime) and n-dimensional quickly
developed but these Non-Euclidian geometries do not appear anywhere in economics with its
array of variables endlessly discussed and gossiped over, breaking Wittgenstein’s rule “you
cannot discuss what you do not know.” The derivation of Risk Price from relevant balance sheet
data relies on these Non-Euclidian n-dimensional geometries. Those parameters that formally
and formerly appear in isolation are now understood as a process5
again connected in their robust
relationship that exists in the firm and between its trading connections, all busy ‘making money.’
We engage markets knowing the “price of risk6
” which very measurably is the best deal for
buyer and seller alike. Given the marked behaviour of the market for trading above Risk Price
realizes a free good actually serving the needs of investors for capital safety, liquidity and a
hopeful but not necessarily guaranteed return above the rate of inflation.
Our method relies on a business debt structure ratio analysis that does very well proximate what
is normally regarded intangible, goodwill, mostly. The result is a behavioural risk metric that
allows us to partition all equities in the market with results obtained by investing only in those
firms whose stock price is greater than our Risk Price. It also gives us a new means of managing
risk with ‘likeables’ proven 2 of 3 gain tendency is a batting average of 667 over home plate.

“
Stoploss is the least value of the portfolio and boundary of puts with the upper deviation game
calls in collaring options optimizing further gain with immediate cash added to dividends earned.
Our positions are usually long, holding times measured in months and even years with the Risk
Price guiding our decisions on collaring options in the face of market price volatility. Profit
taking is encouraged using some of the holdings intending to achieve a zero cost for the balance
and/or to buy puts to protect the price when cautious of high ratio of stock price/risk price.
That is very different from the famine of disjoint data conventions driving their mechanics of
value, volatility, co-volatility and diversification, for the sake of “diversification” by their
numbers. We don’t hope to change that. Their convictions are theirs to commit to and us to feast
on. After all, it would be disingenuous use of our view not to exploit the usual suspects selling
risk they actually know little to nothing about because without Risk Price they have no basis for
determining the odds of their gaming ill-informed bets they stake with others money. Their self-
regulated industrial purpose appears7
to enrich themselves for having sold the unknown and most
likely parlous risk to one client who now needs cash, to you, seeking to buy an income. Risk
Price provides the leverage point to keep your lunch and take some gains for the long term.
What proof does convention offer? Yup, that is an oxymoron. Convention is flat-landers in a
global reality. Fund managers are just used equities traders with pretense, for unworthy fee-
taking so that none is ever left for you. Do not give those Artful Dodgers your wallet.
Financial industry advisors are schooled in financial products to
exploit small investor savings for their taking fees. They are not
changing their tools or sharpening those they have. They took the
“regular courses” required by a self-regulated industry driven only
their creative sales fiction. Seemingly, certification requires
intensive study in the key tools of Rhetoric - Adumbration,
Subterfusion, Mystification and Derogation. Humm, that sounds
familiar.
“I only took the regular courses,” sighed the Mock Turtle.
“What was that?” inquired Alice.
“Reeling and Writhing, of course, to begin with, and then the
different branches of Arithmetic – Ambition, Distraction, Uglification, and Derision.”
Stocks that are priced above the Risk Price are ‘likeables’ an economic free good they say
should not exist. We prove these ‘likeables’ do, good information to know. The Risk Price is
new data and is not correlated to the stock price other than through the price-making investor
behaviour with respect to the company’s deemed worth, now; projections of future earnings
worth are of little value, in reality, providing no reliable information of the future stock price.

“
We aver that “risk aversion” is the only reason that investors can succeed over the long term.
Without Risk Price they do not know whether up is down or down is up. Where you are you
need to know. Risk Price is the leverage point investors need. In order to manage risk, one needs
to know the price of risk, the Risk Price, “the least stock price at which a company is likeable”.
The Risk Price, as we use it, is just a calculation, but the calculation can be shown:
(1) to be a risk-adjusted price of Sharpe-Markowitz type so that stock prices above the price
of risk identify a free good in an economic sense, and also
(2) to have the properties that are required of “the least stock price at which a company is
likeable” where the latter can be shown to exist by thinking about how the stock price is
affected when the company itself deals in or from treasury stock
Equities that tend to hold their value and gain are better than cash. We like Capital Safety and
Liquidity because we have proven our risk averse method works, consistently obtaining both
low risk and AlphaSmartTM
high gain. Our Risk Price is what investors must know to defend
their capital. Market behaviour prefers the “likeables” trading above Risk Price and bids up their
price. Our method is proven. Because we can, you can8
.
In our Modal Geometry9
theory of the firm we make only two assumptions, clearly as follows:
1. there is a balance sheet of the firm (that the rule of law governs its information is
possibly weak assumption but at an accuracy to at least the modest degree accountants
are prepared to be responsible for); and,
2. the firm will vigorously negotiate, “what it owns” (in order to stay in business “what is
owed to it” with “what it owes” and vice versa, to make the best of what it has, that is in
its trading connections).
The Modal Geometry theory of the firm has unfolded by rigourous observation of corporate
ledgers relation to balance sheets as business process10
adds value with its trading connections.
That is aided with logic, epistemology, and some powerful mathematics. You have proof in our
ABC-ZTM
Solo50K-
BlackSwanTradingTM
TaxCharityTM
and BookBuilderTM
public
portfolios performances. Because we can, we do.
Our reasons for having any equity in our portfolios are clear, concise and consistent. The equities
we hold are “likeables” tending to gain for the long term. We do not make stock prices but can
reasonably respond to stock price movements, by our knowing the price of risk, the downside,
and buying and holding accordingly, calling or putting as that becomes necessary to secure gains.
That is theory we have put into policy obtaining 26% IRR average. This we show proof positive,
in our public portfolios continued gain.
Know What You Have. Have What You Know

“
Of course we require a fee for doing that. Mail us for our help.
Hans Goetze,
Architypes Inc and StockTakers Limited
Head Office
76 Midridge Close SE
Calgary, AB
T2X 1G1
7 Balsam Avenue
Toronto, ON
M4E 3B3
351 Chemin Boulanger
Sutton, PQ
J0E 2K0
450 538-1270
1
http://www.slideshare.net/HansGoetze/the-grail-and-the-goat-portfolios
2
http://www.fwi.co.uk/arable/wheat-yield-world-record-shattered-in-lincolnshire.htm
3
http://www.bankofcanada.ca/rates/interest-rates/lookup-bond-yields/
4
http://riskwerk.com/2014/08/17/pi-the-process-in-the-beginning/
5
http://riskwerk.com/2014/03/15/pi-the-process/
6
http://riskwerk.com/2012/08/26/the-price-of-risk/
7
http://www.slideshare.net/HansGoetze/judge-by-company-they-keep
8
http://www.slideshare.net/HansGoetze/the-grail-and-the-goat-portfolios
9
“The Modal Geometry of the Firm and the Balance Sheet Worth of the Trading Connections”, 2006,
10
http://riskwerk.com/2014/03/15/pi-the-process/

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