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KAOBOY MUSINGS and its associated podcast KAOS THEORY focus on the intersection of Financial Markets, Macroeconomics and Geopolitics. I've spent 30+ years as a trader/hedge fund manager and now manage money for my family office across many asset classes.

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Michael Kao

Jul 12, 2023

1/29/21 - Re: Investing-Meme Stocks & The Importance of Shorting.

Re: Investing-Meme Stocks & The Importance of Shorting.

Michael Kao

January 30, 2021

Re: Investing-Meme Stocks & The Importance of Shorting.

When short- selling was banned in 2008, bona fide hedgers could no longer short equity against their portfolios. These portfolios could be comprised of distressed bonds, convertibles, options, or other equities. Inability to hedge then forces long liquidation of LESS LIQUID assets, like credit.

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3/2/21 - Re: Investing-Deep Dive on SPACS.

Re: Investing-Deep Dive on SPACS.

Michael Kao

March 3, 2021

I’ll label the current wave “SPAC Mania 2.0” and compare it to “SPAC Mania 1.0” (roughly the period of 2005-2010). This thread encapsulates some of my findings/observations. Thoughts welcome. First off, SPAC Mania 2.0 is much bigger. 2020 marked first year that SPAC IPOs meaningfully outpaced traditional IPOs, raising $83B. 2021 trends so far point to an…

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7/1/21 - Re: Investing-Exit Strategies/When To HODL.

Re: Investing-Exit Strategies/When To HODL.

Michael Kao

July 2, 2021

Re: Investing-Exit Strategies/When To HODL.

This thread addresses 4 categories of Exit Strategies and when it’s appropriate to HODL. The 4 Exit Strategies are: 1) Replicating Portfolio, 2) Event-Driven, 3) “Greater Fool” Backed By Fundamentals, 4) “Greater Fool” Backed Only By Technicals. Let me explain.

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10/6/21 - Re: Investing-Lessons From Bernard Baruch.

Re: Investing-Lessons From Bernard Baruch.

Michael Kao

October 7, 2021

Re: Investing-Lessons From Bernard Baruch.

This thread focuses on Bernard Baruch (1870-1965), an extraordinarily successful speculator who was a contemporary of the legendary Jesse Livermore. Analyzing Losses: 1) Have new conditions arisen to require change? 2) Have I lost sight of the main thesis and getting lost in distractions? 3) What have I learned to avoid making the same mistakes?

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2/22/23 - Re: Investing Lessons - A Compilation.

Re: Investing Lessons - A Compilation.

Michael Kao

Jun 6

Many of these Musings have previously appeared as individual Musings on Twitter in the past, but I have cleaned them up and collated them here and plan on keeping this list refreshed. I find that re-reading them periodically helps my own process, so I have collated them here. Please feel free to bookmark this link and check back every once in a while fo…

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3/26/23 - Re: Inflation/USD/USTs – “Risk-Free” Riskiness & Austrian Pipe Dreams.

Re: Inflation/USD/USTs – “Risk-Free” Riskiness & Austrian Pipe Dreams.

Michael Kao

Mar 26

Re: Inflation/USD/USTs – “Risk-Free” Riskiness & Austrian Pipe Dreams.

In recent weeks, I have read many incorrect and misleading takes on Twitter by folks who are decrying recent interest rate volatility as some kind of “false advertising” of the term “Risk-Free” when it comes to US Treasury securities (USTs). These takes go something like this:

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6/7/23 - Re: Oil/Investing - Lessons From The Oil Patch / Will Atlas Shrug?

Re: Oil/Investing - Lessons From The Oil Patch / Will Atlas Shrug?

Michael Kao

Jun 8

Re: Oil/Investing - Lessons From The Oil Patch / Will Atlas Shrug?

Investing in cyclical industries, especially Commodity Cyclicals, can be a very tricky business. You can get the Micro-fundamentals right but get killed by Macroeconomic Black Swans. Conversely, you can get the Macro direction right but still get blindsided by Micro issues at the Company/Regional level and/or unexpected Geopolitical developments.

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7/15/23 - Re: Investing - Bottoms Up (Hic!) Macro / Different Styles For Different Situations / Getting Paid To Wait.

Re: Investing - Bottoms Up (Hic!) Macro / Different Styles For Different Situations / Getting Paid To Wait.

Michael Kao

Jul 15

Re: Investing - Bottoms Up (Hic!) Macro / Different Styles For Different Situations / Getting Paid To Wait.

One of my pet peeves is when people use the misnomer “Bottoms Up Investing” when they really mean “Bottom-Up Investing”; the former connotes investing after imbibing copious amounts of alcohol, and the latter connotes Fundamental Analysis! That said, “Bottoms Up Investing” perfectly illustrates the Irrationally Inebriant Macro environment thus far in 20…

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