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Tuesday, April 5, 2011

Fwd: Birthdays and Investment Risk - John Mauldin's Outside the Box E-Letter

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Subject: Birthdays and Investment Risk - John Mauldin's Outside the Box E-Letter
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Volume 7 - Issue 14
April 4, 2011

Birthdays and Investment Risk

By Niels Jensen

"Tail risk (the risk of large losses) is dramatically underestimated by many investors and the tools we have available to manage such risks are hopelessly inadequate. Financial theory which is taught at business schools and universities all over the world is plainly wrong."

This week we turn to my friend Niels Jensen of Absolute Return Partners in London for our Outside the Box offering, in which he looks at tail risk, Modern Portfolio Theory, and a risk he identifies as Birthday Risk. It is a lively and easy read, which is also designed to make you think about your basic investment principles.

Your loving NYC weather today analyst,

John Mauldin, Editor
Outside the Box

Confessions of an Investor

By Niels Jensen
Absolute Return Partners

"When models turn on, brains turn off."
–Til Schulman

I have been thinking a great deal about risk over the past couple of years. The depth of the financial crisis took many of us by surprise. I made mistakes. I am sure you made mistakes. In fact, the whole industry made mistakes, from which we should all learn. Whether we will is another story, but we should try.

Making those mistakes is all the more frustrating because I was aware of the dangers but, like most others, underestimated the magnitude. In fact I wrote about them – see for example the October 2007 Absolute Return Letter ( Wagging the Fat Tail).

Now, let's distinguish between trivial risk (say, the risk of the stock market going down 5% tomorrow) and real risk - the sort of risk that can wipe you out. The geeks call it tail risk, and James Montier provided an excellent definition of it in his recent paper, The Seven Immutable Laws of Investing, where he had the following to say:

"Risk is the permanent loss of capital, never a number. In essence, and regrettably, the obsession with the quantification of risk (beta, standard deviation, VaR) has replaced a more fundamental, intuitive, and important approach to the subject. Risk clearly isn't a number. It is a multifaceted concept, and it is foolhardy to try to reduce it to a single figure."

Following James' line of thinking, let me provide a timely example of the complex nature of tail risk:

The Japanese disaster

Contrary to common belief, the disaster at the Fukushima Daiichi nuclear power plant was not a direct result of the 9.0 earthquake which hit Northeastern Japan on 11 March. In fact, all 16 reactors in the earthquake zone, including the six at the Fukushima plant, shut down within two minutes of the quake, as they were designed to do. But Fukushima is a relatively old nuclear facility – also known as second generation - which requires continuous power supply to provide cooling (the newer third generation reactors are designed with a self-cooling system which doesn't require uninterrupted power).

When the quake devastated the area around Fukushima, and the primary power supply was cut off, the diesel generators took over as planned, and the cooling continued. But then came the tsunami. Around the Fukushima plant was a protection wall designed to withstand a 5.2 metre tsunami, as the area is prone to tsunamis. However, this particular one was the mother of all tsunamis. When a 14 metre high wall of water, mud and debris hit the nuclear facility, the diesel generators were wiped out as well. But the story doesn't end there, because Fukushima had a second line of defence – batteries which could keep the cooling running for another nine hours, supposedly enough to re-establish the power lines to the facility. However, the devastation around the area was so immense that the nine hours proved hopelessly inadequate. The rest is history, as they say.

Other tail risk events

I have included this sad tale in order to put the concept of risk into perspective. You cannot quantify a risk factor such as this one because, if you try to do so, the prevailing models will tell you that this should never happen. Take the October 1987 crash on NYSE. It was supposedly a 21.6 standard deviation (SD) event. 21.6 SD events happen once every 44*10⁹⁹ years according to the mathematicians amongst my friends¹(10⁹⁶ is called sexdecillion, but I am not even sure if there is a name for 10⁹⁹). The universe is 'only' about 13.7*10⁹ years old (that is 13.7 billion years). Put differently, 19 October 1987 should quite simply never have happened. But it did. (My source is Cuno Pümpin, a retired professor of Economics at St. Gallen University.)

So did the Asian currency crisis which resulted in massive losses in October 1997, which statistically should only have happened once every 3 billion years or so. By comparison, our planet is 'only' about 2 billion years old. And the LTCM which created mayhem in August 1998 was apparently a once every 10 sextillion years (10²¹) event. And I could go on and on. The models we use to quantify risk are hopelessly inadequate to deal with tail risk for the simple reason that stock market returns do not follow the pattern assumed by the models (a normal distribution).

Black swans galore

The smart guys at Welton Investment Corporation have studied the phenomenon of tail risk in depth and kindly allowed me to re-produce the table below which sums up the challenge facing investors. In short, severe losses (defined as 20% or more) happen about 5 times more frequently than estimated by the models we (well, most of us) use.

Table 1: Severe Losses Occur More Frequently than Expected

Source: Welton Investment Corporation ( www.welton.com)

Why your birthday matters

It is not only tail risk, though, which brings an element of unpredictability into the equation and effectively undermines Modern Portfolio Theory (MPT), which is the foundation of the majority of applied risk management today (more about MPT later). One of the least understood, and potentially largest, risk factors is what I usually call birthday risk. Effectively, your birthday determines your ability to retire in relative prosperity. Is that fair? No, but it is the reality. Woody Brock, our economic adviser, phrases it the following way:

"I would happily live with vast short‐term market volatility in exchange for certainty about the level of my wealth and future income at that date when I plan to retire. Wouldn't you? Wouldn't most people?"

And Woody goes on:

"But if this is true, then why does most contemporary "risk analysis" completely bypass this perspective and focus on shorter term risk?"

To illustrate the point, let me share with you some charts produced by Woody and his team at Strategic Economic Decisions. Most people have the vast majority of their assets tied up in property, stocks or bonds, or a combination of the three. It is also a fact that most people do most of their savings over a 15-20 year period – from their mid to late 40s until their early to mid 60s, the reason being that most of us are net spenders through our education and until the point in time when our children move away from home. It is therefore extremely important how those 3 asset classes perform over that 15-20 year period. Now, look at the charts below (all numbers are annual returns, and the asset wealth column represents a weighted average of the other 3 columns):

Chart 1a: Growth in US Asset Wealth, 1952-1965

Chart 1b: Growth in US Asset Wealth, 1966-1980

Chart 1c: Growth in US Asset Wealth, 1981-2000

Source: Strategic Economic Decisions ( www.sedinc.com)

When you look at those charts, wouldn't you just love to have retired in 2000? A solid 7.9% per year for the preceding 19 years turned $1 million in 1981 into $4.2 million in 2000, whereas those poor souls who retired in 1980 managed to turn $1 million into no more than $1.1 million during the previous 14 year period. And those who are retiring today aren't much better off following an extremely volatile decade. This is effectively a birthday lottery but, as we shall see later, there are things you can do to address the problem.

The problems with MPT

However, before we go there, I would like to spend a moment on MPT, as I believe it is important to understand the shortcomings of the prevailing approach to investment and risk management. (Much of the following is inspired by Woody Brock.) Let's take a closer look at three of the most important assumptions behind MPT(there are many more assumptions behind Modern Portfolio Theory. Wikipedia is a good place to start should you wish to read more about it):

1. Risk-free investments exist and every rational investor invests at least some of his savings in such assets, which pay a risk-free rate of return.

2. Returns are independently and identically-distributed random variables (returns are trendless and follow a normal distribution, in plain English).

3. Investors can establish objective and accurate forecasts of future returns by observing historical return patterns. (Strictly speaking, this assumption was relaxed by Fischer Black in 1972 when he demonstrated that MPT doesn't require the presence of a risk-free asset; an asset with a beta of zero to the market would suffice.)

Well, if these assumptions are meant to stand the test of time, then good old Markowitz (the father of MPT) is in trouble. Truth be told, none of the three stand up to closer scrutiny. The concept of risk-free investing no longer exists, post 2008. Banks are giant hedge funds which cannot be trusted and even government bonds look dicey in today's world. Secondly, returns are clearly not random. If you have any doubts, just look at how the trend-following managed futures funds make their money. Thirdly, from 26 years of investment experience, I can testify to the fact that historical returns provide little or no guidance as to the direction of future returns.

A new approach is required.

So what does all of this mean? First of all it means that universities and business schools all over the world should clear up their acts. Two generations of so-called financial experts have been indoctrinated to believe that MPT is how you should approach the management of investments and risk whereas, in reality, nothing could be further from the truth. It also means that investors should kick some old habits and re-think how they do their portfolio construction. Specifically, it means that (and I paraphrase Woody Brock):

i. the notion of the "market portfolio" being an appropriate performance benchmark should be discarded;

ii. there is in reality no meaningful distinction between strategic and tactical asset allocation - the difference is illusory;

iii. investors should once and for all reject the notion that there is an optimal portfolio for each investor from which he or she should only deviate "tactically" in the shorter‐run;

iv. market‐timing deserves more credit than it is given;

v. MPT is a straitjacket preventing investors from rotating between different classes of risky assets (with vastly different risk/return profiles) as market conditions change.

Please note that this does not imply that asset allocation is irrelevant. Far from it. However, it does mean that a bespoke approach to asset allocation, where individual circumstances drive portfolio construction, is likely to be superior to a more generic approach based on a strategic core and a tactical overlay.

This is nevertheless serious stuff. Effectively, Woody Brock is advocating a regime change. Throw away the generally accepted approach of two generations of investment 'experts' and start again, is Woody's recommendation. As a practitioner, I certainly recognise the limitations of MPT and I agree that, in the wrong hands, it can be a dangerous tool, but there is also a discipline embedded in MPT which carries a great deal of value. And, in fairness to Woody, he does in fact agree that you can take the best from MPT and mix it with a good dose of 'common sense' and actually end up with a pretty robust investment methodology.

A solution to the problem

Here is what I would do in terms of applying his thinking into a modern day investment approach:

1. Do what you do best. Some investors are made for short-term trading. Others are much more suited for long-term investing (like me). Don't be shy to utilize whatever edge you may have. MPT suggests that markets are efficient. Nothing could be further from the truth. If you have spent your entire career in the medical device industry, the chances are that you understand this industry better than most. Use it when managing your own assets. Insider trading is illegal; utilizing a life time of experience is not.

2. Take advantage of mean reversion. Mean reversion is one of the most powerful mechanisms in the world of investments. At the highest of levels, wealth has a long term 'equilibrium' value of about 3.5 times GDP. As recently as 2007, wealth was well above the long term equilibrium value and signalled overvaluation in many asset classes. But be careful with the timing aspect of mean reversion. The fact that an asset class is over- or undervalued relative to its long term average tells you nothing in terms of when the trend will reverse. A good rule of thumb is to buy into asset classes when they are at least a couple of standard deviations below their mean value.

3. Be cognizant of herding. We are all guilty of keeping at least one eye on other investors, and we are certainly guilty of letting it influence our own investment decisions. This is how investment trends become investment bubbles and fortunes are wiped out. Herding is relatively easy to spot despite the fact that former Fed chairman Alan Greenspan argued otherwise – probably because it was a convenient argument at the time. But herding is also subject to the greater fool theory. You can make a lot of money investing in fundamentally unsound assets, as long as you can find a greater fool to whom you can sell it at a higher price. It works fine but only to a point.

4. Think outside-the-box. All those millions of baby boomers all over the western world who will retire in the next 10-15 years have been told by the MPT-trained financial advisers that they need to lighten up on equities and fill their portfolios with bonds, because they need the income to live on in old age. STOP! Who says that bonds can't be riskier investments than equities? When circumstances change, you should change your investment approach accordingly and not rely on historical norms. Given the state of fiscal affairs in Europe and North America, it does not seem unreasonable to suggest that circumstances have indeed changed.

5. Bring non-correlated asset classes into the frame. One should consider having a core allocation to non-correlated assets. Traditionally, many non-correlated asset classes have not met the liquidity terms required by the majority of investors (see below on liquid versus illiquid investments), but there are exceptions, the most obvious one being managed futures. The asset class proved its worth in 2008 with managed futures funds typically up in the range of 20-30% that year.

6. Take advantage of investor constraints and biases. The classic, but by no means only, example is the outsized impact a downgrade to below investment grade (i.e. a credit rating below BBB) may have on corporate bonds, as some institutional investors are not permitted to own high yield bonds and are thus forced to sell regardless of price when the downgrade takes place.

My favourite example right now is illiquid as opposed to liquid investments. I strongly believe that less liquid investments will outperform more liquid ones over the next few years for the simple reason that the less liquid ones are struggling to catch the attention of investors who, still smarting from the deep wounds inflicted in 200809, stay clear of anything that is not instantly liquid. This has had the effect of pushing the illiquidity premium (i.e. the extra return you can expect to earn by investing in an illiquid as opposed to a liquid instrument) to levels we haven't seen for years.

John F. Mauldin
johnmauldin@investorsinsight.com

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Sunday, April 3, 2011

Fwd: The Confidence Game - John Mauldin's Outside the Box E-Letter

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Date: Mon, Mar 28, 2011 at 7:57 PM
Subject: The Confidence Game - John Mauldin's Outside the Box E-Letter
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Volume 7 - Issue 13
March 28, 2011

The Confidence Game

By Grant Williams

This week's Outside the Box is a little different. It's a stroll down history lane and thoughts on confidence, from Grant Williams, in the form of an introduction to his letter Things that Make You Go Hmmm. Grant currently resides in Singapore, and I find him a very thoughtful read and a wonderful resource. Sit back, relax, and enjoy.

And for those interested, I think I am scheduled to be on Marketplace on your local NPR Radio station on Tuesday, which is today for most readers. Good to be back home for a few days! And now, let's think about confidence in a little different way.

Your Congress is making me less confident analyst,

John Mauldin, Editor
Outside the Box

The Confidence Game

"O, swear not by the moon, the fickle moon, the inconstant moon, that monthly changes in her circle orb, Lest that thy love prove likewise variable."

– william shakespeare

Doyle Lonnegan: "Your boss is quite a card player, Mr. Kelly; how does he do it?"

Johnny Hooker: "He cheats."

– The Sting

"In today's regulatory environment, it's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time"

– Bernard Madoff

On May 12th 1849, Thomas McDonald was walking along William Street in New York City when he was hailed by a 'man of genteel appearance' who proceeded to strike up a conversation with him. After a brief exchange between the two the friendly stranger turned to McDonald and asked matter-of-factly "have you confidence in me to trust me with your watch until tomorrow?"

Despite being unable to place the stranger, the familiarity of the simple request was such that McDonald presumed the man to be an old acquaintance not recollected and happily handed over his $110 pocket watch.

The dapper stranger strolled off in good spirits, never to be seen again - but for a strange quirk of fate.

On July 7th of the same year, McDonald was walking along Liberty Street (sans timepiece) when he happened upon the stranger once again. Recognizing him as the same man who had relieved him of his watch weeks earlier, McDonald hailed Officer Swayse of the Third Ward who just happened to be nearby and, after a short chase and an even shorter struggle, the man had his hands bound and was marched to the nearest police station.

Upon having the thief brought before him, Justice McGrath recognized the felon as one William Thompson, an old offender and 'graduate of the college of Sing Sing' and remanded him to prison for further hearing.

It transpired that Thompson had been wandering the streets of New York City for several months and using the same method to relieve trusting strangers of a significant number of valuable watches. In that time, he had become known to the constabulary as well as a headline-hungry press as 'The Confidence Man'.

William Thompson, while by no means the world's first trickster, but he happened to time his escapades with the rise of the print media and so, consequently, with the New York Herald looking to sell more newspapers, both a nickname and an anti-hero were born.

Through the years, the term 'Confidence Trick' has been shortened to 'con' (also known as a bunko, flim-flam, gaffle, grift, hustle, scam, scheme, swindle or bamboozle) and has become a catch-all for any ruse designed to dupe someone into believing something that isn't true in order to relieve them of something of value.

Very rarely, when hearing the word 'con' these days, do we immediately associate it with the longer word from which it originates. A 'con' has immediate connotations of the negative kind (the most high-profile in recent memory perhaps being that perpetrated by inmate 61727-054 of Butner Prison, North Carolina: a Mr. Bernard Lawrence Madoff), whereas the word from which it derives is generally used to convey a sense of the positive.

And yet...

Every month, all around the world, financial mavens scrutinize the collective confidence as a means to interpret both the mood of the populace and as a predictive tool for the future.

The various Consumer Confidence numbers released for economies around the globe are used as a barometer by analysts and investors to try and determine which direction and to what extent markets will move. Will declining confidence affect consumer spending? Will it lead to reduced investment? Just what DOES the prevailing mood of the public at large tell us?

Of course, the fact that these figures are distributed monthly allied with the ability of the average human being to change his (or her... I definitely do NOT want to exclude the fairer sex from THIS example) mind many times during an extended period such as that, makes them a somewhat unreliable indicator - or at least, one subject to sudden reversals based upon external factors.

This past week, we have seen the release of a number of confidence figures throughout the world and a perusal of those numbers makes for an interesting exercise:

First up, the United States:

(March 25): Consumer sentiment in the U.S. dropped more than forecast in March, damped by higher gasoline costs and the effects of Japan's natural disaster.

The Thomson Reuters/University of Michigan final index of consumer sentiment decreased to 67.5, the lowest level since November 2009, from 77.5 in February, the group said today. The median forecast of 67 economists surveyed by Bloomberg News projected a reading of 68.

Then to Korea:

(March 25): South Korean consumer confidence fell to the lowest level in almost two years, damped by Japan's strongest earthquake and political unrest in the Middle East. Retailers' stocks dropped in Seoul trading.

The sentiment index declined to 98 in March from 105 in February, the fourth monthly drop...

"Consumer confidence worsened so sharply, boding ill for private consumption and also economic growth," said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. "If oil prices stay above $100 a barrel for another month, sentiment will deteriorate further, prompting the central bank to pause interest-rate increases next month."

How about the UK?:

(March 18): U.K. consumer confidence fell to a record low in February as Britons grew more pessimistic about the sustainability of the economic recovery and the outlook for jobs, Nationwide Building Society said.

An index of sentiment dropped 10 points to 38, the lowest since records began in 2004... A measure of whether now is a good time to spend dropped 18 points to 52, also the lowest since the survey began.

A gauge of consumers' future expectations fell 14 points to 50 and an index of their view of the present situation slipped 3 points to 20, the lowest in 18 months, the report showed.

"High inflation has led many to expect interest rate rises by the summer, which may in turn have fanned concerns about mounting pressure on household budgets," Gardner said. He sees rates on hold "until the back end of 2011."

France?:

(March 25):French consumer confidence fell to an eight-month low in March as surging energy costs sapped spending power and President Nicolas Sarkozy readied a new wealth tax.

An index of sentiment fell to 83 from 85 in February, national statistics office Insee said today in an e-mailed statement. That was the lowest reading since July.

With oil prices up more than 40 percent in a year, French motorists are paying more for gasoline while the government is planning electricity-price increases for later this year. That's slashing spending power at a time when joblessness remains stuck near a seven-year high.

So it seems fair to say that the average consumer is not necessarily feeling quite as confident about any 'recovery' as governments around the world would like them to. Soothing talk of improvements which will lead to the return of the good times can be heard from Finance Ministers, Prime Ministers, Presidents and Kings across the globe; but why is it so important to watch these confidence figures? Surely, if things ARE, in fact, getting better then the confidence will return organically?

With interest rates at all-time lows, housing prices in many places (though definitely NOT here in Singapore) significantly lower (and by extension, affordable) than they were a few short years ago, the unemployment situation stabilizing and the meltdown of the financial system averted by a courageous 'Band of Brothers', what the hell is everybody so worried about?

A look at the University of Michigan Consumer Expectations Index paints another worrying picture as it nose-dived last week to levels below those seen when the recession was still uppermost in people's minds back in the dark days of 2009. The drop was the 5th largest on record.

clip_image002

SOURCE: ZEROHEDGE/BLOOMBERG

As a sidebar, it's interesting to note that the first month after the recession officially began back in 2008 saw a positive jump in expectations, while the first month after its end saw the opposite reaction. Fickle things, humans.

Now, it seems quite reasonable to assume that, ultimately, at its base, this is all about confidence. If people are confident about their own prospects as well as those of the economy as a whole, they will be happier to spend their money. If they spend that money then other people will make more 'stuff' for them to spend it on which, in turn will put more money in the pockets of those making that 'stuff' who will then go out and buy 'stuff of their own. Everybody ends up with a lot of 'stuff' which makes everybody happy. Stuff equals happiness. There. Economics for Dummies.

At this point in the proceedings, a quick trip back to the aftermath of 9/11 and an article in the National Post (Canada) proves quite educational:

(September 28, 2001): Western leaders, worried about the possibility of a recession fuelled by terrorist attacks in the United States, are urging their citizens to spend money, take vacations and buy new cars and homes.

Jean Chrétien, George Bush and Tony Blair yesterday all called on consumers not to be spooked by the cataclysmic attacks of Sept. 11.

Mr. Bush urged Americans to "get on the airlines, get about the business of America" as he announced improved security measures on commercial flights.

Mr. Blair used a news conference at 10 Downing St. to appeal to the British public to return to everyday life, including their usual spending habits, to fend off recession.

"People in this country ask what should they do at a time like this," Mr. Blair said. "The answer is that they should go about their daily lives: to work, to live, to travel and to shop -- to do things in the same way as they did before Sept. 11."

And Mr. Chrétien urged Canadians to face down terrorists with their wallets...

Mr. Chrétien observed that interest rates have been cut to the lowest level in years, "so it is time to go out and get a mortgage, to buy a home, to buy a car."

Some American officials are even calling a trip to the mall an act of patriotism as the United States tries to rebound and rebuild.

Rudolph Giuliani, the Mayor of New York, has said that his battered city needs "the best shoppers in the world" to return to restaurants, Broadway shows and shops.

And local officials in Florida have declared this weekend "Freedom Weekend," a time for people to do their patriotic duty and spend money.

"Go out and contribute to the economy," Alex Penelas, the Miami-Dade County Mayor, said at a news conference yesterday. "As my wife said, it has never been more patriotic to go shopping."

The problem comes when, despite plenty of talk about things getting better from those elected to make us all happy, despite us being told that disaster has been averted, that unemployment lines are getting shorter and that things are definitely on the up, confidence wanes and people just stop believing. When that happens, the trouble begins.

Just yesterday, London saw the biggest union-organized protest in 20 years as over 250,000 peaceful protesters marched from Westminster to Hyde Park to demonstrate AGAINST austerity measures being enacted by the coalition British government. The march was, perhaps predictably, hijacked by youthful 'anarchists' who had clearly decided either that Top Shop was the number one villain in the corporate world, or this was a tremendous excuse to don a hood and a bandana and have a day out in London smashing things up - I know what I think to be the truth of the matter.

clip_image004

But I digress.

The pictures of violence and confrontation will no doubt garner the headlines around the world, but to me, this picture (left) is far more illustrative of the problems facing not just the UK, but the world at large.

Here we have 250,000 people, all of whom are seeing their standard of living steadily reduced as first recession, then inflation (yes, inflation - not 'core' inflation but man-in-the-street inflation: 'Cor!' inflation if you will) and now austerity have swept over them in waves.

These people want things fixed. They want petrol and food prices lower, unemployment queues shorter, wages higher and, if not Hoover's 'chicken in every pot' then at least a Hoover and some nuggets in every freezer.

The problem is - as the placards scream - they want all this with 'No Cuts'.

clip_image006

As I have said from the outset of the ongoing efforts to fix the problems facing the world; austerity is a dish best served to somebody else, and we are now seeing that writ large in countries all across the world. Austerity doesn't HAVE to be about cuts in services or public sector wages. It simply means extreme economy and, if that means not being able to afford food then it is just as likely to result in violence and uprisings as slashing public pension benefits or laying off teachers.

This unrest and dissatisfaction with the enactment of measures designed to eventually bring back the good times is sweeping the world and is rapidly getting out of control. Governments are being faced with stark choices. Continue down the path of austerity in the knowledge that it is the right thing to do for the electorate, but face up to the fact that you will be ridden out of town on a rail at the first available opportunity, or cave in to such populist anger and turn on the printing presses once again.

Until now, the second of those options has been far and away the popular political choice, but with the soaring cost of staples - a direct cause of this monetary largesse no matter what ANYBODY tries to tell you - starting to bite, the options - as well as the time - are running out fast.

In any confidence trick, there are two parties. One is the 'confidence man' or 'grifter',the other is the 'mark'. according to wikipedia:

Confidence men or women exploit characteristics of the human psyche such as greed, both dishonesty and honesty, vanity, compassion, credulity, irresponsibility, naïveté, and the thought of trying to get something of value for nothing or for something far less valuable.

Look around you today and you will see an endless stream of politicians, Central Bankers and Heads of State telling us that things are on the mend and that we should be confident about the future. These people are most definitely trying everything they can to appeal to the human psyche.

And as we know, there are two parties to every confidence trick...

HMMM……