Mark E. Jeftovic

Author Archives: Mark E. Jeftovic

Mark E. Jeftovic is the founder of Guerrilla Capitalism and CEO of easyDNS.com, a company he co-founded in 1998 which has been operating along the lines described within these pages. No stranger to competing with 800 lb gorillas, easyDNS has consistently "punched above its weight" in a field dominated by behemoths such as Godaddy and Web.com. Since 2013 the company has successively achieved YoY all-time high revenues and profitability despite the entry of Amazon, Google and Oracle into the space as direct competitors.

GCap #3: Right now it’s all about optionality

The Guerrilla Capitalism Monthly Briefing.
GCap #3: Right now it’s all about optionality
This is the Guerrilla Capitalism quasi-monthly briefing, third edition.
Bitcoin Halving 2020 – Bitcoin Reformation

The title for this month’s edition comes out of this talk between Tuur Demeester and Ryan Selkis around the event of the May 2020 bitcoin halving “and the political, historical, and economic significance of Bitcoin as a technological revolution”.

One of notable takeaways from Demester was the idea that it is still too early to tell which defensive strategy will be the best defensive strategy. I think about this all the time, especially when it comes to dry powder / war chest.

Is cash safe? What if your bank undertakes a bail-in?

Physical gold? What if there is widespread gold confiscation?

Bitcoin or alt-coins? Which crypto to bet on, and what if governments outlaw that?

Owning property in another political jurisdiction? Which one? And how will you get there if you need to?

Multiple businesses? How will we know which ones are even permitted to operate let alone will weather the economic storm.

At this point, it’s too early to tell and so what we really need to do is cultivate optionality.

This goes beyond “diversification”, in the sense of simply holding a mixed bag of (hopefully) non-correlated assets. Optionality transcends paper claims on assets goes directly to providing real life alternatives.

That’s the name of the game right now.

A great listen via the Messari podcast.

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The following is not investment advice:

(I in intent to add more specific tactics and strategies around wealth preservation, or on occasion, let’s call it for what it is, speculation.)

Further on the topic of Bitcoin, there is the historical phenomenon of the Bitcoin price entering a bull cycle 12 to 15 months after each halving (after an initial drop).

Via

After the previous time to this (2019) when I caught Tuur Demeester on a podcast, I wrote this article about a possible bottom and shifted my business strategy over at easyDNS.

At that time we were converting our Bitcoin into gold via Goldmoney (note: they no longer accept Bitcoin fundings anymore), and we shifted back to accumulation. We’re been in accumulation mode ever since. (We also accumulated from 2013 right into the December 2017 super-spike when we cashed in our chips).

Anyhoo, I came across another way to pick up what I view as a long dated call option on Bitcoin, which was to buy shares of HUT 8 Mining Corp (TSE:HUT).

Hut 8 is a straight ahead Bitcoin mining farm operating in Alberta, Canada, where they were getting dirt cheap electricity. With oil and gas at unheard of levels (I’m sure we’re all aware how oil hit a negative price back in April) they are paying even less for energy and they’ve swung to profitability.

To me, this chart looks like a textbook “Stage 2 Breakout”, as popularized by an old, somewhat obscure, but in my experience excellent trading book by Stan Weinstein called “Secrets For Profiting in Bull and Bear Markets”.

The title and the cover look cheesy, but it really holds up well. If you’re familiar with Mike Swanson from Wall Street Window, he’s based a large part of his methodology on this approach for the near 20 years I’ve been following him.

The Weinstein methodology, in a nutshell is this:

There are four phases in any financial instruments cycle:

  1. Basing
  2. Running
  3. Topping
  4. Falling

That’s it. It applies to stocks, it applies to markets, it applies to sectors. You have to figure out what phase whatever you’re looking at is in, and if you’re right, then you know what to do.

For example, the major indices have been stage 3 “topping” for a couple years now, and have finally entered a Stage 4 “falling” or bear market. That’s why I’m not chasing this current rally in the wider markets.

Gold, and precious metals, on the other hand, have been in a stage 2 bull market for a couple years now, and hardly anybody notices. Or cares. (This may be changing as we speak).

Back to Bitcoin. I think Bitcoin is still somewhere, possibly near the end of the Stage 1 “basing” phase that came after the last bear market (2018-2019), and the next phase is Stage 2: bull.

With all this in mind, I re-entered HUT 8 last week. That’s my disclosure that I have a position in HUT, and the other one is this: I have previously lost money trying to go long this stock. So as QTR Podcast guy often says “Don’t listen to me, I don’t know anything”.

Still, my preferred method for accumulating crypto-currencies always was and remains to earn it. Take them as a payment option from your business and sit on them until the next superspike. If you don’t know where to start for that, take a look at MyBTCServer which is an open source project that makes it easy to setup your own crypto payment server.

If that’s outside your wheelhouse, fear not, over at easyDNS we’re going to be rolling out a managed service to deploy MyBTCServer under your own domain later this summer. If you’re interested, jump on the invite list here.

Bill Fleckenstein On How To Profit From Central Bank Mistakes – The Felder Report

Another great podcast I heard over the past month was Bill Fleckenstein on The Felder Report.

It was hearing Fleckenstein take the listener through the logic again that finally convinced me to swear off attempting to short sell, ever. Doesn’t matter what it is, doesn’t matter how much it deserves to go down, doesn’t matter if it’s an egregious hype job verging on fraud (looking askance at $TSLA)…. unless you’re a professional who can watch his positions full time, and lever up to get the returns, the risk / reward on shorting just isn’t there.

Not when there is a global, ingrained and systemic imperative to make stocks go up no matter what.

The better play, according to Fleck, and I have lost enough money to finally agree, is to just go long precious metals instead. “It’s a better way to express a short thesis on everything else”, in his words.

Because everything the central banks do to prop up stocks is simply wind at the back of gold (and lately, silver, maybe).

I think the only short I have on is a bit of TWM, the Russell 2000 ultrashort ETF. Because that’s the only short I’ve ever actually made any money on. The decay is not bad for an ultrashort ETF and I’ve been able to hold it for lengthy periods and come out pretty good when the market finally dumps. (Again, not  investment advice).

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The Four Shall Inherit the World

This Matt Galloway article (@profgalloway) on Twitter, where he’s big, looks at how Apple, Amazon and Google are thriving while nation states are failing. He discounts Facebook as the outlier sociopathic megacorp, who no longer gets to sit with the cool kids at lunch, but I think he’s underestimating Facebook and being too kind on the other three.

But this hits on one issue my compadre Jesse Hirsh (of Metaviews) discusses a lot on my new #AxisOfEasy Cybersalon podcast (our third co-conspirator is Charles Hugh Smith).

While none of us would lament the loss of what Charles calls “The Saviour State”, Jesse frequently points out it would suck even more if the biggest inheritors of power after the implosion of nation state relevancy were Google and Facebook. Along with Amazon (what I’ve come to call “The Company Store“).

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There Will Be Blowback, In Mostly Good Ways – AIER

I have to admit I am vulnerable to bouts of pessimism regarding the current pandemic and what “The New Normal” will look like in the coming years.

So I’ll leave you with this article by the incessantly optimistic Jeffrey Tucker which gave me some comfort. In it, he posits that the there will be a palpable backlash against government overreach. I hope he’s right:

“Our lives in the coming years will be defined by forms of backlash, as a much needed corrective. You can’t take away everyone’s rights, put a whole people under house arrest, and abolish the rule of law without generating a response to that in the future.”

My own Jackpot Chronicles goes through my four possible scenarios for how things play out, I recently put out Scenario Two: Conspiracy Theories meet Radical Uncertainty as well as Scenario Three: The Great Bifurcation which looks at the institutionalization of inequality by our elites. The final scenario should be out this week sometime.

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Jackpot Chronicles #3: The Great Bifurcation

This is part 4 of the Jackpot Chronicles: Four Post-Coronavirus Scenarios. Read the series here, or sign up for Guerrilla Capitalism here.

“In the future there will only be one occupation: managing one’s wealth. And the majority of the population will be unemployed.”

– Me.

The original working title for this installment of The Jackpot Chronicles was “Mandatory Pollyanna”. That’s the one where central planners and bureaucrats manage to “save” the global financial system yet again, but at a cost of undertaking an LBO of the entire economy and running it as a centrally planned utility.

I’ve decided to rename this scenario “The Great Bifurcation”, because should it come to pass,  I think the the inevitable result  would be the emergence of an even more pronounced and starkly divided Two Tier Society. Read on

The Jackpot Chronicles: When Tin Foil Hats Meet Radical Uncertainty

This is part of the ongoing Jackpot Chronicles, looking at four possible Coronavirus scenarios or lenses.

The last instalment was “Force Majeure”, which posited a complete breakdown in seemingly permanent institutions. As it may turn out, these outwardly immovable edifices may not survive this economic collapse and be left out of “the new normal” that emerges out the other end.

Given that the idea of Coronavirus being concocted in a Wuhan Lab has gone from being a conspiracy theory that could get you deplatformed, to being seriously looked into by Western intelligence agencies, now may be a good time to look at the “Tin Foil Hat” scenario, and try to discern where viewing this pandemic through the proverbial conspiracy theory lens actually gets us.

Conspiracy theories make for tricky subject matter for anybody who tries to look deeper than the veneer of conventional narratives. What we are expected to accept unquestioningly out of mainstream circles is sometimes less plausible than what we are expected to dismiss as conspiracy theories.

It get’s even more distorted when inversions or backwardations occur between what is fringe and what is, ostensibly, “fact”. Read on

GCap #2: What the Hell Just Happened?

The Guerrilla Capitalism Monthly Briefing.
GCap #2: What the Hell just happened?
This is the Guerrilla Capitalism monthly briefing, second edition.
THE DEMISE OF THE FINANCIAL SYSTEM IS IMMINENT | Matterhorn – GoldSwitzerland

“Next five years is not about winning but surviving.”

There’s been no end of articles describing in gory detail exactly how bad the current economic situation is. I found this one and it seemed to do a good job covering most of the bases.

Granted, it’s over a week old so it doesn’t factor in everything. 

 

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WSJ: A New Bull Market Has Begun

…or not. It seemed less than a week after I jokingly remarked on Twitter, “Do you honestly think the longest bull run in history will be followed by the shortest bear market in history?”, WSJ made the call.

Whew. I’m sure I’m not alone in being glad that’s over.

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In case you’re having a hard time spotting it, I’ve taken the liberty of plotting out that last bull market and the shortest ever bear market above.

If you download the image and then hit Cmd-+ repeatedly, and put your cursor right at the tip of the arrow you’ll clearly see the New Bull Market.

German finance minister commits suicide as coronavirus hits – New York Daily News

German finance minister found dead on railroad tracks amidst coronavirus stress.

If this really was the shortest bear market ever and we’re back into a V-shaped recovery, then wouldn’t this guy feel foolish, having thrown himself in front of a train right before that new Bull Market broke out.

It reminds of an old Dave Allen joke about the last man on earth who is so lonely he decides to commit suicide. He leaps off the top of a tall building and on the way down… he hears a telephone ringing. (It’s possible I just dated myself).

 

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Surveillance Capitalism: Bigger Brother | by Tim Wu | The New York Review of Books

How we went from B.F. Skinner to China’s social credit system.

If you’re like me, you’ve been wanting to read Shoshanna Zuboff’s “Surveillance Capitalism” for awhile. However times being what they are, I’ve had too much stuff coming at me to read through the 500+ pages. I even have the audiobook and still haven’t made much of a dent in it yet.

A colleague sent me Tim Wu’s (author of The Master Switch, The  Attention Merchants, et al) review with the short note “everything you need to know about the book is in here”.

It’s a detailed deep dive into the book, and I’m thankful for it, I still plan on getting through it someday.

Also this interview with Shoshanna Zuboff on Demetri Kofina’s Hidden Forces is a good listen as well.

 

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3M pushes back after Trump orders it to stop exporting N95 masks

Making the rounds on Facebook, among my Canuck friends is a contagious meme  along the lines of “Canada helped the US out after 9/11 and now Trump is banning N95 exports to Canada”

I just find those widely shared outrage-du-jours so tiresome. I started looking for which Canadian companies are going to ramp up N95 mask production themselves.

There are a couple, Medicom, who will be ramping up production of N95 masks immediately, there is Woodbridge Group who just got approval for a new N96 mask, and there is a team mobilized at McMaster University tasked with regearing industrial response to N95 mask supply, and even more refreshing was 3M’s response to Trump’s call for the export ban: “I don’t think so”.

 

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The JackPot Chronicles Scenario 1: Force Majeure

I mention the above issue of N95 masks for a reason. In my latest installment of The Jackpot Chronicles I outline how one post-pandemic scenario involves the breakdown of traditional institutions and authorities.

When the fate of the entire world relies on how one man, such as the president of the United States, responds (or fails to respond) to a situation, that means we’ve reached a point where that system is breaking down.

In engineering systems it’s called a SPOF (Single Point of Failure), and the entire impetus in systems, in economic structures, in political ecosystems, is to eliminate SPOFs.

Here we have authorities acting by edict, and markets simply responding according their own imperatives.

That said, It’s perfectly understandable why a country would under these circumstances ban the exports of N95 masks. China did that back in January.

But note how market participants can step into this and react to the demand. One of the things slowing them down is obtaining the necessary government approvals.  

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To Short or Not to Short?

As I write this section it is Easter Friday, one day after the US Federal Reserve announced it would start buying junk bonds which induced a kind of mini-meltdown in me.

This is not the way free markets are supposed to work. If a company over-leverages it, it gets worked out amongst creditors, not bailed out by an entity that can print currency out of thin air.

The whole thing made me question my plans for one of my TFSAs, where I had placed some capital for the express purpose of hedging on the short side.

So far I’d done ok with PUTs on JNK and even (get this) DUST. My idea there was because 3X ETFs are so toxic, no matter what their orientation was, you could do ok buying long dated, ATM PUTs on any spike in the underlying. (The logic was that the time decay on the option was slower than the ETF decay when the latter was levered 3X and recalculated daily)

It worked for awhile, until DUST got absolutely destroyed last month, even when gold was tanking.

That was that, DUST and NUGT are 3X no more, and were converted to 2X on April 1st. It was good while it lasted.

To my larger point: is it rational to go short the market when the US Fed as well as every Central Bank in the world is hellbent on printing as much money as it takes to make you wrong?

And yet… I was journaling my angst and frustration around all this just to clear my thoughts and I remembered what happened in 2007… when I pretty well picked the top and bought a pile of 2 year LEAPs on the QQQ’s, the SPYs and the DJIA.

Trade of the century, right?

Wrong.

The Fed once again stepped in for what looked like a stick save and ignited a Christmas Rally, in a fit of revulsion and disgust, very similar, albeit not as intense as what I’m feeling now….. I covered my shorts with a minor gain.

“Don’t fight the Fed”… was what I was muttering to myself as I staggered away from the trade…..

We all know what happened next.

So the question I’m asking myself now is “Am I making the same mistake as 2007, and my fatigue in fighting the Fed is a sign they’ll soon lose control?”

I don’t know the answer to that. Maybe. Maybe not.

However, In 2007 I didn’t know about Pascal’s Wager, but today I do….. when I do a Pascal’s Wager type grid about “shorting everything” vs “long precious metals” I get something like this:

It just seems like being long precious metals (which I am already, mind you), covers a wider swath of probability vs trying to short against the might of the world’s central banks.

Besides, if  they really are serious that they’ll do “whatever it takes” to prevent a financial meltdown, even if they do lose control, I think that is more likely to be inflationary, even hyperinflationary. And if that’s the case, stocks will still go up anyway.

I really do harbour a kind of hero worship for short-sellers and daydream about “wouldn’t it be cool to do that”. But the “know thyself” sort of reality check clearly shows that I just don’t have the perseverance and pain tolerance for it.

Yesterday my longtime friend and mentor Sieg Pedde sent me this presentation on silver and when I think about all this, and also realize I’m probably underweight on silver anyway, I may just change plans on that “Short only” account I had setup and just back up the truck on silver. YOLO.

Feel free to forward to your friends and colleagues, and if they want to subscribe to Guerrilla Capitalism, just go here, and I’ll send you a free copy of 1893 novella Pictures of the Socialistic Future with a new foreword by me when you opt-in.

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The JackPot Chronicles Scenario 1: Force Majeure

This is the second instalment of The Jackpot Chronicles: Four Possible Post-Coronavirus Scenarios.

Force Majeure means:

a chance occurrence or superior force that renders a contract unenforceable and frees all parties from their obligations under it.

We are frequently told that there exists some manner of “Social Contract” to which we are implicitly bound by virtue of being alive. This implied Social Contract confers legitimacy upon the institutions that order our world, the national governments, the central banks, the miltary and police. And by extension certain communication outlets and media are endowed with a status of official curators over the narratives around institutional power. Read on

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Welcome to The Jackpot

William Gibson’s most recent novel Agency, describes a type of “many worlds” tapestry of a multiverse as it exists after a catastrophe called “The Jackpot”. The main character’s POV takes place from within one of these “stubs” as they are called, which for some reason forked off from the “real” Earth timeline sometime after the 2016 US election.

Although Gibson doesn’t exactly strike me as a MAGA guy in real life, it is interesting to note that in the story, the “real” Earth timeline is one in which it’s implied that Hillary Clinton won the 2016 election (neither “Clinton” or “Trump” are mentioned by name anywhere in the book).  However, it’s also the timeline in which a global thermonuclear war erupted around the Syrian conflict.

It is this outcome which the protagonists, some of which are covert operatives from our future, are seeking to nudge the other stubs away from. In other words, it’s classic William Gibson, who’s enduring quip The future is here, it’s just unevenly distributed” has probably garnered even more relevance of late.

Read on

GCap #1: Beware the Ides of March

 

The Guerrilla Capitalism Monthly Briefing.
GCap #1: Beware The Ides of March
I’ve been wanting to do a monthly newsletter for awhile, and I had the opportunity to test a new system that made creating them a snap, so here we are and please do let me know if you find this useful or annoying.
Unassailable: The book that protects you from Cancel-Culture and Deplatform Attacks

Nevermind Coronavirus (for now), the big news for me last month was the release of my second book, Unassailable.  It seemed that as I was finishing up the book in late 2019 that cancel-culture had perhaps peaked and I had missed the moment with this book.

That sentiment was dashed quite quickly out of the gate in the early days of 2020:

  • Email provider mailchimp suspended Stefan Molyneux’s account in response to a tweet from somebody else (a woman who is the co-founder of the Sleeping Giants collective)
  • Twitter took down Zerohedge’s account based on a hit piece penned by Buzzfeed author Ryan Broderick. An examination of his Twitter archives showed he had committed the exact offense he accused ZH of (namely doxxing somebody). ZH was suspended, whilst Broderick maintains his blue checkmark)
  • Slate magazine asked out loud if there was too much free speech online?
Learn More

To discuss all this and more I went on the Tom Woods show, which was quite an honour for me.

Canada’s Broadband Telecom Legislative Review (BTLR) dropped and Slate readers in Canada should be thrilled: it contains a blue print for controlling internet content, including mandatory licensing for all content creators and forcing social media networks to only link to, or provide “discoverability” for “approved media sources”.

Taxpayer funded CBC joined the clamour a few weeks later, marshalling a group of Canadian media companies to draft an open letter to the Trudeau government pleading for legislation to regulate “trusted news” sources online.

All this to combat what I once dubbed “the fifth horseman of the internet apocalypse” – fake news.
Who would be an approved media source in Canada? Probably anybody who benefits from that 600M subsidy announced by the federal government last year.

The BTLR has to be stopped and yours truly introduced a petition into parliament to block it.

(The section headline links to an op-ed I wrote for ThePostMillennial)

Coronavirus pops the Everything Bubble

As Frank Hickey writes in his latest High Tech Strategist, “Once Again, The Music Stopped (Without Much Warning)”.

Imagine if you will, the US markets, as measured by the DJIA experiencing:

  1. The largest single day gain in history
  2. The second largest single day gain in history
  3. The largest single day loss in history
  4. The fastest 10% drop in history
  5. A 50bps emergency rate (the very next day after #1)

…all within the space of a week, I would say that volatility is back and I am going out on a limb to posit that The Everything Bubble has finally topped out.

This is, of course, inexcusable, and the powers-that-be will do whatever it takes to keep asset prices inflating, coronavirus be damned….

Uhm,

As it stands now, gold is powering higher, looking to blow through $1,700/oz, but the gold miners aren’t really confirming (yet).

Bonds are the last man standing of the Everything Bubble and once that pops, look out. See below…

 

The Bond Market And The Price Of Gold Are Making Massive Cycle Turns – Mike Swanson (03/07/2020) – WallStreetWindow.com

The Quickening….

I started fiddling with the idea to do a monthly newsletter during the last week of February, and my rough notes contained ideas like:

  • The price of TSLA had gone hockey-stick parabolic
  • Elizabeth Warren captured on video deplaning from a private jet going viral (ironic and in line with GCap’s popular post about banning private jets to save the environment).
  • Canada’s supply chain disruptions due to pipeline protestors
  • A mini-rant about “equality of outcomes” as an ideal to strive toward

That was around two weeks ago, and most of that stuff has been rendered obsolete:

The TSLA share price has already nose-dived below the secondary offer price of $767, closing Friday at $703.48. That’s an 8.3% haircut in 10 trading days.

Warren threw in the towel after super-Tuesday.

Canada’s supply chain now faces a much bigger existential threat because of COVID-19 (as does everybody else’s)

Equality of outcome

My mini-rant against the goal of equality of outcome never progressed much further than observing that anybody who espouses that as an ideal is really saying, in effect that,

“nobody else should be more successful, or happier, than me”

and that the sentiment is almost exclusively advocated by miserable and frustrated Marxists who meet many of the symptoms of being mentally ill.

Prove me wrong!

… was as far as I got with it. Other than that the progressive’s zealousness over the certainty of their own morality crowds out self-awareness.

I have 10 invites for ThinkSpot

I set up my Thinkspot account in February. That’s the new social media platform developed by the likes of Jordan B Peterson and Sam Harris, intended to be a place where ideas can be freely expressed without the spectre of cancel culture hanging over one like a Sword of Damocles.

If you’re interested, just reply to this email and the first 10 people will get an invite from me. I’m @markjr on that system so look me up once you’re there (I even seem to have a blue checkmark!)

Should I keep doing this?

Should I keep writing a monthly GCap newsletter? Please reply to this email and let me know if this was of any value to you or a complete waste of your time.

Thanks!

Feel free to forward to your friends and colleagues, and if they want to subscribe to Guerrilla Capitalism, just go here, and I’ll send you a free copy of 1893 novella Pictures of the Socialistic Future with a new foreword by me when you opt-in.

 

Unicorn Winter / Unicorn Bingo

The theme for today’s post is from Scott Galloway’s (@profgalloway on Twitter) “Casper Should Not Go Public” post on Medium, which he wrote in response to the news that Casper, a mattress company I had never heard of, had filed to go public, having lost $73.4 million on $250.9 million revenues in 2017 and another $92.1 million loss on $357.9 million in 2018.

This post isn’t about Casper, the Galloway article is superb in analyzing exactly why anybody dumb enough to buy this IPO deserves to lose the 30% decline in stock price he posits for the first year (which I think is being charitable). Read on

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This is Politics

I managed to catch a glimpse of Arif Virani’s campaign headquarters when I was driving down Jane St. in Toronto the other day. Virani is the Liberal MP for Parkdale / High-Park, whom I went up against in 2015 when I ran for the Libertarian Party of Canada. Read on

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Guest post: Why Transactions Get Declined

By David Goodale of Merchant-Accounts.ca

Don’t Lose Your Customers on the Goal Line

A declined transaction is quite possibly the worst reason to lose a sale. All that’s left is to take the money. This should be the easiest part, and it’s important to do, because the cost of acquisition of for new customers is a consideration for every online business. In short, customers don’t usually fall out of the sky. Getting them to your website is hard, educating them about your product or service is harder still, and helping them through the sales funnel will determine whether your business succeeds or fails.

Considering the amount of work going into the sales process, it’s extremely painful to lose it on the goal line because of a hiccup while collecting a payment. It’s a terrible reason to lose a sale. That same potential customer can easily bounce away, and unless they are particularly keen on your product, they might not come back.

It’s important to:

  1. Be aware of why declines occur
  2. Work to prevent them from happening
  3. Attempt to recapture them when they do

Read on

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