24 Minute Read

Environmental Hedging: Self-Interest and Social-Equality

November 21, 2017

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Tally-Ho Tackle Traders!

So last week we came bearing good news about Puerto Rico and a service project Tackle has in the making. To submit an update: were getting everything in line and will be commencing solar-kit installation starting Dec 14, most likely. Our efforts will be focused on the center of the island, the portion that has experienced the most damage from Maria and government neglect. For this part of P.R., estimates have it upwards of 1 year before power could be restored to the region, that and the P.R. government has almost ran out of funding already. Thus there is the possibility that the center of P.R. may never actually be able to rebuild beyond the efforts of people like ourselves…and it’s basically the coolest part of the island in my opinion: it is a mountainous land of rainforest, waterfalls, hidden tropical lakes, and an amazingly unique culture—known for its street music and laid-back lifestyle.

In other news… yep, the markets are still very bullish. However, a potential short-term top may be forming as a result of the G.O.P. trying to slip health-care into tax-reform, that and the stalling on finalizing corporate reform as either a “phase-in” of the reform or immediate implementation thereof. Naturally, tax-breaks for the top %1 will be immediate, that and any inheritance / trust-funds will be free from dipping hands, but what matters to the market is corporate tax-reform, which is being juggled at the moment. Beyond that, the markets keep setting new records upon new records and seems to be an unstoppable force of price-action. Keep it coming!


AMD—Advanced Micro Dynamics

Naked Put: As mentioned last week, AMD is consolidating after earnings and seems to gearing up to jump the $12.70 resistance zone. I issued naked puts last week and plan on realizing gains at resistance. From there I will give it a wait, let it breath, and get back in if 12.70 is broken and the stock holds.

X—United States Steel

Naked Put: As Mentioned last week, X sucked back to that $25 and immediately upon doing so the bulls stepped in, sending it to $28 as prescribed. I collected profits on my Naked Puts, and plan on letting the stock breath for a few days and get back in after a retracement.

USO – United States Oil

Waiting: I’ve been holding off on this one since USO premium has dropped significantly. However, data is coming in and prices are starting to stick with Crude Oil. We just had a bullish retracement and the commodity is moving north again, that and the developing crisis between the Saudi’ and Yemen will assist higher oil prices. I plan on issuing Naked Puts sometime this week if all goes well.

UNG – United States Natural Gas

Waiting: Temperatures are cooling in the northern hemisphere and demand should be picking up in the near future. Natty Gas had a bit of a break out last week and later retraced back to support, where it is consolidating at the moment. If confirmation is given, this sucker could run north. If it breaks down, well, back to business as usual with Natty Gas. I am anticipating northernly movement, just waiting on confirmation as mentioned last week.

FCX—Freeport McMorhan

Naked Put: I got a good laugh out of this one last week, thought rebels were the cause of it’s drop, however, later found out Carl Icahn had sold 5% of his position. So, yes, rebels are not at fault. However, good for the rebels, FCX is a net-negative company, one with a horrible track record in conflict mining operations. Which is why we like stealing their money.

Outside of that, FCX is back to buffalo status, grazing between $14-15 per share.


FSLR—First Solar

Covered Call: Im still covered on FSLR and the stock is hovering between $60-62 per share, which I am loving as long as it either drops slightly or continues being neutral for 23 more days. FSLR does this often, hovers for a month and will suddenly jump 8%. If this happen I am fine with being called out since I am already 30% up on the stock. If it stays neutral or retraces a bit, perfect, more cash flow.

TSLA—Tesla Motors

Long Stock or Bull-Put Spread: TSLA has been playing with a short-term resistance point of $320, if it breaks and holds it should run to $345. I already have a trade on the stock, one I did in anticipation of the the release of their semi-truck—which was awesome and was properly described by Sir Musk as having B.A.M.F. performance capabilities, lol.


Covered Call: I covered the stock last week and SPWR has dipped below an important support level of $8. It has a tendency to dip below supports, hover, then jump back north real quick. Also last week we almost had a Golden Cross form, which is typically a very bullish signaling of sorts. I wasn’t buying it however, and the stock retreated south. If you are not covered already, maybe just wait on it in an uncovered position in anticipation of a northernly jump. SPWR could go both ways and is issuing mixed technicals. But true to it’s nature, whatever direction it moves, it will move big.

Environmental Hedging, Week 20: The Logic of Self-Interest and Social-Equality. 

Since ancient Greece philosophers and politicians have been troubled by a particular aspect of Democracy— primarily, that Democracy is prone to revolutionary shifts in power and property ownership. In the first major work on political systems, Aristotle was very quick to point to a constant ebb and flow between the proletariat and the ruling-class over property-rights, capital distribution, and state control. For Aristotle some eras of a nation are characterized by the collective, wherein the people controlled the majority of that power. In other times, however, it is individuals such as sympathetic property owners who run the show. But in order to avoid a constant string of revolutions and political disruptions Aristotle suggested that the ruling-class place a heavy focus on inequality and social welfare. In his opinion that would be the best way to maintain political consistency in a democratic state and provide the best grounds for human happiness. 

The divide between collectivism and individualism within a democratic state is what, ultimately, makes democracy unique. It makes it unique because if the few control to much and distribute to little, the many will conspire to overthrow the few, and would legally be able to do so under a democratic structure. But when the many later become the few, they too will inevitably face a similar fate. As Aristotle suggested in his book on Politics the best way to avoid this was through social-equality. By appealing to the “Golden Mean” he envisioned a harmonious society wherein people helped one another and acted in accordance with human solidarity, whether it was on a individual basis or through political structuring.

The fostering of logic guided by ethics is an important idea in Aristotle’s conception of proper governance and the primary threat to a fair arrangement are sentiments like selfishness and greed, which have the ability to turn any democratic arrangement into a despotic atrocity. However Alexis de Tocqueville in his book: Democracy in America: 1850 made fundamental departure from Aristotelian thought and offered a different perspective.

Tocqueville, who was a French political philosopher, found it curious why democratic Europe had upwards of 10 revolutions during the period of 1789-1849 whereas the United States—which is almost as demographically diverse as Europe and democratic—had zero revolutions during the same time frame. For Tocqueville the answer lied in the dichotomy between collectivism and individualism, and between the European and American implementation thereof. He asserted that the United States was more geared toward self-interest and a modest central government whereas Europe upheld social-equality, and did so through robust government and regulatory practices.

What Tocqueville discovered in his analysis was that if a government became too big and the people were to reliant of it’s services, (as they were in Europe at the time), that group of people would be more likely to revolt than if they were under a more sovereign, self-sufficient form of governance. On one level his theory is backed by commonsense. Take children as an example: If children are constantly coddled and not taught to fend for themselves, as they mature they become completely reliant upon the services of their parents and later will have extreme difficulty becoming adults.

In a Tocquevillian “Father-State” its citizens—in our case children—would be provided the necessary nourishment in their developmental stages, but will later have to fend for themselves, make something of their lives, and rightfully protecting their own. In return citizens will experience lower taxation and less governmental intervention. Tocqueville’s base point was that because democracy was in and of itself a “motherly” institution, it best be guided by a “fatherly” ethos and be free of micromanagement and the financial cost which accompanies social-welfare.

The best way to achieve this, in his purview, was to adopt self-interest; self-reliance; and engender a balance of capital power between property owners and government. It was under these conditions that an entrenched oligarchy and a democratically elected government could coexist. Another aspect of Tocqueville’s philosophy is the final consideration that self-interest could, ultimately, be in the best interest of the collective. Think of it in this way: If everyone is trying to create the best world for oneself then it is possible the resulting effect is a better world for all.

The book, Atlas Shrugged by Ayn Rand presents such a case. If such an idea is in fact reasonable, then the best means to create the largest amount of human happiness is through self-interest, not social-equality. However, the silly thing between Aristotle’s social-equality and Tocquevillian self-interest is that both individualism and social-equality seek to achieve the exact same ends—political and economic utopia. If or when there is conflict between the two ideologies it is merely the result of a power struggle, that Aristotelian ebb and flow if you will.

Aristotle’s efforts are based upon a total philosophy, one which included his works on metaphysics and ethics. Tocqueville’s work was merely a commentary on a particular time frame in American and European history—however, is a philosophical contribution to conservative and neoconservative thinking in modern times. The idea of social-equality, however, is derived from a much longer tradition, dating back as early as 300 B.C.. History is consistent in showing that in environments of self-interest, social-equality tends to win out over the long-term.

The reason why is because the idea of social-equality is the fleeting concept of the many, of which, for the majority of history have been the subjects of the few. The Enlightenment gave such voice to the middle-class and allowed the many to overcome the monarchies and oligarchies of the past. Ideas like Greek Democracy, Existentialism, and Capitalism eulogized the old world and turned society upside-down, ushering in an new age in Western Civilization.

In a socially-equal nation state, those who do not have voices are spoken for by elected-representatives. Those that are without substance are extended the helping hand of compassion and generosity. And when systematize politically or economically, social-equality is merely a concerted distribution of excess goods, labor, and capital back to the people. Adam Smith in the Wealth Of Nations took great care explaining the importance of human dignity, solidarity, and social-equality on such grounds. His famous statement: “All for ourselves, and nothing for others, seems to be in every age of this world, to have been the vile maxim of the maters of mankind,” is such a testament.

On the other hand, however, self-interest can be purported as a remedy to the inefficiencies of centralized government and social-equality. Ayn Rand made this a cornerstone of her philosophy—that politics and economics are best left to sympathetic property owners, intellectuals, and to the captains of industry and innovation. By freeing the “gifted few” from the bonds of regulation and constrictive legislation, liberty and the pursuit of happiness has its best chance of being grasped by all.

As a woman who grew up in a communist economy, Rand’s perspective is very much a product of her environment. In her society the virtues of self-interest economics had been suppressed by the governance of social-equality, resulting in a broad loss of productivity, intellectualism, innovation, and economic growth. She painted a portrait of social-equality as an ideal that carried an equal capacity for despotism that self-interest did.

In fact, she believed social-equality most often led to a state of indentured servitude, the kind which George Orwell alluded to in his work: 1984. Which is interesting because Orwell was a champion of social-equality in the modern era. He speculated that self-interest would be the cause of all bad governance in the modern world, not the other way around.

All in all Rand’s take on the matter can be seen as paradoxical, however, her purview is fundamental in conservative and neoconservative economics. Consider that one of her first understudies was Alan Greenspan himself. What Rand largely understood in her meta-philosophy was that the perversions of this world can take on many different facades and that philosophical theories like Marxism, which are beautiful in their inception, are often ruined by the hubris of humanity itself, even if they are designed to be immune from such things. In terms of self-interest and social-equality, she was merely weaving an intellectual tapestry that identified social-welfare states having the capacity to naturally devolve into self-interest states—thus being rather explicit that self-interest eventually wins out over the long-term, not social-equality.

The above described is a dichotomy I find of interest here and now. For the most part it can be seen as a description of American political history, one which ended with the self-interest system we are accustomed to today. It also points out, however, that this is the nature of democracy and, ultimately, what makes a democracy, democratic. But herein lies the ultimate question: in what ways does corporatism fit into the modern equation? Well, we would need G.F.W. Hegel to explain that aspect of the big picture and that will be next week’s philosophical conversation. The prior two blogs: “Death and Taxes” and “Concentration of Wealth vs Distribution of Wealth” all build off of the logic of “Self-Interest and Social-Equality”. Next week will be the summation of all three.

3 Replies to “Environmental Hedging: Self-Interest and Social-Equality”

  1. IreneMar says:

    Oohhh….Aaargh….!!!! Just about everything that has me calling congressional reps, senators, and watching MSNBC round the clock. How to safeguard this imperfect democracy, that has nevertheless been the best haven for my ancestors and world neighbors at large? I am still trying to get the hang of covered calls, naked puts and TOS…Hope to catch up with you soon. I don’t suffer from Ayn’s conflict between self interest and social responsibility. Both aspects have the possibility, in fact the necessity, of partnering, balancing to co-create a climate of true prosperity — finances are just the tip of the iceberg.

    Good luck in Puerto Rico – will keep track of you, promote and collaborate as I can. Thank You!

  2. Robert Shannon says:

    Thanks a lot Irene! Your efforts and collaboration will be of great help. Feel free, per usual, to reach out if you have any questions. Cheers!

  3. Fidelserrano says:

    nice photos from puerto rico , I leave here , next time contact me to help you in the island

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