With many Jr companies finding there's no bottom dilutions of an abstract nature will become the new norm. What used to be a warning sign will become an acceptable standard. Where companies used to grow their share pools to a couple hundred million to complete a project we will now see that become a billion.
Like one person said of deficits, we are now using numbers that rightly belong to astrophysics. From millions to billions to trillions. Soon we'll be measuring shares in AU's or parsecs. But this should not come as a shock. Look at deficits. They have inflated the money supply in to the realm of funny money once the ledger domain of cartoons and theoretical mathematicians.
So just what is this going to do to valuations you ask? Currently, we advise hanging on to companies that are banked in the old money system. If they have cash from the old system they will survive the transition period. If they do not have cash they must venture into the new system and most will fail. Our only way to pick new projects will be done using every method we currently use minus the money equations. We will have to translate between the old and the new.
I see this as the realm of the computer only. Like chess, the human machine hybrid will dominate until the machine shapes the market entirely to its own purpose. Humans will slowly fade into the background as the landscape changes to a trading ground only. At this point we will begin using equations from quantum mechanics. Our humans senses cannot bridge the gap from the quantum to the Newtonian. There is a barrier there where our senses just simply break down. This too is becoming true of trading with shares held for milliseconds and ruled by Failure to Deliver.
In nature, subatomic particles are strapped to order by the filter of our three dimensions. This is also true of investing in shares of a company in the landscape of mining. But our problem is primarily the speed with which the trading occurs. Just like the atomic transition barrier you can't be sure what shares will end up where. But unlike nature, this scheme is by design! It's rules can change and in fact, they have been changed to screw you, the retail. And who is responsible for that? You are. Just like in the political arena, if you don't speak out then they do what they want and not what you want.
As the fabric of the ethereal investo universe unravels, the minds behind the screen are beginning to realize that Skynet has indeed taken over. They have begun to realize that they alone are responsible for the destruction of the human market force. With that comes the responsibility of feeding the machines. For without fresh meat the machines can only feed on themselves until there is one super dominant machine left standing. In the race to build the super chess program these same competitions play out every year. They usually end up with one machine being leaps and bounds above 99% of all others. So to is this true of algo traders.
In the investo universe, there are less and less human combatants willing to enter the battle field for in the investo universe the blood is real. In chess, a beaten machine feels no remorse over the loss and gets no pleasure out of its wins. But with humans, once scorned... And so, the humans are being beaten into submission. What's even more disgraceful is the gods of investo universe pay the machines to fight it out but not the humans. What and ugly lopsided affair. Now that 65% of the trading has been replaced by machines (a rapidly growing number) it's pretty clear the humans are being displaced. Like chess, I predict that by the end of this year there will be only a handful of investment grandmasters who are willing to brave these waters and very quickly they will discover that the machines can't be beaten.
"It is possible to make no mistakes and still be beaten." (Guinan's advice to Data) What these brave GM's have yet to realize is that the machine never tires. In chess, the GM's quickly figured that one out. So give them this year to reach the same conclusion in investosphere.
The return of the humans. The gods recognize the loss of the humans and are striving to figure out how to entice them back into the trap set by the machines. They are trying to create a world where both can coexist but they realize the machines will just evolve to dominate the new realities they create every time. The gods of Mount Olympus understood that if the people didn't worship them that they would fade away. They eventually realized that it was the time of man and had to accept that. The gods of investosphere have yet to recon with this.
Give this year's investments time to play out and watch as the people drop off and do not return. They will gravitate to the main markets and hole up there until the machines begin to consume that world too. In the wake of their exodus there will be no Jr market left. Not even the seasoned backers of Jr mining will remain for there will be no profit to take and all money that enters the system will be lost to the machines. When this happens the gods who pay the machines will begin to feel the pressure as they themselves will not have any money to continue this lopsided affair. And like a crooked casino who's patrons have all left, they will try to attract them back. I don't see that happening.
When the gods stop paying the machines all that will be left is a cold still universe. The machines will eventually be turned off or put into sleep mode awaiting the unwary should one accidentally stray into their domain. There will be no Jr market left because they were forced to transform or die. All those that could not transform will be dead.
These are the machinations of the disaster economics doctrine. As our weather becomes more extreme companies seek to profit by it. As is above so it is below is the philosophy. They deliberately try to shape all things below in the mold of the disasters above. The Jr market is but one example. Look at agriculture and in particular farming. One only has to look at the chicken quota system here in Canada to realize what's coming. Much to my shock I discovered that most Canadian's do not know that Chicken is and has been a controlled substance in this country for a very long time. They have no idea how lopsided the rules are when it comes to small farms which were once the backbone of the world. They do not recognize the peril that comes with their destruction.
So, just like farming, investors will have to create their own world. Small farmers created a network of farming designed to be hidden and designed to exclude the evils that are represented by Monsatan et al. So to will investors also have to strive to keep the machines out. They will have to create a new investo universe and appoint new gods who will stand guard over the humans. These gods may have to do battle with the old gods but with the support of the humans they should be able to win. The only question left is how long will all this take?