Saturday, 13 January 2024 — Melbourne, Australia

By Murray Dawes Editor, Fat Tail Daily

[1 min read]

Dear Reader,

I hope you are as relaxed as I am as we get ready to rumble in 2024.

A few weeks of fishing and playing golf after a morning swim in the ocean has completely washed away 2023.

The markets can be all consuming, so I reckon it is imperative to down tools at regular intervals to rejuvenate and get ready for another round of battle.

In today’s Closing Bell, I thought it would be useful to stand back and look at the big picture. And by ‘big picture’ I mean more than 100 years of data.

I think we all suffer from the mistake of getting caught up in the day to day gyrations without considering how markets behave over very long periods of time.

When you look at 100 years of data in the S&P 500, it becomes clear that it is foolish to think you can pick every twist and turn that markets make.

Since the 1929 crash, the S&P 500 has steadily moved up, although there are periods when it treads water.

Two decades of rallying will morph into two decades of treading water and then another rally could erupt.

By looking at the price data on a logarithmic scale (where percentage moves are equal), you can see clearly that the correction over the last couple of years was a mere blip in the big picture.

Now that the long-term trend has turned up and prices are testing the all-time high, we should give the S&P 500 the benefit of the doubt and allow the current uptrend to play out.

If the long-term trend turns down again, then by all means run for the hills, but until then the best course of action is to move to a more bullish posture.

A false break of a major high is often the beginning of a corrective phase and I show you examples of that happening over the past 50 years.

But you have to wait for the false break to be confirmed with serious selling pressure before you can change tack and become bearish.

That’s where we are as we enter 2024.

The trend is up and there is blue sky ahead if the rally continues beyond the old all-time high from 2022. While the momentum is up you go with it.

But if the selling returns and a double top is confirmed, a more conservative stance will be necessary.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps

Murray Dawes is our resident expert trader and portfolio managers. He is a former Sydney Futures Exchange floor trader who went on to design custom trading systems and strategies for ultra-wealthy clients (including one of Australia’s richest families). Today, his mission is to help ordinary Aussie investors make profitable investments, while expertly managing risk.

He uses his proprietary system for his more conversative and longer-term-focused service Retirement Trader…and then applies the same system to the ultra-speculative end of the Australian market in Fat Tail Microcaps (this service is strictly limited and via invitation only).

By Nick Hubble Editor, Fat Tail Daily

[6 min read]

Dear Reader,

You might think that an airline capable of time travel would have a distinct advantage over its competition. Imagine being able to give your customers the opportunity to add several hours to their holiday.

Unfortunately, such things are not yet possible. But that didn’t stop Qantas from trying…

Yes, despite everyone’s warnings, my sister in-law booked her flights to the Sunshine Coast via Melbourne with Qantas. But I can safely say that it will be the last time she does so. Or anybody in our family.

You see, Qantas had to reschedule the second leg of her booking, for some unknown reason. And they booked her onto a flight that departed before her first flight was scheduled to arrive…

To be clear, Qantas didn’t offer her a choice of flights. They didn’t ask whether she would like to depart Melbourne before she arrived there, or after. They just booked the change for her and kindly let her know that her flight from Melbourne would depart 45 minutes before she landed in Melbourne…

Now, I didn’t know that airlines are allowed to rebook your flight without asking you to confirm their new schedule remains suitable. And I never could’ve imagined they’d booking a flight that departs before the connecting flight on the same booking even arrives. I mean, if you and I had made such a mistake, what would Qantas’ response be?

But, being quite used to Australia’s ‘she’ll be right, mate’ way of running a country, let alone an airline, my sister in-law decided to take it upon herself to fix Qantas’ ridiculous mistake. It’s not like the airline would figure out that it’s impossible to depart before you arrive.

Calling the Qantas hotline eventually got things sorted out…after a very long wait…and an indignant bookings agent who wondered how my sister in-law had even managed to make such a stupid mistake in the first place. I mean, who manages to book a departing flight before their connection even arrives!?

But things only got even more surreal upon arrival in Melbourne…

Not only is Qantas’ booking technology capable of time travel, it also presents its customers with the opportunity to book seats in an alternative universe. You see, the seat in the universe my sister in-law inhabits was already occupied by a mystified looking gentleman with the same seat and row number on his ticket too.

Now, there aren’t many airlines that would be incompetent enough to allow passengers to book the same assigned seat, let alone check in with the same assigned seat, let alone board the plane with the same assigned seat, right? I mean, what’s all the scanning, beeping, buzzing, and checking and rechecking your tickets for if you end up sitting on each other’s lap?

Heck, what did the passenger manifest look like? Did the plane really have two names next to the one seat?

So, the only possible conclusion is that my sister or her seatmate came from an alternative universe, with the transition occurring somewhere inside the plane. I’m not sure which of the two was the alien. And Qantas’ customer service staff aren’t either.

I don’t think there are any Hollywood blockbusters about both time travel and an alternative universe in the same movie. But what happened next was straight out of the film Anger Management. In a most memorable scene in that movie, an airline crew and passengers conspire to make the protagonist lose his temper by behaving in a barely plausible but entirely infuriating manner. Qantas, however, outdid them in the real world.

The solution Qantas flight crew came up with to resolve the double-booked seat was as obvious as it was absurd: simply compound the problem. They asked my sister in-law to take a seat in an empty spot in the vague hope that it would remain unoccupied. Or perhaps they just didn’t realise anyone would want to sit on a Qantas flight they’d booked a seat for. 

To be clear, they didn’t inform my unseated sister in-law which seat was not booked and therefore available to her. They didn’t tell her where she could sit. They told her to find a random empty seat to sit down in.

So, having rebooked my sister in-law on an impossible connecting flight, and then selling her seat to someone else, they asked her to take someone else’s seat instead. This may seem like an imperfect solution to you. But it didn’t seem to bother anyone, except my sister in-law, at the time…at first.

But rather soon the alternative universes began to collide in a series of echoes that my sister in-law will never forget, but which Qantas flight crew couldn’t possibly have foreseen...

Having sat down on the nearest empty seat, you’ll never guess what happened next. Yes, my sister in-law was confronted by a very angry Qantas customer without the manners and patience my sister in-law has, or had, for Qantas’ nincompoopery. The passenger demanded my sister in-law vacate his seat and sod off.

His unnecessarily rude behaviour might’ve seemed a bit out of place at the time, but in hindsight it makes perfect sense. He must’ve been used to this sort of thing because he seemed to know that whoever claims Qantas’ double-booked seats first gets to stay in them…unless you can terrify the person who also booked that same seat into leaving. That is how Qantas assigns seats, given my sister in-law’s experience 30 seconds earlier. Unfortunately, it leaves polite people at an immense disadvantage.

And so my sister in-law vacated another seat for the passenger who had booked the seat, and was asked by Qantas staff to find yet another one.

At this point, you might think that the consequences of asking someone to sit in a seat which someone else intends to occupy would’ve been painfully obvious. But it depends on who is incurring the resulting discomfort. Qantas flight crew were blissfully ignorant. My sister in-law was neither blissful nor ignorant.

Sure enough, after a few seconds in her second, (or was it third?) seat, another angry Qantas passenger showed up with a red face and an entirely valid ticket. My sister in-law was once again turfed out in rude fashion.

By now, many of the passengers nearby were wondering what the hell was going on. I mean, what sort of idiot is too dumb to read their own boarding ticket’s seat row and number and then sit in it? What sort of idiot sits down in other people’s seats at random and has to be told to get up, over and over again, without learning their lesson? The same sort of idiot who would book a connecting flight before their scheduled arrival, perhaps?

The other passengers began to shake their heads. To snicker. To make comments. To complain that they had to get up over and over again to make way for my sister in-law climbing over them to make way for the latest person to have booked the seat she was sitting in this time.

The game of musical chairs was, however, only just beginning. After all, the flight was fully booked, but for one seat, it would turn out. But discovering which seat it would be in advance was not possible for Qantas, apparently. Which is probably true. I mean, if they double book seats and allow passengers with the same assigned seat to board, they probably have no clue who sits where and who doesn’t sit anywhere. 

And so the Qantas crew repeatedly demanded my sister in-law sit down in an empty seat so as not to disrupt the boarding of other passengers. Which, at this point, was a bit of a flawed concept given the chaos each time a passenger found their seat occupied by my sister in-law.

Here’s a maths problem for you: how many times would you have to give up your seat and move to another empty one in order to randomly discover which one single seat on an entire plane is in fact not reserved?

The answer is, a lot.

It happened again, and again and again…until the other passengers who had openly blamed my sister in-law for the chaos were wondering what could possibly be going on. I mean, why don’t the Qantas flight crew solve the problem and sit the increasingly disoriented and utterly humiliated girl in her assigned seat? It’s not like someone can board a plane without an assigned seat…?

But no, the Qantas flight crew must’ve been as clueless as their booking colleagues to figure out which seat was and which wasn’t occupied.

Helpfully, the mystery was eventually solved. Once the chaos had finally settled and the last person had boarded the plane, the final empty seat revealed itself. And my sister in-law had to vacate her seat one last time before being paraded past all the other exasperated passengers to sit in ‘her’ spot.

Admittedly, my family could not possibly have a lower opinion of Qantas as it is. Perhaps this is why the extended family seem to be taking the airline’s latest horror show in their stride. Low expectations, and all that. 

However, Qantas have met their match in me, a German with a long and proud family history of making complaints. My mother once gave German federal police such an absolute pasting that they released my dad on the spot and promptly ran away. Given they thought my English dad was an IRA terrorist hiding out in Germany, and had been holding him at gunpoint, this must’ve been quite an impressive display.

Funnily enough, the police had treated my dad better than Qantas staff treated my sister in-law by giving him a very carefully assigned seat in their police car...

But something tells me that Qantas staff are so used to complaints and getting a pasting that they won’t care much about me. And so I wrote up my sister in-law’s experience instead, to share with you.

It’s a strategy that has worked quite well on Australian customs, the City of Port Phillip, and HSBC bank in the past. Public humiliation is much more powerful than a complaint.

Would you choose an airline that lets its passengers discover double bookings after they’ve boarded the plane, and then deal with the consequences in a seat-free-for-all? Would you like to be humiliated in such a fashion?

In my opinion, Qantas’ supposedly stellar safety record is likely the result of sufficiently poor record keeping denying the existence of any crashed aircraft. After all, who would believe that a passenger boarded a Qantas flight in Australia before their flight to Australia had even arrived?

Kind Regards,

Nick Hubble,
Editor, Strategic Intelligence Australia

Nick Hubble found us at Fat Tail Investment Research in 2010 after a stint inside Wall Street’s most notorious bank, Goldman Sachs, during the 2008 GFC. That’s where he saw the true nature of the investment banking business. Since then, he’s been the editor of the Daily Reckoning Australia and the UK-based Fortune & Freedom and Gold Stock Fortunes.

He’s delighted to work as Investment Director and Editor for Jim Rickards’ Strategic Intelligence Australia. Here he helps turn Jim’s big-picture views into specific actionable advice and ideas for Australian investors.