The Crock of @#$% Report v.030

September 11, 2015
How to play a Fed rate hike: Experts

A Federal Reserve rate hike will have "absolutely" no impact on the value of equities, but because it will nonetheless move some stock prices, investors should be prepared to scoop up names that overreact, market pro Charlie Bobrinskoy said Friday.

Charlie Bobrinskoy just couldn't be satisfied by claiming that it would have a small, tiny, bitty, puny, minuscule, modest, slight, trifling, teeny, meager, microscopic, inconsequential, or trivial impact. No, sir. He had to say "absolutely" no impact.

1. Place one straw on camel's back.
2. Absolutely no impact?
3. Repeat.

You gotta start somewhere. When the back eventually breaks, should we blame just the last straw or was it a combination of all of them?

Butterfly effect

In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state.

Perhaps Charlie Bobrinskoy would like to share his proof that the butterfly effect won't be in play here. How hard can it be? I'm confident that the global economic system is so simple that a child chosen at random can perform the simulation in his or her head. It should therefore be child's play for a market pro to do it!

I mean really, it's as easy as throwing dice.

The butterfly effect is exhibited by very simple systems. For example, the randomness of the outcomes of throwing dice depends on this characteristic to amplify small differences in initial conditions—the precise direction, thrust, and orientation of the throw—into significantly different dice paths and outcomes, which makes it virtually impossible to throw dice exactly the same way twice.

Oops. Bad example. Never mind.

You know what? F%^k it. The Fed should just raise rates to 20% for a few years and we'll count how many companies in the S&P 500 survive. All 500, right? It's the only way to be "absolutely" sure that rate hikes can't affect the value of companies.