Specious Argument

On the evening of 17 December 2011, I saw Alberta Ballet's The Nutcracker. This performance was the first time that I had seen this ballet.

The Nutcracker is a well known ballet to most everyone, and even if you have never seen this ballet, you have heard Pyotr Ilyich Tchaikovsky's music. It's beautiful and unforgetable.

Having recently completed Jennifer Homans's book Apollo's Angels: A History of Ballet, I had a stronger appreciation for the ballet. Of course, I enjoyed the wonderful dancing. The dancers, including all the children dancers, were great. Everyone seemed to have a lot of energy and enthusiasm. Even prior to the performance, I saw some of the young dancers in the lobby area excited to be performing that evening.

Knowing some of the ballet's history, I found myself traveling back in time as I watched the ballet. I enjoyed how Alberta Ballet created scenes from Russia near the 1900s. Even the wheelchair had an authentic look.

The Nutcracker has become a holiday staple. If you have never seen it, I encourage you to see it next year.

On the evening of the 17th, the following artists were featured:

• Klara: Asaka Homma
• Drosselmeyer: Kelley McKinlay
• Karl/Nutcracker: Anthony Pina
• Father: Kelly McKinlay
• Mother: Melissa Boniface
• Nikolai: Yukichi Hattori
• Babushka: Beverly Bagg
• Grandfather: Blair Puente
• Hussar Doll: Davidson Jaconello
• Ballerina Doll: Alison Dubsky
• Rat Doll: Garret Groat
• Males Guests, Female Guests, Calvalry & Wolves: Artists of the Alberta Ballet and Students of the Alberta Ballet
• Rat Tsar: Garret Groat
• Snow Tsarina: Alison Dubsky
• Snowflakes: Artists of the Alberta Ballet and Students of the Alberta Ballet
• Spanish: Hayna Gutierrez
• Arabian: Emily Collier, Davidson Jaconello & Andrea Battaggia
• Chinese: Nicole Caron & Peter Starr
• Russian: Mark Wax & David Neal
• Flowers & Flower Cavaliers: Artists of the Alberta Ballet and Students of the Alberta Ballet
• Sugar Plum Fairy: Tara Williamson
• Her Cavalier: Jaciel Gomez

There were numerous children cast as Party Girls, Party Boys, Little Mice, Cossack Rats, Soldiers, Palace Page Girls, and Palace Page Boys.

I hope everyone had a great holiday period. And I wish everyone a Happy, Healthy, and Prosperous New Year 2012!

Note to Seeking Alpha, please don't bother publishing this article. This article doesn't offer any indepth analysis or advice.

Normally, I can investigate a company's financials and business outlook to arrive at an investment thesis. I might wish to go long, short, or just ignore the company and its stock altogether.

But right now, with the heightened uncertainty in Europe, analysis is useless. Correlations among most equity securities are close to one, and the headline risk dominates any security analysis. If the headlines are positive, then it is risk on, or, if the headlines are poor or uncertain, it's risk off.

I suspect that most fiduciaries have moved to the sidelines as much as possible. While they might miss a rally, their primary concern is not to be caught in a meltdown. Later, if necessary, they will chase the market upward. If Europe is able to stabilize for a while, then we might be in a position for a major advance. There are a lot of ifs and maybes.

While I have reduced my exposure to the markets from my summer levels, I still have reasonable exposure. Depending upon how Europe plays out, this might be a wise or not-so-wise strategy.

Of the articles I read this weekend, here are two articles with opposite directions. First, a negative or cautious Telegraph article: Prepare for riots in euro collapse, Foreign Office warns. Preparing for riots doesn't sound encouraging, does it? Next, a positive or hopeful Bloomberg article IMF Readying Loan of as Much as $794 Billion for Italy, La Stampa Reports. If the IMF or some other party rides to the rescue, then that will certainly influence Monday's markets.

Unfortunately, I do not have much to offer in terms of advice or recommendations. For now, I suggest paying attention to the headlines and making sure that your portfolio can withstand these challenging times.

On Thursday, 27 October 2011, I attended the Royal Winnipeg Ballet's Wonderland.

The ballet is basd on Lewis Carrol's Alice in Wonderland, a story that we're all familiar with.

I was curious as to how a ballet could capture our minds' imagination to create a convincing story. When I saw the performance, I was impressed with the multimedia and stage sets. The Royal Winnipeg Ballet successfully recreated a story that was a joy to watch.

In looking around the audience, I noticed a larger proportion of children than usual, which is always a good thing. However, even us older children enjoy the ballet. If you watch and listen carefully, there are always messages that are applicable to all us, regardless of our age or station in life

"Would you tell me, please, which way I ought to go from here?" "That depends a good deal on where you want to get to," said the Cat. "I don't much care where--" said Alice. "Then it doesn't matter which way you go," said the Cat. "--so long as I get SOMEWHERE," Alice added as an explanation. "Oh, you're sure to do that," said the Cat, "if you only walk long enough."

Although Wonderland is not a physically demanding ballet, I enjoyed watching the dancers perform. Because of the storyline, the attention was focused on Alice and the Queen of Hearts. Both were exceptional. I also took notice of the Dormouse.

Although it is too late to recommend Wonderland to Calgary audiences, I highly encourage those in Edmonton to enjoy the ballet this week.

The cast for last Thursday's performance is as follows:

• Alice: Amanda Green
• Queen of Hearts: Tara Birtwhistle
• White Rabbit: Yosuke Mino
• Mad Hatter: Amar Dhaliwal
• March Hare: Jo-Ann Sundermeier
• Dormouse: Emily Grizzell
• TweedleDee & TweedleDum: Tristan Dobrowney & Thiago Dos Santos
• Duchess: Eric Nipp
• Cook: Yayoi Ezawa
• Toony Loons: Alex Lantz, Thiago Dos Santos, Liam Caines, Zhen Guo Chen, Sophia Lee, Alanna McAdie, and Catherine Rutherford
• Creatures: Thiago Dos Santos, Alex Lantz, Liam Caines, Zhen Guo Chen
• Birds: Jo-Ann Sundermeier, Dmitri Dovgoselets, Beth Lamont, Sarah Davey, Harrison James, Tristan Dobrowney, Serena Sandford, and Alexander Garmayunov
• Tooney Cooks: Sophia Lee, Catherine Rutherford, Thiago Dos Santos, and Liam Caines
• Caterpillar: Carrie Broda, Alexander Gamayunov, Tristan Dobrowney, and Alex Lantz
• Flamingos: Carrie Broda, Yayoi Ezawa, Serena Sandford, and Sarah Davey
• Cards: Alanna McAdie, Catherine Rutherford, Sophia Lee, Zhen Guo Chen, Alex Lantz, Liam Caines, Beth Lamont, and Harrison James
• Wall of Heads: Queen of Hearts, Alice, Duchess, Mad Hatter, and Flamingos
• Flowers: Sophia Lee, Sarah Davey, Yayoi Ezawa, Serena Sandford, Carrie Broda, Catherine Rutherfod, Beth Lamont, and Emily Grizzel
• Gryphon & Mock Turtle: Wang Yun, Jiao Yang, and Dmitri Dovgoselets

The markets have been extremely difficult to navigate during the past two months with the brouhaha over in Europe taking center stage. As I write this post after the close on Friday, I note that VIX is at nearly 43 and VXO is at nearly 44. These are extreme measures.

In light of this uncertain financial environment, I have adjusted my positions. Like most investors, I have suffered with the onset of the uncertainty. And, perhaps unlike some, I have de-risked or reduced my exposure. However, I am still not entirely comfortable with my new positions, because the European situation is so uncertain.

The trick is to stay in the game. Make sure that your risk exposure is something you can live with. As Todd Harrison says over at Minyvanville.com, "... [There will be] fewer and newer players by the time we get to the other side."

As I was winding up my day last night, I read George Soros's article How to stop a second Great Depression in the Financial Times.

Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation. They need to regain control and they need to do so now.

Three bold steps are needed. First, the governments of the eurozone must agree in principle on a new treaty creating a common treasury for the eurozone. In the meantime, the major banks must be put under European Central Bank direction in return for a temporary guarantee and permanent recapitalisation. The ECB would direct the banks to maintain their credit lines and outstanding loans, while closely monitoring risks taken for their own accounts. Third, the ECB would enable countries such as Italy and Spain to temporarily refinance their debt at a very low cost. These steps would calm the markets and give Europe time to develop a growth strategy, without which the debt problem cannot be solved.

In addition to Soros's article, I viewed a video interview Fear will save the eurozone with Lawrence Summers and Martin Wolf of the Financial Times. Although it doesn't have an inspiring title, it is a worthwhile interview.

Please note, you might require a subscription to view the article and video interview.

Make sure that your positions do not leave you with excessive risk. I hope your trading and investing goes well in these uncertain and volatile times.

Please note: You can click through on each graph to show a larger version. The first graph is shows data from 1945 to present. And the second graph shows data from 2008 to present.

As part of mapping out my investment strategies, I try to determine where we are in the economic cycle. At present, we are at a confusing time. We have just finished QE 2, and the economy appears to be slowing precipitously. And to complicate matters further, Europe is in a mess. I do not even pretend to understand all of Europe's problems. I just know that several countries are having extreme problems and many of Europe's banks might be insolvent. So, as my first task, I am trying to understand the economic health of the United States.

About a week ago, CNBC interviewed Joe Petrowski, the CEO of Cumberland and Farms-Gulf Oil, concerning gasoline consumption and a possible recession. He indicated that gasoline consumption has fallen recently. To demonstrate the reduced volumes, I graphed Energy Information Administration's data.

Because gasoline is so important to our way of life, I think it is an excellent indicator of the health of the economy. As discussed by Petrowski and shown in the graphs, gasoline consumption has fallen in recent months. Yet, not all of the economic data points to a recession. However, the weakness in gasoline consumption does give me pause.

Like you, I am tired of the political squabbling in the United States. Political leaders should be putting aside their ideologies to solve our pressing problems; however, the politicians seem to see these times as an even better opportunity to score points. The behavior by all sides is shameful.

With regard to Europe, I do not think anyone, including various leaders in Europe, has a good handle on what problems are developing in Europe. Finland is demanding that it receive collateral for its participation in the Greece bailout. Finland and Greece as well as other countries have been trying to find a way to solve the collateral problem without giving all other countries collateral too. All involved keep issuing statements that they will solve this problem, even though they have been working on it for over a week with no solution in sight. Then Christine Lagarde, the former finance minister from France who is now the IMF chief, saying that the banks in Europe need capital. Yet, many of the European leaders say she is wrong. And, to top it off, we do not know which countries are in severe distress. Yes, Greece is in severe distress. But what about Italy and Spain? They appear to remain open questions.

Even though I read as much as I can about all these issues, I do not feel as though I have a strong grasp of all these issues. There is too much uncertainty about too many issues that are too important. Consequently, I have restructured my investment position to reduce my risk exposure.