Feb

21

Venezuela, from Duncan Coker

February 21, 2007 |

Now on a visit to Venezuela, I thought I would share some highlights on what's happening here from a ground view. Though I am mainly at resort type areas away from the city, the spirit or how things are done here or not done can still seen.

The black market for dollars in very active, changing daily and at a 30-40% premium to the stated bank rate. It is actually very difficult to change the local currency, Bolivares (B) to dollars, other than through the black market. The spread on the exchange is about 10%. So going the other way and changing $200 for a week's expense in B's garners a nice profit for the locals. Unfortunately the black market is used mostly by the wealthy and connected here as a vehicle to siphon funds. It work like this: the government will exchange B's for dollars at the fictional rate of 2150 B/$ for certain business. They have to justify a "need" to buy imported goods and then can get the very favorable and fictional bank rate. These exchange rights are given to government cronies for big infrastructure projects, of which there are many.

The dollars are then sold back on the black markets at 3300B/$, and they just used domestic suppliers. I imagine this is funded by oil profits that bring in dollars to the treasury, but amount to a heavy indirect tax on the country. Gasoline, however, is government controlled and incredibly cheap, about 40 cents a gallon. There are shortages for other goods caused by price controls, mostly on food distributors who have no incentive to supply at capped prices. It varies from week to week. Sometimes chicken, sometimes meats, dairy, or other. There is very little regulation or laws on ownership for property or vehicles. One of the locals tells me, regarding cars, "If you have the key, you own it." Chevys and Jeeps are very popular here and made in the country. Land titles are slightly more organized but involve much greasing of the wheels.

On a more uplifting note, I saw some incredible bird life while on the island of Los Roques, where pelicans in particular are abundant. When they are feeding they have a signaling element for the local fisherman. Like the seagulls in the Northeast showing the way to the bluefish, the pelicans feeding on bait fish are usually followed by tarpon and red snapper. The feeding skills of these predatorily birds are incredible.

Related to this is my pursuit of bonefish and tarpon. With a fly fishing rod, I'm always honing proficiency. While casting I have been thinking about the steps that lead to the best casts. It is a series of counterintuitive things. You start with creating line speed by swinging loops in the line with the rod. You try to maintain a tight loop, to keep the line loaded. In other words you prefer a v-like line to a u-like line up in the air and taught at all times.

But the most important step is then abruptly and dramatically to stop the movement of the rod. The line continues in the desired direction towards the fish you have your eye on. But the stopping is the key and the difficult part. You have to move the rod tip away from the fish in order to get the line to the target. The closest example I can think of is the action of cracking a whip.

I have been thinking about what stopping techniques are used in trading. If the stopping is the entry of a trade, then I view it as getting in with confidence and size, not limping in afterward. Chasing the trade afterwards is like dropping the rod tip, losing line speed. Another part is to allowing the line to reach its target. It is better to set wide perimeters for profits, not to take quick ones.

Basically, let the line reach its target. The best casts are unforced, combining patience and timing. Sometimes you have to force yourself to relax even in the face of a fast-approaching school of bonefish that will be quickly past you. Relax, but be quick; generate speed, but then stop. It is a combination of counterintuitive actions, much like trading.


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