Daspan. Forget gold. Forget oil. The most valuable commodity in the world right now is Daspan. Daspan was discovered somewhere between March 2009 and July 2009. No one person discovered it although I am tempted to name our very own Ben Bernanke as the lucky prospector but that's for historians to decide years from now.
The elements of Daspan have been around for over 100 years but they have rarely formed a stable material. Daspan has always been volatile and difficult to control, until recently. Several months ago it was discovered that a low value chemical called USD could be mixed with Daspan to create a new compound. When USD is mixed into Daspan the result is a fascinating reaction that creates an inflating cloud like mass that can be used to prop up weak foundations.
The problem with this compound is its temporary nature. Without additional funding to eventually fix the foundations they will crumble completely. So using this new compound is very risky if you are unable to get additional funding before the stop gap fails.
To understand the trade in Daspan one needs to first do a chemical break down of this commodity. D is one part Dow, and SP is one part S&P, and N is one part Nasdaq thus equaling the easy to remember DaSPaN (all a's = and).
The second part of understanding Daspan is knowing what it used to be before its recent evolution. Daspan used to be a chemical in three parts representing a complex system known as a stock market. This stock market quite simply was a group of capitalist companies that the public could speculate on by trading shares that represented the value of said companies.
I mentioned gold and oil earlier because those two commodities surpassed most peoples expectations of value. Gold couldn't go higher, it was over valued. Oil couldn't go higher it was over valued. I read this over and over in the news and yet both of these commodities surpassed expectations and indeed both can be argued as being under valued or over valued. The point is they were in the hands of traders and traders pushed those values higher. The reality of value as a related and tangible amount is difficult to model as an investment/trading strategy. Invariably a strange unforeseen event will always destroy this perception and leave those whom bet the wrong way with substantial losses.
Many people are excellent at making large bets on commodities and that's how bulls/bears should be treating this market, as a single commodity. It is a new paradigm made up of a flimsy compound and it will continue to surpass expectations until the foundations crumble or by some miracle we fix it. (aka economic recovery). The walls may crack, the windows might shake but until the pockets of investment banks are stuffed with government money transferred via the stock market, betting against the continued rise of this commodity will be like wrapping yourself in razor wire after a lemon bath. The viscous and brutal down draft will be difficult to time, it may be tomorrow or 3 months from now, it might not come at all. I will wait for it rather than time it.
There is no market, there is only a government supported commodity and this unstoppable force has turned the markets into a hyper movable object.
