"Risk Happens Fast"

The Financial Times did a quick writeup on the Microstrategy ecosystem that looked at the volatility of the common and the great lengths that the 2x funds have had to go to in order to do what they are intended to do. The simple version is the the two 2x funds are so big that counter parties (banks) are not comfortable, or not able, to provide enough the swaps needed to keep up with how big the funds have become. They've had to turn to the options market which, as the article digs into, can be less precise. 

Here's the position run for the Rex Shares 2x Microstrategy ETF (MSTU).

The bottom six positions listed are call options. There are obviously different strike prices and they will all react differently to changes in volatility and the price changes of the common. Today, the common fell 8.19% while MSTU fell 16.40% so if using options to create part of the exposure is a problem, it wasn't a problem today. 

Here's a look at more of the ecosystem versus Bitcoin.

MSTY is the YieldMax covered call fund that tracks MSTR. In the middle of the chart, MSTY went ex-dividend for a whopping $3.08. These are fun to write about in theoretical terms about barbelling volatility and other out-there portfolio concepts but owning these is really a tough way to make a living. I've quoted Mark Yusko, one of the biggest Bitcoin proponents out there, many times as saying risk happens fast. The declines in the Microstrategy ecosystem over the last few weeks versus a 4% decline for Bitcoin, are a great microcosm of that effect. 

A quick pivot to firefighting. We had a legit structure fire on Sunday that required full turnout gear and airpacks (SCBAs). It was a chimney fire that was billowing heavy brown smoke, that's not good, when we got there. Two of us went in and then realized the most effective strategy would be to access the chimney from the back deck. There was smoke and rolling flames visible on the back deck.

We dug into the chimney exterior and then sprayed water up, down and all around in there which worked but it took more than a few minutes. We also hit the roof over the deck, as shown in the picture. That's me in the red helmet. We managed to get the smoke to lessen considerably and go from brown to white (white smoke is much better than brown smoke). 

As this was happening our mutual aid response from two neighboring career departments arrived on scene. They worked to go in through the roof and work interior to actually take the incident from knock down (what we did) to actually being able to call it out. Relative to someone's house catching on fire, it was a big win. 

Volunteering as a firefighter is a great way to do just about everything they talk about for successful aging. If you're actively engaged with a medium or larger sized organization, you are maintaining social relationships. It's actually easier being part of an organization for anyone who leans shy or introverted, it's interaction with a purpose. We have thirty something firefighters, plus board members and other types of volunteers and we also maintain working relationships with the other fire departments and agencies (Forest Service and state forestry department).

Obviously there is the potential for maintaining a high fitness level. Full turnouts and airpack weighs close to 50 pounds. Working hard for an hour wearing all that gear is a great test of work capacity. The rate at which you breath down an air bottle before needing to swap out is another barometer of fitness. If you can work for a while with all that weight and not breath down a 45 minute bottle from 10 minutes are work, that's a good fitness win. 

These sorts of calls for service are a lot of fun for me which is also important. For years, I've described wildland and structure fires by saying you work your ass of for a few hours and accomplish something. 

I would encourage everyone to find some sort of volunteer outlet, all the better if it requires problem solving, social engagement and fitness.

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.