Catching a Falling Knife: The Art of Day Trading
Interview with Michael Goldberg By Geert Lovink
Over the next three weeks artist Michael Goldberg will be betting on
Newscorp shares. The installation, Catching a Falling Knife, opens
tomorrow at Artspace in Sydney (Oct 17, 18.00). As Artspace's critic in
residence, together with Michael, I will report on the ups and downs of
Murdoch's media enterprise and Michael's efforts to play the market . The
following interview gives the reader an idea about Michael Goldberg's
previous work, his intentions and expectations. You can follow the project
at falling knifeGL: In an earlier installation, situated in a gallery, you traded gold
stocks. What exactly happened and how did you get this idea?
MG: 'NCM open/high/low/close' took place at the Bathurst Regional Art
Gallery between 22 April and 10 June 2001. The installation was
commissioned for 'Auriferous — the Gold Project', curated by Amanda Lawson
and Craig Judd. The exhibition was part of the sesqui-centenary of the
discovery of gold in Australia. A joke circulated that I was only included
in the show because of my name! I quite like that pitch, but there was a
more serious side to what I was doing too. Craig had known that I was
researching aspects of the stockmarket, looking at ways in which these
could be included in my site-specific and intervention work. The sesqui
offered a good opportunity. So, while most artists in the show considered
the material qualities of the metal, I focused on the abstract — gold's
value. In the context of site-specificity I was particularly interested in
the Newcrest mining company's publicly traded shares (Australian Stock
Exchange code: NCM). Newcrest owns and operates the Cadia Hill gold mine,
one of Australia's largest open cut goldmines, just outside Bathurst.
I didn't actually trade gold but charted its price and the trajectory of
NCM shares over a 100-day period. During 22 April to 10 June I regularly
worked in person at the gallery. I sat in my 'office' on a 3m high
scaffolding tower monitoring live data feeds. I posted a daily report and
offered visitors to the gallery technical analysis on the gold price and
commentary on the state of Newcrest stock. Huge charts were drawn on the
gallery walls showing trendlines, price caps and support levels as well as
theoretical 'buy' and 'sell' points. The daily chart was updated at the
close of trade and intraday prices were also logged. I descended from the
platform at regular intervals to update these. The top of the platform was
intentionally not secured and thickly cushioned high-jump mats were placed
next to the scaffolding to provide a soft-landing should I slip (or should
the market crash!). Daily detritus, such as scrap paper, pencil stubs and
lunch-containers were allowed to build up under the platform — the
tailings of production, so to speak.
One of the aims of the project was to give the public an opportunity to
understand a bit more about how the price movements of stocks are
represented on the market as the key daily levels are reached, open, high,
low and close. I was also interested in how, from an artist's point of
view, reams of financial data could be transformed into large wall
drawings in order to explore an aesthetic dimension. In addition to more
conventional methods such as line graphs I also used 'candlestick' charts.
This technique, developed by the Japanese in the late 1800s, while
accurately representing the health of a stock, also combines beautifully
elegant graphic symbols and patterns with poetic descriptions such as
'morning stars', 'shooting stars' and 'spinning tops'.
With the gallery located in historic Bathurst and close to Newcrest's
Cadia mine, I intended the project to question how the value of gold is
represented on today's financial markets. 150 years after its dusty,
labour-intensive Australian debut, gold is now comfortably prospected by
speculators trading shares, indexes and futures from office networks and
home PCs. I wanted to draw attention to this transition. On the days when
I 'performed' live I started off from the Australian Stock Exchange in
Bridge Street at around 8 am. I wore crisp white overalls with NCM logos
and carried my drawing implements, newspapers etc. with me. I would watch
Bloomberg commentary on the ASX screen for a time and then take a taxi to
the airport, flying Hazelton airlines to Bathurst. At the end of a day's
work in the gallery I would commute back the same way. During the course
of the project, gold shot up from around $260 to $290. Newcrest's share
price vaulted accordingly. Some visitors to the gallery asked if I had
somehow engineered this assault on the magical $300 mark! Others returned
to express regret at not having bought Newcrest shares when they first saw
the price moving up on my wall charts. I also had one regular visitor who
would stretch himself out on the high jump mats and rave for a couple of
hours on the scourges of globalism and the demise of Marxism.
There was also has a sacred aspect to my profane activities. While keeping
an eye on the gold price and Newcrest's shares I also sifted through an
online bible prospecting for gold references from Genesis to Revelation.
Over the course of the project some of these verses were transcribed onto
notepad paper and pasted onto the gallery walls for contemplation and
inspiration.
GL: The idea is that you are going to be a day trader for three weeks.
Could you explain why you have chosen to trade only in one stock? Why News
Corp? Do you think it makes a difference to operate with real money? You
have exercised with bogus trading programs as well. What made you look for
sponsors?
MG: Several reasons informed my decision to trade in one stock only.
Within the context of an art intervention what I'm doing here is not BEING
a day trader as much as BEHAVING like one for the purposes of the project.
In a number of my past projects I behaved as if I was an 'archivist', and
sometimes a 'museum curator'. I employed their strategies in order to
achieve my ends. But I was always aware of their dependence on the
Institution and my independence from it - an essential difference. I am
also careful not to engage in what one might term true-to-life theatrical
gesture, which might confuse my work with aspects of performance art. When
I behave like a day trader I adopt a repertoire of tactics, but there are
always certain slippages. Day traders might trade a number of stocks
including some blue chips and 'penny horrible' mining shares. The latter
would provide the substantial volume and volatility necessary to achieve
the constant turnover of small profits that characterises classic day
trading. Share derivatives such as options and warrants are the
instruments most favoured to provide the leverage needed to speculate in
the market giants. Here I will follow a similar strategy, but essentially
I've decided to keep to one stock because it will be easier for the public
to follow my tactics. Multiple stock strategies would be too complex.
There are also socio-political subtexts around New Corp that I want to
explore. The company is a 'household name' as well as being a major local
and global media player. Apart from its daily impact on the market, the
newsworthiness of News Corp is legendary. The popular press closely
follows even the most banal personal exploits of Murdoch family.
News Corp is a well-traded and hence liquid stock. Its trajectories can be
demonstrably analysed and charted. One of the intentions of the project is
to reveal the elaborate choreography of the stock market as it unfolds
daily, minute by minute, second by second, responding to constantly
shifting global algorithms. The graphic representations of these movements
will be key aesthetic features of the project. On an emotional level, as I
trade News Corp shares with real money, the risk and reward factors will
be clear and present. If I stuff up a trade I'll have to answer to my
backers. If I win out, the accompanying adrenalin rush will no doubt be
enjoyable. Through it all though I'll be constantly reminded of the
statistics suggesting that I'm more likely than not to fail!
While I was developing this project I flagged some of my ideas on a day
traders' website chatroom. By identifying myself as both an artist and a
trader I drew the attention of a number of interested parties. Securing a
financial commitment from anyone did not come easily though and it took
awhile before the online forum got used to the idea that I was serious.
Eventually I was able to develop a relationship with three individuals who
surmised that by associating themselves with the project they could at one
and the same time be stock market speculators and patrons of art. This
conflation is probably not all that dissimilar from conventional
investment in the art market. Speculators identify artists whose work they
imagine will turn them a profit over time. In my case, the returns promise
to be much more immediate. Of course they have to accept that if they lose
money on the deal they won't even be left with something they can as much
as hang on their walls!
GL: What happened to you during the wild stockmarket years of 1998-1999?
MG: Those years functioned as 'boot camp' for me. I was first attracted to
the market, as were many Australians, by the promise of profiting from the
public sale of Telstra. I got in on the float and after that became a
follower of the broader market. I became interested in technical analysis,
that is the study of the charts and indicators that trace the trajectories
of shares and share indices. As I mentioned earlier, charts don't simply
consist of conventional bar and line graphs. Candlestick, Renko and Kagi
charts and their interpretation are highly aestheticised processes.
Evident throughout, one encounters the marvellous poetics of the algorithm
via Fibonacci, Mandelbrot and Deleuze's rhizome.
GL: Could you tell us more about the process of trading? We can get a
Schwab account and click around on their site, but that's probably not
what you are going to do. What set up are you using and to what extend
does it differ from the hobbyist day trader and the financial banker on
the other hand?
MG: My trading set-up will be fairly sophisticated. A dedicated trading
account will be opened with a broker. I'll need to be in phone contact at
a moment's notice so they'd have to be lightning fast, reliable and get
used to my trading style quickly. I prefer a telephonic link for the
project as it will provide a more direct way for spectators to follow
what's happening. Using a bricks and mortar broker will also get me into
the market when an online service would have closed its order books. I
need access right down to the wire with this venture.
The share derivatives I'll be trading are known as warrants. These are
issued against a range of equities by so-called market makers such as BNP
Paritas, Societe Generale and Citibank (a market maker is the equivalent
of the 'house' in gambling terminology). Warrants have different degrees
of volatility (I won't go into detail here) and provide substantial
leverage against the head-stock. Because they can be traded in large
volumes they are a favoured inclusion in most day traders' repertoires.
There'll be a dynamic data link in the gallery as a constant flow of
prices from the stock exchange will be crucial. I'll also have charting
software containing the indicators I'll be using such as moving average
histograms, stochastics, and momentum and volatility markers. I'll be
interacting with online chatrooms on a regular basis and Bloomberg.com
will keep me in touch with financial news and events. This all seems quite
complicated — but sophisticated trading strategies are no less or more
complex than the manipulation of the elements of art! Many aspects are
shared in fact; techniques can be acquired, skills developed and idioms
learnt. I have no problem with this project being as much about
administration as anything else.
It will be important for me to show that the trading tools and trading
tactics I use are within the capabilities of most people (something
Beuysian in that, perhaps) — those who have access to the Web and a modest
amount of capital that is. Trading is often confused with 'investing'. In
reality nothing is further from the truth. Investing is a marketing ploy
used by the banks. Even superannuation funds that invest on our behalf in
order to take the pressure of social security as the population ages have
been shown to be inefficient with a low return and a high cost. It is
essentially a passive process and subject to the vagaries of global
politics and prevailing economic trends. Active trading on the other hand
takes possession of the means to confirm support for and opposition to
market forces. The trader takes responsibility for his or her own
decisions. Through the skilled use of technical analysis one can become
equipped to enter the stockmarket arena with a fair degree of control.
When general trade opens at 10am the playing field is level for all
concerned, including Murdoch (yes I know that price manipulation happens,
but we won't concern ourselves with that at the moment). Whether or not
the company's books are in the black or in the red is of no concern — the
trader plays a stock as it works its way up to its highs and plays it as
the lows are plumbed as well. All that's important is liquidity and
movement. 'Chance ' and 'probability' become the real adversaries and
allies. Dealing with these factors is not easy. It takes focus, study and
commitment. A sense of strength can be gained in seeking out comrades in
this process. For some time we've been seeing the formation of
share-trading cooperatives where people organise to pool expertise,
information and of course, capital. The participants here are mostly
veterans of the tech-wreck. Battle-hardened, they have assembled in the
smouldering ruins (I prefer this sort of terminology to that of the
'deflated bubble' variety) and are finding ways to exist amongst the
bears. The survivors bivouac around the online trading chatrooms where the
camaraderie is palpable. Multi-nationals and remaining dot-commers no
longer offer them promises of 'blue sky' opportunity, but they do provide
a steady stream of income for the well prepared.
GL: Do you see yourself as an artist any different from other day traders?
My work of the past decade has closely examined the power relations of the
British Empire's colonial project in Australia. For example 'A Humble
Life' (1995), situated in Colonial Secretary Alexander Macleay's ornate
residence at Elizabeth Bay, looked at the relationship between the Macleay
family and their servants. 'Real Estate' (1996), installed in merchant
Alexander Spark's villa Tusculum at Potts Point examined colonial land
grants, the architecture of Empire and links to contemporary real estate
mania, tracing the subsequent subdivision and development of the Tusculum
estate. A project dealing with the stockmarket seemed a logical segue in
an updated consideration of these power relations. Likewise, the
transition from the immediate foci of colonialism to the global net cast
by multi-nationals and corporate giants seems appropriate.
I'm also really interested in the frisson between the emotions of fear and
greed that become heightened during speculative activity. I'm reminded of
a scene in Antonioni's "Blow Up" where the character played by David
Hemmings mixes it with rock fans as they fight over the remains of a
guitar, trashed on stage at the end of a concert and flung into the
waiting crowd. He emerges the victor, only to discard the prized relic
moments later as so much trash — the adrenalin rush of the pursuit having
been the only real satisfaction to be gained. In this project treading the
fine line between fortune and misfortune, success and failure is a primary
motivation for me. It's important to mention that I won't benefit or lose
financially from this exercise in any manner. Any profit I make goes
straight to the backers. Likewise they will absorb the losses. I will act
only as an agent of risk and reward.
GL: Some would say, Michael, this is not 1986-87 or 1998-99. You're three
years late! It is likely that the News Corp stock will further
deteriorate, no? The company has made its largest ever loss so far over
the last financial year. Ever since the NASDAQ crash in April 2000, the
following recession, 9/11 and the corporate accounting scandals,
stockmarkets have been falling dramatically. The Australian ASX may have
been an exception, but it hasn't grown much either. How do you plan to
make a profit in this bearish market? What strategy are you going to use?
MG: I mentioned before that I'd be trading share derivatives called
warrants. The two basic types I'll be using are 'call' warrants and 'put'
warrants'. The former benefit from the upward trend of a particular share
price and the latter benefit from a downward trend. So I can trade a
falling market just as effectively as I can trade a rising one. Warrant
trading strategy is a little too complex to go into here, but suffice to
mention that there are a number of factors affecting volatility. The
higher the volatility the greater the opportunity for substantial profit
(and likewise, the greater the loss if you get the trade wrong). By using
this strategy I don't care whether News Corp stock is deteriorating or
not. The important factor is that I work out the probabilities of
tradeable movement, up or down. Get the movement right and you profit. Get
it wrong and you'd better close out your position quick smart before you
cop too great a loss. This is the basic principle of daytrading.
Daytraders usually close out their positions at the end of each day,
protecting their profits from possible adverse overnight moves on the
markets. In my case I may keep a position open for a number of days,
increasing its size if the indicators are favourable. I may even open
corresponding counter-trend trades to make the most of intraday moves.
This would be comparable to a surfer moving down the face of a wave and
then pivoting to rise to the crest again to make most use of all of the
wave's energy.
GL: The art market has directly benefited from the financial bubbles. A
lot of the speculative capital was invested in art. How do you see the
relationship between the art of speculation and the contemporary arts
system and where does your installation fit in?
MG: I think that the records we're seeing broken on the Australian art
market at the moment are a direct result of the channelling of speculative
capital OUT of the sharemarket and into the galleries. The financial
success of indie art stars overseas and the huge prices being realised by
well-promoted artists on the home front can be pegged alongside the three
year long bear market and tech wreck of April 2000. The returns on painter
Philip Wolfhagen's 'blue skies', for instance, are now far more reliable
than the blue sky profits promised by the surviving dot commers and fiber
roll-out merchants. It's no coincidence that one of my early online
conversations with a chatroom member — let's call him Mr. X — who is now
one of the backers of my project, revolved around the art market and how
one might turn a buck in it. During subsequent emails I managed to
convince him that it would indeed be possible to combine the 'skill' of
the artist with that of the trader. "Why not", I suggested, "take a punt
on both". I mean, if I've been trained to create and to recognise good
formal gestalt why shouldn't I put this to good use in identifying
promising trends on a stock chart. Of course it's not as simple as that
but I'm sure you get my drift. Well at least Mr. X did. He and his
partners are betting $50 000 that I can gauge the probable direction of
News Corp stock over a three-week period and turn a profit for them
trading warrants. Am I nervous? Is October not the most difficult and
dangerous month on the stockmarket calendar? Go figure.
GL: Are there any artists that you know of that have done something
similar before? Like buying and selling on Ebay? The only references I can
think of works by Peter Fend and Ingo Guenther who worked with satellite
images. They also worked with raw realtime data.
MG: I can't say that I've noticed any recent projects that are similar,
but whatever resonant work there is out there you can bet that it has some
affinity with the early "realtime systems" of Hans Haacke (who is better
known now for his political installation work). Those early works have
been described as being the embodiment of General Systems Theory whereby
phenomena are described in terms of their structural organisation. Jack
Burnham used the term "systems aesthetics" with reference to Haacke. "I
would like to lure 1000 sea gulls to a certain spot (in the air) by some
delicious food so as to construct an air sculpture from their combined
mass," said Haacke in 1966. This poetic image has more to do with my
current work than might seem obvious. So too does a work from 1964 —
"Condensation Cube", — the earliest of Haacke's "realtime systems". It
consisted of a sealed glass cube the bottom of which had been covered with
a thin film of water. As the gallery fills with people the temperature of
the room rises causing the water to condense on the walls of the cube
forming delicate traceries. Overnight the gallery cools and the water
again collects at the base. Here, as in 'catchingafallingknife.com', the
artwork comprises a number of components and active agents combining to
form a volatile yet stable system. Well, that may also serve as a concise
description of the stockmarket.
GL: What do you expect the News Corp stock to do? Recently they reported
their biggest loss ever. There are rumours that Murdoch may buy some of
the assets of the insolvent German media conglomerate of Leo Kirch.
Murdoch is still on the look out to get a strategic position within the
US-American satellite market. On the other hand, we might not expect to
see a recovery of the global advertisement market any time soon. What's
your overall impression of News Corp, before you start trading?
MG: Despite the reported loss, which may or may not have been a case of
just shifting money around the house, News Corp seems as voracious as
ever. Just yesterday, on the 2nd of October, News Corp signed a definitive
agreement with Vivendi Universal and the Canal Plus Group to acquire
Telepiu, the Italian pay TV business. This move will further strengthen
News Corp's position in Italy with the formation of Sky Italia. Rupert's
company will be the majority equity interest. I think that we shouldn't in
any way underestimate this company's aggressive strategies, no matter what
the balance sheets suggest. At the moment it's obvious that News Corp's
share price is in a downtrend. Looking at the charts now, it's extremely
difficult to form an opinion about the probability of a turnaround in the
near future. In the U.S. News Corp's shares have also been on a wild ride
as investors responded to Bush's war rhetoric and in turn the Iraqi
weapons inspection deal. Overall I think that the instability we're seeing
on world markets now is typical of any bear market — that is, a market in
a definable downturn. This behaviour can only be expected — it's only been
a couple of years since the bubble burst.
Nevertheless, as I've outlined earlier in this conversation, I believe
that there are still profits to be made under these conditions. A true
chart trader or day trader wouldn't concentrate too much on what the
number crunchers and analysts are saying about fundamentals. They'd rather
be looking at what the charts are telling them about how punters are
behaving on the market each day, each minute, each second. Get an accurate
picture of where the crowd is moving and you jump on for the ride — uphill
or downhill — it doesn't matter. The only trouble with charting News Corp
at the moment is that it's not so much a case of following semi-orderly
trends, but trying to determine which end of the trading washing-machine
one is likely to be spat out of!
GL: You have made a website for the project
(www.catchingafallingknife.com). Is there any possibility for online
audiences to respond? One could, for instance, bet about the success or
failure rate of your day trading activities. Can visitors of the Artspace
gallery participate in the project or do see the installation, by and
large, as a pedagogical enterprise?
MG: It's essential for me that people have the opportunity to respond to
the project. The website will feature email, bulletin boards and a
chatroom. There'll be a morning report featuring my News Corp stock
predictions, a record of trades showing profits and losses, and also
transcripts of my conversations with my backers at the close of trade each
day. I'll be working in the gallery each weekday from 9am to 10am and all
day Saturday, so visitors will get a chance for live interaction as well.
GL: A last, general question. What is the moral of
www.catchingafallingknife.com? Would you make a difference between
speculative and productive capital? What do you think of today's movements
against the free markets of global capital such as ATTAC that propose to
install a Tobin tax on speculative transactions? Do you consider yourself
part of "casino capitalism"?
MG: That sounds like a very specific line of questioning, Geert! I don't
think that one can easily identify a moral or in fact determine if there
is any moral here at all. I believe that it is important though for my
work to pose certain questions while resisting taking a position on one or
another side of an argument. I prefer to keep the project's circuits open
and allow for a degree of intellectual speculation regarding its readings.
So in the context of 'catchingafallingknife.com' I'd prefer not to be
drawn on where I stand or what my intentions are. On a personal level I
may have strong opinions about corporatism and the global manipulation of
capital but I constantly have to resist the didactic urge in my projects.
On the other hand I always level some form of critique against the
institutions in which I situate my work, achieved in part by blurring the
role and motives of the artist. As Haacke has suggested - in order to
critique the institution you have to learn to use the language of the
institution. For example in 'Ground Zero' (1997), an installation located
in Sydney's Royal Botanic Gardens, I addressed the sanitised
representation of historical events for public consumption. The subject
was the first contact between white invaders and indigenous inhabitants on
Sydney's shores in 1788. Illustrated information panels produced by the
Gardens Trust, featuring agricultural and horticultural themes, portray a
heroic struggle by 'settlers' to prevail over an alien environment and
establish their first farm. I constructed an alternative display in the
mode of a museum exhibit, selecting texts from the archives that portrayed
a more accurate version of the skewed balance of power between Europeans
and aborigines. These texts were first-hand accounts of military personnel
describing a dÈtente, not of reconciliation, but of coercion. In keeping
with the Trust's theme I also exhibited diagrams of early hoes, spades and
the like but countered the innocuous nature of the display by including
detailed illustrations and ballistics of those most efficient of frontier
tools — the musket and pistol.
Your questions regarding speculative and productive capital are important,
and I'm sure that they will be repeated when the project is critiqued. The
Tobin Tax you mention, although referring specifically to global currency
speculation, has important resonances regarding my dalliance with News
Corp. It would be difficult to assess my project without a consideration
of what Tobin and subsequently, organisations such as ATTAC, have
identified as the most virulent form of neo-colonialism now being
practised on developing nations. Although 'catchingafallingknife.com' will
function in a localised arena, the conduits that connect News Corp to
global markets and contexts through the ASX, will intimately bind me to
those theatres as well. There are a number of points of engagement here
and as the project progresses some will simply enjoy the prospect of me
wagering someone else's $50 000; others will appreciate the beauty of the
ever-changing trading algorithms I'll be charting. But inevitably I will
be called to book as a willing proponent of what you accurately identify
as "casino capitalism" — and so be it. I believe that the real value of
the project will emerge in the form of interrogations from the dark
recesses of its implausibilities and not from the spectacle of
successfully meeting its expectations.
catch a falling knife
artspace
Michael Goldberg:
Email: bivouac
