God was a geek

God was clearly such a geek.

He got all the nerdy stuff working great – atoms, molecules, sub-atomic particles, photons, etc. He perfectly balanced all the different forces – gravitation, weak force, strong force, electromagnetism… really, really, tough problems in universe creation! And we know that was what really interested him, because he did all that stuff first and spent nearly 2/3’s of his time on it.

Then he finally got around to the yucky, squishy stuff – animals. Even there he took the techie approach, setting up a bunch of single celled animals with this really cool DNA stuff and a set of rules for reproducing and mutating. Then he let the machine do all the real work. When that was done he took credit for fashioning all the beasts that walketh, swimmeth, or flyeth, which I suppose technically he did do, but, not in so many words.

Finally he gets around to making man and creates him in his own image. What a self-important dweeb. But it turns out that he completely forgot that one guy all alone in the Garden of Eden is going to get really bored, which can only lead to trouble. So what does he do? A total hack. He takes a rib from man and creates woman. That is a kludge if ever I saw one.

Then, like any nerd that has spent the past 6 days head down working on a project, living on Mountain Dew and Doritos with hardly any sleep, on the 7th day he totally crashes. Like out cold for 24 hours. Not even a shower first, just boom, into bed still covered with Cheetos dust.

To top it all off, he didn’t get around to writing any documentation for eons, but when he did finally get it done it sucked. It needed all kinds of updates by end users (most of whom were really just guessing). Stupid books like Humans Made Easy, and Humans for Dummies, ended up being best-sellers because the original document set was borderline useless. In the end all the tech support had to be done by users groups.

Geesh! What a geek!

A (not so) brief primer on the recent GameStop stock movements

Introduction

Recently there has been a swirl of news related to the sudden, meteoric rise in the price of GameStop stock (as well as that of AMC and others). I have heard a lot of misunderstandings related to what occurred. Friends, family members, strangers, and people in the media, seem to harbor a variety of errors in their understanding of stock markets, “short selling”, hedge funds, and the like.

I intended to write a brief primer on some of these things in the hopes of making it clearer. However, this appears to have turned into a rather lengthy discourse on variety of subjects that the GameStop trading issue touches on. Nonetheless, I hope some will find this useful.

Note: I am not securities lawyer, nor a lawyer of any kind. I am not a broker, advisor, nor investment manager. I have no role in any investment business of any kind, other than as an individual investor who has been managing his own portfolio for 40 years. None of the information presented below is intended to be construed as investment advice. When making investment decisions, always seek advice from a qualified professional. None of the examples I provide below are intended to reflect any real-world event. I have used Apple Computer as an example to explain various transactions. This should not be construed as an endorsement of Apple, its products, or its stock. Nor was Apple Computer involved in the GameStop events in any way.

Liquidity

We refer to some assets as “liquid” and others as being “illiquid”.

For example, as of this writing, the stock of Apple Corporation is considered to be “highly liquid”. Thousands of people buy and sell millions of shares of Apple Corporation (AAPL) each day. As of this writing, the average daily volume of AAPL is almost 109 million shares! At today’s closing price of about $140/share, almost $15 billion (with a “b”) worth of Apple stock changes hands on an average day. If you wish to either by or sell shares in Apple, it will be very easy for you to do and will take just fractions of a second. There will always be someone out there that is happy to buy AAPL shares from you or sell them to you. The stock might not be trading at a price that you like, but whether you can acquire or dispose of it is not in question.

Other assets are “illiquid”. This includes all sorts of collectibles, for example “Beany Babies.” If you want to buy or sell a particular Beanie Baby, you could go on eBay and either buy or sell it there. However, it could take an unknown amount of time to either find someone selling the Beanie Baby you want or find someone willing to buy your Beanie Baby. The price to either buy or sell could vary widely depending on who the other party is, what the condition of this particular beanie baby is (which is never an issue with corporate shares), how badly you want to buy/sell the Beanie Baby, and how much the other party feels it is worth. Unlike Apple stock, there are not millions of Beanie Babies changing hands every day in a well-organized market.

Another common example is an asset like a house, which is generally considered to be “highly illiquid”. Selling a house (in the US) normally involves finding and hiring a realtor, advertising the house, making it available for inspection by interested parties, and potentially waiting while a prospective buyer arranges for a loan from a bank, has the house inspected, and so forth. Depending upon the house, the location, and the price, in the US this could take as little as a month, but it could take years or even decades. Buying a house is similarly complex and time consuming.

Why do we care about liquidity?

Well, the more liquid market is, the easier it is for individuals to buy and sell in that market. If you’re an investor, you probably like securities and commodities markets due to the liquidity. If you have money to invest, you “go to the market” and purchase whatever investments you like. If you no longer want a given investment, you go back to the market and sell it. Buying and selling are normally almost instantaneous for commonly traded stocks. [Side note: there are “thinly traded” stocks in which there are relatively few trades per day, but even in this case, there will usually be thousands of shares changing hands on an ordinary day.]

You might like investing in art, or collectibles, or real estate; but in doing so you must understand that you may or may not be able to get into or out of an investment when you want to, or you may have to take a significant loss in order to get out of such an investment in a hurry. Because of illiquidity, you’re probably not going to be willing to invest unless you’re quite sure that there are significant gains to be made.

Buying “on margin”

Stated simply, buying stock on margin is purchasing stock using money that a broker lends to you for that purpose.

Imagine that you think Apple stock is going to do very well in the future. So, you use the money that you have for investing to buy shares in Apple. This is a very normal transaction that happens every day. If the stock goes up in value, great, you make money. If it goes down, you lose money. Very straight forward.

Now let’s say that you really, really think that Apple is going to do super well in the future. You might wish that you could buy even more shares than you can afford. You might be able to borrow money from friends, relatives, or a bank, and use that to buy the stock. Alternatively, you could borrow the money from a broker to buy more shares, “on margin”. If you’re right and Apple goes up, then you will have made even more money than had you simply purchasing the stock outright, because you own more shares than you were otherwise able to afford. On the other hand, if you’re wrong and Apple goes down, you will own more shares that have lost value. You will have lost more money than if you hadn’t borrowed to buy those extra shares. Also, no matter what happens, you still owe the broker the money that you borrowed. Sooner or later you’re going to have to pay up. Buying shares on margin multiplies the amount you could gain, and the amount you could lose. This is a form of “leveraged investing.”

If you ask friends or family to lend you money, they might just give it to you (sweet), but if you ask the broker to buy you Apple on margin, they are going to want collateral on the deal. In this case, the collateral is simply the stock itself. But stocks go up and they go down, and if your investment goes down, then you might no longer have sufficient collateral to cover the loan.

Let say you bought $10,000 of AAPL on margin. If your stock were to lose $1000, then there would be only $9000 worth of Apple in the account. Now your $10,000 loan is collateralized by just $9000 worth of stock. To make sure that there is always enough collateral in the account to cover your loan, brokers have what’s called an “margin requirement”. This is an amount of money that they insist you have in your account so that there is enough collateral to cover the loan even if the stock goes down in value. For example, let’s say the margin requirement is 20%. To buy that $10,000 worth of Apple, the broker is going to insist that there is at least $2000 in your account (in addition to the $10,000 worth stock.) If Apple stock goes up, good for you. Everything is just peachy. However, if Apple were to decline, the total value of the account will go down. If you then skip town, the broker could be left holding the bag, but, because of the margin requirement, they can still make themselves whole by selling the stock and making up any loss from the cash you provided as collateral.

Under normal circumstances that is not the conclusion anyone wants. You want to keep the investment, and the broker does too. But there is no longer enough value in the account to cover the 20% margin requirement. The broker wants to maintain the account with total assets worth at least the value of original investment plus a 20% buffer. With the stock worth less than its original cost, you are going to have to kitty up some more dough.

The broker is going to make what is called an “margin call”. Basically, they’re going to call you up and say, “hey, you gotta put more money in the account.” If you don’t, they will sell enough of your shares of Apple to bring up the amount of cash in the account, and lower the number of shares, thus covering the exposure. This is part of the margin loan deal. The broker can sell your shares if they feel they need to. [Note that the margin amount in your account does not need to be in cash, it could be shares of some other stock. However, if that is the case, should that other stock go down, that too might trigger a margin call if there is then not enough total value in the account to cover the margin requirement.]

Finally, the broker didn’t just lend you that money out of the goodness of their heart; they are going to charge you interest on the amount loaned for the entire period that you borrowed it. So, your chosen stock needs to go up by at least enough to cover the interest on the loan, and you want it to do so pronto.

Going “long”

When someone owns shares of a stock (or some other investments) we will often say that they are “long” that stock, for example, “I am long Apple.” Similarly, if someone owns a lot of shares in different high-tech stocks, we might say that they are, “long high-tech”.

For the purposes of this discussion, “long” is really only interesting in that it is the opposite of “short”.

“Short” Selling

Short selling (or “selling short”, “going short”, or “shorting”) is the crux of what was going on with GameStop recently.

Simply stated, a “short” is selling something that you don’t own – in this case, shares of a stock. A broker will lend you the stock so that you can sell it. You might want to do this if you believe that the stock is going to go down in value over time, just as you would go long if you thought the stock was going up. You borrow the stock today at its current market value and sell it at the going price. Later you buy that stock back at the then current market price and return it to the broker. Assuming the stock did go down over that period, you keep the difference between what the stock was worth when you borrowed and sold it, and what it was worth when you repurchased and returned it. Of course, if the stock went up instead, you’re going to have to rebuy it at a higher price than when you borrowed it, so you lose the difference.

Note, that this is effectively borrowing from the broker, and so it is a transaction on margin. You will have to pay interest on the transaction, there will be a margin requirement, and you may be subject to margin calls. The only difference is that in this case you would face a margin call if the stock went up (making your short position worth less) rather than getting a margin call when the value of the security goes down, as is the case in a normal purchase on margin.

Limited gains but unlimited losses are possible

One important thing to be aware of with short selling is that there is a limit to how much profit you can make, but your potential loss is theoretically limitless.

For example, let’s say you buy (long) a stock at $20 a share. The most you can lose is $20 a share if it were to go to zero. On the other hand, it could be the next Google and just rise and rise and rise making you more and more profit. However, if you sell that same stock short at $20 a share, the most you can possibly make is $20 - if the business goes bust. However, if you were dead wrong, and the stock shoots up, you are losing money all the way up. In practice, stocks don’t go from $20-$1 million over night, so practically speaking, you can’t actually lose an infinite amount of money, but depending upon how many shares you have shorted, you can lose a hell of a lot more than you can gain, and theoretically your potential loss is unlimited. Sophisticated investors are supposed to understand this risk.

Is short selling legal, and why does it exist?

Short selling is entirely legal. It is a common practice. I have done it myself.

Why is there this thing called short selling, and why is it legal? Basically, it helps increase liquidity in the market overall. The more buying and selling of stocks, the greater the market liquidity. By allowing people to borrow stock that they don’t own and then sell it, you have increased the number of transactions, and the number of people buying and selling stock. Since liquidity is good, the availability of short transactions is good for the market.

Also, prohibiting short selling would be almost impossible. The SEC could prohibit brokers from lending shares to investors, but it would be very difficult to prohibit individuals (or firms that aren’t brokers) from lending stock to each other and then selling it.

We should also note that it is usually wealthy individuals who do things like this. Not because poor people are actively excluded from these markets, but because poor people don’t normally have the money available make such risky investments - if they can afford to invest at all. They might also have poor credit, in which case the broker would not be willing to lend to them for any margin activity, be it long or short.

Hedging

Hedging is basically “hedging your bets”. Hedges are simply ways of insuring your portfolio. You buy a stock or other investment that you expect to go up, and then you also by something else that will go up if that first thing goes down – i.e., you buy two investments that move opposite to each other. Most of this requires sophisticated analyses. Hedging in a portfolio is a way to reduce risk at the cost of purchasing the hedge. Though it reduces the possible total gain of the portfolio, it reduces the amount of money that can be lost.

Effectively, hedging, it is a fancy kind of insurance. People buy insurance all the time to hedge various risks. You use your life savings to buy a house. That is a major “investment” for you. But all kinds of things could go wrong that would wipe you out: fire, flood, Godzilla, etc. So, you buy insurance to cover your loss if something happens to your house. This is the same thing as buying a hedge on your portfolio. If your investment goes down, your hedge goes up, reducing or eliminating the loss. Hedges cost money (and hence lower your return in the case where things go well), but they reduce risk. Making money with as little risk as possible is the name of the game.

Hedge funds

Originally hedge funds were basically managed portfolios in which the hedge fund manager and his or her team used all kinds of fancy esoteric methods to make money regardless of whether the economy went up or down, the stock market went up or down, etc. They promised to use hedging to make money with as little risk as possible. Some hedges sound crazy (to me), but apparently the math works out (usually.)

Over time, the hedge fund world changed. A lot of funds gave up on the idea of low risk, and instead used their sophisticated investing techniques to take big risks in the hopes of extraordinary gains. Bernie Madoff’s fund (which turned out to be a hoax) was pretending to be just that. It was actually a Ponzi scheme, but it seemed to investors at the time as though Madoff was successfully taking big risks and returning outstanding results. There are still hedge funds whose business is making money with as little risk as possible. But there are also now funds which call themselves "hedge funds", courting investors by chasing extraordinary gains.

Most hedge funds specialize in some particular strategy. One of the original types of hedge funds is referred to as “long-short equity”. Such a fund buys one investment (“going long”), and shorts some other investment, so that no matter what happens they make at least a little bit of money on the deal, and if they did it right, the risk was negligible.

However, nothing is ever certain. You can never eliminate all risk and still make any returns. During the great recession of 2007-2008, markets were roiled by a “once in a century” shakeup and a tremendous (temporary) loss of liquidity. Facing margin calls, hedge funds (and others) were forced to get out of positions at a time when no one was buying, and so had to sell at “pennies on the dollar.” During that period, long/short hedge funds lost prodigious amounts of money, in spite of having their positions carefully hedged. They hedged against a normal market environment. They did not hedge against markets collapsing as they did in 2007. In a similar way, funds that were recently shorting GameStop were not hedged against the possibility of the stock shooting up with no one willing to sell them the stock they needed to close out their short positions.

Another type of hedge fund is a “distressed” fund. These funds look for opportunities in businesses, real estate, or other investments which are in trouble - investments which are “distressed.” They then attempt to make money either by short selling the investment or buying the investment and attempting to increase its value (possibly by breaking it up and selling the parts ala “corporate raiders”), or by bringing in new management for the business, or by putting together a group of investors that will buy the business and attempt to turn it around, or other things. [Side note: the 2007-2008 recession created lots of opportunities for distressed investing. However, there was so little liquidity in the market that many funds weren’t able to take advantage of these opportunities.]

There are lots of other kinds of hedge funds, but these are the two types that are interesting for our story.

Are hedge funds only for the rich?

A complaint that people tend to have about hedge funds is that they are only for the rich. That the game is rigged for the wealthy, and the little guy can never get ahead. It is true that small investors generally cannot invest in a hedge fund, but not for the reasons most people think. It’s not some rich guy club that is out to screw the poor and won’t let less affluent people in.

There are two main reasons why only wealthy individuals can invest in hedge funds.

First, these are odd, esoteric, investments with specialized risks. So, hedge funds will only accept investments from experienced investors. This is to keep novices from investing in products where they might not understand the risks that they are taking. “Shares” in a hedge fund are private sales to sophisticated investors and are largely unregulated. People who cannot afford to lose large amounts of money should not be in this arena, even if it can offer great rewards. So, hedge funds will not accept investments from inexperienced investors who cannot afford big losses if things go wrong.

Second, these sophisticated mechanisms often require long timelines to execute. If you’re going to buy real estate in Tokyo and hedge it against Argentinian cattle (hyperbolic example), that’s a very illiquid set of trades. For this reason, hedge funds often limit the timing or frequency with which you can extract your money. They may allow investors to withdraw money only once per year, or only on one particular day in the year, or even less often than that. So, they want to make sure that the partners (their investors) have sufficient personal funds to put in huge amounts of money, and not take it out for a very long time. Having lots of small investments from people with limited net worth, that might want to remove their money at any time, would make it impossible for a hedge fund to successfully execute its strategies.

Fiduciary duty

Another thing that’s important to understand is fiduciary duty. “A fiduciary duty is an obligation to act in the best interest of another party.” (definitions.uslegal.com) Hedge fund managers, as well as other investment advisors, are required to act in their clients' interest. It is illegal for them to do things which are not expected to benefit the client. So, when people point at hedge fund managers and accuse them of being greedy, their actions aren’t entirely driven by greed. If they see a market opportunity that fits their mission, they are obligated to invest if such an investment is in the best interest of the hedge fund and therefore its clients. If they see an investment which is outside their stated mission, or is not in the fund’s best interests, then they are legally prohibited from making that investment. It is said that they have a “fiduciary duty” to their clients (which doesn’t mean that they aren’t greedy, just that in this case they are not acting on behalf of their own greed.)

Holding stock in street name

Investors virtually never take possession of the stock certificates for the shares that they own. Actually having the physical pieces of paper is kind of a pain in the ass. You’ve got to get them from your broker, store them safely, and then get them back to your broker when you want to sell. At the end of the day, you want to participate in the profits of Apple Corporation, you don’t care about that piece of paper.

So, under normal circumstances brokerages hold their client’s stocks for them “in street name”. This means that if you put in order for AAPL, the brokerage buys the shares on your behalf and just makes a note that they are yours. It’s pretty much all electronic anyway these days. You will get such privileges as receiving dividends (if any) and voting those shares at a shareholders meeting, but underneath the covers it’s all done with smoke and mirrors.

One aspect of the GameStop fiasco is that many of the people involved didn’t understand how it was that brokers could just lend somebody’s stock to someone else. Basically, the stock was held in “street name”, not owned by the individual investor. So, the broker could lend it to someone else without so much as a by-your-leave from the investor.

Just as with the EULA’s (End User License Agreements) that people sign all the time without reading them, this information is spelled out in the contracts people sign with their brokers (and probably don't read). Most people never need to know this stuff - it hardly ever matters. But these facts managed to ruffle a lot of feathers of people who didn’t realize them during this GameStop business.

So, what the hell happened with GameStop?

Well, some managers at hedge funds, as well as sophisticated individual investors, saw GameStop as a distressed business, and therefore an opportunity. These investors saw in GameStop what they had seen in Blockbuster Video years before. People used to go to Blockbuster to rent videotapes or DVDs. But along came Netflix, first allowing customers to rent and return movies through the mail, and then online. Then Walmart jumped into the act, and Amazon, and others. Blockbuster was late to the online game so didn’t survive.

GameStop is a bricks and mortar store that sells video games. But nowadays most gamers play online or buy and download games over the Internet. GameStop’s business is drying up. When COVID-19 came along, people stopped leaving their homes at all, let alone going to a store to get something that they could get more easily, safely, and conveniently online.

GameStop’s business is a bad business to be in right now. They are selling buggy whips in the age of the automobile. Investors observed this, predicted its stock would go down (eventually to zero), and so sold the stock short. But, surprise, surprise, a group of young people figured out a way to outsmart the short sellers. They realize that there were so many short-sellers that if they bought enough stock to drive the price up just a little bit, margin calls would force covering of shorts making the stock price go up further, which would force more margin calls, causing it to spiral upwards, costing the short-sellers vast amounts of money. It is uncommon that a stock is so highly oversold, with so much leverage, that a small amount of buying would generate such a large and rapid reaction in the market. Well, now we know. Ooops.

Were laws broken?

As noted, I am not a securities lawyer. Indeed, I’m not a lawyer of any kind. But I am certain that the hedge funds and brokers (including Robin Hood), are run amok with lawyers. These entities might very well get as close to the line of legality as they possibly can, but their lawyers should make damn sure that they don’t step over it, especially once the eyes of the world were focused on them, as they were once GameStop blew up in the news. Thus, I would be surprised if any of these entities broke any laws or regulations.

On the other hand, the individual investors trading in GameStop, not having the benefit of staffs of lawyers, may have broken laws, intentionally, by accident, or due to a lack of understanding of how the laws are applied. Of that I cannot say.

Should any laws or regulations be changed because of these events?

Honestly, I don’t know. But I suspect not. The hedge funds that lost money knew what they were doing. They are highly sophisticated investors. They knew the risks they were taking, even though in this case it turns out that they underestimated those risks. It’s hard to blame them though, because nothing quite like this ever happened before, so these events weren’t in their models.

The investors in the hedge funds, and other investors that got hurt in the short selling, should have been sophisticated investors. Brokerage houses should have been making sure that novice investors weren’t buying shorts.

Those investors from the Reddit board observed a market opportunity and took it. They were not working based on secret insider information. They did not break into systems, or hack something, or steal money. Everything they did, they did out loud, in the open, on public bulletin boards, using publicly available information. Clever. Not illegal.

Should laws and regulations be changed to better protect innocent investors, or protect the proper operations of the markets as a whole? Again, I don’t know, but I suspect that no changes are required. Sophisticated investors who practice these strategies are now warned that there are really clever people out there that might very well exploit any error they make. These sophisticated investors should carefully review their investment practices to make sure that there are no other such errors in their portfolios. But that doesn’t mean we need to create a new law requiring them to do so.

Conclusion

Hopefully, this post will help people understand what happened, what these investment mechanisms are, why they exist, and how a group of individual investors on Reddit managed to shoot gaping holes in the portfolios of a group of hedge funds. I hope this will help people understand that, though we do have terrible wealth disparity in this country, this particular event does not expose a world of nefarious wealthy investors taking advantage of their wealth to collude with other greedy, rich, old men (and women.)

Wealth disparity is a crushing problem which is destroying the fabric of our society and our economy. But it should be cured by increasing taxes on people like me, and breaking down systemic racism and the barriers that limit what people of lesser means can achieve in their lives. Opportunities should be increased. School systems should be improved. College should be made affordable. And so on. Ending a handful of investment mechanisms such as short selling and hedging won’t solve any of these problems.

Australian Finger Lime Marmalade

[Note: I have redone my recipe for finger lime marmalade and posted a new version. This post is still useful as I did not copy all of the background information, etc., but you can find the latest and greatest here.]

Several years ago I planted an Australian finger lime bush (Citrus australasica). It took a few years to get established, during which time I got just a couple fruits, then a handful of fruits, then more, and more, until now I harvest a couple of pounds per season (they are quite small, so that is a lot.) Though they are great on sushi, salmon, and a few other things, it’s not clear what else to do with them. 

The thing that is cool about finger limes is that when you cut them open, little balls of lime juice spill out. They are about the size of flying fish row (aka tobiko) and are sometimes referred to as “lime caviar”, which is an excellent description. Unfortunately, you can’t really taste them unless they get burst by your teeth when you chew them. So, they easily get lost in a lot of applications. I have read that bartenders have gone crazy for them, but when I use them in drinks they are a flop, because most people don’t chew their beverages.

 

A bowl of finger limes

Since I now harvest a lot of finger limes, I have been looking for things to do with them other than give them to my favorite sushi chefs and bartenders. The skin of the finger line is delicious, but sharp and (pleasantly) bitter. The fruit inside tastes much like standard limes – not identical, but similar. Taken together they have a unique lime flavor, but if you use the skin, the bitterness can easily become overwhelming. So how, I wondered, can I take advantage of so many fruits, and their skins, and manage the fact that the juice is locked up in tiny capsules. I concluded that marmalade could show off the special characteristics of finger limes.

I am working on a finger lime marmalade recipe. Note that this is a recipe in progress. I have made it just once, and it was only semi-successful. The result of my first batch is sourer and a lot more bitter than what I had in mind. It is nice as a garnish - a dollop on salmon is great, and it is a delicious accompaniment to brie on crackers, but it is not something you are going to want to spread on toast. The next time I make it, I intend to try to reduce the bitterness and increase its sweetness.

Even though the recipe isn’t ready for "publication", I present it here for your interest. Hopefully, I can get some comments and suggestions for the next batch (to be made after the next harvest.) Perhaps people in Australia, or elsewhere in the southern hemisphere, will make some marmalade now, and let me know how it went.

It is also worth mentioning that for the purpose of incorporation into a cooked product like marmalade, these limes freeze well. In fact, they freeze surprisingly well to store for almost any application. This first batch included frozen fruit collected over a couple of seasons, in addition to fresh. 

Left, fresh. Right, previously frozen.

My recipe is loosely based on a lime marmalade recipe from Blue Ribbon Preserves by Linda J. Amendt. Mine is a new recipe due to the unique characteristics of finger limes, but I did use her recipe for the general structure. It is also assisted by ideas from the two web sites that claim a finger lime marmalade (which are almost identical to each other).

Also note that currently finger limes in the USA run about $30-$50 per pound. So, you pretty much must have your own tree to consider making this marmalade. The recipe below yielded 10 cups of marmalade. Thus, the cost would be between $10 and $17 per cup if one needed to purchase the limes.

And so, for your enjoyment, I present the “beta test” of my Finger Lime Marmalade, v1.0. 

Finger Lime Marmalade Recipe v1.0

Yield: 10 cups

INGREDIENTS:

• 3.5lbs Finger limes.
• 3.5lbs Sugar for macerating limes.
• Additional 8oz sugar added during cooking.
• ¼ C dextrose to reduce sugaring off (can sub Karo, or other non-sucrose sugar.)
• 1 pkg liquid pectin (3oz).
• Baking soda (optional).

METHOD:

Processing the limes took a fair bit of time and effort, so I did it in two batches over two days, then cooked them on the third day. I don’t think this is necessary, though macerating fruit for marmalade is generally a good idea to get it to release liquid and pre-absorb sugar. On the first day I processed about 1.5 pounds, macerating them in the refrigerator with an equal amount of sugar. On the second day I processed the rest, adding them to the same container, again with an equal amount of sugar. On the third day I cooked the marmalade.

Useful tools for processing the limes: knife, mini-rolling pin, and bench scraper.

PROCESSING THE LIMES: 

1. Blanch the whole finger limes in boiling water for a couple minutes, then plunge them into cold water. This will help to remove some of the bitterness and make them easier to “squeeze” (see below.) Unfortunately, for v1.0 I decided that I wanted to retain some fresh lime oil, so I left about 1 cup of fruit unblanched. As noted, the marmalade was too bitter, so next time I will blanch the whole batch.
2. Next, slice the stem end from each lime. Squeeze the fruit from the skins with a small rolling pin.
   
   
   
3. 
   Spread the pulp out on a cutting board to pick out all the seeds you can. This is a long, tedious process. Hey! Guess what! When I cooked the fruit, I found that any seeds I had missed floated to the top! Next time I will skip picking out the seeds and simply skim them off during cooking. Assuming that works, it will be a big time saver. If it doesn’t work, I guess I’ll have a batch of seedy marmalade.
   
   
4. I did not do this, but next time I will re-blanch the emptied skins to try to remove some of the bitterness of the pith which is now exposed. Hopefully that won’t remove too much flavor from the end product.
   
   

5. Chop the skins into pieces of a size that is pleasing to you. I started out trying to make neat, uniform disks, but quickly realized that I would go mad before I finished, so I resorted to just chopping. The result was fine. Disks would have been prettier, but not if they dragged me away in a straight jacket before I got done.
   
   
   
6. Put the fruit and chopped skins in a container with an equal amount of sugar (by weight). Allow them to macerate in the refrigerator at least overnight. Note that it can be held this way for an indefinite number of days until you are ready to cook.

COOKING THE MARMALADE:

I strongly recommend investing in a copper jam pot if you do a lot of preserving. They are quite expensive (generally US$200 and up), however, using one makes preserving easier and produces a better product. Really. If you don’t have one and can afford it, you’ll thank me. 

Before starting, put a plate in the freezer with several spoons to use in testing for setting. 

Put the macerated limes into the pot along with 8 oz additional sugar (next time I intend to use more.)

Add the baking soda. Note that since the skins are very thin, this is probably unnecessary. Baking soda in marmalade helps to break down the peels, shortening the time it takes to cook and soften them.

Bring to a full boil over medium-high heat. Reduce the heat and simmer for about 20 minutes, stirring occasionally. Return the mixture to a full rolling boil, stirring constantly. Add the liquid pectin. Stir constantly while bringing the mixture back to a full rolling boil. Boil for one minute. 

Test for set and consistency using a spoon from the freezer (or any other method you prefer.) When the marmalade has set to your satisfaction, remove it from the heat. Allow it to cool for a few minutes to minimize separation of the fruit, skins, and juice in the jar.

For working with hot jam or marmalade, silicon gloves are a must-have.

Ladle into sterilized jars and process by whichever safe method you prefer.

Pumpion Pie

Introduction

For several months I have been watching the YouTube channel, Tasting History with Max Miller. It's great. His mix of humor and ingredients strikes just the right tone, and he manages to make both a recipe and a history lesson entertaining without being overly long (a fault of which I am clearly guilty.)

Just before Thanksgiving he did an episode on 17th C. “Pumpion Pie”, aka pumpkin pie. I made one, and it was delicious. Everyone that tasted it wanted more. But, making it was something of a pain. At the very least, it was much more work than a modern custard-based pie. I wanted to come up with a recipe that produced a result that was the same, or comparable, with less effort. I’ve been cooking pies and experimenting with this ever since. I think I finally have a delicious, easier to make, pumpion pie, which I share at the end of this post.

Miller also skipped a few factoids that I think are worth mentioning. He obviously can’t discuss every last thing about a recipe or else the segments would be too long for anyone but the most diehard to sit through. I have no such problem here. If you don’t care about these extra notes, jump ahead to the recipe😊

Note: though I am including a set of historical notes, the recipe I present is intended to be easier to make than Miller’s recipe, but it is not intended to be historically accurate. If you want to make the most authentic redaction of the recipe, stick with Miller’s excellent video. 

Not all pumpkins are smooth, spherical, or orange.

Words for pumpkins and squashes

I am going to make several references to “pumpkins”, and also to what are more broadly called “winter squashes” (though “pumpkins” are, in fact, winter squashes.) Note that, “the term pumpkin has no agreed upon botanical or scientific meaning, and is used interchangeably with ‘squash’ and ‘winter squash’.” (source: Wikipedia). Pumpkins are like obscenity – I can’t define them, but I know one when I see it.

The Annotated FRENCH GARDINER, Part One, The Kitchen Garden, 1658 by Nicholas de Bonnefons, translated by John Evelyn, edited and annotated by William Rubel

Pumpeons are raised also upon the hot-bed, and are removed like the former, but for the most part upon plain ground: being placed in some spacious part of your Garden because their shoots and tendrells straggle a great way before they knot into fruit.

The pumpeon of this work refers to winter squashes in general, including our pumpkin. It could have been a Cucurbita pepo, C. moschata, or C. maxima. [Annotation by William Rubel.]

For clarity, I will use “pumpkin” to refer to the spherical orange winter squashes that modern Americans (and many others) would call a “pumpkin”, as well as pumpkins like jarrahdale, porcelain doll pink, tiger, and dozens of other squashes called "pumpkins" which aren’t necessarily orange, nor particularly spherical. I will use the phrase “winter squash” to refer to hard-skinned, late season squashes such as butternut, kabocha, buttercup, etc., but not including squashes previously defined as “pumpkins.” Finally, I will refer to specific varieties of winter squash or pumpkin by name. 

The original recipe

Miller provides us with a recipe by Hannah Wooley from The Queen-like Closet, 1670. Page 256 (recipe CXXXII)

To make a Pumpion-Pie.

Take a Pumpion, pare it, and cut it in thin slices, dip it in beaten Eggs and Herbs shred small, and fry it till it be enough, then lay it into a Pie with Butter, Raisins, Currans, Sugar and Sack, and in the bottom some sharp Apples; when it is baked, butter it and serve it in.

However, the same book has another, rather different, recipe (XCIII), presented on page 235, some 20 pages earlier.

To make a Pompion-Pie.

Having your Paste ready in your Pan, put in your Pompion pared and cut in thin slices, then fill up your Pie with sharp Apples, and a little Pepper, and a little Salt, then close it, and bake it, then butter it, and serve it in hot to the Table.

You may find it odd that the book contains two recipes with the same name which are not presented together as two versions of the same thing. There is a surprising reason why this might be the case. For much of the history of publishing, copyright laws were non-existent or ignored. [Copyright law came into existence in England in 1710.] It was common for authors, or publishers, to fill out short books with sections lifted from other books. In fact, there are books that are nothing more than a combination of sections from different pre-existing books with no original content whatsoever, and without any credit to the originals. Indeed, plagiarizing entire books was not uncommon. So, while Wooley may have included two different “pumpion-pie” recipes of her own, it is equally likely that one of the two (or both?) came from some other source and was added to give the book heft.

In any case, the other version (XCIII) is interesting to consider - the differences in ingredients and method are significant. It is vastly simpler, consisting of nothing other than pumpkin and apples, plus salt, pepper, and butter. This version of the recipe is practically just sliced pumpkin baked with apples; it hardly matters that they are baked within a pie shell – they could easily have gone into the oven in a baking dish. This may harken back to a time when crusts were used to contain filling, but were not intended to be eaten.

Another contemporaneous “pumpion pye”

Yet another recipe, published two years before The Queen-like Closet, presents some additional clues about pumpion pies. I assume this is the other recipe to which Miller alludes.

The Compleat Cook, Expertly Prescribing The Most Ready Wayes, Whether Italian, Spanish Or French, For Dressing Of Flesh And Fish, Ordering Of Sauces Or Making Of Pastry, written anonymously and published in 1658:

To make a Pumpion Pye.

Take about halfe a pound of Pumpion and slice it, a handfull of Tyme, a little Rosemary, Parsley and sweet Marjoram slipped off the stalks, and chop them smal, then take Cinamon, Nutmeg, Pepper, and six Cloves, and beat them; take ten Eggs and beat them; then mix them, and beat them altogether, and put in as much Sugar as you think fit, then fry them like a froiz*; after it is fryed, let it stand till it be cold, then fill your Pye, take sliced Apples thinne round wayes, and lay a row of the Froiz, and a layer of Apples with Currans betwixt the layer while your Pye is fitted, and put in a good deal of sweet butter before you close it; when the Pye is baked, take six yolks of Eggs, some white−wine or Verjuyce, & make a Caudle of this, but not too thick; cut up the Lid and put it in, stir them well together whilst the Eggs and Pumpions be not perceived, and so serve it up.

* BritishFoodHistory.com tells us “A froiz is something that has been fried, usually with beaten eggs like a Spanish omelet”. Photos of froiz look very much like a frittata.

 

The king of the pumpkins receiving homages from his subjects
Autumn Sketches, 1865

Pumpkins or “pumpion”

Winter squashes were brought to Spain in 1492, but it appears that they did not arrive in England until sometime later – possibly a lot later. In William Rubel’s annotations to The French Gardiner, he notes that the use of the word “pumpeon” could have referred to winter squash or pumpkin, so presumably pumpkin was being grown in English gardens by that date, but so were other winter squashes. So, while Wooley certainly had access to pumpkins, she could have been referring to other winter squashes. 

Currans or Currants

In modern English, the word “currant” refers to either the fruit of the currant bush (Ribes) (red, black, or white), or to completely unrelated small raisins (often referred to as “Zante currants”).

Currant bushes (Ribes) have grown in northern Europe since time immemorial and have probably been eaten by humans since homo sapiens arrived in the area. The little raisin, “Zante currant”, dates to at least Rome of the first century CE. So, both would have been known and available in England in the 17th C. As a result, we can’t definitively say which one Wooley meant, however, based on other similar recipes it is virtually certain that she is calling for Zante currants. There are some additional clues. “Zante currants” at the time were generally referred to as “currans” without the “t”, as she does. Also, she is using dried fruit (raisins) in the recipe, so another dried fruit is reasonable.

Side note: Other than those used for Zante currants, seedless grapes did not exist at this time (there may have been some seedless mutations here or there in the world, but they weren’t commonly available.) The Thompson’s seedless grape, now used for most raisins consumed in the US, was introduced in the mid-19th C. Thus, if you wanted seedless raisins (and who doesn’t), you would have needed to pick out the seeds before drying the fruit. The exception was the grape used for Zante currants, making them a much easier ingredient to produce. So, one might ask why she didn’t skip the raisins and use only currants - they are similar and would have been easier to make.

Side note 2: One runs into a lot of recipes that call for both raisins and currants. I have never understood why. To my tongue they are very similar, and, once cooked, they are almost indistinguishable. I wonder whether period currants were notably different than raisins of that time period.

Herbs

Wooley refers simply to “herbs shred small”. Miller imagines this as “2 handfuls” of rosemary, parsley, and thyme. This is a reasonable guess. The Compleat Cook uses this trio (plus marjoram and spices.) But Wooley’s pumpion pie could have included any set of herbs, any number of different herbs, and in any quantity. 

Apples

Granny Smith apples did not exist in the 17th C. They are a relatively new cultivar. So, both Miller and I are stepping away from authenticity by using this apple (though it does work brilliantly in this pie.)

About my recipe

My recipe differs from Millers in several respects: intention, ingredients, and method. 

Intention

This pie is so delicious that I think it should be resurrected as common fare – at Thanksgiving or any time of the year. Thus, my intention is to make it as easy as possible for modern cooks to enjoy it, regardless of historical accuracy. If my result is comparable to the original, but easier to make, then I have succeeded. If I may be so bold, in addition to ease, I believe my creation is more delicious than the original on which it is based. 

Ingredients:

Pumpkin/squash

In most parts of the United States (and, indeed, the world), pumpkins seasonal availability is brief. Butternut squash is available almost year-round and is generally cheaper than pumpkin, making it an ideal substitute.

To add injury to unavailability, pumpkins aren’t the easiest winter squash to work with. Their skin is tough, and the seed cavity is large. [Kabocha squash, while delicious, can be even more of a pain.] In his video, Miller shows a smooth skinned pumpkin which he peels with a vegetable peeler. All the pumpkins I have found for sale have had ridges, as well as defects, making such treatment impossible and requiring a good knife and good technique. [Note: if you are cutting away the skin of a pumpkin with ridges, the easiest tool is a serrated knife, not a chef’s or paring knife.] Even Miller admits almost cutting himself while working with pumpkin.

The kind of pumpkins available in my area. Rough and ridged.

Conversely, butternut squash has softer skin and never has ridges. It is easily peeled with an ordinary vegetable peeler. Also, it has a smaller seed cavity that is easier to scoop out. Lastly, to my palate, butternut has a finer texture than pumpkin, and a more pleasing taste. Not only that, but when cooked, butternut squash has a deeper, redder color than pumpkin.

[Side note: Many canned “pumpkin” products are made from other winter squashes, especially butternut. Thus, if you are used to canned “pumpkin”, you may have been eating butternut squash all along, and, to you, it may taste more like pumpkin than pumpkin!] 

[Update: According to the site MentalFloss.com, "Libby’s, the largest pumpkin puree brand, has developed its own unique brand of squash called the Dickinson, which is more closely related to a butternut squash than a pumpkin."]

Currants

As noted, Wooley is probably specifying Zante currants, which are just tiny raisins. Zante currants tend to be a little bit sweeter than many other raisins, and they have a somewhat different texture, but, after baking in a pie, the difference is minor. So, while it is not terribly difficult to find Zante currants in grocery stores, raisins are more available, cheaper, and people are likely to already have them in their pantry. After making several recipes with both, I dropped the currants and doubled the quantity of raisins. If you have Zante currents on hand, use them. Otherwise, standard raisins work out fine.

[On one occasion I made a pie replacing the currants with dried cranberries. That was a delicious edit, which I suggest as an option.]

Eggs

The Queen-like Closet has us dip the squash in an egg-herb mix, and then pan fry. The “pumpion pye” from The Compleat Cook, has similar instructions, but directing that it should be made like a “froiz” - comparable to a Spanish omelet. I cannot figure out why either method is called for. First and foremost, cooking the squash like this in a pan takes a long time and requires active attention. Wooley wastes a lot of egg and herbs that drip off the slices as they are dipped. Finally, dipping the slices in egg precludes other cooking techniques for the squash.

Cooking the squash uncoated while adding eggs and herbs directly to the pie (along with sugar, butter, sack, etc.) produces a result which is different than the original version, but, no less delicious. This allows us to cook the squash by any method we desire. 

Herbs

Personally, I like rosemary and thyme with the squash, but not parsley. Though I like parsley in general, in this context I found it unpleasant. Thus, I substituted sage. This is 100% personal taste. Also, I am not certain what Miller means by “2 handfuls”. I provide specific quantities that I feel balance well with the other flavors. 

Butter

The 6 tbs of butter makes this dish rich and yummy, but I found it excessive. Not cooking the squash in a pan (see Method below) removes 2 tbs, and I don’t see much value in adding butter on top after cooking,. This leaves just 2 tbs in the pie - healthy pie!

Pie crust

I love a great pie crust. A well-made pâte brisée is a wonderful thing. However, the standout feature of this pie is the filling. The crust isn’t terribly important. Once they taste the pie, even your most finnicky friends will forgive a store-bought pie crust.

[Warning: Standard commercial pie crusts are very shallow, and smaller than 9” in diameter. Commercial “deep dish” crusts are about the height of a standard pie dish, though still often smaller in diameter. Take this into account when determining quantities for your pie’s filling.] 

Method

The big effort and time killers are peeling, seeding, and slicing the pumpkin, and then pan cooking the egg-dipped pieces. As noted, I took care of the first issue by substituting butternut squash. The pan cooking is an even greater hassle, requiring monitoring, moving, and flipping the squash slices. I found it to be a very troublesome process. To make matters worse, one either needs a very large pan, multiple layers of squash which demand even more active sautéing, or cooking them in multiple batches, which expands the time considerably.

Ultimately, the goal of pan cooking the squash is simply to par-cook it before finishing cooking in the oven, and to set the egg. Since these ingredients are all going into a pie which will be baked in the oven for close to an hour, a lot of sins can be hidden. The squash could be par cooked by any method you prefer – boiling, baking, sautéing, or microwaving. Yes, microwaving. I have found that this is the quickest and easiest way to par cook a bowl of squash. Its vastly faster and does not require much attention. Even knowing that this dastardly deed has been perpetrated on innocent ingredients, I challenge you to detect it in the result. You would be surprised how lewd and crude you can be with ingredients that end up baked in a pie.

I am also slicing the squash thicker than Miller calls for. I found that gave a toothier texture and even more attention to the squash, being in pieces rather than pureed.

In his video, Miller appears to be adding a whole 2Tbs pat of butter to the filling. I cut up the butter for better distribution. 

Unattractive burned raisins

Lastly, Wooley's recipe calls for adding the raisins to the mixture. However, I have found that they don’t get very well distributed, and many end up on top. The ones on top tend to burn, which is unattractive. So, I layer the raisins with layers of squash mixture, (as in The Compleat Cook) attempting to have squash on top with few raisins exposed directly to the heat of the oven.