Hurricane Matthew hit the east coast this week. It was the strongest storm we've weathered in 12 years (with 125 mph winds).
As a trader, I've often thought that weather and market conditions share similarities. As a result, the techniques used to understand and predict them are similar.
Have you heard the term "Eye of the Storm"? Well, in the context of Hurricane Matthew, it went directly over a weather buoy (Station #42058).
The chart is interesting. Imagine being a person observing the storm. It builds, and builds until you don't think it can get much worse. Then, it appears to stop. You can breathe. You can see. You relax … Then it comes back faster than before. Your nerves and reserves were already diminished. So, it is worse.
Similarly, it's easy to mistake the eye of the storm (in a major market move) for a sign of safety and opportunity.
I remember 2008. Storms like that caused many to buy wrong and sell wrong.
Humans see clear skies and walk outside. Perhaps we can teach the computer to know better (or at least to measure and recognize what is happening better).
Managing stress and controlling mental states are important components of being successful personally and in business. I know that I operate and respond better when I am in flow, or "in-the-zone." So, I value tools and techniques that help me get there.
One of these tools is called Holosync. It is still incredibly useful to me, even though I've been using it for over ten years.
It induces relaxation and meditative states without any effort or technical know-how. Simply put on the headphones and listen to seemingly normal music. The sounds are specially encoded to do all the work.
The basic premise is that soundwaves can affect brainwaves .
Bill Harris has built a business around figuring out the brain wave patterns for meditation, creativity, compassion, etc. – and finding a way to send tones through headphones to help guide your brain waves into the chosen pattern.
I reconnected with him at a Biohacking conference last week and shot this video.
Bill was a musician and has made sure that the scientific stuff is well-hidden beneath, nicely arranged musical scores and relaxation sounds.
My heart rate calms down, my head clears, and in a few minutes, I'm in a measurably better state. How do I know? Because I have a biofeedback device that measures my pulse, heart rate, galvanic skin response, and other readings to help me learn to relax better.
I have tried various breathing and focus techniques, with varying degrees of success. However, without fail, I simply put on the headphones, and I relax.
Not just me, though, either. I've demonstrated this to skeptical children, friends, and even my wife. All of them experience the same thing. We hook them up to the biofeedback machine, we put the headphones on them, and they relax.
I use it several times a week, and almost every time I travel. I find myself using Holosync mostly at night. However, our portfolio manager uses it at the beginning of the day. He claims that it helps him concentrate and it puts him a better state to do his job.
You be the judge, though. Bill has a free trial at his website. Here is the link. All in all, this is certainly a technology worth investigating.
From May 1 through October 31 seasonality is unfavorable, and the market most often finishes lower than it was at the beginning of the period.
The period from November 1 through April 30 is seasonally favorable, and the market most often finishes the period higher.
While the statistical average results for these two periods are quite compelling, trying to ride the market in real-time in hopes of capturing these results is not always as easy as it sounds.
Historically speaking, The Dow goes up regardless who gets elected, but the data isn't particularly strong either way. Election results don't actually predict the stock market that well. The converse isn't true.
Can the stock market reliably predict who gets elected? According to Kiplinger, if the stock market is up the three months prior to the election, the incumbent party wins. Based on 22 elections, with 14 having gains in the prior months, 12 elections saw the incumbent party win.
So, what's your bet? Will this year be an exception to the rule?
This week, Zach and I went to see the Dallas Cowboys new headquarters.
They spent $1.5 billion, and it was impressive (not just because of the Super Bowl trophies).
We also watched a practice … and I was impressed by the amount of preparation, effort, and skill displayed.
Every minute was scripted. You could tell there was a long-term plan … but, there was also a focus on the short-term details (many details).
Monday they recover and watch film from the last game (and of next week's opponent); Tuesday they hit; Wednesday they go full pads, with high intensity; Thursday they run through specific plays they expect to see … Meanwhile, they film (and review) every drill from every practice.
Drills are run for shorter than you'd guess. It is bang-bang-bang – never longer than a millennial's attention span; and they move from drill to drill working on not just plays, but the skillsets as well (where are you looking, which foot do you plant, how do you best use your hands, etc.).
How you do one thing is how you do everything. So, they try to do everything right.
What Can Business Learn From Football Teams?
Pro football is one thing. College football is another. But, even in high school, the coaches have a game plan. There are team practices and individual drills. They have a depth chart, which lists the first, second, and third choice to fill certain roles.
Before a game, the coaches prepare a game plan and have the team watch tape of their opponent in order to understand the tendencies and mentally prepare for what's going to happen.
After the game, the film is reviewed in detail. Each person gets a grade on each play, and the coaches make notes for each person about what they did well and what they could do better.
Think about it, everyone knows what game they are playing … and for the most part, everybody understands the rules, and how to keep score, and even where they are in the standings.
Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.
