Thoughts about the markets, automated trading algorithms, artificial intelligence, and lots of other stuff

  • New Version 4 of Shift Happens Video

    091025 the Getson Boys Last week I wrote that my son (and his generation) won't communicate the way we do.

    For example, he used 9,827 text messages and 564 MB of data on his phone this month.

    I'm not going to pretend that I understand how I would use that many messages … But I'm beginning to understand that he does.

    A decade ago, I couldn't have conceived the way we use trading technology today.  The scope and scale of what's possible would have seemed like an improbable science fiction plot.

    And that is the point.  Some things seem like nonsense (or magic), until they become science and way things are done.

    New Version 4 of Shift Happens Video

    Fascinating presentation of facts, stats, and insights about how technology (like the internet) has been changing the world. Some of the tech that we take for granted is now at an inflection point because of the sheer mass of late-adopters.

    It is worth watching and thinking about … as someone living in these
    changing times … and in terms of how these changing times shift the
    game and create a whole new set of opportunities.

    While similar to the post on how Social Media is changing everything … this presentation focuses on the bigger picture and has a more general business tone. 

    I like the new
    design and the added content; yet, found the music a bit distracting.

    We are moving forward more quickly than ever.  What you thought you knew about the
    economy, technology, innovation, and the world are probably
    out-of-date. I can't wait to see what comes next.

    090109 Did You Know

  • New Version 4 of Shift Happens Video

    091025 the Getson Boys Last week I wrote that my son (and his generation) won't communicate the way we do.

    For example, he used 9,827 text messages and 564 MB of data on his phone this month.

    I'm not going to pretend that I understand how I would use that many messages … But I'm beginning to understand that he does.

    A decade ago, I couldn't have conceived the way we use trading technology today.  The scope and scale of what's possible would have seemed like an improbable science fiction plot.

    And that is the point.  Some things seem like nonsense (or magic), until they become science and way things are done.

    New Version 4 of Shift Happens Video

    Fascinating presentation of facts, stats, and insights about how technology (like the internet) has been changing the world. Some of the tech that we take for granted is now at an inflection point because of the sheer mass of late-adopters.

    It is worth watching and thinking about … as someone living in these
    changing times … and in terms of how these changing times shift the
    game and create a whole new set of opportunities.

    While similar to the post on how Social Media is changing everything … this presentation focuses on the bigger picture and has a more general business tone. 

    I like the new
    design and the added content; yet, found the music a bit distracting.

    We are moving forward more quickly than ever.  What you thought you knew about the
    economy, technology, innovation, and the world are probably
    out-of-date. I can't wait to see what comes next.

    090109 Did You Know

  • Capitalogix Commentary 10/18/09

    Dow 10,000 – Version 2.0.

    SNL made a joke that hitting Dow 10K was different this time.  The difference was that 15 million unemployed Americans cheered while they watched CNBC on their couch in their pajamas.

     091019 Letting the Air Out of Hope

    The U.S. Equity Indices continue to perform well.  The economy, however, is sending mixed signals.  At this point, some would argue that any positive economic signal is a welcome signal.

    Mixed Signals: Two Charts Giving Us Different Views Into a Potential Economic Recovery.

    The first chart shows that unemployment is still growing faster than new job growth.  Recent readings show six unemployed people for each potential job opening.  A glance at the chart shows that ratio is usually 2:1 (rather than 6:1).  I'll be watching this indicator, and will take even a small improvement as a positive sign for the economy.

     091019 Number of Unemployed Per Job Opening

    Speaking of positive signs of economic recovery, the next chart does show a hopeful turn of events (based on increasing Capacity Utilization).

     091019 Capacity Utilization Up-Turn

    Utilization has increased for three straight months, and is up from the record low set in June (the series starts in 1967). Capacity Utilization had decreased in 17 of the previous 18 months.  An increase in capacity utilization is usually an indicator that a recession is over.  Let's hope it keeps up.

    When In An Up-Trend, Like This, Don't Fight the Fed.

    I was reading "A Dash of Insight" and saw this investment hypothesis: "The government is on a mission.  You may not like the policies, but as an investor, you fight it at your peril."  In other words, don't fight the Fed.

    Recently,
    that has been a painful lesson to Bears trying to short the rally.  The
    result, a dramatically declining short interest.  Here is a chart from
    Bespoke, illustrating that point.

     091019 Short Interest Declining

    At a certain point, the lack of sellers
    becomes the contrarian indicator that we are near a top.  Again, in
    trending markets, too much thinking is dangerous.  Just consider this
    another indicator to watch when the up-trend finally breaks.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Impacts of High-Frequency Trading – Manipulation, Distortion or Improvement? (Wharton)
    • Blue Chips Top 10,000 for the First Time in a Year. (WSJ)
    • Loose Monetary Policy: When Will Wall Street's Biggest Gravy Train Slow? (WSJ)
    • Goldman Sachs Sees a "Perfect Storm" for M&A. (StreetInsider)
    • Venture Capital Exits Dallas and Other Places Outside of Silicon Valley. (WSJ)
    • Pessimistic Commentators Remain Anything But Convinced by the Rally. (Economist)
    • Bloomberg Buys BusinessWeek From McGraw-Hill. (StreetInsider)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Mossberg Gives Windows 7 a Good Review. (WSJ)
    • White House Tells Fox Network News to Take a Hike. (Newser)
    • Patent Auctions Offer Protections to Inventors. (NYTimes)
    • Facebook Has a Happiness Index Drawn From Posts. (NYTimes)
    • Anthropologist: Modern Male Is 'Worst' Man Ever. (Newser)
    • Un-Tapped Potential: Autistic Savant Draws Cities from Memory. (Wiltshire)
    • Cool Chart of Apple's Path To 2 Billion iPhone App Downloads. (BusinessInsider)
    • More Posts with Lighter Ideas and Fun Links.

  • Capitalogix Commentary 10/18/09

    Dow 10,000 – Version 2.0.

    SNL made a joke that hitting Dow 10K was different this time.  The difference was that 15 million unemployed Americans cheered while they watched CNBC on their couch in their pajamas.

     091019 Letting the Air Out of Hope

    The U.S. Equity Indices continue to perform well.  The economy, however, is sending mixed signals.  At this point, some would argue that any positive economic signal is a welcome signal.

    Mixed Signals: Two Charts Giving Us Different Views Into a Potential Economic Recovery.

    The first chart shows that unemployment is still growing faster than new job growth.  Recent readings show six unemployed people for each potential job opening.  A glance at the chart shows that ratio is usually 2:1 (rather than 6:1).  I'll be watching this indicator, and will take even a small improvement as a positive sign for the economy.

     091019 Number of Unemployed Per Job Opening

    Speaking of positive signs of economic recovery, the next chart does show a hopeful turn of events (based on increasing Capacity Utilization).

     091019 Capacity Utilization Up-Turn

    Utilization has increased for three straight months, and is up from the record low set in June (the series starts in 1967). Capacity Utilization had decreased in 17 of the previous 18 months.  An increase in capacity utilization is usually an indicator that a recession is over.  Let's hope it keeps up.

    When In An Up-Trend, Like This, Don't Fight the Fed.

    I was reading "A Dash of Insight" and saw this investment hypothesis: "The government is on a mission.  You may not like the policies, but as an investor, you fight it at your peril."  In other words, don't fight the Fed.

    Recently,
    that has been a painful lesson to Bears trying to short the rally.  The
    result, a dramatically declining short interest.  Here is a chart from
    Bespoke, illustrating that point.

     091019 Short Interest Declining

    At a certain point, the lack of sellers
    becomes the contrarian indicator that we are near a top.  Again, in
    trending markets, too much thinking is dangerous.  Just consider this
    another indicator to watch when the up-trend finally breaks.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • Impacts of High-Frequency Trading – Manipulation, Distortion or Improvement? (Wharton)
    • Blue Chips Top 10,000 for the First Time in a Year. (WSJ)
    • Loose Monetary Policy: When Will Wall Street's Biggest Gravy Train Slow? (WSJ)
    • Goldman Sachs Sees a "Perfect Storm" for M&A. (StreetInsider)
    • Venture Capital Exits Dallas and Other Places Outside of Silicon Valley. (WSJ)
    • Pessimistic Commentators Remain Anything But Convinced by the Rally. (Economist)
    • Bloomberg Buys BusinessWeek From McGraw-Hill. (StreetInsider)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Mossberg Gives Windows 7 a Good Review. (WSJ)
    • White House Tells Fox Network News to Take a Hike. (Newser)
    • Patent Auctions Offer Protections to Inventors. (NYTimes)
    • Facebook Has a Happiness Index Drawn From Posts. (NYTimes)
    • Anthropologist: Modern Male Is 'Worst' Man Ever. (Newser)
    • Un-Tapped Potential: Autistic Savant Draws Cities from Memory. (Wiltshire)
    • Cool Chart of Apple's Path To 2 Billion iPhone App Downloads. (BusinessInsider)
    • More Posts with Lighter Ideas and Fun Links.

  • Social Media is Changing Everything

    091019 Getson Family 240pMy son won't use e-mail the way I did. So how will people communicate and collaborate in the next wave of communications?

     Here is a peek into the difference that is taking hold.  I was looking at recent phone use.  The numbers you are about to see are from the first 20 days of our current billing cycle.

    • My wife, Jennifer, has used 21 text messages and 38 MB of data.
    • I have used 120 text messages and 29 MB of data.
    • My son, at college, used 420 text messages, and is on a WiFi campus so doesn't use 3G data.
    • My son, in high school, used 5,798 text messages and 472 MB of data.

    How can that be?  That level of emotional sluttiness makes porn seem downright wholesome. 

    But, of course, that isn't how he sees it.  He is holding many conversations at once.  Some are social; some are about the logistics of who, what, when, where and why … some are even about homework.  Yet, most don't use full sentences, let alone paragraphs.  There is near instant gratification.  And, the next generation of business people will consider this normal.

    Is social media a fad? Or is it the biggest shift since the Industrial Revolution?

    Welcome to the World of Socialnomics.  This video has a bunch of interesting statistics … and is fun to watch. 

    Other Resources:

  • Social Media is Changing Everything

    091019 Getson Family 240pMy son won't use e-mail the way I did. So how will people communicate and collaborate in the next wave of communications?

     Here is a peek into the difference that is taking hold.  I was looking at recent phone use.  The numbers you are about to see are from the first 20 days of our current billing cycle.

    • My wife, Jennifer, has used 21 text messages and 38 MB of data.
    • I have used 120 text messages and 29 MB of data.
    • My son, at college, used 420 text messages, and is on a WiFi campus so doesn't use 3G data.
    • My son, in high school, used 5,798 text messages and 472 MB of data.

    How can that be?  That level of emotional sluttiness makes porn seem downright wholesome. 

    But, of course, that isn't how he sees it.  He is holding many conversations at once.  Some are social; some are about the logistics of who, what, when, where and why … some are even about homework.  Yet, most don't use full sentences, let alone paragraphs.  There is near instant gratification.  And, the next generation of business people will consider this normal.

    Is social media a fad? Or is it the biggest shift since the Industrial Revolution?

    Welcome to the World of Socialnomics.  This video has a bunch of interesting statistics … and is fun to watch. 

    Other Resources:

  • Sparks of Innovation

    Here is a video reminder that a small insight can make possible radically different results.

    Was this just a proof of concept … or will it be the catalyst to more.  To some it might be little more than science fiction … to others it may have been the open door to something completely new and different.

    Thoughts Do Become Things. 

    Here is an example where a simple text-book idea really transformed lives.  And it is a good story.

    William Kamkwamba, from Malawi, is a born inventor. When he was 14, he built an electricity-producing windmill from spare parts and scrap, working from rough plans he found in a library book called "Using Energy" and modifying them to fit his needs. The windmill he built powers four lights and two radios in his family home. Now it is changing his homeland.

    Here is a link to more about William Kamkwamba and his TedTalk Videos.

    Here is a link to the book: The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope.

  • Sparks of Innovation

    Here is a video reminder that a small insight can make possible radically different results.

    Was this just a proof of concept … or will it be the catalyst to more.  To some it might be little more than science fiction … to others it may have been the open door to something completely new and different.

    Thoughts Do Become Things. 

    Here is an example where a simple text-book idea really transformed lives.  And it is a good story.

    William Kamkwamba, from Malawi, is a born inventor. When he was 14, he built an electricity-producing windmill from spare parts and scrap, working from rough plans he found in a library book called "Using Energy" and modifying them to fit his needs. The windmill he built powers four lights and two radios in his family home. Now it is changing his homeland.

    Here is a link to more about William Kamkwamba and his TedTalk Videos.

    Here is a link to the book: The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope.

  • The Game Is Changing

    Mergers and Acquisitions are likely to increase before the next big bull run.  This chart shows that we aren't there yet.

     091011 Decline in Merger and Acquisition Activity

    We're at the point in the economic recovery cycle where a lot of companies have folded, or will soon fold. On the other hand, the survivors are starting to see the clearing … or at least the light at the end of the tunnel. Consequently, I expect to see more merger and acquisition activity at the next pull-back.

    This will help the strong get stronger … But it will also serve as a catalyst to new growth and new leaders.

    M&A Isn't the Only Way.

    This is a great environment to incubate what comes next. During downturns, some people lose their money, business, or hope. During that same period, other people recognize and seize the opportunity to create something great.

    There so much talent on the street right now looking for work … yet there is even more looking for something that inspires them.

    At the same time, technology continues to
    get better. And that just means it continues to get cheaper and easier to implement
    great ideas and scalable businesses.

    Consequently, I think a lot of talent is going to switch from the confines of
    corporate America to more entrepreneurial ventures. Bright minds will
    shed cost-cutting cultures and management-by-committee for virtual
    teams of talented individuals looking to innovate and operate more
    nimbly.

    Something Old is New Again.

    Sometimes new things come from familiar faces.  There are many
    successful entrepreneurs who have been to the brink, and back. What's
    interesting is that
    they tend to succeed faster, later in their
    careers. It makes sense if you think about it; losing money or facing a
    setback doesn't take away the other skills that they had … so their
    next venture is easier for them simply because they
    are more experienced and better seasoned.

    Nonetheless, I'm confident that we will soon see a new wave of
    the business leaders emerge. I'm curious who you think the likely winners will be?

  • Capitalogix Commentary 10/11/09

    This was a good week for bullish traders.  Sure volume was light for the rally.  But selling was even lighter.  In a trending market, thinking too much can be detrimental to your wallet.  And from March until now, the trend points up.

    What Does the Bigger Picture Show?

    A weekly chart of the SPY, which is the ETF for the S&P 500, shows price coming into a cluster of resistance.  There are three things that jump out at me.  First, we are at the 50% Retracement of the October 2007 to March 2009 downswing.  Second, price is also are trying to break through the long-term downtrend line from that bear swing.  And third, there is a significant Gap (which often acts as resistance) at that same level from last October.

    091011 SP500 Decision Cluster

    The good news is a move above this level would be quite bullish.

    Can We Move Higher?

    The market does not directly reflect the economy.  So price can go
    higher, even without a real economic recovery.  For traders, the
    question is how long the rally will be sustainable?  The answer is
    simple; it is sustainable until price breaks the trendline. 

    It is a little tricky, here, because we have the battle of two trendlines. 

    What About the Economy?

    As for the economy, consumer spending has been weak, so expect that corporate revenues will continue to drag. And companies straining to realize their inflated expectations for 2010-11 earnings will continue to focus on cutting costs, which translates into cutting jobs.  Unfortunately this likely results in even less consumer spending …

    Where Are Consumers Spending?

    This chart from the New York Times tells an important story.  It shows where consumers are spending … and where they aren't.  Last year, consumers pulled back on spending and the retail sector suffered. But not all retailers are faring worse than they did a few years ago. 

    Against a baseline of spending levels in 2003, sales in computer stores have continued to rise. Restaurant and liquor-store sales are at much higher levels, and purchases at warehouse stores are up nearly 50 percent.

    Still, in major retail divisions like home furnishings and clothing, sales faltered in 2007 and are now below their levels of 2003.

    091011 Where Shoppers Spend

    Does a Weak Dollar Matter?

    This chart series from Bespoke highlights one reason that a weak dollar matters.  While gold is at record highs in dollar terms, the commodity is still down 10% from its highs when priced in Euros or Yen.  This indicates that the strength is a function of a weaker dollar rather than a real increase from demand.

    091011 Gold ValueThe same logic applies to the recent market rally.  If the dollar gets stronger, expect the market to move down.  Consequently, many traders are watching the dollar as it tries to bottom.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • What's Luck Got to Do With It? The Math of Gambling. (NewScientist)
    • Women, Testosterone & Finance – Risky Business? (Economist)
    • Private Equity's Return Dilemma – Hope Dwindling for a New Buyout Boom.(WSJ)
    • Please Do Feed the Bears – The Financial World Needs Its Pessimists. (Economist)
    • Return of Day Traders Drives Volume; But Who Is Sitting-Out? (WSJ)
    • Uncommonly Clever Economic Indicators. (Forbes)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Microsoft Offers Free Security Essentials Anti-malware Package. (InformationWeek)
    • More Cases of Autism in U.S. Kids Than Previously Realized. (CNN)
    • A Credible Kindle Killer? Competitors Team-up to Take on Amazon. (Forbes)
    • Tracing the Origins of Human Empathy. (WSJ)
    • Allocate Hours for Maximum Productivity in Your Perfect Day. (ETR)
    • Samurai Mind Training for Modern American Warriors. (Time)
    • More Posts with Lighter Ideas and Fun Links.