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

  • Are We There Yet? Some Changes Happen In Slow-Motion.

    Change is a constant. Yet it's often hard to see the forest for the trees. 

    It seems like just yesterday that my son, Zach, was making sand castles on the beach. This week he turned 16 and is driving.  It reminds me of line from a song in the show, Fiddler On The Roof: "Sunrise, Sunset; Sunrise, Sunset … Swiftly Go the days."

    Zach Building Sand Castle on Margate Beach 200p                   090130 Zach at 16 200p 

    On a day-by-day basis, I rarely noticed the change. However, looking at old pictures makes it obvious that there was growth and progress. 

    So, what did I notice?  Sometimes it was what a great kid, or how loving, he has been.  Other times I noticed that he didn't eat his vegetables, or that he drives passionately with a very heavy foot.  In any case, what I focused on is what my life seemed filled with, to me. 

    Unfortunately, that is what has been happening in the markets as well.  There is a lot of fear, uncertainty and doubt because people are focusing on what is wrong or what is missing.  And frankly, the world has given us a lot of opportunities to focus on that lately.

    But that isn't all there is to focus on in the market.  I was talking to an old trader friend of mine, this week, and said he is "cautiously optimistic" because the lows have held even though everything but the kitchen sink has been thrown at the markets recently.

    It is all about perspective, isn't it?

    Here is a series of photos starting with Bush and ending with Obama. In the series, the differences from picture to picture are subtle.

    Bush to Obama

    This is also a metaphor for what I expect to happen over time. We are where we are. It doesn't really matter how or why we got there. We are here. And little-by-little we won't be here anymore.

    If you are looking at the country or the economy, realize that it took years to get here. Simply changing a regime won't flip a switch.  Some changes happen in slow-motion.  Or, perhaps from our perspective, some changes appear to happen in slow-motion.  From a different vantage point, the rate of change might seem very different.

    The same can be said for changes in a person are changes in the business. It's easy to see the gap between where you are and where you'd like to be. Regardless, you will probably get there faster by building momentum and confidence by focusing on the improvements and progress you're making.

    Tough times are great opportunities to discover character.  I'm often amazed at the innovation and insight that occurs at times like these.

  • Capitalogix Commentary 01/30/09

    090130 Cartoon Global Financial Crisis Davos WEF
    In Davos, they are holding the World Economic Forum.  The tone is a little different this year.

    Putin warned about the first truly global economic crisis,
    which he says is continuing to develop at an unprecedented pace.

    Soros said “Central banks have lost control,” and basically predicted a new economic world order and the end of the Dollar as the world's default currency.

    So far at the Forum, the U.S. has played the role of the wounded giant.

    Meanwhile, at home, the WSJ says there have been more than 70,000 layoffs this week alone,
    something President Obama called "a continuing disaster for America's working
    families." He urged passage of his $900 Billion stimulus bill and issued Executive Orders to increase the clout of unions.

    Reports show the U.S. economy shrank about 5% last fall — the worst contraction since 1982. Because businesses failed to cut production fast enough after the financial crisis hit in October, they're now stuck holding vast inventories of unsold goods. In order to correct, they've begun aggressively closing factories and shedding workers.  The Washington Post says the economy is sinking under the weight of this excess inventory, and that the data suggests the worst is yet to come.

    090130 Ships in SPore
    This story is playing-itself-out in different forms across the globe.  For example, I got an e-mail from a trader showing ships stacked-up in the Port of Singapore.  This picture was taken a few weeks ago. Apparently these are empty ships, waiting for cargo.  Since the docks are full of other empty ships, the result is a near complete slow down.

    Question: Does that illustrate the state of the commercial world in the Far East?  Or, perhaps, could it simply be the result of Chinese New Year celebrations? I guess time will tell.

    Charts That Caught My Eye This Week:

    The January decline was steep, but U.S. Markets held above their late November lows. Most surged
    over their 50-Day Moving Averages, only to sink back downwards.

    090130 SP500 Breaking Down

    With Equity Indices suffering and Bond prices falling as well, is there anything performing well?  Recently, Investors have turned to gold as a safe haven. It looks like gold just broke above and successfully re-tested its trendline.  On a closing basis, Friday was the highest gold close in six months.

    090130 Gold Breaking Out 

    Here are a few of the posts I found interesting this week:

    • Why Obama unloaded on Wall St execs, as JFK once unloaded on steel barons. (NYTimes)
    • UK article spotlighting 25 people at the heart of the economic crisis (Guardian)
    • Apple awarded key patent on things that makes the iPhone, the iPhone. (AppleInsider)
    • Elliott Wave Theory's explanation of "irrational herding" during uncertain times. (Prechter)
    • Americans display venturesomeness, even in grim economic stretches. (NYTimes)
    • Steve Jobs a music visionary, or just visionary? Judge for yourself. Interesting article. (CNet)

    And, a little bit extra:

    • An attempt to make the ThinkPad sexy. I'll admit, they caught my eye. (Lenovo)
    • Watch the Ads From the Super Bowl Online (Hulu)
    • Add "Obama-cized Poster Effects" to your photos. Interactive and flexible. (Obamicon.Me)
    • Malwarebytes fixed a Trojan for me that apps I paid for couldn't remove. Nice. (Download)
    • Big Brother's Watching: Swiss Police Spy Marijuana Field With Google Earth (ABC News)
    • Printing the NYT Costs Twice as Much as Sending Every Subscriber a Free Kindle (Silicon Insider)

  • Capitalogix Commentary 01/23/09

    Last week I said that it didn't matter whether we were in a depression or a recession. My basic rationale was that if you don't have a cure, then recognizing the disease provides little benefit. The second rationale was that much of the commentary I read talks about our troubles is if they're happening in a vacuum, when in fact, the whole world is suffering from similar financial challenges and instabilities. What that implies is that independent actions (or events that happen here in America) will have less long-term effect than hoped.

    In medicine, I suspect that doctors would prefer to cure a disease rather than treat symptoms. On the other hand, until the disease is cured, treating symptoms can often make the patient feel a lot better. While governments around the globe look for a cure, investors will feel a lot better if they figure out a way to make money in this economy, rather than the one they hope for.

    It amuses me when I hear that "markets went down today on concern that "XYZ" did ABC". No one really knows why markets go up or down. Sometimes markets respond favorably to news, but other times they don't. Ultimately markets go up when more people buy than sell. Conversely markets go down when there are more people intent on selling, than buying.

    So when people insist on creating certainty around what caused markets to move in one direction or the other, I suspect this is a symptom that relates back to a tendency shared by many humans. We are naturally afraid of the dark. It's comforting to believe that there's enough light to see what's going on and to make sense of what's happening around us. It doesn't even really matter that we truly believe it, as long as it's believable and it makes us feel better.

    So Where Are We?  We are in an alternate universe. We have a wildly popular African-American President and the Cardinals in the Super Bowl. Remember Seinfeld? Castanza would be a Billionaire.

    The market had another terrible week, including the worst inauguration day decline in history; but the White House has a new blog, so apparently everything is okay.

    The VIX seems to be saying the same thing.  According to Bespoke, one difference between the current decline and the declines in October and
    November is that the VIX has not spiked nearly as much.  Many think of the VIX
    as an indication of fear in the market, and whether it's good or bad, there
    seems to be more complacency during the most recent downturn.  This chart shows the VIX volatility index along with the S&P
    500. 

    090123 VIX and SP500

    Here are a few of the posts I found interesting this week:

    • Obama's Inauguration Speech. (Transcript, Visualizations, & Commentary)
    • No soft landing for Asian airlines. (WSJ)
    • Despite Crisis, Jim Rogers is Still a China Bull. (Reuters)
    • Are riots in Iceland, Latvia and Bulgaria are a sign of things to come? (Times UK)
    • If Google can't make it work, newspaper advertising must really be dying. (SJ Mercury)
    • Be Nice to Those Who Lend You Money.  Another great Fallows piece. (The Atlantic)
    • Thought Provoking Article discussing Business Cycles and Creative Destruction. (Guardian)

    And, a little bit extra:

    • The cure for retail doldrums … Obama has an action figure with "Presidential Accessories".
    • Timely article called "Reading the Energies of the Time". (Quantum Think)
    • W's Greatest Hits:  Love him or hate him, these 25 BUSHisms will make you smile. (Slate)
    • Open Source Democracy: The technology that helped elect Obama (AFP & .GOV)
    • Pictures of Obama's Inauguration from Space;  see a different perspective. (TechBoost)
    • Super squeaky safe sex. Funny condom ads with balloon animals and bloopers. (Durex)
    • Free video and worksheet from Tony Robbins about the Power of Momentum. (Nice tool)

  • Capitalogix Commentary 01/23/09

    Last week I said that it didn't matter whether we were in a depression or a recession. My basic rationale was that if you don't have a cure, then recognizing the disease provides little benefit. The second rationale was that much of the commentary I read talks about our troubles is if they're happening in a vacuum, when in fact, the whole world is suffering from similar financial challenges and instabilities. What that implies is that independent actions (or events that happen here in America) will have less long-term effect than hoped.

    In medicine, I suspect that doctors would prefer to cure a disease rather than treat symptoms. On the other hand, until the disease is cured, treating symptoms can often make the patient feel a lot better. While governments around the globe look for a cure, investors will feel a lot better if they figure out a way to make money in this economy, rather than the one they hope for.

    It amuses me when I hear that "markets went down today on concern that "XYZ" did ABC". No one really knows why markets go up or down. Sometimes markets respond favorably to news, but other times they don't. Ultimately markets go up when more people buy than sell. Conversely markets go down when there are more people intent on selling, than buying.

    So when people insist on creating certainty around what caused markets to move in one direction or the other, I suspect this is a symptom that relates back to a tendency shared by many humans. We are naturally afraid of the dark. It's comforting to believe that there's enough light to see what's going on and to make sense of what's happening around us. It doesn't even really matter that we truly believe it, as long as it's believable and it makes us feel better.

    So Where Are We?  We are in an alternate universe. We have a wildly popular African-American President and the Cardinals in the Super Bowl. Remember Seinfeld? Castanza would be a Billionaire.

    The market had another terrible week, including the worst inauguration day decline in history; but the White House has a new blog, so apparently everything is okay.

    The VIX seems to be saying the same thing.  According to Bespoke, one difference between the current decline and the declines in October and
    November is that the VIX has not spiked nearly as much.  Many think of the VIX
    as an indication of fear in the market, and whether it's good or bad, there
    seems to be more complacency during the most recent downturn.  This chart shows the VIX volatility index along with the S&P
    500. 

    090123 VIX and SP500

    Here are a few of the posts I found interesting this week:

    • Obama's Inauguration Speech. (Transcript, Visualizations, & Commentary)
    • No soft landing for Asian airlines. (WSJ)
    • Despite Crisis, Jim Rogers is Still a China Bull. (Reuters)
    • Are riots in Iceland, Latvia and Bulgaria are a sign of things to come? (Times UK)
    • If Google can't make it work, newspaper advertising must really be dying. (SJ Mercury)
    • Be Nice to Those Who Lend You Money.  Another great Fallows piece. (The Atlantic)
    • Thought Provoking Article discussing Business Cycles and Creative Destruction. (Guardian)

    And, a little bit extra:

    • The cure for retail doldrums … Obama has an action figure with "Presidential Accessories".
    • Timely article called "Reading the Energies of the Time". (Quantum Think)
    • W's Greatest Hits:  Love him or hate him, these 25 BUSHisms will make you smile. (Slate)
    • Open Source Democracy: The technology that helped elect Obama (AFP & .GOV)
    • Pictures of Obama's Inauguration from Space;  see a different perspective. (TechBoost)
    • Super squeaky safe sex. Funny condom ads with balloon animals and bloopers. (Durex)
    • Free video and worksheet from Tony Robbins about the Power of Momentum. (Nice tool)

  • Hope Is Only The First Step.

    090123 HMG Innovate Poster
    It doesn't matter whether you liked or supported Obama during the campaign. Something changed, and the effects will be felt around the world.

    That isn't a political statement.  It is a call for action and an alert to the opportunities and possibilities ahead.

    Watching the Inauguration I knew, deep in my body, that I was watching (and a part of) something historic.

    Just because the change hasn't yet flowed through to something you're looking at, doesn't mean that the change hasn't already occurred.  So, simply looking around, you might not notice that anything changed (for
    example, the market continued to go down on Inauguration day). Make no mistake,
    though, things Changed.

    Hope Is Only The First Step.

    In business (and certainly in trading) hope is not a great strategy; so it's ironic that it's what we need most right now.

    Hope creates confidence, and confidence breeds action. 

    Sitting around waiting for governments to fix what's wrong is a recipe for disaster.  Gandhi said "Be the change you seek in the world." It's never been more true than now.

    This is not the time to wait for others to fix everything and clean up the mess.  This is a time for action.  This is a time to be open to possibility.

    I'm excited!  Periods like this are ripe with opportunity. And it brings to mind something my father told me a long time ago.  The difference between good and great is infinitesimal.  People who are good take advantage of opportunity, while people who are great create opportunity.

  • Hope Is Only The First Step.

    090123 HMG Innovate Poster
    It doesn't matter whether you liked or supported Obama during the campaign. Something changed, and the effects will be felt around the world.

    That isn't a political statement.  It is a call for action and an alert to the opportunities and possibilities ahead.

    Watching the Inauguration I knew, deep in my body, that I was watching (and a part of) something historic.

    Just because the change hasn't yet flowed through to something you're looking at, doesn't mean that the change hasn't already occurred.  So, simply looking around, you might not notice that anything changed (for
    example, the market continued to go down on Inauguration day). Make no mistake,
    though, things Changed.

    Hope Is Only The First Step.

    In business (and certainly in trading) hope is not a great strategy; so it's ironic that it's what we need most right now.

    Hope creates confidence, and confidence breeds action. 

    Sitting around waiting for governments to fix what's wrong is a recipe for disaster.  Gandhi said "Be the change you seek in the world." It's never been more true than now.

    This is not the time to wait for others to fix everything and clean up the mess.  This is a time for action.  This is a time to be open to possibility.

    I'm excited!  Periods like this are ripe with opportunity. And it brings to mind something my father told me a long time ago.  The difference between good and great is infinitesimal.  People who are good take advantage of opportunity, while people who are great create opportunity.

  • Resonant Chamber

    This Animusic video is mesmerizing.  The animation is better than what you find in many video games and adds something to the music, which is pretty good in-and-of itself. 

    The video was not animated by humans.  Instead, the studio that created this video invented an animation engine that analyzes the notes in a piece of music and the engine's algorithms animate from there.

    Fascinating; check-it-out for yourself.

    Here is a direct link to the video on YouTube.  Animusic has their own YouTube Channel.

  • Resonant Chamber

    This Animusic video is mesmerizing.  The animation is better than what you find in many video games and adds something to the music, which is pretty good in-and-of itself. 

    The video was not animated by humans.  Instead, the studio that created this video invented an animation engine that analyzes the notes in a piece of music and the engine's algorithms animate from there.

    Fascinating; check-it-out for yourself.

    Here is a direct link to the video on YouTube.  Animusic has their own YouTube Channel.

  • Disclosures

    DISCLAIMER AND CONFLICTS

    THE PUBLICATION OF THIS BLOG IS FOR YOUR INFORMATION AND AMUSEMENT ONLY. THE AUTHOR IS NOT SOLICITING ANY ACTION BASED UPON IT, NOR IS HE SUGGESTING THAT IT REPRESENTS, UNDER ANY CIRCUMSTANCES, A RECOMMENDATION TO BUY OR SELL ANY SECURITY.

    THE CONTENT OF THIS LETTER IS DERIVED FROM INFORMATION AND SOURCES BELIEVED TO BE RELIABLE, BUT THE AUTHOR MAKES NO REPRESENTATION THAT IT IS COMPLETE OR ERROR-FREE, AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN FACT, MUCH OF WHAT IS ON THIS SITE IS THERE BECAUSE IT I THOUGHT IT WAS INTERESTING OR HUMOROUS RATHER THAN BECAUSE IT IS MY OPINION.  EVEN WHEN AN OPINION IS STATED, HOWEVER, IT IS TO BE TAKEN AS THE AUTHORS OPINION AS SHAPED BY HIS EXPERIENCE, RATHER THAN A STATEMENT OF FACTS. THE AUTHOR MAY HAVE INVESTMENT POSITIONS, LONG OR SHORT, IN ANY SECURITIES MENTIONED, WHICH MAY BE CHANGED AT ANY TIME FOR ANY REASON.

    CAPITALOGIX, HOWARD GETSON, NOR ANY RELATED ENTITY OR PERSON CANNOT AND DOES NOT MAKE ANY REPRESENTATION AS TO THE ACCURACY OF THIS INFORMATION ON THIS SITE OR LINKS TO OTHER SITES OR SOURCES. PLEASE VERIFY ALL INFORMATION YOURSELF.

    THIS MATERIAL IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED IN ANY WAY AS AN INDUCEMENT TO INVEST. AN INVESTMENT IN SECURITIES OR FUTURES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK .

    NEITHER HOWARD GETSON NOR CAPITALOGIX IS A REGISTERED INVESTMENT ADVISOR OR A BROKER/DEALER.

    RISKS OF SECURITY FUTURES TRANSACTIONS: TRADING SECURITY FUTURES CONTRACTS MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU MAY LOSE A SUBSTANTIAL AMOUNT OF MONEY IN A VERY SHORT PERIOD OF TIME. THE AMOUNT YOU MAY LOSE IS POTENTIALLY UNLIMITED AND CAN EXCEED THE AMOUNT YOU ORIGINALLY DEPOSIT WITH YOUR BROKER. THIS IS BECAUSE FUTURES TRADING IS HIGHLY LEVERAGED, WITH A RELATIVELY SMALL AMOUNT OF MONEY USED TO ESTABLISH A POSITION IN ASSETS HAVING A MUCH GREATER VALUE. IF YOU ARE UNCOMFORTABLE WITH THIS LEVEL OF RISK, YOU SHOULD NOT TRADE SECURITY FUTURES CONTRACTS.

    PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN SECURITIES, MANAGED FUTURES, OR FUNDS.

  • Disclosures

    DISCLAIMER AND CONFLICTS

    THE PUBLICATION OF THIS BLOG IS FOR YOUR INFORMATION AND AMUSEMENT ONLY. THE AUTHOR IS NOT SOLICITING ANY ACTION BASED UPON IT, NOR IS HE SUGGESTING THAT IT REPRESENTS, UNDER ANY CIRCUMSTANCES, A RECOMMENDATION TO BUY OR SELL ANY SECURITY.

    THE CONTENT OF THIS LETTER IS DERIVED FROM INFORMATION AND SOURCES BELIEVED TO BE RELIABLE, BUT THE AUTHOR MAKES NO REPRESENTATION THAT IT IS COMPLETE OR ERROR-FREE, AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN FACT, MUCH OF WHAT IS ON THIS SITE IS THERE BECAUSE IT I THOUGHT IT WAS INTERESTING OR HUMOROUS RATHER THAN BECAUSE IT IS MY OPINION.  EVEN WHEN AN OPINION IS STATED, HOWEVER, IT IS TO BE TAKEN AS THE AUTHORS OPINION AS SHAPED BY HIS EXPERIENCE, RATHER THAN A STATEMENT OF FACTS. THE AUTHOR MAY HAVE INVESTMENT POSITIONS, LONG OR SHORT, IN ANY SECURITIES MENTIONED, WHICH MAY BE CHANGED AT ANY TIME FOR ANY REASON.

    CAPITALOGIX, HOWARD GETSON, NOR ANY RELATED ENTITY OR PERSON CANNOT AND DOES NOT MAKE ANY REPRESENTATION AS TO THE ACCURACY OF THIS INFORMATION ON THIS SITE OR LINKS TO OTHER SITES OR SOURCES. PLEASE VERIFY ALL INFORMATION YOURSELF.

    THIS MATERIAL IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED IN ANY WAY AS AN INDUCEMENT TO INVEST. AN INVESTMENT IN SECURITIES OR FUTURES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK .

    NEITHER HOWARD GETSON NOR CAPITALOGIX IS A REGISTERED INVESTMENT ADVISOR OR A BROKER/DEALER.

    RISKS OF SECURITY FUTURES TRANSACTIONS: TRADING SECURITY FUTURES CONTRACTS MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU MAY LOSE A SUBSTANTIAL AMOUNT OF MONEY IN A VERY SHORT PERIOD OF TIME. THE AMOUNT YOU MAY LOSE IS POTENTIALLY UNLIMITED AND CAN EXCEED THE AMOUNT YOU ORIGINALLY DEPOSIT WITH YOUR BROKER. THIS IS BECAUSE FUTURES TRADING IS HIGHLY LEVERAGED, WITH A RELATIVELY SMALL AMOUNT OF MONEY USED TO ESTABLISH A POSITION IN ASSETS HAVING A MUCH GREATER VALUE. IF YOU ARE UNCOMFORTABLE WITH THIS LEVEL OF RISK, YOU SHOULD NOT TRADE SECURITY FUTURES CONTRACTS.

    PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN SECURITIES, MANAGED FUTURES, OR FUNDS.