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

  • Visualizing Walmart’s Growth

    Chances are this will give you a different perspective on their impressive land-grab and expansion.

    There are three simple reasons I'm looking at Walmart.  Tough economic times have Americans looking to save money.  Proximity is power.  And that means most Americans don't have to look far to find a Walmart.  So I'll be watching how they do.

    Data visualization is an important tool in trading.  Sometimes work skills carry-over into personal life.  Watching stuff like this interests me.  Not sure if that means my hobby is part of my work, or if work is part of my hobby.

    Click the image below to watch Walmart's Growth.

    080815 Walmart's Growth Map

    Click here to check-out FlowingData.  I've found several interesting posts on that site.

    Also, here is more info about Walmart from FinViz and StockTwits.

  • What I Love Best About the Kindle, Amazon Took From Vegas.

    Disruptive Technology:

    090306 Tivo Logo I
    remember the first time I used TiVo. I instantly knew it was a
    disruptive technology that would change how people watch TV. It's even
    better than I thought I was. That doesn't mean it was a great
    investment in the stock market; but it was a terrific investment in the
    household.

    And the ripples of this technology are still being felt
    whether you're using TiVo or some other digital video recorder.

    The Kindle is a Disruptive Technology Well-Placed In the Consumer Adoption Cycle:

    Using
    a Kindle reminds me of the first time I used TiVo. Only this might be
    different, because we're several generations of technology further
    along. And the world is ready for it.

    The
    Kindle 2 is ergonomic and reasonably fast. It is a great way to read. 
    It also has a built-in Internet connection, which means you have access
    to content virtually anywhere. And it just so happens that the content
    you want is the content Amazon sells.

    Chances are you already go to Amazon's website.  Because of
    economies of scale, not only do they have a bigger inventory, they have
    a bigger community of users who rate the books and write reviews of the
    books.

    A few years ago, Barnes & Noble and Borders tried to compete
    with Amazon online. As a user, I went to the competitors' site once or twice … but the
    first time Amazon had the book I was looking for and the other site didn't … or
    the first time that Amazon had reviews of a product and the other site didn't –
    well, that was all it took to stop going to those sites.

    And
    Amazon
    continues to extend that edge with bigger inventories, more product
    lines, and a truly mature delivery pipe. Their storefront and
    shopping cart has been used tens of millions of times is an important
    part of the value proposition.

    Psychologically Smart, Part 1: Amazon Banks on Funny Money:

    090306 casino chipsOnce you have a profile on
    Amazon, it doesn't feel like you're spending money. Casinos know the
    token is treated differently than cash.

    On the Kindle, Amazon makes it easy for you to
    buy with "one click" over their "Whispernet" always-on data network.
    So you don't hear or feel your money as it leaves your account. This is
    brilliant.

    Psychologically Smart, Part 2: Amazon Banks on Your Addiction to Instant Gratification:

    Even better, though, is how they handle samples.  It is already changing how I use Amazon. With the Kindle, I
    have instant gratification.

    I can find a book and download a sample in
    seconds. In many cases, the Kindle version is dramatically cheaper than
    the old paper version. So, I suspect that I'll be downloading samples
    of many books. And when I like the author's writing style or find a few
    ideas that I can use, I'm one click away from being able to read the
    rest of it (even if I'm in a meeting or stuck at the airport).

    Over
    time, I might find that I prefer certain books in paper format. On
    the other hand, I've been surprised by how likely I am to read a little
    of this and a little of that.

    And being able to have a whole bookshelf
    is a pretty cool competitive advantage too.

  • Capitalogix Commentary 03/20/09

    090320 Political Cartoon - The Debt Star
    As the recession deepens, the Federal Reserve announced a plan to revive the struggling economy. It will pump more than an
    extra $1 trillion into the mortgage market and longer-term Treasury
    securities.  Short-term, equity markets did push higher.

    The problem with desperate measures, though … they can end up stoking fear, not confidence.   In this case, the plan to buy-up bonds caused the decade's steepest one-day fall in the Dollar against the Euro as investors worried that the Fed's decision to print new money would lead to inflation.  

    One Man's Trash Is Another Man's Treasure:

    In business, I'm constantly facing a build or buy decision.  Namely, is it cheaper to develop something that does what I want, or can I simply buy something that does it already? 

    Well, that equation may soon produce a different result for many companies.  A key indicator is flashing.  Companies are starting to notice. What is it?

    For the 4th quarter of 2008, Argus Research notes the "Q" ratio declined its lowest level since the 4th quarter of 1991.  This implies that it is cheaper to buy a company than to build a replacement.  To me this is an early indicator that merger and acquisition activity is about to increase.  So, expect to see more deals like IBM's proposed acquisition of Sun.

    090320 Buy versus Build Signal

    Sector Rotation: Will Financials Take the Lead?

    Sector rotation theory posits that Financials are a leading indicator of the economy.  Historically they start to perform well six to twelve months before the general market.  Perhaps one of the reasons is that they tend to generate big fees from M&A activity.  And M&A activity starts to get interesting while certain assets are still cheap.  Consequently, I'm watching the Financials and the level of deal activity.

    Last week I posted a chart highlighting the performance of the banking sector, noting that it hadn't been able to sustain a rally longer than a week for quite a while. Well, it looks like decision time.  Just a few weeks ago, Citi's stock price was under $1.  Saturday Night Live made a joke that it was the first major bank to make it onto McDonald's value menu.  Well, it has tripled since then. And the rally has taken prices in this sector to interesting levels.  The chart below shows that the rally has a series of heavy technical burdens to overcome.

    090320 XLF Sell Signal

    However, making it past this price area would go a long way towards convincing me that an intermediate term rally was starting. 

    One other potential negative, indicating a reversal back to the down-side (at least in the short-term), is that the Equity Put-to-Call ratio just hit its ten month low … and that is often a reliable sell-signal.

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

    • Fed to Buy $1 Trillion in Securities to Aid Economy. (NYTimes)
    • Geithner's New Plan to Revive U.S. Banks. (Bloomberg)
    • The Fed's Downside to Desperate Measures. (WSJ)
    • Looking to Learn From Prior Bear Markets. (Economist)
    • More Posts Moving the Markets. (My List)

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Bush Book Deal Worth $7 Million. (TDB)
    • Which of 14 Types of Twitter Personality are You? (Media Caffeine)
    • Why money messes with your mind – New Scientist. (NewScientist)
    • Old age begins at 27 – scientists claim after new research. (DailyMail UK)
    • More Posts with Lighter Ideas and Fun Links. (My List)

  • Capitalogix Commentary 03/20/09

    090320 Political Cartoon - The Debt Star
    As the recession deepens, the Federal Reserve announced a plan to revive the struggling economy. It will pump more than an
    extra $1 trillion into the mortgage market and longer-term Treasury
    securities.  Short-term, equity markets did push higher.

    The problem with desperate measures, though … they can end up stoking fear, not confidence.   In this case, the plan to buy-up bonds caused the decade's steepest one-day fall in the Dollar against the Euro as investors worried that the Fed's decision to print new money would lead to inflation.  

    One Man's Trash Is Another Man's Treasure:

    In business, I'm constantly facing a build or buy decision.  Namely, is it cheaper to develop something that does what I want, or can I simply buy something that does it already? 

    Well, that equation may soon produce a different result for many companies.  A key indicator is flashing.  Companies are starting to notice. What is it?

    For the 4th quarter of 2008, Argus Research notes the "Q" ratio declined its lowest level since the 4th quarter of 1991.  This implies that it is cheaper to buy a company than to build a replacement.  To me this is an early indicator that merger and acquisition activity is about to increase.  So, expect to see more deals like IBM's proposed acquisition of Sun.

    090320 Buy versus Build Signal

    Sector Rotation: Will Financials Take the Lead?

    Sector rotation theory posits that Financials are a leading indicator of the economy.  Historically they start to perform well six to twelve months before the general market.  Perhaps one of the reasons is that they tend to generate big fees from M&A activity.  And M&A activity starts to get interesting while certain assets are still cheap.  Consequently, I'm watching the Financials and the level of deal activity.

    Last week I posted a chart highlighting the performance of the banking sector, noting that it hadn't been able to sustain a rally longer than a week for quite a while. Well, it looks like decision time.  Just a few weeks ago, Citi's stock price was under $1.  Saturday Night Live made a joke that it was the first major bank to make it onto McDonald's value menu.  Well, it has tripled since then. And the rally has taken prices in this sector to interesting levels.  The chart below shows that the rally has a series of heavy technical burdens to overcome.

    090320 XLF Sell Signal

    However, making it past this price area would go a long way towards convincing me that an intermediate term rally was starting. 

    One other potential negative, indicating a reversal back to the down-side (at least in the short-term), is that the Equity Put-to-Call ratio just hit its ten month low … and that is often a reliable sell-signal.

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

    • Fed to Buy $1 Trillion in Securities to Aid Economy. (NYTimes)
    • Geithner's New Plan to Revive U.S. Banks. (Bloomberg)
    • The Fed's Downside to Desperate Measures. (WSJ)
    • Looking to Learn From Prior Bear Markets. (Economist)
    • More Posts Moving the Markets. (My List)

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • Bush Book Deal Worth $7 Million. (TDB)
    • Which of 14 Types of Twitter Personality are You? (Media Caffeine)
    • Why money messes with your mind – New Scientist. (NewScientist)
    • Old age begins at 27 – scientists claim after new research. (DailyMail UK)
    • More Posts with Lighter Ideas and Fun Links. (My List)

  • Tough Times Call For Hope And Inspiration

    The Red Ribbon is a fun video worth watching.  It is a reminder that Hope, Inspiration and Passion are important catalysts to moving forward, regardless of what you do for a living.

    I hope you like it.

    Here is the direct link on YouTube.

  • Tough Times Call For Hope And Inspiration

    The Red Ribbon is a fun video worth watching.  It is a reminder that Hope, Inspiration and Passion are important catalysts to moving forward, regardless of what you do for a living.

    I hope you like it.

    Here is the direct link on YouTube.

  • Capitalogix Commentary 3/13/09

    Cartoon Economic Rubik Cube
    It's a puzzle.  Is this yet another bear-market bounce, or the start of something more meaningful? It was just the second gain in 10 weeks; but the 12% rise from 12-year lows was enough to start the debate.

    The usually bearish, and quite well-respected, Doug Kass suggested that we might be seeing a "generational low" here.  Personally, I'm skeptical.  But when Doug Kass and Warren Buffet agree, I'm going to try and see what they see.

    Also note that tech is leading, and the financials are doing reasonably well, right now, too.  For a sustained rally, that is as it should be.  Nonetheless, the proof will be in the follow-through.

    With that in mind, here is a chart of the Banking Index from Bill Luby's VIX and More.  It shows that we've had one-week rallies several times since August.  A bigger move might be an important sign?

    090313 BKX One-Week Rallies

    Also note that the major US Equity Indices are rallying into the overhead resistance created by the November lows. And that is where we start the week.

    There's a joke amongst traders: The Trading Gods allow you to buy the low-tick then sell the high-tick … once. After that, you're free to do the opposite as often as you want.

    Note that there is a kernel of truth in most good humor … and if you haven't seen Jim Cramer on the Daily Show, it's worth watching.

    Here are a Few of the Business Posts Moving the Markets that I Found Interesting This Week:

    • Global Stimulus Coordinated Effort Shot Down. (The Daily Beast)
    • China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries. (NYTimes)
    • Outsmarting Wall Street? How Quants Tried to Model The Physics of Money. (NYTimes)
    • AIG Paying $165 Million in Bonuses After Federal Bailout. (NYTimes)

    And, Here are a Few More Lighter Ideas and Fun Links:

    • What does one TRILLION dollars look like? (PageTutor)
    • The Unsaid Reason VCs May Not Back You: Resource Efficiency (Mark Peter Davis)
    • Time Management in the Age of Social Media. (BusinessWeek)
    • Twitter Has A Big Month, Grows To Over 8 Million U.S. Users (SocialTimes)

  • Capitalogix Commentary 3/13/09

    Cartoon Economic Rubik Cube
    It's a puzzle.  Is this yet another bear-market bounce, or the start of something more meaningful? It was just the second gain in 10 weeks; but the 12% rise from 12-year lows was enough to start the debate.

    The usually bearish, and quite well-respected, Doug Kass suggested that we might be seeing a "generational low" here.  Personally, I'm skeptical.  But when Doug Kass and Warren Buffet agree, I'm going to try and see what they see.

    Also note that tech is leading, and the financials are doing reasonably well, right now, too.  For a sustained rally, that is as it should be.  Nonetheless, the proof will be in the follow-through.

    With that in mind, here is a chart of the Banking Index from Bill Luby's VIX and More.  It shows that we've had one-week rallies several times since August.  A bigger move might be an important sign?

    090313 BKX One-Week Rallies

    Also note that the major US Equity Indices are rallying into the overhead resistance created by the November lows. And that is where we start the week.

    There's a joke amongst traders: The Trading Gods allow you to buy the low-tick then sell the high-tick … once. After that, you're free to do the opposite as often as you want.

    Note that there is a kernel of truth in most good humor … and if you haven't seen Jim Cramer on the Daily Show, it's worth watching.

    Here are a Few of the Business Posts Moving the Markets that I Found Interesting This Week:

    • Global Stimulus Coordinated Effort Shot Down. (The Daily Beast)
    • China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries. (NYTimes)
    • Outsmarting Wall Street? How Quants Tried to Model The Physics of Money. (NYTimes)
    • AIG Paying $165 Million in Bonuses After Federal Bailout. (NYTimes)

    And, Here are a Few More Lighter Ideas and Fun Links:

    • What does one TRILLION dollars look like? (PageTutor)
    • The Unsaid Reason VCs May Not Back You: Resource Efficiency (Mark Peter Davis)
    • Time Management in the Age of Social Media. (BusinessWeek)
    • Twitter Has A Big Month, Grows To Over 8 Million U.S. Users (SocialTimes)

  • The Twitter Tools I Use All The Time

    090306 Twitter Logo
    Last week's article predicted that Twitter is likely to be in your future. In this article I'm going to share some guidelines and the best tools I've found to make your Twitter use easier and more productive.

    The number of third-party tools available for Twitter is one of the best indications that the service is destined to continue growing in functionality and popularity. I tried many things and settled on a few that work well. Hopefully that list will save you some time.  It is at the bottom of this article.

    Twitter 101: The Basics.

    Twitter can be anything you want it to be.  If you only want to follow a few friends and keep things very social, that's okay. On the other hand, if you want thousands of followers and the ability to drive traffic to your website, it's still okay.

    I've come up with some basic guidelines that work well for me. I'll share some of them with you here.

    First, you never have a second chance to make a first impression. So make a good first impression. That means choosing the right user-name and picture to support the image you want.  It also means that you should fill-in your one-line bio in a way that makes people want to find-out more about you.  Try to use the key words that will help people find you
    using search (or choose to follow you when they look at your profile).

    Second, Twitter is not e-mail, and you're never going to read all of it. This was hard for me because I'm used to starting at the beginning and ending at the end. I like that kind of structure. However as the number of people you follow grows … the stream of information becomes overwhelming. It helped me to think of it as a stream. That meant I didn't have to drink all of it, but it was there for me to dip my cup into anytime I wanted.

    Third, Twitter doesn't limit your ability to follow people for the first 2,000 people. For most people that means that Twitter doesn't put any practical limit on them. However, after the first 2,000 followers, Twitter restricts your ability to follow additional users using a simple guideline … you are limited to a 10% extension of your followers. So if you have 3,000 followers, then Twitter will allow you to follow up to 3,300 people. With very few exceptions, that means that I un-follow someone if they don't follow me back. A lot of people follow that rule. This brings me to the fourth rule.

    Fourth, you'll end up with a lot more followers if you follow people back. Tony
    Robbins and Bill Gates can get by following a dozen people and still
    have 100,000 people follow them. I suspect that you and I won't be able to do
    the same thing. At first, I spent a lot of time deciding whether I was
    going to follow a certain person. Over time, however, I started to set
    the bar much lower. It simply took too much time to filter. So now, I
    follow back almost everyone, but I'm very quick to un-follow someone
    whose messages are too frequent or too distracting. This was simply a
    more efficient way of dealing with the practical realities of using
    Twitter.

    Fifth, this is social media … be social. For every two or three posts, have at least one with a link to an interesting article not by you. Also, study a few of the stars, thought leaders, and examples of your target customer. Note that they have different behaviors. Then match and mirror relevant behavior (follower/followee ratio, number of posts with external links, etc.).

    Hope that helps.

    Here are the tools I use to make working with Twitter easier and more productive.

    Browsers:

    • TweetDeck: Very nice, full-featured Twitter browser application.  I keep coming back to this.
    • Twittelator Pro: Complete iPhone Twitter client. I tried them all, this was the best for me.
    • Power Twitter: If you use Firefox, then try this add-on.  It works very well.

    Search:

    • Twitter Search: See what's happening – right now.
    • Twithority: Comprehensive and pretty Twitter search by rank, time, etc.
    • Twilert: Receive e-mail updates of tweets containing your brand, name, or any keyword.

    Stats:

    • TwitterCounter: Great graph showing your Follower growth, top 100 lists, etc.
    • TwInfluence: Measures the combined influence of a user and their followers.
    • Twitalyzer: reports on relative influence, signal-to-noise ratio, generosity, velocity, & clout
    • Twitter Friends: Lots of statistics about your Twitter behavior and contacts.

    Looking for Trends:

    • ReTweetist: Find the most popular items and people on Twitter.
    • ReTweet Radar: Another trend-spotting service with Twitter word cloud.

    Find and Manage Followers:

    • Mr.Tweet: Very nice service that recommends followers and helps you connect with them.
    • SocialToo: Reporting service shows who followed or un-followed you; lets you auto-follow back.
    • Twitter Karma: Who do you follow but doesn't follow you back … and who aren't you following?
    • Twollow: Auto-follow people on Twitter based on keyword matching in their posts.

    Utilities:

    • TwitterFeed: Easy way to send your blog's RSS feed to Twitter and other services.
    • TweetBurner: Shorten & track URLs used in you posts (works with TweetDeck & Twitterfeed).
    • TwitBacks: Custom Twitter background for your profile.

    Finally, Here are some good posts to expand your Twitter horizons:

    • Twitter in Plain English – a brief video answering the question Why? (Vimeo)
    • Twitter Basics … and More! (James Dickey)
    • Personal Branding with Twitter. Nice list of things to consider. (Sebastien Page)
    • Finding the right Brand Voice on Twitter.  Nice list to consider. (Mashable)
    • Twitter Graphics for your "Follow-Me" Badge. (Sebastien Page)
    • Twitter Background Images for your Profile Page. (Sebastien Page)
    • Nice Twitter-related blog. (Twit Tips)

  • The Twitter Tools I Use All The Time

    090306 Twitter Logo
    Last week's article predicted that Twitter is likely to be in your future. In this article I'm going to share some guidelines and the best tools I've found to make your Twitter use easier and more productive.

    The number of third-party tools available for Twitter is one of the best indications that the service is destined to continue growing in functionality and popularity. I tried many things and settled on a few that work well. Hopefully that list will save you some time.  It is at the bottom of this article.

    Twitter 101: The Basics.

    Twitter can be anything you want it to be.  If you only want to follow a few friends and keep things very social, that's okay. On the other hand, if you want thousands of followers and the ability to drive traffic to your website, it's still okay.

    I've come up with some basic guidelines that work well for me. I'll share some of them with you here.

    First, you never have a second chance to make a first impression. So make a good first impression. That means choosing the right user-name and picture to support the image you want.  It also means that you should fill-in your one-line bio in a way that makes people want to find-out more about you.  Try to use the key words that will help people find you
    using search (or choose to follow you when they look at your profile).

    Second, Twitter is not e-mail, and you're never going to read all of it. This was hard for me because I'm used to starting at the beginning and ending at the end. I like that kind of structure. However as the number of people you follow grows … the stream of information becomes overwhelming. It helped me to think of it as a stream. That meant I didn't have to drink all of it, but it was there for me to dip my cup into anytime I wanted.

    Third, Twitter doesn't limit your ability to follow people for the first 2,000 people. For most people that means that Twitter doesn't put any practical limit on them. However, after the first 2,000 followers, Twitter restricts your ability to follow additional users using a simple guideline … you are limited to a 10% extension of your followers. So if you have 3,000 followers, then Twitter will allow you to follow up to 3,300 people. With very few exceptions, that means that I un-follow someone if they don't follow me back. A lot of people follow that rule. This brings me to the fourth rule.

    Fourth, you'll end up with a lot more followers if you follow people back. Tony
    Robbins and Bill Gates can get by following a dozen people and still
    have 100,000 people follow them. I suspect that you and I won't be able to do
    the same thing. At first, I spent a lot of time deciding whether I was
    going to follow a certain person. Over time, however, I started to set
    the bar much lower. It simply took too much time to filter. So now, I
    follow back almost everyone, but I'm very quick to un-follow someone
    whose messages are too frequent or too distracting. This was simply a
    more efficient way of dealing with the practical realities of using
    Twitter.

    Fifth, this is social media … be social. For every two or three posts, have at least one with a link to an interesting article not by you. Also, study a few of the stars, thought leaders, and examples of your target customer. Note that they have different behaviors. Then match and mirror relevant behavior (follower/followee ratio, number of posts with external links, etc.).

    Hope that helps.

    Here are the tools I use to make working with Twitter easier and more productive.

    Browsers:

    • TweetDeck: Very nice, full-featured Twitter browser application.  I keep coming back to this.
    • Twittelator Pro: Complete iPhone Twitter client. I tried them all, this was the best for me.
    • Power Twitter: If you use Firefox, then try this add-on.  It works very well.

    Search:

    • Twitter Search: See what's happening – right now.
    • Twithority: Comprehensive and pretty Twitter search by rank, time, etc.
    • Twilert: Receive e-mail updates of tweets containing your brand, name, or any keyword.

    Stats:

    • TwitterCounter: Great graph showing your Follower growth, top 100 lists, etc.
    • TwInfluence: Measures the combined influence of a user and their followers.
    • Twitalyzer: reports on relative influence, signal-to-noise ratio, generosity, velocity, & clout
    • Twitter Friends: Lots of statistics about your Twitter behavior and contacts.

    Looking for Trends:

    • ReTweetist: Find the most popular items and people on Twitter.
    • ReTweet Radar: Another trend-spotting service with Twitter word cloud.

    Find and Manage Followers:

    • Mr.Tweet: Very nice service that recommends followers and helps you connect with them.
    • SocialToo: Reporting service shows who followed or un-followed you; lets you auto-follow back.
    • Twitter Karma: Who do you follow but doesn't follow you back … and who aren't you following?
    • Twollow: Auto-follow people on Twitter based on keyword matching in their posts.

    Utilities:

    • TwitterFeed: Easy way to send your blog's RSS feed to Twitter and other services.
    • TweetBurner: Shorten & track URLs used in you posts (works with TweetDeck & Twitterfeed).
    • TwitBacks: Custom Twitter background for your profile.

    Finally, Here are some good posts to expand your Twitter horizons:

    • Twitter in Plain English – a brief video answering the question Why? (Vimeo)
    • Twitter Basics … and More! (James Dickey)
    • Personal Branding with Twitter. Nice list of things to consider. (Sebastien Page)
    • Finding the right Brand Voice on Twitter.  Nice list to consider. (Mashable)
    • Twitter Graphics for your "Follow-Me" Badge. (Sebastien Page)
    • Twitter Background Images for your Profile Page. (Sebastien Page)
    • Nice Twitter-related blog. (Twit Tips)