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

  • 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.

  • Data Visualization of President Obama’s Inauguration Speech

    Here are two interactive ways to look at and understand what was said.

    090120 Obama Speech Word Cloud

    Go to Wordle's site to make one yourself.  You can choose colors and layouts to get the look you want.

    Also, here is a Word Tree from IBM's Many Eyes site.  I like this type of tool because you can interact with the data.  Type in any word you see in the Word Cloud above.  This will show you every instance of that word, in context.

    090120 Obama Speech Word Tree Also, here is an embedded link to a version you can interact with yourself.  I suggest you start with words frequently used in the speech like: Nation, People, Today, New and Must.  You can also try phrases like "We Will".

    The Word Tree tool is interesting and useful. Also, I can see how it will work in a business setting with business plans, proposals, marketing material, etc.  This is very cool; and it is easy to build a word tree on your own data at Many Eyes.  Have Fun. 

    Other Links:

    • Word Clouds of Inaugurations Compared (Bush, Clinton, Reagan, Lincoln). (Read Write Web)
    • Hand-Drawn Mindmap of Obama's Speech. (Agerbeck)
    • Photosynth Image of Inauguration site. (Mashable)
    • Another Inauguration site panorama with incredible detail. (Gigapan)
    • Pictures of Obama's Inauguration from Space; puts things in a different perspective. (GeoEye)

  • Capitalogix Commentary 01/16/09

    Are we in a Recession or Depression?  From my standpoint, I don't think it matters much.  Naming the disease doesn't fix it if you still don't know the cure.  Regardless of what you call it, we're still faced with the symptoms: the credit collapse, carnage in the financial sector, higher prices but less money to spend, and rising unemployment. 

    The kicker is this has been happening worldwide.  Yet, most commentary I read treats this like the cause and effect happen here.  If you look around, though, there haven't been many safe havens. And I suspect that we have less to do with the start or end of this mess than we give ourselves credit or blame for.

    It Is Not What Happens, But What You Do.  You see it repeated through history … Times like these are the catalyst to great wealth for some, and the poor-house for others.  If someone were looking back on this time from 10 or 15 years in the future, this is probably early in the new cycle.  This is a good time to figure-out what you believe will work going forward. 

    The party isn't over.  It is just a new dance, with a different rhythm and a faster pace.  So, maybe it is time to be nimble and to learn some new steps?

    A Look at the Markets:  A few weeks ago, 80% of stocks in the S&P 500 were trading above their 50-day moving averages.  With the declines we've seen since then, that percentage has moved down to 40%.  Financials have led those declines

    This chart shows 2009 performance, by sector.  So far most sectors are doing well.  The exception has been Financials, which look a bit oversold.

    090116 Sector Performance Chart

    Nonetheless, with the S&P 500 approaching its November lows, it's comforting to see 40% of stocks still trading above their 50-day moving averages.  At the prior lows, the number got down nearly to zero.  The fact that the overall declines have been limited to a smaller area of the market is a positive for those hoping that the lows will hold.

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

    • Is so much bad news good news for you? A Bullish forecast. (Dash of Insight)
    • Bank of America gets another $20 Billion from the Fed (Federal Reserve)
    • Yahoo has a new CEO, how did Wall Street react? (TechCrunch)
    • Sony looks set to lose $1.1 Billion in Fiscal 2008 for first loss in 14 years. (Gizmodo)
    • Circuit City Pulls the Plug.  They are liquidating and closing over 500 stores. (Huffington Post)
    • Disney seeing some positive signs? (Jim Hill)
    • Great Visualization showing GM's woes, the least of which is lack of cash. (WallStats)
    • Twitter's New Status as an Investment Tool. (MSN Money Central)

    And, a little bit extra:

    • Size Does
      Matter: Finger length may reveal your financial acumen. (New
      Scientist       & Telegraph)
    • Your inner voice never lies. But does it know what it is talking about? (Psychology Today)
    • Schools get futuristic face scanners to identify students and strangers. (Telegraph)
    • In retrospect, this was a huge marketing boner. Funny. (YouTube)
    • MS’s new Songsmith product adds music to any vocal track. "Epic Fail". (Blog & Gizmodo)
    • The taxman cometh? IRS urged to tax virtual worlds, economies. (Ars Technica)
    • Surprise, surprise … research shows Facebook still mostly for the young. (MIT Tech Review)