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

  • The Rise of the Intangible

    In the past, most profitable companies built or sold some sort of tangible product. The Titans of industry were automobile manufacturers, oil producers, land owners, etc.

    Over the past 20 years, the Titans have changed dramatically. Now, the leaders are in tech, IP, and other intangible assets. Here is a chart showing the changing weight of tangible and intangible assets as part of the S&P 500’s total assets between 1975 and 2020.

     

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     via visualcapitalist

    By VisualCapitalist’s definition, intangible assets are holdings that don’t carry any physical or financial embodiment. This includes R&D, intellectual property, and computerized information such as data and software. Today, intangibles are worth over $21 trillion.

    With technology becoming more ubiquitous, I think the trend will continue – which makes protecting your intangibles even more important. 

    Patents and trademarks are a great way to build a moat between you and your competitors. Remember, however, that anything you get a patent on becomes public knowledge – so be careful with your trade secrets. 

  • Envisioning A Bigger Future

    Last week, I shared an article about creating your annual plan (and how Capitalogix does it).  This week, I want to talk more high-level about how we create a bigger future for ourselves, and next week I’ll talk about how I translate that bigger future into resolutions and actions. 

    The beginning of a new year is an excellent time for a fresh start.  While it’s always the right time to take the right action, the structure of a year-end is a helpful crutch and force function. 

    We look forward to what we will achieve – even though history says we rarely achieve everything we hope for.  Meanwhile, paradoxically, it is also true that we rarely achieve things we don’t hope for.  So, Hope!  It may not be a reliable strategy … but it beats the alternative.

    I’m excited about 2023.  Despite the abnormal market, the crazy headlines, and the still volatile political climate, we’re moving toward increased stability. 

    Even though I expect some volatility, we have become more accustomed to handling it (and we’ve become better at transforming its strategic byproducts into strategic benefits).

    On a different topic, think about how much progress we’ve made and how different the “new normal” has become.  For example, think about Zoom and remote work or how quickly our economy migrated online.  On many levels, what we are doing now seemed like science fiction, even just a few years ago.

    We are living in an age of exponential technologies and exponential possibilities.

    I commissioned this image from GapingVoid, to remind our team to keep shooting higher.

     

    How Can It Be Impossible If We're Already Doing It_GapingVoid

     

    Resilience, resourcefulness, and a worthy goal are the foundational keys to many entrepreneurial success stories.

    In the spirit of New Year’s Resolutions – I’ll add that a deliberate approach to goals is important too.

    I’m a big fan of picking a Big Hairy Audacious Goal (sometimes called a “BHAG”) and taking actions that move you in that direction. 

    I’m also a big fan of Strategic Coach’s Bigger Future exercise.  It is a 25-year planning exercise where you lay out your commitments and goals to yourself, your family, your career, and your legacy.  One of the keys to this is chunking high enough to name the roles, goals, and strategies you select with timeless language (meaning that the target words hold up even as you pivot and adjust your focus and actions).

    While doing this, I realized that my ideal next chunk of years involves taking Capitalogix to the next level (and beyond) through collaboration, cooperation, and joint ventures. 

    Once you know your long-term goal, it is relatively easy to plan the steps you need to achieve it.  Achieving smaller goals reinforces successes, builds momentum, and makes continued progress feel more likely.

    Extra points if you make them SMARTs (Specific, Measurable, Attainable, Realistic, and Time-Bound). 

    Actions speak louder than words, and your words can distract you. 

    If your goal is to win first place at a competition, focus on the metrics of a first-place finish instead of the medal.  This makes the goal concrete and sets an internal locus of control for your victory.  This also means you don’t need to tell others about your goal too soon.  Studies show that when you announce your intention to achieve a goal in public, you decrease the likelihood of succeeding. 

    It’s okay to misstep, and it’s okay to get stuck – but recognize where you are and what you’ve done … and move forward. 

    Delayed gratification happens when you want something badly, but are not able to get it right away.  The result is often anger or frustration.

    Meanwhile, the mainstream media broadcasts a seemingly non-stop stream of messages screaming for immediate attention and gratification.  The result of that is not good either (for example, it can result in higher rates of obesity, drug abuse, and depression). 

    Don’t be fooled.  Overnight successes are rarely actually overnight successes (for long).

    It’s also important (once you’ve accomplished your goal) to set new goals. 

    Over the next 25 years, there are many people I want to impact – and many goals I want to accomplish.

    It hasn’t always been easy – but building Capitalogix has been an intensely rewarding passion.  It has been easier because I want what I want.  Make sure you know what you really want … it makes getting it much easier.

    I look forward to you all being a part of it as well.  Here’s to a successful 2023 and an even more successful 2048.  

    Onwards!

  • Another AI Art Gimmick

    There's a new trend of AI-generated profile pictures – using tools like avatar.ai.

    Below are some sample results my son, Zach, got after downloading an iPhone app called Lensa.  The company that makes it also offers a product called Prisma that is worth looking at as well.  He paid $4 within Lensa to generate these AI photos (for context, avatar.ai charges more than 5x as much).  He uploaded 17 photos from different angles (and with different expressions), and the app promised 50 pieces from 4 styles.

    What do you think of the results?  I thought some of them were surprisingly good. 

     

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    Some were not so good … (or at least outside my zone of artistic preferences).

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    After seeing his, I'll admit I got curious and made my own. 

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    To be honest, these apps are still volatile … meaning, sometimes they are good enough to seriously impress – but they also can underwhelm from time to time.  Check out DALL-E for more examples of the dynamic range of possibilities and results.

    Regardless, I am impressed with AI art's progress and momentum.  Recently, generative AI has gotten a lot of hate (along with the hype), nonetheless, people are talking about it (meanwhile AI art is still not as polarizing as Kanye). 

    The reality is, most of these tools still are an elegant use of brute force.  Nonetheless, I am bullish.  Hardware and software are getting better … and when fed more data, generative art depictions get better as well. 

    The uses continue to get more elegant and complex as time passes … but we're still coding the elegance. 

    For more on this topic: 

  • Here Are Some Links For Your Weekly Reading – December 4th, 2022

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    Here are some of the posts that caught my eye. Hope you find something interesting.

    Lighter Links:

    Trading Links:

  • Creating Your Annual Plan

    It is that time of year, again.  We are in the midst of our annual planning for 2023.

    The process is relatively straightforward.  We start by deciding what the company's three highest priority goals are. With those goals as the base, each department (and manager) creates a big three that represents what they can do to reach the company's big three. From there we dive into quarterly rocks, SMARTs (goals that are specific, measurable, actionable, relevant, and timed), as well as the explicit tactical steps it will take to accomplish what we set out to achieve. 

    The meetings are going well.  There is a lot of back-and-forth idea sharing, negotiating, and priority setting.

    Nonetheless, I had a sneaking suspicion that sometimes what seemed like a dialogue, was really multiple monologues. 

    The reason for the disconnect (or misconnect) was that the participants had fundamental beliefs, at a higher level than we were discussing, that were at odds with each other. 

    I shot two videos that I think help teams get to alignment.

    Thinking About Your Thinking

    The first discusses several techniques to enhance your decision-making. 

     

    One of the ideas is something called "Think, Feel, Know." Basically, it explains that you have to deal with superficial thoughts before getting to deeper feelings. Then, you have to deal with those feelings before you get to "knowing". 

    Another technique discussed in the video involves adding time to look for "insights" after working on something.  Those insights are often the seeds for something greater.

    Chunking Higher

    The second is on how to chunk high enough that you can start from a place of agreement.  Exploring distinctions from there is relatively easy.

    I'll add one more concept for good measure … Start with the end in mind. Alignment happens in stages.  Before you can truly get alignment on what to do next, you have to get agreement and alignment about where you are and where you want to go.

    With that said, another important component of meaningful communication is a shared understanding of a common language.  Words can mean different things to different people.  Simply agreeing on a "word" is different than agreeing on a common meaning.

    To summarize these concepts:

    1. Make sure you have a common language
    2. Begin with the end in mind
    3. Start with the highest level of agreement
    4. Make distinctions from there

    Hope that helps. 

  • Here Are Some Links For Your Weekly Reading – November 27th, 2022

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    Here are some of the posts that caught my eye. Hope you find something interesting.

    Lighter Links:

    Trading Links:

  • Happy Thanksgiving 2022!

    I hope you all had a Happy Thanksgiving! 

    This year, we continued our tradition of going to the Cowboys game – then having a big dinner together afterward.

    I got to spend time with both my sons and my first grandchild (who didn’t seem to want her picture taken while there was so many other things to investigate).

     

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    Thanksgiving is a reminder to be grateful for the blessings in your life – big and small. But it's also a time to be thankful for the challenges in your life – and the opportunities for growth.

    Often, when I think about what I want, the first thing I think of is what I don't want. Similarly, when I think about what's going well (or something worthy of being thankful for), I first think about what has been difficult or isn't above minimum standards yet.  Some things change quickly.  Apparently, human nature isn't one of them.

    Challenges are often hidden gold mines. Instead of thinking about them being obstacles for you, recognize that getting past them creates an obstacle for competitors. In other words, figuring out a strategy to achieve these lofty goals creates a new status quo and a sustainable competitive advantage.

    At Capitalogix, we often talk about "finding a way," "creating breakthroughs," and "setting new standards."  The reason is that most things an innovator wants are just outside their current capabilities (otherwise, they'd already have them).  

    Dealing with this on a daily basis requires a resilient mindset and the ability to be comfortable with being uncomfortable. 

    Having no problems either means you're blind to your flaws or aren't playing a big enough game (which is a problem in itself). 

    So, I am thankful for my health, my family and friends, and the quality of my life. But, I am also thankful for the stress, the challenges, and the opportunity to face a continually better class of challenges that forge a path to a bigger future.

    Happy Thanksgiving!

  • What’s The Dollar Milkshake Theory?

    Right now, the US Dollar is outperforming other currencies – in part, because it's the Reserve Currency.

    image from econofact.org

    via Econofact

    But, that's not necessarily a good thing.

    One possible occurrence of this is called the Dollar Milkshake Theory.

    It purports that the US dollar will suck up liquidity from the other currencies, creating a chain of events that will drive the US dollar even higher. Unfortunately, this increases the risk of debt defaults. Eventually, the dollar ends up drinking the liquidity from the entire world economy.

    Think about it. If you're getting negative yields on your two-year bonds from other countries, after a certain point you would sell those investments and switch to US two-year treasury bonds. It's a slippery slope from there. 

    If this is true, then it also has dangerous implications for crypto – which is already in peril after the FTX controversy. 

    So, the question becomes, does the dollar's strength truly help us? What about the global economy? What do you think?

  • Here Are Some Links For Your Weekly Reading – November 20th, 2022

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    Here are some of the posts that caught my eye. Hope you find something interesting.

    Lighter Links:

     

    Trading Links:

  • The Social Media Universe

    We recently dove into what's happening at Twitter. Since that article, Elon wrote an ultimatum e-mail to his employees saying that if they wanted to stay, they would have to work harder and longer than before … and that they would get three months severance if they chose to leave. In a result that might have surprised Elon, thousands of Twitter employees quit.  In response, Elon locked the doors, cut badge access, and attempted some damage control.

    On top of that, you also have Meta having its own issues. 

    With that, it's probably a good time to take a look at the social media landscape.  Here is an infographic that shows the relative popularity of various social media properties. 

     

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    via visualcapitalist

    If you rank the top 10 social media by monthly users, Twitter isn't even on the list. Nor is it on the list for driving clicks. 

    Meta and YouTube top the list – by a mile. 

    As well, there's a growing network of smaller social media vying for a spot in the global paradigm, like Parler, Mastodon, or even Onlyfans.

    Meaning there's a lot more chaos in the system. 

    As always, chaos creates opportunity – in this case, both for new media and for brands to capitalize on the change in trends. 

    The question is, will Facebook and Twitter survive the storm, and if not, what will take their place?