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

  • Why Less Is Often More

    The concept of “less is more” has gained popularity recently, transcending its roots in minimalism.  This idea can be observed in many areas, ranging from the resurgence of simplistic design aesthetics to the widespread popularity of decluttering guru Marie Kondo …or in the renewed interest in Stoicism.  Minimalism has become an essential aspect of modern life, where people seek to simplify their lifestyles and focus on what truly matters.

    The abundance of information and distractions vying for our attention has created a cluttered and overwhelming environment.  We can’t buy everything we see on TV, deep-dive into every interesting topic we learn about on the internet or track everything happening worldwide.  Our limited time and resources force us to choose and prioritize what truly captures our interest and deserves our attention.

    In addition to the overwhelm created by the competition for our attention, it is becoming increasingly difficult to discern what is real and trustworthy because of deepfakes, intentional misinformation, and even the seemingly benign advent of AI-generated content that blurs the lines of reality.

    The current state of information saturation and manipulation makes it imperative that we approach every piece of information with a healthy dose of skepticism and take the time to verify its authenticity.

    Given these limitations, it’s only natural to prioritize and focus on what is relevant and meaningful to us, using our limited time and resources wisely.  The competition for attention demands that we exercise caution, discernment, and purpose in our choices.

    There are two critical distinctions that impact your approach to information, as well as your sense of priority and choice of strategies and activities. 
     
    The first is whether you are a Specialist or a Generalist.  It isn’t hard to imagine that these two types have pretty different reading lists, habits, and sources of happiness or fulfillment.
     
    The second distinction is whether you are a Simplifier or a Multiplier (which is a concept that Dan Sullivan at Strategic Coach has written a book about).  To get to where you are, you’ve been successful at two things in your business career.  You’ve simplified things, which gave you an advantage.  And you multiplied things, which gave you an advantage.  Said a different way, as a simplifier, you took something complex for everybody else and made it simple.  And as a multiplier, you took something that was a new solution, and you had success multiplying it out in the world so that many people could get the advantage of your simplifications.

    The truth is, while we all do both, we default to being primarily a Simplifier or a Multiplier. 

    The best partnerships happen when you pair the two.  For example, amazing conversations happen when a simplifier says to a multiplier, “I’ve got this elegant solution … What would you do with it?” Each has something the other doesn’t, and the combination is often exponential.

    I am primarily a simplifier.  So, I tend to look for people or technologies to multiply what I produce.

    I shot a video on the topic.  Click here to watch.

     

    The internet and global digital economy enable you to find an audience for almost anything. 

    No matter how far you niche down to find your true calling, there are likely people who are just as excited about what you do as you are. 

    In an age where we’re inundated with attention-stealers and ways to spend our time, it’s helpful to remember that less can be more. 

  • Here Are Some Links For Your Weekly Reading – February 12th, 2023

    With the Super Bowl over, don't forget that Tuesday is Valentine's Day. 

    Valentine Testing_cover

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

    Lighter Links:

     

    Trading Links:

  • The Importance of the Super Bowl

    Thirty years ago, the Cowboys played the Bills in the Super Bowl.  As a Cowboys fan, I wanted to watch the game, but my second son was scheduled to be born that day. 

    Luckily, our doctor said, “if you want me to be the one to deliver your baby, you need to induce early.” 

    So, I got to watch the Cowboys win with my youngest in hand … while his mother shot me angry looks as I woke him up with my screaming. 

    That anchors the Super Bowl as a special day for me … but some believe it’s also a "special day" for markets. 

    The theory is a Super Bowl win for a team from the AFC foretells a decline in the stock market – while a win for the NFC means the stock market will rise in the coming year.  There is one big caveat … the history of that "indicator" counts the Pittsburgh Steelers as NFC because that’s where they got their start.  If you accept that caveat, it has been on the money 33 years out of 41 – an 80% success rate.  Sounds good, right?

    Come on … you know better!

    There is no substantial evidence to suggest that the outcome of the Super Bowl has any significant impact on stock market returns. 

    The stock market is driven by many factors, including economic data, company earnings, and overall market sentiment, rather than the outcome of a single sporting event.

    Ultimately, it’s important to recognize that the stock market is a complex system – and that no single event, such as the Super Bowl, can predict its performance.  While the Super Bowl may be a fun event and a source of excitement for many people, it’s not a reliable indicator of stock market returns.

    Here are some other “fun” stock market fallacies:

    Back to Reality

    Rationally, we understand that football and the stock market have nothing in common.  And we probably intuitively understand that correlation ≠ causation.  Yet, we crave order and look for signs that make markets seem more predictable.

    The problem with randomness is that it can appear meaningful. 

    Wall Street is, unfortunately, inundated with theories that attempt to predict the performance of the stock market and the economy.  The only difference between this and other theories is that we openly recognize the ridiculousness of this indicator.

    More people than you would hope, or guess, attempt to forecast the market based on gut, ancient wisdom, and prayers.

    While hope and prayer are good things … They aren’t good trading strategies.

    As goofy as it sounds, some of these “far-fetched” theories perform better than professional money managers with immense capital, research teams, and decades of experience.

    Here is something to ponder…

    What percentage of active managers beat the S&P 500 in any given year?

    … Now, what percentage beat the S&P 500 over 15 years?

    The percentage of active managers who beat the S&P 500 in any given year can vary, but it is typically low. According to research by S&P Dow Jones Indices, the majority of active managers underperform the S&P 500 over the long term.

    For example, in 2020, only 24.5% of large-cap fund managers outperformed the S&P 500. In 2019, the figure was slightly higher at 28.2%, but in 2018 it was just 17.2%. These figures are representative of a broader trend in which a relatively small percentage of active managers outperform the benchmark index in any given year.

    Over 15 years, the answer is about 5% of active managers are able to beat the performance of the S&P 500 Index (and that’s in a predominantly bull market). That’s significantly worse than chance.  It means that, in general, what they’re doing is hurting, not helping. 

    It's worth noting that these figures represent the average performance of active managers across all market segments and time periods. The percentage of managers who outperform the S&P 500 in any given year can be influenced by a number of factors, including the overall performance of the stock market, the specific market segment being analyzed, and the time period being considered.

    In conclusion, while there are some active managers who outperform the S&P 500 in any given year, the majority of them underperform the benchmark index over the long term.

    6a00e5502e47b28833022ad3bb6fb9200d

    via Gaping Void

    There’s simply too much information out there for us to digest, process, rank, and use appropriately.

    In 2009, I wrote an article about how things aren’t always what they appear to be.  In it, I mentioned the human predisposition to find patterns in data.  At the time, I was still analyzing and marking up charts looking for patterns … but I was also using early AI and computers to find better patterns and remove my fear, greed, and discretionary mistakes. 

    I suspect that the desire to find patterns is the same element of human nature that leads people to become superstitious, read their horoscope, or go to a fortuneteller.  It is also the reason so many authors and speakers sell access to their chart patterns that supposedly work. The successes are much more startling than the failures.  So the successes stand out.
        -"Things Aren't Always What They Appear To Be"

    Today, my stance is even more extreme.  Every second you spend looking at a market is a second wasted.

    There are people beating the markets — not by using the Super Bowl Indicator … they’re doing it with more algorithms and better technology. 

    There will never be less data or slower markets.

    Onwards.

  • Asking The Right Questions

    There’s immense power in asking the right questions. 

    Asking the right questions is often more advantageous than having the answer to the question asked.

    Asking the right questions is crucial as it facilitates the discovery of appropriate answers, demonstrates progress, and creates meaningful momentum, regardless of the actual answers obtained.

    I shot this short video on the power of asking the right questions.  Check it out. 

     

    Asking the right questions demonstrates the power of framing, as it allows for a different interpretation and digestion of information.  Even reframing the same question can have a significant impact.  For example, “How do I compete with ChatGPT or other AIs?” vs. “How can I leverage AI to automate tasks I don’t want to do?”

    In my experience, when asking someone what they want, often their response revolves around what they don’t want.  However, reframing the obstacle as the path forward makes it easier to uncover the “hidden” opportunity.

    You have control over the meaning you assign to things and the emotions they evoke in you.  These distinctions are what separate feeling “sad” vs. “happy” – or “feeling like a victim” vs. “feeling in control of your destiny”.  The power to control your perception determines whether life happens “to you” or “for you”.

    When faced with a problem, a mindset of “it can’t be done” can be limiting.  For better results, reframe that "problem" as a "challenge" that can be done – just not in the way it’s currently being approached.

    The most important advances in society were impossible until they weren’t.  For example, imagine telling someone in the Middle Ages that you could communicate with people around the globe (in real-time) while simultaneously seeing their faces and sharing documents.  They’d try you as a witch faster than you could say, “Zoom!” 

    In the technology industry, the term “Moonshot” refers to a bold and groundbreaking project that was once considered impossible (like landing on the moon).

    Success is often a function of using Moonshots to set direction, asking the right questions, being willing to see things differently, and finding a way to move in the right direction while gaining capabilities and confidence.  As long as you are doing those things, the trick is to keep going until you get there.  The result is inevitable if you do those things and don’t give up.

    Onwards!

  • Here Are Some Links For Your Weekly Reading – February 5th, 2023

    Classified-documents-are-everywhere

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

    Lighter Links:

     

    Trading Links:

  • Time’s Ticking On The Doomsday Clock

    The Doomsday Clock was created by a group of atomic scientists in 1947 to warn the public about the dangers of nuclear weapons.  The clock is a metaphor, with midnight representing the catastrophic destruction of the world.  The closer the clock is to midnight, the closer humanity is to a global catastrophe.

    Nuclear war is still a significant risk, but not the only one.  A list of the biggest existential risks to humanity includes:

    1. Nuclear War: The threat of nuclear weapons and the possibility of a global nuclear war continue to pose a significant risk to humanity.

    2. Climate Change: Climate change is a growing threat to humanity and the planet, causing rising sea levels, extreme weather events, and loss of biodiversity.

    3. Pandemics: The rapid spread of infectious diseases, such as COVID-19, highlights the vulnerability of the human species to pandemics.

    4. Artificial Intelligence: The development of advanced AI systems has the potential to pose existential risks if not properly regulated and controlled.

    5. Biotechnology: The rapid advancement in biotechnology, including genetic engineering and synthetic biology, has the potential to bring about new risks to humanity.

    6. Natural Disasters: Natural disasters such as earthquakes, tsunamis, and volcanic eruptions can cause widespread destruction and loss of life.

    Some would argue that our exploration of space is another potential threat.  So, these are just a few examples, and the list is not exhaustive. Addressing these risks requires a global effort and cooperation between nations, organizations, and individuals.

    The Doomsday Clock was initially set at 7 minutes to midnight in 1947.  In the 76 years since it launched, the hands have been adjusted 25 times.  The most recent change, in 2023, moved the clock from 100 seconds to midnight to 90 seconds.  This was a small but significant shift.

    Flowing Data put together a chart to show the clock's movement since inception. 

    Doomsday-shiftsvia flowingdata

    The Doomsday Clock provides a long-term perspective on the dangers facing humanity.  Despite the seemingly small number of seconds remaining to midnight, it serves as a reminder of the urgency to act.  We can move towards a brighter future by acknowledging the potential consequences of our actions (or inactions).  Advancements in fields such as medicine, technology, and human potential offer hope and the potential to overcome even the most pressing challenges.  With collaboration from the brightest minds across the world and private industry, we have the ability to solve even the world's most significant problems.

    If I have to choose, I always bet on humanity. 

    Onwards!

  • Tracking Tech Layoffs

    We have a picture displayed at our office that illustrates one of my beliefs: "The heartbeat of AI is still human."
     
    The Heartbeat of AI is Still Human_GapingVoid
     
    This isn't true just for AI – it's true for tech in general.
     

    Despite the rapid progress in the power, speed, and use of AI (and other innovations and automation), human involvement remains crucial in its creation and implementation. 

     

    It is a reminder that the development and application of those capabilities still rely heavily on people's creativity, ingenuity, and practicality.

     
    Said a different way, substantially less of the fantastic innovations we see would be possible without the engineers, scientists, and developers … who are now being laid off in droves [link to a post about this]. 
     
    So, as the tech giants let go of talent, it's an excellent opportunity for smaller firms to capitalize.
     
    If you are looking to pick up talent, here's a great resource – https://layoffs.fyi/
     
     

    This website provides an easy-to-use platform for tracking layoffs at tech companies, as well as access to a list of the individuals who were affected. To view the details of employees who were laid off from a specific company, navigate to the "List of Employees Laid Off" tab, select the company, and click the Google Doc link in the "Link" column. This will give you access to information such as the name, title, type of work, and LinkedIn profile of the affected employees.

    Combine that with the list of new AI tools, and your business could radically change in the next six months. 
     
    I recorded a quick video about this. It's my first "YouTube Short"
     

    To summarize, these layoffs are a great opportunity … but don't lose sight of the bigger picture. You have to be long-term greedy, not short-term greedy. Recognize what you want to create and find people (or technology) that can help you get there. 
     
    Onwards!

  • Here Are Some Links For Your Weekly Reading – January 29th, 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 Heartbeat Of AI Is Still Human

    I'm proud of our team.  We have a shared sense of Mission, Values, and Purpose.

    Also, we understand that robots aren't coming for our jobs.  We're creating the robots, the AI, and the automation – and it's exciting!

    With that said, as tech becomes more capable, some will focus on the promise … while others will focus on the peril.

    We're seeing lots of hyperbolic promise and peril in the news cycle recently because of ChatGPT. Trends in technology news appear to come in cycles, with different names and topics but similar patterns. This is because, despite the constant evolution of technology and the world, human nature remains relatively unchanged.

    While browsing a library of our old content, I came across an old news story from a local news channel that discussed finding tech talent and featured Capitalogix.  Here's the article.  You can watch the video below. 

    via NBC DFW

    We are always hiring.

    It's not enough to invest in the right ideas or technologies.  You have to invest in the right people as well. 

    "Standing still is moving backward … so you don't only need new technology, you need a new level of data scientists – a new level of professional that can think about what's possible, rather than how to do what we want to do right now."

    Even though we've got an incredible edge now, I recognize that edges decay faster than ever.  The trick is to stay ahead.  

    The future is bright, and the best way to predict the future is to create it.

    Onwards!

  • Capitalogix’s 23rd Anniversary

    Last week I started getting “Happy Work Anniversary!” messages on LinkedIn … and I was a bit confused because people kept mentioning 23 years. 

    Twenty-three years … That can’t be right? Can it?

    For context, here’s what I looked like around that time.

      IMG_5265

    My eldest son (who’s now married with a baby) was in middle school. I was just out of the events I described in my TEDx talk. 

    However, depending on your definition, the 23rd anniversary can be true or false. Legally, the Capitalogix that exists today is distinct from the initial iteration. Additionally, the company has expanded, its direction has shifted, and what was once a one-person operation has grown into a team of over 20 individuals focused on advancing and commercializing the field of Artificial Intelligence.

    It reminds me of the Ship of Theseus (also known as Theseus’ Paradox), which is a philosophical thought experiment that poses the question of whether an object that has had all of its parts replaced is still considered to be the same object. It raises issues of identity, continuity, and change over time. The concept can be applied to physical objects, living organisms, and even organizations or businesses. It challenges our understanding of what it means for something to be fundamentally the same, and if an object can remain unchanged despite undergoing significant changes over time.

    The name “Capitalogix” did originate in the year 2000 … and a surprising amount of the original North Star “purpose” still exists. Honestly, I’m surprised by how much holds up despite 20+ years of passing … but almost all of it has needed some course correction to adjust to changing tides.  

    Regardless, it’s staggering to think about how long I’ve worked in A.I. (since 1991, when it was hard to spell A.I.) and how far we’ve come. 

    If I had known how difficult it was at the beginning, I probably never would have pursued it. However, knowing how difficult it is, and how challenging it is to make meaningful progress, I feel better that I did because I realize that it’s not just a competitive advantage, it’s a sustainable competitive advantage. It’s easy for people to focus on a capability, it’s another to make it industrial-grade, robust, reliable, and able to work in difficult conditions. They say that things that don’t kill you make you stronger, it’s true for people, but it’s also true for technologies.  

    As we celebrate Chinese New Year, it also feels like a new beginning for Capitalogix as we chase after new possibilities and probabilities. 

    We didn’t come this far — just to come this far! Onwards!