The last few weeks have been pretty volatile in the Markets.  We've seen major indices rising and falling 10% in a single day – multiple times.  You can attribute some of the selling to fear surrounding COVID-19 (colloquially the Coronavirus) and some of the selling is the result of traders being forced to cover margin calls.  Whatever the reason, it has been unsettling …

via FinViz

The NYSE halted trading twice this week. For context, the last time a trading halt like that was triggered was back on October 27, 1997.

Adding to the agitation, Russia and OPEC are in a price war on oil, and the US both cut interest rates and is pumping $1.5 Trillion of liquidity into our financial system to try and cushion the fallout.  While that seems calming, people are worried about why they felt compelled to calm so grandly in the first place.

There are lots of fringe symptoms sprouting up (and making people wonder how bad the root cause really must be).  The NBA put its season on hold, March Madness was canceled, Tom Hanks and Rita Wilson caught "The 'Rona," and Trump just announced that the U.S. is closing travel from Europe.

Hospitality, travel, entertainment, manufacturing, small businesses, and a cavalcade of other industries are suffering. Ask yourself, is this it … or is there worse yet to come?

With markets making new lows and volatility shaking out investors in both directions, I thought this would be a good time to talk about coping with losses and how to manage your anxieties in "scary times." 

 But first, I want to set the frame by reiterating that I believe the fears of the Coronavirus are overemphasized.

Don't get me wrong, COVID-19 is very contagious and the incubation period is 2 weeks, so you have the possibility of getting people sick before you know it. But, the mortality rate is relatively low at 3% (according to WHO as of March 3rd). That means many people will get sick but most people will survive. 

To protect yourself from the virus, wash your hands aggressively, avoid touching your face, and avoid communal spaces/items. You don't, however, need to stock up on toilet paper like the world is ending. 

via TIME

On a systematic level, we need a better response. More testing, more access to treatment, more social distancing.  If at the macro level we respond appropriately – and flatten the infection curve – most people have nothing to worry about.

Slowing the spread and increasing the availability of testing (even if the same amount of people get sick) reduces strain on the healthcare system and will save lives.

Now, on to the real point I want to make …

 

The Anxiety Antidote

"When the trough gets smaller … the pigs get meaner." - Dan Sullivan

Many people are suffering from "I should have …", or "if I would have …", or "if I could have …" thoughts.

The problem is that thoughts like those create more stress and distraction.  They are a lens focused on loss, difficulties, past events, things that are missing, and what you don't want.

Think of them as an unhealthy reflex that wastes energy, confidence and time.

All We Have To Fear Is Fear Itself  

I often talk about market psychology and human nature. The reason is that markets are a reflection of the collective fear and greed of its participants… people tend to get paralyzed during scary times like these.

But it's not the economy that makes people feel paralyzed. People feel paralyzed because of their reactions and their beliefs about the economy. Your perception becomes your reality. 

A little examination reveals that most fear is based on a "general" trigger rather than a "specific" trigger. In other words, people are afraid of all the things that could happen and are paralyzed by the sheer scope of possibilities. These things don't even have to be probabilities in order to scare them.

You gain a competitive advantage as soon as you recognize that it's not logical. Why?  Because as soon as you distinguish that fear as not necessarily "true", you can refocus your insights and energy on moving forward. You can act instead of react. You make better decisions when you come from a place of calm instead of fear… so create that calm. 

Even a tough environment, like this, presents you with opportunities if you watch for them … or even better, if you create them. 

The Scary Times Success Manual

The goal is to move forward and feel better.  Strategic Coach offers ten strategies for transforming negativity and unpredictability into opportunities for growth, progress, and achievement. They call it the "Scary Times Success Manual", and what follows are some excerpts:

Forget about your difficulties, focus on your progress.
Because of some changes, things may not be as easy as they once were. New difficulties can either defeat you or reveal new strengths. Your body's muscles always get stronger from working against resistance. The same is true for the "muscles" in your mind, your spirit, and your character. Treat this whole period of challenge as a time when you can make your greatest progress as a human being.

Forget about events, focus on your responses.
When things are going well, many people think they are actually in control of events. That's why they feel so defeated and depressed when things turn bad. They think they've lost some fundamental ability. The most consistently successful people in the world know they can't control events – but continually work toward greater control over their creative responses to events. Any period when things are uncertain is an excellent time to focus all of your attention and energies on being creatively responsive to all of the unpredictable events that lie ahead.

Forget about what's missing, focus on what's available.
When things change for the worse, many desirable resources are inevitably missing – including information, knowledge, tools, systems, personnel, and capabilities. These deficiencies can paralyze many people, who believe they can't make decisions and take action. A strategic response is to take advantage of every resource that is immediately available in order to achieve as many small results and make as much daily progress as possible. Work with every resource and opportunity at hand, and your confidence will continually grow.

Forget about your complaints, focus on your gratitude.
When times get tough, everyone has to make a fundamental decision: to complain or to be grateful. In an environment where negative sentiment is rampant, the consequences of this decision are much greater. Complaining only attracts negative thoughts and people. Gratitude, on the other hand, creates the opportunity for the best thinking, actions, and results to emerge. Focus on everything that you are grateful for, communicate this, and open yourself each day to the best possible consequences.

 Click here to download the full PDF version.

Final Thoughts

The VIX (Cboe Volatility Index)  is regarded as the "Fear Index".  On Monday, it screamed "Fear" (jumping to levels not seen since the 2008 crash). Even more interesting than the one-day jump was the year-to-date increase in volatility. 

via MarketWatch

To me, this shows how uncertain and anxious the average "trader" is with various global trends. We can pontificate all day long on the short-term causes of the rises and falls of markets, but I don't think it does much good. I let the algorithms worry about those. It's the larger trends we have to be personally cognizant of.

I sound like a broken record, but volatility is the new normal.

• Markets exist to trade, and if there's no "excitement"  on either side, trades don't happen
• Trades are getting faster, which means more information has to confuse both the buyer and the seller
• You're no longer competing solely against companies and traders like you. It's like the cantina from Star Wars, you've got a bunch of different creatures (and bots) interacting and fighting with each other, trying to figure out how to make their way through the universe

Pair that with all the fear and uncertainty and you've got a recipe for increased volatility and noise. That means that the dynamic range of a move will be wider and happen in a shorter period of time than ever before. You'll hear me echo this thought over the next few years as the ranges continue to expand and compress. Cycles that used to play out over weeks now take days or hours. The game is still the same, it just takes a slightly different set of skills to recognize where the risks and opportunities are. 

Today's paradigm – both in life and in trading – is about noise reduction. It's about figuring out what moves the needle and focusing only on that.

The crucial distinction is between adding data and adding information. Adding more data does not equal adding more information. In fact, blindly adding data increases your chances of misinformation and spurious correlations i.e. watching Fox News or MSNBC to listen to their news reports on COVID-19.

My final comment is that there's a difference between investing and trading, and while humans can invest if you're "personally" still trying to trade – you're playing a losing game. If you don't know what your edge is, you don't have one. 

If you're investing, then I'll advise you to act like a robot. If you removed human fear and greed from your decision making – what would you do?

Keep calm and carry on.  

 

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

Lighter Links:

Trading Links:

Humans are notoriously bad at large numbers. It's hard to wrap our minds around something of that scale. We're wired to think locally and linearly, not exponentially (it's one of the reasons I love AI so much). Here are a couple of ways to help you understand a billion dollars. 

via AskOpinion

First, let's look at spending over time. If you were to spend a dollar every second for an entire day, you would spend $86,400 per day. If you have a million dollars, you can do that for approximately twelve days. With a billion dollars, you can do that for over 31 years. Ignoring the difference between net worth and cash, Jeff Bezos could spend $9M per day for over 31 years.

If you make $100k a year, you can earn $1 million in 10 years. At the same rate, it would take you 10,000 years to make $1 billion.

For another example, let's think about spending money.  Imagine making 50k a year as the base, and imagine buying a laptop, a car, a house. Now we're going to shrink the cost of those items, instead of increasing your pay. If you were a millionaire, a laptop might cost the equivalent of $100 dollars, a Porsche, $3,000 dollars, a house, $25,000. Now, let's say you're Mike Bloomberg and you're worth $60B. A laptop is literally worth pennies, a Porsche is less than 60 cents, and your mansion would cost around 500 dollars. You could have everything you ever wanted for a minute fraction of your wealth. 

Okay, last one before I show a video … 

Let's try explaining it through time. 50,000 seconds is just under 14 hours. A million seconds was 11 days ago. A billion seconds ago from today? 1988. Pretty crazy. 

Here's a video from the 1970s that helps you understand scale through the power of tens, and an exploration of our universe. 

 

Eames Office via BetterExplained

Hopefully, that was helpful!

Perhaps funnier than spending $500M to only win American Samoa is this tweet with amazing math skills. 

She made her profile private after this mess, so I can't link it, but it also ended up on MSNBC – and not because they realized the math was bad. 

Pretty funny. 

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

Lighter Links:

Trading Links:

I wish I could say that I'm surprised that one of the most popular articles I've written was about Pornhub … Every month I get hundreds of views on that post without having linked to it, promoted it, or put ads behind it. 

The reality is that Pornhub does a lot right as a company. I'm going to clarify now, before we get into the real article, that I'm not advocating for Pornhub, or porn, or anything of that nature.  I am advocating for good business practices and for good case studies. 

Cool tech often gets adopted by porn and gambling before more mainstream uses. Porn was the launchpad for video streaming, mobile-enabled sites, VR, and (unfortunately) pop-up ad technologies. It is really popular.  Check out these statistics.

I'm a vocal proponent of tracking, analytics, and data being the new precious commodity.

Pornhub tracks data like its business depends on it, which it likely does.  A staggering 90% of all the world’s data (2.5 quintillion bytes per day) has been created in the past two years, last year, Porrnhub represented over 6597 petabytes of data of that (about 18,000 terabytes a day). 

In 2019, over 5,824,699,200 hours of porn was watched on their site. That's over 6300 centuries of video. 

via Pornhub Insights

Moreover, last year, it received 42 Billion views…. 10 billion more than last year.  That’s 1,332 people a second, or 115 million a day.  To put that in perspective, only 11 countries have populations greater than that.

Here are some additional facts about its use.

• Women typically spend 23 seconds longer on the site than men (and represent a third of users)
• The average time spent on the site is 10 minutes and 28 seconds (older demographics spend more time on the site than younger demographics) 
• Sunday is their most popular day

While I would not suggest going through the full report (there's a lot of information on different pornstars) if you're interested in what platforms people use, what search engines, time of stay based on region, the effect of "events" on viewership, and more, Pornhub's insights are … robust. Here's a link to the full report.