Capitalogix

There's No One "Right" Path to Success

“Many of life's failures are people who did not realize how close they were to success when they gave up.”   ~ Thomas Edison

I love that quote.

One of my core beliefs is that the game isn't over until I say it's over. For the most part, that means the game isn't over until I win. 

That is an interesting belief to hold ...  and it has many consequences.

Here is another good one from Winston Churchill.

 

 

Many of the people we see as most successful have failed more times than they can count. Nonetheless, they kept going until they persevered. 

Here are a few examples.

 Jack Ma, Co-Founder and Executive Chairman of Alibaba Group. 

 "Today is cruel. Tomorrow is crueller. And the day after tomorrow is beautiful." 

Full Infographic via Quick Base

Richard Branson, Founder of Virgin Group

“You’ve got to take risks if you’re going to succeed. I would much rather ask forgiveness than permission.”

Full Infographic via Quick Base

Walt Disney, Founder of The Walt Disney Company

"All our dreams can come true, if we have the courage to pursue them."

Full Infographic via Quick Base

Keep on keeping on.

Onwards!

Here Are Some Links For Your Weekly Reading - August 26th, 2018

My experience is that you tend to see the same people on the way up ... as you do on the way down.

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

Lighter Links

• Anonymous Bidder Pays $3.3 Million for Lunch with Warren Buffett. (New York Times)
• What If Your Business Was So Intelligent that Nothing Came as a Surprise. (Medium)
• Here's Why You Shouldn't Multitask, According to an MIT Neuroscientist. (Southernliving)
• Why No One Answers Their Phone Anymore. (The Atlantic)
• What is the 80/20 Rule? How the Pareto Principle Will Supercharge Your Productivity. (HubSpot)

  

Trading Links

• The Stock Market is on Pace to Hit Another, More Impactful Trillion-dollar Milestone. (Finance)
• Too Little Too Late': Bankruptcy Booms among Older Americans. (New York Times)
• THE MOST AMAZING STORY about BITCOIN YOU'VE EVER HEARD. (James Altucher)
• Why AI Isn't the Death of Jobs. (McKinsey)
• Los Angeles' Median Home Price Nears $1 Million as Fierce Bidding Wars Continue. (Forbes)

 

Bulls Say They're Hesitant While Active Managers Jump In

I saw this article on SentimenTrader.  Thought it was worth sharing.

 

Maybe bulls are just superstitious

 

Even though investors are buying, they won’t say they’re bullish in sentiment surveys. The Advisor & Investor Model (AIM) is a model that averages the momentum of the four major sentiment surveys.  It has been below 50% for 6 months, one of the longest streaks since 1970.

 

via SentimenTrader

Nobody wants to short

 

Among active investment managers, even the most bearish one is betting on a rally, which is a break from other surveys which mostly show apathetic sentiment. Unlike other surveys, this one has less of a contrarian bent, however.

 

Call buyers return

 

On the ISE exchange, recently, there were more than 200 call options bought for every 100 puts. That’s typically interpreted as a sign of excessive optimism from options traders. 

 

So, how are you feeling about the markets.  Let me know.

Willpower Doesn't Work - Benjamin Hardy

“The addict only needs to change one thing… their whole damn life.” — Ben Hill, Ph.D.

In one way, shape, or form, we’re all prone to some form of addiction or bad habit. Whether it’s food, adrenaline, TV, we all have a psychological or physiological “need” for something that we could probably afford less of.

Every second you spend or decision you make trying to fight that compulsion depletes your ability to say “no” to it the next time. If you want to permanently change your relationship with something ... willpower, alone, may not get you there.

That same principle applies to pursuing success or personal progress.  The trick is recognizing that you can create conditions that make your success much more likely.

Benjamin Hardy is a Ph.D. candidate in Organizational Psychology, a bestselling author of "Willpower Doesn’t Work", a top writer on Medium, and a friend from Genius Network.

I spoke with him about his new book, the idea that “willpower doesn’t work” and what the lessons taught in his book can do for you or your organization. Check it out.

 

No matter how much internal resolve you have, changing the story you tell yourself and the environment you create for yourself, are reliable ways to make meaningful and lasting change.

Once you’ve found what you really want and created the environment to support it – willpower is secondary.

Here Are Some Links For Your Weekly Reading - August 19th, 2018

Turns out, Google is tracking your location history - even when you turn off location tracking in Google Maps.

It's increasingly apparent that privacy in today's digital age is a farce. 

 

If you want to actually stop Google from tracking location (short of selling all of your material possessions and living off the grid) turn off your device information, location history and web activity here. This will depersonalize your searches as well - so your ads will (hopefully) not know your deepest darkest secrets anymore. 

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

 

Lighter Links

• 3 Key Factors that Led to Apple Becoming the World's First Trillion-Dollar Company. (Entrepreneur)
• 7 Job Skills of the Future (That AIs and Robots Can't Do Better Than Humans). (Forbes)
• This Will Help You Grasp the Sizes of Things in the Universe.(Nautilus)
• A Fascinating List of Autonomic Functions that Occur within Human Bodies Every 60 Seconds. (LaughingSquid)
• Hear Freddie Mercury & Queen's Isolated Vocals on Their Enduring Classic Song, We are the Champions. (OpenCulture)

  

Trading Links

• Here's How Fortnite Hooked 125 Million Players.(TheNextWeb)
• Six Media Giants Control 90 Percent of the Content We Consume. (PR Daily)
• Contradiction: Fund Managers Love Tech but Worry about the Trade War. (ValueWalk)
• Report: Just 12% of 2017'S $43 Billion in Music Industry Revenue Went to Artists. (CNW)
• Bill Gates Noticed a Global Economy Trend that No One is Paying Enough Attention To. (Observer)

Will This Be The Longest Bull Run In The Modern Era?

When August 2018 ends, should the trend continue, the current bull market will become the longest bull market (post-World War II,) taking over for the S&P 500 surge from November 1990 to March 2000. 

Today's bull market run started after the financial crisis caused by the US housing bubble collapse. 

Full Infographic via Visual Capitalist

What ended the previous runs?

Who knows why a bull market really ends?  After-the-fact, it’s easy to proclaim that previous bull runs ended for a “reason”.  Looking back, there was the dot-com bubble, Russia launching Sputnik, the energy crisis (and double-digit inflation), Black Monday, the housing bubble, etc. 

There is an undertone of fear as interest rates rise, stimulus tightens, and debt rises.

Nonetheless: 

• U.S. stock markets are at all-time highs
• U.S. housing prices are at all-time highs
• World bond markets are in a bubble
• The Fed is raising interest rates

 

Should we be worried?

Ultimately, the Market is not the Economy. And, traders have not been skittish recently.

In addition, markets aren’t governed by the laws of physics ... so, what goes up doesn’t really have to go down (at least not all the way).

However, there are signs of underlying weakness.  And while markets are impossible to predict, and history doesn’t really repeat itself (though it often rhymes) ... a number of indicators are flashing that have previously signaled a recession. 

A trader knows that a trend continues until it breaks.  This one hasn’t broken.

Nothing works forever, but there is always something working.

Pay attention, and respond accordingly.  

Let me know what you think.

Onwards!

Economists and Markets

I recently got a text from Megan Greene, who is a friend and the global chief economist at Manulife Asset Management.

 

She told me that she wrote an article in FT about a conversation we had.  Her take was that 

systemic failures and the misallocation of capital could cause a bear market.

 

 

Here are some excerpts:

I was recently informed by the owner of an artificial intelligence fund that markets do not listen to economists anymore. Rather than immediately dust off my CV and see what transferable skills I might have, I dug around for evidence of his claim and found there was something to it.

A fundamental shift in market structure towards rules-based, passive investing over the past decade means a lot of trading is no longer based on fundamentals. But just because some markets do not pay attention to economists, it does not mean economists should not pay attention to these markets. On the contrary — this shift in market structure could well be a trigger for the next global downturn. The US Federal Reserve is concerned enough that “Changing Market Structure and Implications for Monetary Policy” is the topic for this year’s economic symposium in Jackson Hole.

JPMorgan notes that only about 10 percent of US equity investment is now done by traditional, discretionary traders. AI quant funds use powerful supercomputers to crunch huge amounts of data, unearth patterns and survey trading strategies across different markets in real time. They do not care why markets move, only that they do.

These funds are not waiting on tenterhooks for my analysis of every non-farm payrolls report, Fed press conference, Donald Trump tweet, or earnings report. Instead, they look for trading strategies that are succeeding and adopt those strategies until a better one comes along, regardless of the underlying fundamentals. But what happens when the strategy suddenly becomes to sell everything? Will the computers find the buyers they need?

Passive investments, such as exchange traded funds (ETFs) and index funds, similarly ignore fundamentals. Often set up to mimic an index, ETFs have to buy more of equities rising in price, sending those stock prices even higher.

...

Passive investors and quant funds could also threaten the economy by making markets vastly more complex, noisy and opaque. They send mixed signals to active investors about what the fair value of a stock is. That could cause a significant misallocation of capital.

The danger is exacerbated by the speed at which trading is now done. The average holding period for a security on the New York Stock Exchange has fallen from two months in 2008 to just under 20 seconds today, according to analysis from Cumberland Advisors. Market regulators have put circuit breakers in place, but the flash crashes we have seen suggest they may not work in a crisis.

Systemic failures, misallocation of capital and dried up liquidity could cause a bear market, dragging on growth when the economic backdrop is already lackluster. Do not be fooled by the 4.1 percent growth in gross domestic product in the second quarter of 2018. The underlying fundamentals of the US economy leave a lot to be desired. A market crash — worsened by systemic effects — would probably send the economy into a tailspin.

So even though passive investors ignore economists, economists should pay attention to risks posed by the shift in market structure they represent. One would be hard pressed to find a customer willing to hand their money to an investor who genuinely does not care about fundamentals or price. Yet this is the strategy pursued by passive and quant funds.

This is not to say these funds are necessarily bad. But the real test will come when there is a sudden crisis followed by a sustained bear market. If markets stay liquid, my AI friend might be right. If not, I will be waiting by the phone to discuss the fundamentals that might lead to recovery.

Interesting take ... Let me know what you think.

Missing the Bus: Lessons in Regret

Don't wait. The time will never be just right.   -  Napoleon Hill

Imagine owning 10% of the most profitable company in the world ... now imagine selling your shares for $800 dollars. 

You've now put yourself in the shoes of the little known third co-founder of Apple, Ronald Wayne. 

Crazy ... but true.

You'd think that lack of foresight would be rarer - but people are often more focused on the risks and prior obligations instead of the potential. In fact, during Apple's early phases, HP and Atari both opted against investing for ownership. 

 

Carl Richards via NY Times

Think how many people sold Bitcoin when it transformed from worth a penny to a dollar - only to see it become worth almost $18,000 at its peak. 

• Blockbuster refusing to buy Netflix
• Mark Zuckerberg's roommate refusing to help build Facebook
• James Altucher passing on Google because it was "too small an opportunity" 

There are tons of stories like that ...

When you ask people on their deathbed what they regret, their #1 answer is having the courage to live a life true to themselves - where they fulfilled their dreams and took chances. 

 

 

Seize Opportunity!  Seize the Day!  And have a nice week.

Here Are Some Links For Your Weekly Reading - August 12th, 2018

via ShoeBox  

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

Lighter Links

• The Truth about Intelligence: What Makes Someone Smarter Than Others? (NewScientist)
• Yuval Noah Harari Extract: Humans are a Post-truth Species'. (TheGuardian)
• Pentagon Restricts Use of Fitness Trackers, Other Devices. (AP News)
• China is Quietly Relaxing Its Sanctions against North Korea, Complicating Matters for Trump. (LATimes)
• Democrats Warn Candidates Not to Use Chinese Devices 'Even If the Price is Low or Free'. (BusinessInsider)

  

Trading Links

• Here's What Tesla Would Have to Do to Go Private. (Money)
• A New Cold War? Why the U.S. and China Would Both Lose. (Knowledge)
• Malls are Turning Empty Storefronts into Startup Incubators. (Footwearnews)
• NYC is Set to Impose a Cap on Uber. (Bloomberg)
• July Sets a Record for Number of $100M+ Venture Capital Rounds. (TechCrunch)

Exploring Nasdaq's Prediction for 2018 FinTech Trends

We’re past the midway mark for 2018. It has been an interesting year for America and for technology. At the beginning of the year, Nasdaq released its predictions for this year’s FinTech trends. I think it’s worth seeing how they've held up.

Nasdaq has been around since 1971 when they launched the world’s first electronic stock exchange, and they’re doing their best to hold innovation as one of their core tenets. According to them “recent advances in technologies such as blockchain, cloud computing, machine intelligence, behavioral science, and other areas provide us with the opportunity to literally rewrite tomorrow and drive our industry forward in entirely new ways.”

They identify four key trends and seven advanced technologies that will start to converge.

Four Key Trends

 When evaluating a new product or market, trends are an important factor. The four key trends Nasdaq foresees are as follows.

• First, is the development of the marketplace economy, an evolution in the purchase and sale of non-financial assets using market mechanisms that allow for real-time negotiation on price.

• Second, is investment banks demonstrating an interest in partnering with firms to develop new technologies that can drive their businesses into the future.

• Third, is the big data explosion which combined with advances in machine learning creates a myriad of opportunities in market surveillance, data analytics and in the capital markets themselves.

• Finally, the investment management is becoming increasingly competitive, specifically in regard to technology-powered pursuits.

If one thing is apparent, innovation is the golden thread between it all. Finance is quickly becoming synonymous with FinTech as finance and technology becomes inextricable.

Seven Key Technologies

• Cloud technology is maturing and adoption is accelerating. People are recognizing that several types of workload work more efficiently in the cloud.  It’s not right for everyone, and the scale and speed of adoption will differ for different industries, but hybrid cloud experiences will be widely adopted by organizations.
• Machine intelligence is helping firms find an edge in an increasingly tough landscape. Machines are getting better at interpreting data and creating structure from unstructured data (80% of the world’s data is unstructured, according to Gartner Group). Machine intelligence is also enabling real-time broad-spectrum surveillance.
• Behavioral Science is increasing sophistication by increasing insights from human factors and cognitive analysis. This can bolster machine learning as well as improve workflow and user interfaces.
• Blockchain is rapidly moving towards commercial applications, with proof of concepts becoming pilots and soon live products. Lots of activity as well in the crypto space.
• Pari-mutuel technology can be applied to create new products. Bilateral trading works when you have a liquid market, but it's not always possible to find a counterparty. Pari-mutuel (pool-based) models enable more products - as long as there is still differing sentiment. This also allows more customized positions.
• Cybersecurity is becoming more and more necessary as cyberattacks increase. Cybersecurity is evolving and becoming an issue and focus for not just firms but individuals. Reminder: Here are some cybersecurity tips I put together last year.
• Quantum Computing - while exciting - has no clear timeframe of adoption. It's an emerging technology but has the potential to radically transform the trading landscape by increasing the rate at which we perform optimizations and calculations.

If you’re interested in seeing the whole report you can download it here.