Capitalogix

Humanizing The Exceptional

How automated is too automated? 

“To speak to a representative, say … representative …. “ 

“Representative.” 

“Sorry I didn’t catch that … would you like for me to repeat the options menu?” 

“NO” 

“Sorry I didn’t catch that … please state wh…” 

“REPRESENTATIVE” 

“Sorry, all of our representatives are busy helping others at the moment ... Goodbye.” 

*CALL ENDS* 

 

How many of us have been in this scenario when on the phone with an airline, insurance company, or any other automated call center?

Where are the people?  Why can’t I speak to a human?  

 

One of my son’s few memories of my Dad involved listening to him going through a scenario like this with a late 1990s version of an auto-attendant.  It was funny.  My Dad became increasingly incensed that he couldn’t get to an actual human being.  It devolved into: “Shut up!  Stop talking!  I’ll give you $50 if you let me talk with a real person.” And it went downhill from there.

The reality is that despite these systems being frustrating, they save companies time, money, and resources.  And, in an ideal world, they streamline callers into organized categories, making for a more efficient experience.  They’re clearly working on some level because you’re seeing increased adoption of A.I. chatbots and digital support systems. 

For what it’s worth, I predict that AI-enabled chatbots are about to be huge!  The evolution of this technology is going to take the place of people in marketing, sales, consulting, coaching, and even therapy.

But does the efficiency or effectiveness it creates justify the lack of human connection?  Why did so many of the legacy call systems get rated so poorly?

I came across an article highlighting a trendy new restaurant in Venice, Italy.  They serve the best dishes from several popular restaurants from across the city!  They must have a massive kitchen and extensive staff to take on such a task, right?  Wrong.  This restaurant is fully automated; you order and receive food via … vending machines. 

My first reaction was this … the convenience is fantastic, but you lose so much of the community and human interaction that you enjoy when going to a traditional restaurant.  As I continued to read, however, the article explained that in order to “humanize” the restaurant, it is used as a meeting place for food tastings, community gatherings, and question-and-answer sessions. 

Humanity and automation merged beautifully.   

Semi-Automated Often Beats Fully Automated  

Systemize the predictable so you can humanize the exceptional

— Isadore Sharp, Four Seasons

Earlier, I mentioned automated call centers, and how frustrating they can be.  I’ve come in contact with several who have found a great balance in how they automate their system.  

Often, the automated answers allow calls to be organized before reaching their intended destination or to answer frequently asked questions.  Either way, it reduces the need to transfer calls to find the correct department or gets the caller the information they need without tying up phone lines and wasting their and the receptionists’ time with basic questions.  

“There’s a lot of automation that can happen that isn’t a replacement of humans, but of mind-numbing behavior.”

— Stewart Butterfield

This quote highlights the point of automation!  Expedite the menial tasks, which in turn frees up the people working to provide a far more attentive experience.   

 

Humans tend to look for ways to increase efficiency in all aspects of their world.  But we are social creatures, craving meaningful connection and community.  Therefore, the human element will not only persist but remain vital.

Here Are Some Links For Your Weekly Reading - August 27th, 2023

 

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

Lighter Links:

• Advice for Non-Technical People on Building Their AI Knowledge.(Year2049)
• Stuart Kauffman: The "Adjacent Possible" -- And How It Explains Human Innovation. (TED)
• America's Electrical Grid is an Incredible Feat of Engineering—And Its Biggest Bottleneck. (Every)
• An AI's Guide to Thriving in the Robot Apocalypse: Insights From an Empathetic Algorithm.(HackerNoon)
• Forgetting: Not a Flaw, But a Brain's Hidden Feature of Memory.(NeuroScienceNews)
• The Longevity Skeptic – Biochemist Calls BS On Extending Human Lifespan. Is He Right? (Nautilus)

 

Trading Links:

• Some of the Thorniest Questions About AI Will Be Answered in Court.(Wall Street Journal)
• Finding the Wisest Ways to Global AI Regulation. (Spectrum)
• Alternative Data Revenues May Exceed Traditional Data by 2029.(MarketsMedia)
• At $3.5 Billion, Michael Jordan is Now the Richest Basketball Player Ever. (TheStreet)
• France to Spend Over $215M to Destroy Surplus Wine as Demand Continues to Plummet.(TheMessenger)

Camp Kotok: Back Again!

I was just in Maine at Camp Kotok, a private gathering of economists, fund managers, and other financial industry professionals. 

There was limited phone service or access to the Internet… so people had to talk with each other.  And unlike most of my schedule, almost everything happened outside.  Discussions, while vigorous, often take place while fishing or grilling. 

At a past Camp Kotok, I did this interview with Bob Eisenbeis, Cumberland Advisors' Vice Chairman & Chief Monetary Economist.  Check it out. 

 

Cumberland Advisors via YouTube

 

Camp Kotok is an interesting place. The event transformed from a simple retreat after 9/11 ... when many attendees experienced the WTC collapse and came together for some fellowship and to discuss their experiences.  From then on, attendance grew, and the gathering evolved. 

As a side note, before the gathering became known as Camp Kotok, it was referred to as the “Shadow Fed” (in part because of the people who attend).

Attendees are bound to “Chatham House Rules” (participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed).  However, general thoughts, ideas, forecasts, and comments can be discussed and published.

On this trip, I talked with David Kotok about the event, what it means, and how it’s grown.

The intent of the participants (and the environment) helps create a platform for meaningful and productive conversations about the opportunities and obstacles facing America and the world. 

Every year, I come back with new ideas and fresh perspectives on things I forget to think about. 

AI was on everyone's mind.  The financial industry is changing quickly, and I’m confident that advanced technology will become an even bigger driver. 

In general, economically, the mood was cautiously optimistic to bullish. 

Remember, it is an election year!

Social Media Is Changing Everything ... 10+ Years Later

In 2009, I wrote an article highlighting the audacious amount of texts and data my then-16-year-old son was using compared to the rest of the family ... It's funny to look back on.

Here is an excerpt from that post. 

_______

My son won't use e-mail the way I did. So how will people communicate and collaborate in the next wave of communications?

 Here is a peek into the difference that is taking hold.  I was looking at recent phone use.  The numbers you are about to see are from the first 20 days of our current billing cycle.

• My wife, Jennifer, has used 21 text messages and 38 MB of data.
• I have used 120 text messages and 29 MB of data.
• My son, at college, used 420 text messages, and is on a WiFi campus so doesn't use 3G data.
• My son, in high school, used 5,798 text messages and 472 MB of data.

How can that be?  That level of emotional sluttiness makes porn seem downright wholesome. 

But, of course, that isn't how he sees it.  He is holding many conversations at once.  Some are social; some are about the logistics of who, what, when, where and why … some are even about homework.  Yet, most don't use full sentences, let alone paragraphs.  There is near instant gratification.  And, the next generation of business people will consider this normal.

Is social media a fad? Or is it the biggest shift since the Industrial Revolution?

_______

Fourteen years later, I send more text messages than my son, and we both use multiples of that amount of data a month. 

I also remember scoffing at my son having his phone on hand at meetings - that it was a distraction. And yet, here I am, phone on my desk at meetings. But, e-mail is just as important as it was in 2009. 

One of the things we miss in discussions about generations is that the trends of the younger generation are often adopted by the previous - even if they're not as tech literate. 

Technology changes cultures for better or worse ... but it's hard to look at the impact of social media and believe it hasn't been deleterious. 

The promise and peril of technology! 

"Is The Stock Market Going To Crash?!"

I usually don't concern myself with looking at stock charts anymore, but I still like paying attention to what people say about them ... 

Recently, I saw this image posted.

via r/StockMarket

So, will the market attract buyers … or sellers?

Personally, I expect volatility.  

Why?  

Because markets exist to trade, and it tends to generate those trades by 'shaking' the weak holders.  

A big move up here will trigger a lot of buying (and short-covering by weak bears).  

While a big move down will trigger a lot of selling (as Bulls fear the long-anticipated next leg down).

I also recognize that we're entering an election year. So there's still time for a correction before a sustained rally.

Here's the problem.  Even though I still enjoy the mental exercise of going through these scenarios, I recognize how little value they add.

You can look at any point in history and find articles and charts that tell you the world is ending, or that the fear is overblown and we're going to get to the other side, and there's a pot of gold waiting for you. 

It's easy to use charts to explain what happened. It is a lot harder to use charts to predict what is about to happen.

I still keep my ear to the ground because I like having a feeling for the sentiment around both experienced investors and your average Joe.  Conventional trading wisdom says that crowds are usually wrong at turning points.  That doesn't mean they are always wrong (still, it makes sense to notice when Smart Money clearly disagrees). 

Knowing these things doesn't make any difference in the decisions I make about trading ... because I let the computer make those decisions.  Nonetheless, it makes me feel better. 

So, is the stock market going to crash?  Who knows?  Anyone that pretends they know is full of it.  There are too many factors at play to decide whether the market is going to crash.

From my perspective, it doesn't make sense to try to predict something random.

On the other hand, if you don't know what your edge is ... you don't have one.

Algorithmic trading is about creating more ways to win. 

To be effective, algorithmic trading is about switching from lower expectancy positions to higher expectancy positions.

In general, here is how that works.

Understand that you can make trading decisions based on market patterns, trends, sentiment, statistics, behavioral economics, game theory, reversion to the mean, or countless other methods.  Further, realize that no technique works all the time ... but there is always a technique that works (even if that means getting out of the market). 

There is an advantage in tracking each of these to gain a perspective of perspectives (in order to identify an advantage or opportunity in real-time as it happens). For example, you could measure and calculate a blend of your confidence in an algorithm or technique and how it is performing.  This creates the opportunity to switch into and out of various techniques and markets as things change.

Having an edge in trading often comes down to information asymmetry. This means knowing more, faster, better, or different things than what others are using to make decisions.

Hope that helps.

Here Are Some Links For Your Weekly Reading - August 20th, 2023

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

Lighter Links:

• AI Expert Max Tegmark Warns that Humanity is Failing the New Technology's Challenge. (Wall Street Journal)
• Gartner Hype Cycle Places Generative AI on the ‘Peak of Inflated Expectations'. (VentureBeat)
• Intuition: What It is and How It Works. (PsychologyToday)
• Why You Have to Walk So Far to Your Gate at the Airport. (CNN)
• Scientists Build Humanoid Robot that Can Pilot a Plane. (Futurism)

 

Trading Links:

• China's 40-Year Boom is Over. What Comes Next? (Wall Street Journal)
• Radio Shack Set For a Major Retail Comeback. (TheStreet)
• Amazon Relaunches Shipping Service that Competes With FedEx and UPS. (TheMessenger)
• Why Generalist Investors Will Always Win. (TechCrunch)
• Coinbase Wins Approval to Offer Federally Regulated Crypto Futures Trading to Eligible US Customers. (TheTrade)

 

Understanding Industrial Revolutions

Last week, I talked about the potential for room-temperature superconductors. 

In that discussion, I noted that we are now in the 4th Industrial Revolution, in part because of better and more connected chips (semiconductors).

I want to dive back into Industrial Revolutions because we're at an inflection point in AI and chips. 

A Look at Industrial Revolutions

The Industrial Revolution has two phases: one material, the other social; one concerning the making of things, the other concerning the making of men. - Charles A. Beard

There are several turning points in our history where the world changed forever.  Former paradigms and realities became relics of a bygone era. 

Tomorrow's workforce will require different skills and face different challenges than we do today.  You can consider this the Fourth Industrial Revolution.  Compare today's changes to our previous industrial revolutions. 

• First industrial revolution - Discovery of the steam engine and creation of factories
• Second industrial revolution - Introduction of the assembly line and mass production
• Third industrial revolution - The world wide web and computers connect the world, enabling the digital age. 

Each revolution shared multiple similarities.  They were disruptive.  They were centered on technological innovation.  They created concatenating socio-cultural impacts.

Since most of us remember the third revolution, let's spend some time on that. 

Here's a map of the entire "internet" in 1973. 

Reddit via @WorkerGnome.

Most of us didn't use the internet at this point, but you probably remember Web1 (static HTML pages, a 5-minute download to view a 3Mb picture, and of course ... waiting for a website to load over the dialup connection before you could read it).  It was still amazing!

Then, Web 2.0 came, and so did everything we now associate with the internet; Facebook, YouTube, ubiquitous porn sites, and Google.  But, with Web 2.0 also came user tracking and advertising, which meant that we became the "product."  Remember, you're not the customers of those platforms - advertisers are.  And if you're not the customer, you're the product.  And when you're not the customer, there's no reason for the platforms not to censor what you see, hear, or experience to control the narrative. 

Now we're seeing a focus on the Blockchain, and its reliant technologies, with Web3.

Where we are and where we are going

I believe that, if managed well, the Fourth Industrial Revolution can bring a new cultural renaissance, which will make us feel part of something much larger than ourselves: a true global civilization. I believe the changes that will sweep through society can provide a more inclusive, sustainable and harmonious society. But it will not come easily. – Klaus Schwab

With Web3, A.I., better chips, and more, we're at the apex of another inflection point.  As a result, the game is changing, as are the rules, the players, and what it means to win. 

At significant transition points, it is easy to see fear, resistance, and a push to keep things the same.  Yet, time marches on.  Much of the pain felt during these transitions occurs because people hesitate to adapt.  As a result, the wave crashes on them instead of them riding it to safety. 

Robots can do many things, but they've yet to match humanity's creativity and emotional insight.  As automation spreads to more jobs, the need for management, creativity, and decision-making won't go anywhere … data and analytics might augment them, but they won't disappear. 

Our uniqueness and flexibility rightly protect our usefulness.  AI and automation free us up to be our best selves and to explore new possibilities. 

All of these changes bring about a decentralization of power - and a new set of freedoms for people – including the ability to discover and adopt capabilities in less time and with less effort.  But, to bring it back to my skepticism again, there are a lot of roadblocks, interferences, and time between now and the consumer being in control again. 

We can shorten that distance, though.  This reminds me of a quote by Elon Musk: 

Stop being patient and start asking yourself, how do I accomplish my 10 year plan in 6 months? You will probably fail but you will be a lot further ahead than the person who simply accepted it was going to take 10 years."

One of an entrepreneur's most powerful capabilities is the ability to shorten time - and get more done than others thought possible. 

Onwards!

Here Are Some Links For Your Weekly Reading - August 13th, 2023

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

Lighter Links:

• Why Everyone's Worried About Their Attention Span—And How to Improve Yours. (Time)
• The Science of Sleep Inertia & How to Feel More Alert in the Morning. (OuraRing)
• We are ‘50% Human and 50% Technology,' and It's Fueling an American Health Crisis. (Fortune)
• Why Humans are Afraid of AI, or a Brief History of the Relationship of Humans and Robots. (HackerNoon)
• 'The Most Stunning Demo I've Ever Seen in My Life': ChatGPT Impressed Bill Gates by Acing AP Bio Exam. (Insider)

 

Trading Links:

• AI Will Be at the Center of the Next Financial Crisis, SEC Chair Warns. (Axios)
• Venture Capital — We're Still Not Normal. (Medium)
• Update: Lumber Prices Down 29% YoY. (CalculatedRisk)
• German Sandal Maker Birkenstock Heads to US Stock Market. (DW)
• A Real-Estate Billionaire Said Fridays are ‘Dead Forever' for Offices and Remote Work Guru Nick Bloom Says He's Right—It's Part of a New 3-Part Week. (Fortune)

Are You Ready For Some Football?

Are you ready for some Football?

Yesterday was the Cowboys' first preseason game. 

It wasn't exactly the prettiest (partly because it was the first game of the season, but also because many of the starters sat the game out to avoid injury).  With that said, it was still a fantastic experience.  The NFL (and Jerry Jones) knows how to put on a show. 

 

It's Easy to Feel Good at the Start of a Season.

Lots of people ask me how the Cowboys look this year.  The truth is, at this point in the season, it's impossible to know because injuries have a dramatic impact on the game.  

Regardless, each year I choose to be optimistic about the chance of a post-season run. 

That kind of logic (or lack there of) is why I think automated trading is better than humans attempting to do it themselves.  It's a way to make objective decisions and eliminate fear, greed, and discretionary mistakes.

On the other hand, it feels so good to hope!

A Lesson From the Game.

I had an interesting discussion at the game yesterday.  My guest commented that Jerry Jones is a fantastic business person - which is hard to argue - but probably shouldn't be running the team.  He believes the team needs a change of pace to switch things up. 

While I don't know if that's why we tend to struggle so much more late in the season, it reminded me of a great business lesson. 

Entrepreneurs often mistake their domain expertise for general expertise.  "I'm fantastic because I'm fantastic at all these different things." And the result is they overestimate their ability to be great at things outside their unique ability.  A similar issue is that many people believe they are deep thinkers, because they think deeply about what they think about.  However, they often don't realize how narrow their range of thinking is, and how many things fall outside their expertise, interest, or even consideration.

Less Is Often More.

Learning to offload tasks that you may not be as fantastic at as others is a great way to free up time to focus on not only the things that you're great at – but also bring you joy and energy. 

Hope that helps!

How 'bout them Cowboys!

Why You Should Be Excited About Room-Temperature Superconductors

This past week, Korea released two papers claiming to have created a material (LK-99) that is superconductive at ambient temperatures. Before you get too excited, other scientists are still skeptical and cannot replicate their results fully. 

Hyun-Tak Kim—ScienceCast via TIME

Whether this ends up being the breakthrough (or not), there's reason to be excited about where this technology is going.

Semiconductors are the unsung heroes of the tech world, and they power everything from your smartphone to your car. A semiconductor, colloquially a "chip," is a substance that falls somewhere on the continuum between conductor and insulator. Manufacturers process silicon and other materials into semiconductors for all kinds of devices that rely on harnessing electricity for processing power. They're the underpinning of technology, and the 4th industrial revolution is built on the development of better and more connected chips.

That's just a semiconductor, though. What we're talking about now are superconductors. Superconductors have (you guessed it) very high electrical conductivity, allowing lossless or semi-lossless transfer. Up until now, superconductors were only possible at very specific temperatures. A common example of this technology is an MRI machine. 

In 2021, I posted an article on which technologies I thought would impact us most over the next 5-10 years.  

Before I get back to superconductors, here's what I wrote in 2021 about my top 5 technologies: 

1. Compute Power is going to increase, and the ability to brute force problems will create new possibilities. Quantum computing will become more important and likely available for commercial use. 
2. New and better AI platforms will transition AI from a tool for specialists to a commodity for everyday people - it won't just be Artificial Intelligence, it will be Amplified Intelligence (helping people make better decisions, take smarter actions, and continually measure and improve performance). 
3. Blockchain and authenticated provenance are going to become more important as the world becomes increasingly digital. Trust and transparency will be important as indelible logs are needed for finance, medical, armies, etc.
4. IoT will become more pervasive, enabling near digital omniscience as everything becomes a sensor that transmits data up the chain. 
5. Mass customization will become the norm instead of simple mass production as hardware, data, and AI continues to improve products, medicine, custom supplements, and just about everything else. 

 via - "What Technologies Are Going To Most Impact The Next 5-10 Years?" - August 2021

At that same time, the chip shortage massively affected the supply chain. My takeaway was that building and running intelligent AI systems takes a lot of computing power, and as more competitors enter the scene, the cost to play will increase, and so do the stakes of winning and losing. 

To a certain extent, the AI arms race has become a chip arms race. To nations, it is a cold-war-level existential threat.

Advancements in room-temperature superconductors would create a snowball of changes that would affect technology everywhere, and change the makeup of that chip arms race. 

Better conductivity means less heat dissipation, smaller wires, more efficient and faster movement, and smaller tools. That means your processors won't heat up, motors will be able to handle higher torque/weight, and it also becomes a step in making quantum processors a reality. More practically, it means better and longer-lasting batteries, significantly less waste, and a massive jump in robotics. It also means 50x-100x faster chips. 

You could argue it's the "holy grail" of material science. But, we haven't addressed the implications of those new technological possibilities. Electrical grids would be more efficient. Data centers would not only be cheaper but more efficient. And on the more sci-fi side of it, we could create superfast levitating trains which would travel with less friction. 

The chip arms race would still exist because human nature means we will always fight for the best technology and advantages. However, when new technologies are created, their predecessors get cheaper and more accessible. That means more people experimenting with better technology, which often leads to unexpected boons. 

Every technological advancement makes technology as a whole more accessible and prevalent. 

Whether this breakthrough ends up being scalable and sustainable is up for debate, but it's already a sign of progress. 

Onwards!