I often talk about how robots are changing the workplace (For example here, and here) because it's a topic that hits close to home.
I remember, back in the late 90's, starting to trade based on my knowledge and my insights (and feeling like I had an edge). By 2003, most of my trading was automated. But, I wouldn't have believed how much of today's daily volume is now traded by computers.
Likewise, I remember the tech bubble and recognizing that more businesses were going online. But, I wouldn't have believed what the Internet did to retail, music, TV, banking (face it, to Business and the World in general).
Regardless of the veracity of the statement, it's evidence that we have a tendency to think emotionally, and aren't always great at rationally analyzing facts.
As proof that it's everyone, the week after the election, many Democrats believed the economy had already worsened.
Roddy Roediger is a leading expert in learning and memory, and he says there are 3 key principles that make false information believable:
Plausibility;
Suggestions and innuendo can be just as convincing as assertions; and
The more we engage with the lie, the more we misremember.
JP Spears is famous for his humor. However, before he found this "character," he made his money as a spiritual coach. One step under the surface, I believe there are a few consistent hidden messages in his humor.
The first hidden message is to let go of what served you that no longer serves you.This is also a key to profitable trading. The market doesn't care what your favorite trade looks like. Nor does it care whether you're comfortable, or how you made money in the past.
You have to be more committed to your results than you are attached to your process.
Many times, your favorite practice is more beneficial to you as a nightlight, which keeps you comfortable, rather than as an alpha-generating strategy, tactic, or technique.
The second hidden message in JP Sears' humor is to look for happiness where it is, not where it isn't. This also is a key to trading. It doesn't make sense to look for a good trade in a bad market. The key is to understand where your edge is, and to use it where and when it exists.
In the video, JP says that we should all stop using our "analytical minds" to trade, and instead use our third eye – and while I don't think my third eye is the answer, I do think our analytical minds can confuse us instead of help us.
Look at it this way: Less than 10% of active traders beat the S&P 500 any given year; and if they beat it one year, the chance is less than a coin flip, that they beat it again the following year.
Most traders understand that analysis and knowledge isn't enough anymore.
So what's the answer?
Well, if you watched the video, I'm leaning towards algorithms and artificial intelligence.
That doesn't mean looking for the "Holy Grail" – or a good set of three to five trading systems either. First, there's no Holy Grail, and it isn't realistic to believe a few systems can handle the chaos of modern markets.
There's always something working in the markets, but there isn't something that works all the time.
There's something to be said for knowing when to switch it up and try something new.
JP Sears was, and is, an emotional healing coach, and licensed "Holisitic Coach Advanced Practioner," but he found then when he posted a YouTube video he was excited when he got a couple hundred views (you can see his more serious origins in this video from four years ago).
He added the funny/satirical aspect as a complement to what he already knew, and it took him to the next level. He now gets millions.
So, who were they? A 13-year-old who used a mix of guesswork and preferences, a 47-year-old English woman who used algorithms and data science (despite not knowing the game), and a 70-year-old bookie who had his finger on the pulse of the betting world.
Proof that different factors can lead us to believe we have control over something with odds at 1 in 9,223,372,036,854,775,808. For those who don't wanna do the math that's 9.2 quintillion.
That's not to say that different factors don't provide an edge. Knowing the history of the teams, their ranks, how they performed historically in the playoffs, all provide important information, to humans and machines that try to make the perfect bracket.
The way people fill out their brackets often mimics the way investors pick trades or allocate assets. Some use gut feel, some base their decisions on rank and past performance, and some use predictive models.
Just as an FYI, this March Madness, the last perfect bracket busted after just 40 games. This includes reporting on tens of millions of brackets from NCAA.com, Bleacher Report, CBS, ESPN, Fox Sports and Yahoo.
People aren't as good at prediction as they predict they are.
Is your password up there? Might want to change it.
I've started using phrases for my password. They're harder for computers to guess, but easier for you to remember. This comic by former NASA scientist, Randall Munroe sums it up:
Recently, we talked about billionaires and how they made their money. Today, I want to talk about companies that are valued at over $1 billion dollars.
In tech finance, a "Unicorn" is the moniker applied to private startups when they cross the supposedly mythical $1 Billion valuation level.
Well, fairy tales are coming true more often.
The number of Unicorns doubled in 2015 … and not just in number – but in value as well.
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