Capitalogix

Are You Smart?

I know a lot of smart people.

I also know a lot of people that think they're smarter than they are (even the smart ones ... or, perhaps, especially the smart ones). 

It's common.  So common, in fact, that there's a name for it.  The Dunning-Kruger Effect.

Have you ever met someone who's so confident about what they think that they believe they know more than an expert in a field? That's the Dunning-Kruger effect. It's defined as a cognitive bias where a lack of self-awareness prevents someone from accurately assessing their own skills. 

Here's a graph that shows the general path a person takes on their journey towards mastery of a subject. 

via NC Soy

The funny thing about the above image... it's actually not a literal part of the paper on the Dunning-Kruger Effect. But it's now so commonplace that people report that chart as fact. A fitting example of the effect. 

David Fitzsimmons via Cagle Cartoons

In our daily lives, it can often be funny or frustrating to see the "victims" of this effect, but I'd warn you that we all have times where we're prone to this; and it's a sign of ignorance, not stupidity. 

This is a problem with all groups and all people. Even if you already know about the cognitive bias resulting from the Dunning-Kruger Effect, you're not immune. 

It should be a reminder to reflect inward - not cast aspersions outward. 

Two different ways that people get it wrong, first is to think about other people and it’s not about me. The second is thinking that incompetent people are the most confident people in the room, that’s not necessarily true.

Usually, that shows up in our data, but they are usually less confident than the really competent people but not that much... - David Dunning

To close out, even this article on the Dunning-Kruger presents a simplification of its findings. The U-shape in the graph isn't seen in the paper, the connection that lack of ability precludes meta-cognitive ability on a task is intuitive, but not the only potential takeaway from the paper. 

Regardless, I think it's clear we are all victims of an amalgam of different cognitive biases. 

We judge ourselves situationally, and assume "the best".  Meanwhile, we often assume "the worst" of others. 

We can do better ... it starts with awareness.

Progress starts by telling the truth.

Before You Vote: Getting Educated

Early voting has started, but, if all goes to plan, we'll know who will be the President on November 3rd. 

The fears of fake news and the growing echo chambers around candidates (and policies) mean it can be tough to truly make an educated decision. The reality is, most of our news sources are tinted by the lens of their ideology - which is okay. That means they're appealing to their targeted audience. 

That being said, it may also be worth looking at the same news story from a comparative news source from the other spectrum - or even better, a primary source when it comes to science/economics. 

Here's a chart that shows where news sources rank. You can click the image to go to an interactive version with more details. And, if you're curious about their methods, click here. 

via Ad Fontes Media

On top of reading various news sources, there are a couple of other tools I like: 

• FiveThirtyEight - Uses graphics to tell visual stories on valid statistics. Named after the number of electoral votes. Also has a visual presidential forecast. 
• RealClearPolitics - Aggregates news from various sources, as well as writing their own opinion pieces. Also has a good visual on the current state of the presidential, senate, and house races. 
• Brittanica ProCon - Tracks the stated positions of politicians on various issues. Can be sorted by candidate, and by issue. It also has a quiz you can take to assess which candidate you actually resonate with. 
• Politifact & FactCheck - Both sites fact check presidential statements, party statements, and more. We know politicians often lie by omission, or focus only on the specific stats that are relevant to their point. Fact-checking helps you gain a more holistic picture. 

 

As a last warning on believing anything you hear, most polls I've seen put Biden in the lead ... but if you remember 2016, you know the polls are working on incomplete information. Clinton had a lead on most polls and lost to President Trump. 

We live in interesting times!

Here Are Some Links For Your Weekly Reading - October 18th, 2020

 

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

Lighter Links:

• The Only Four Books Bill Gates Has Rated Five Stars. (Medium)
• Meet the 2020 Nobel Laureates. (Flipboard)
• How Crowd Forecasting Can Predict the Future. (Axios)
• Nvidia Will Build the 'World's Fastest AI Supercomputer'. (TechRadar)
• Record Avalanche of Early Votes Transforms the 2020 Election. (APNews)

 

 

Trading Links:

• Six NFL Teams Return Positive COVID-19 Tests in 24 Hours, and Why It's Important. (NESN)
• Fed Officials Call for Tougher Regulation to Prevent Asset Bubbles. (Reuters)
• As US Election Nears, Hedge Funds Gauge Far-reaching Market Impact of Trump-Biden Battle. (HedgeWeek)
• Beware Stock Market Divergence and Double Top Patterns!. (SeeItMarket)
• Young and Dumb' Traders Have Created a Total Nightmare' in the Stock Market, Fund Manager Warns. (MarketWatch)

 

Have You Voted?

It's election season! Early voting is now open in most places. 

Regardless of your preference, it doesn't count if you don't vote. 

Gandhi once said, “Be the change you wish to see in the world." This wasn't exactly what he meant … nevertheless, one of the ways you can impact the world is by impacting who gets chosen to represent us in government.

 

2020 has shown how important choosing the right leader is for the country and each of us.

 

I have friends on both sides of the political spectrum, and I hear complaints from both sides. The one thing we all can agree upon is that not enough people (who claim to care) actually get out and vote.

 

It is one thing to whine about the status quo … It is quite another to get up, get out, and do something about it.

 

Combat fake news and media sensationalism by doing some research choosing candidates you think will leave us better than they found us.

If you're not sure where your polling location is, check here. 

How Normal Is Your Face?

Project SHERPA recently released an AI-powered tool that analyzes your face and reveals how average it is. 

It's called How Normal Am I?

via How Normal Am I?

It's an interactive video that uses your webcam to walk you through the various assessments on BMI, emotion, beauty, etc.  At the end, it'll give you your life expectancy, and then your "normal score".

It's not the most complex use of AI, but it provides interesting insights, and is becoming increasingly prevalent. 

Governments, police stations, retail stores, etc. all use this technology to track individuals, and if you remember one of my previous articles - there are plenty of cameras to go around. 

If you did the demo, were you surprised by the results?

Interesting stuff!

Here Are Some Links For Your Weekly Reading - October 10th, 2020

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

Lighter Links:

• The Quantum Internet Will Blow Your Mind. Here's What It Will Look Like. (Discover)
• The US Military is Trialing Augmented Reality Goggles for Dogs. (CNN)
• Modern Science Didn't Appear until the 17Th Century. What Took So Long? (NYT)
• Qantas Airways 'Flight to Nowhere' that Sold out in Minutes Takes Off. (FoxNews)
• What Really Happens When You Become an Overnight Millionaire? (Marker)

 

 

Trading Links:

• Tesla Plans to Offer Machine-learning Training as Web Service with Its New 'Dojo' Supercomputer. (Electrek)
• Analysis: We Read the Antitrust Case against Amazon, and these are the Key Takeaways.  (GeekWire)
• Father of VIX Warns Options Glitch is Costing Investors Millions. (Bloomberg)
• Economists are More like Storytellers Than Scientists Don't Let the Nobel for Economic Sciences' Fool You. (TheConversation)
• The Stock Market Won't See the Bullish Outcome It's Expecting from a Biden Win Unless There's a Full Blue Wave, a JPMorgan Stock Strategist Says. (BusinessInsider)

How Machines Learn: Big Brother Is Watching

The ubiquity of Machine Learning algorithms remains a topic of interest because we, as a society, still haven't come to terms with what "acceptable" use looks like, and what privacy looks like in the post-AI world. 

Algorithms are helping you pick out your next gift on Amazon, controlling what you find on Google, they're suggesting new music for you on Spotify, and they're doing their best to keep you on their website.

They're following you in stores, on the streets, and many would argue they're tracking your phone calls, text messages, and more. 

With all that being said, I do think it's important to have a cursory knowledge of the things that impact our lives ... so, even if you're not an AI-aficionado, I think it's important to somewhat understand how machines learn, and how powerful they're becoming. 

The video is a bit simple in its explanations, but it describes some important concepts.

 

CGP Grey via Youtube

The video focuses on Genetic Algorithms, which is one type of machine learning – and neglects some of the other more complicated approaches.

As machine learning gets more complicated and evolved, it gets harder for a human to understand what makes it good … and that's okay. Understanding the direction AI is heading is more important than truly understanding the intricacies. 

It's human nature to feel safer when we understand something. It's human nature to envision machines as making human-like decisions, just faster.

Of course, just because it suits human nature to believe something, that doesn't make it true. 

Part of what makes machine learning exciting is that it can do a lot of things well that humans are really bad at. 

In reality, it doesn't matter why a bot is making a decision, or what inputs the bot is making the decision on. What matters is the performance and level of decision-making in relation to itself and to other options (and whether the bot is biased).

With respect to trading, focusing on the markets is a distraction.

For the most part, I don't care how markets are doing.

I care how our systems are doing and I care how the portfolio is doing.

It's a brave new world, and not only is big brother watching, but algorithms are too.

Live long and prosper!

What It Was Like Buying a Computer in 1994

We take for granted a lot of the technology we have today. Computers and phones have evolved so fast that it's hard to remember that they haven't been around for many years. When my youngest son was born in 1993,  cassette tapes and the Sony Walkman were still popular, I had a wired phone in my car, and we had a Macintosh-II in the study. 

Everything in this photo now exists in the cheapest of smartphones. 

For a blast from the past and a look back at what used to be top-of-the-line ... here's a video of people buying a computer in 1994. 

 

via David Hoffman

Video transfer and playback. 160-megabyte hard drive. 32 megahertz. All for the low price of $2,000. 

Pretty cool to see how far we've come!  Still, someday soon, they will look back at the tech we have now as "primitive" and "quaint".

I can't wait!

Here Are Some Links For Your Weekly Reading - October 4th, 2020

Did you watch the first presidential debate this week? I have friends on both sides of the fence, but we all agreed the debate was a mess. 

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

Lighter Links:

• Don't Neglect the Thing that Makes You Weird - People Probably Admire it. (Freakonomics)
• Mindfulness for Skeptics. (RealSimple)
• Elon Musk: Neuralink Brain Implant Will Improve 'Bandwidth' of Human Communication. (CNet)
• The Typical Progression of Covid-19 Virus. (CNBC)
• Why Magic Mushrooms are the next Big Booming (and Legal!) Drug Market. (Observer)

 

 

Trading Links:

• President Trump Tests Positive for Covid. Why the Stock Market Isn't Getting Hammered. (Barrons)
• There's No Place to Hide Anymore When the Stock Market Plunges. (Wall Street Journal)
• Big U.S. Banks to Report Profit Plunge as Pandemic Recession Takes Hold. (Investing)
• Manhattan Apartment Sales Tumble 46%, Leaving 10,000 Homes on the Market. (DailyMail)
• SEC is Willing to Try' a Tokenized ETF, Chairman Says. (CoinDesk)

 

Can A Minute Be Faster? A Look At The Internet Minute

As I get older, time seems to move faster ... but it's also true that as I get older, more is accomplished every minute. 

Technology is a powerful force function.

Every couple of years I revisit a chart about how much data is generated every minute on the internet.  

In reverse chronological order, here's 2018, 2015, and 2011. 

Here's an excerpt from 2015 for some perspective: 

Compared to 2008 here is what's happened with social networks:

• The number of people online has more than doubled from 1.4 billion to over 3 billion
• Facebook has gone from 80 million users to more than 1.4 billion
• Twitter had 2 million accounts and now it is 300 million and counting.
• The number of smartphones was 250 million in 2008 and today there are more than 2 billion. That is an 800% increase!

Today this is what happens every minute on the web.

• 4 million search queries on Google
• Facebook users share 2.46 million pieces of content
• Email users send 204 million messages

Over the course of its (pretty short) history, the internet has been arguably the most important battlefield for relevancy and innovation. 

So, what does the internet look like in 2020?

DOMO via VisualCapitalist

Partially as a result of the quarantine, you're seeing an increase in digital cash transfers with tools like Venmo, an increase in e-commerce shops like Shopify, and an increase in (you guessed it) collaboration tools like Zoom or Microsoft Teams. 

This year, DOMO also created a chart that shows the services that have appeared in the graphic since 2012. It's an interesting way to look at the relevancy and staying power of different companies and technologies. 

We're currently in a time period of massive competition and turnover. Innovation means incumbents are being challenged every day, and the status quo doesn't stay that way for long. Even within the S&P 500, you're seeing companies stay a member for shorter periods of time.  

You have to stay on your toes to maintain an edge. I think you can expect increased competition, increased volume, and as a result, increased noise vying for your attention or fueling your distraction.