Capitalogix

Here Are Some Links For Your Weekly Reading - March 10th, 2019

I was in Toronto this week – and it was COLD!

Daylight Savings Time just springed forward ... and here in Texas, it is getting warmer.  Perhaps winter is over?

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

 

Lighter Links

• The World's Fastest Supercomputer Breaks an AI Record. (Wired)
• Study Shows Parrots Can Pass Classic Test of Intelligence. (Phys)
• Huge Spider Drags Opossum across Amazon Rainforest Floor in Horrifying Footage. (Video)
• H.I.V. is Reported Cured in a Second Patient, a Milestone in the Global AIDS Epidemic. (New York Times)

 

Trading Links

• Bill Gates Reveals the 10 Breakthrough Technologies that Will Change the World in 2019. (Forbes)
• Artificial Intelligence Regulation Will Be Impossible. (Forbes)
• Scientists Just Pulled CO2 from Air and Turned It into Coal. (Forbes)
• Map: The Most Valuable Brand in Each Country in 2018. (VisualCapitalist)
• Who's the Richest Owner in the NFL? Cowboys' Jerry Jones Doesn't Even Crack the Top Three. (CBS Sports)

 

The Too True Story of "The Nail in a Fence"

In the course of business this week, I noticed that certain comments and interactions triggered hurt feelings.

Stress, high expectations, and a narrow focus often result in hurt feelings.

Of course, I understand that a little conflict is normal (or even beneficial).  Yet, I guess I'm getting a little softer as I get older.

It doesn't take "intent" to hurt someone's feelings (or to have your feelings hurt).  It can happen by a simple disagreement, a stubborn point of view, a dismissive comment, or even a judgmental look.

Sometimes, the catalyst can be part of effective strategies.  And normally, people just brush off these smaller-scale disturbances with the excuse with: "I was angry"; or “I’m only human”; or "There is no place for cry-babies in business."  Nevertheless, it’s important to remember that we should strive to be better.

To drive the point home further, here is the story of "The Nail in a Fence."  While you might have seen it before, it is worth reading again. 

 

Nail In The Fence:

 

There once was a little boy who had a bad temper. His Father gave him a bag of nails and told him that every time he lost his temper, he must hammer a nail into the back of the fence.

The first day the boy had driven 37 nails into the fence. Over the next few weeks, as he learned to control his anger, the number of nails hammered daily gradually dwindled down.

He discovered it was easier to hold his temper than to drive those nails into the fence.

Finally the day came when the boy didn't lose his temper at all. He told his father about it; and the father suggested that the boy now pull out one nail for each day that he was able to hold his temper.

The days passed and the young boy was finally able to tell his father that all the nails were gone.

The father took his son by the hand and led him to the fence. He said, "You have done well, my son, but look at the holes in the fence. The fence will never be the same. When you say things in anger, they leave a scar just like this one. You can put a knife in a man and draw it out. It won't matter how many times you say I'm sorry, the wound is still there."

A verbal wound is as bad as a physical one.

 

This story is a reminder to be mindful of cause and intent.  Hope it helps.

Causing pain to others is one problem.  Causing pain to ourselves is another.

Feeling and stoking anger is like taking poison and hoping the other person suffers.  It isn't efficient or practical.

So, what about "Forgiving"?

It doesn't have to be forgetting.  

Forgiving removes the valence (or charge) from a situation or memory.

It only takes a moment to create an emotional trigger (think about how you felt when you saw a high school bully in the hallway).  It is simple, evolution and natural selection favored species that remembered and avoided danger.  It is in our DNA.  But avoidance isn't always a great strategy ... especially when it is blocking the attainment of something beneficial.

Forgiveness is a way to disable or mute the emotional trigger (this is called "collapsing an anchor" in NLP). It's also a choice to move forward.

Forgiveness is also a release of "claim".  When we are wronged, we expect an apology, retribution, restitution, or recognition.  And until we get it, we are stuck, waiting for it.  In a sense, forgiveness releases the stuck energy and makes it available for something else (hopefully, something better).

Forgiveness changes the route and allows you to move forward.

And I've found that good things happen more often when you are in motion.

Who or what do you need to forgive?

Onwards.

The Relationship Between Stock Exchanges and Indices

Last year, I wrote about how the top 16 exchanges each have a market capitalization above $1 trillion.

That's a staggering amount of money being traded; but, how much of is it traded well?

82% of funds trailed their respective benchmarks over 15 years, and Indexes consistently beat stock pickers. 

With the NYSE and NASDAQ being the two biggest stock exchanges, looking at them can provide a lot of insight. The NYSE has 2058 companies, and the NASDAQ has 2588. 

 

via VisualCapitalist

 

With active managers' struggle to beat the market, many investors have moved to index-tracking funds (as of last year, investors withdrew $1.2 trillion from actively managed U.S. funds since 2007, according to Morningstar). 

My prediction, active management becomes a lot easier with AI and machine learning. You'll be hearing more about that from us soon. 

The Oxford Comma: Still Important, Even If Oxford Doesn't Think So

Grammar isn't everyone's cup of tea ... but it's something I spend a lot of time thinking about. 

Should I use an ellipsis here or a dash? Is this an unnecessary parenthetical?

Because of that,  the serial comma (commonly known as the Oxford comma) is surprisingly important to me. 

If you don't know what an Oxford comma is, it is the comma before the word "and" at the end of a list. 

I love it (and use it). I think it adds clarity in most situations, and while some lists make sense without it, it is helpful if not necessary in many lists.

Like below: 

 

Who wants that?

Use the Oxford Comma ...  Save yourselves the imagery. 

If you need a guide of when to use it, Check out this infographic ... Click it to see the whole thing. 

 

via PRDaily

Profound Population Proliferation

Humanity is a force to be reckoned with. For better or worse, we've terraformed the world to our design. 

It's interesting to see the ebbs and flows of populations – and how exponential today's growth is. 

Watch the video. 

 

American Museum of Natural History via Youtube

It took 200,000 years for our population to reach 1 billion. It took 200 years to reach 7 billion. Our population has doubled since 1971.

The video predicts that the earth's carrying capacity is about 11 billion and that we'll reach that by 2100.

Farming took humanity from a couple million to hundreds of millions. Modern medicine and the industrial revolution took us from hundreds of millions to billions ... and we're in the middle of a technological revolution. 

When you think about how radically our population has grown in the past 200 years, it's no surprise the dynamics of our relationship with the world have changed. 

You don't have to be an economist to predict the number of 18-year-olds in 15 years. You merely count the 3-year olds. India and China's influences are both going to grow due to the sheer number of people they have. Africa is slowly building megacities to accommodate the growing population with the help of China.  How else do you think this is going to impact the world order in the coming decades?

 

Funding Fintech's Future

I think it’s clear that Fintech is getting a lot of attention from the press, investors, and talent.  It is a hot space!

Here is a chart showing the Fintech companies that got the most funding recently.

 

via howmuch

Rapidly maturing sectors are payment processing, personal finance, and blockchain/crypto.

• Payment Processing - Stripe received $685 million in funding last year and is valued at over $20B
• Personal Finance - This is a broad market, but we're seeing the "average joe" empowered to make smarter personal finance decisions with companies like Robinhood, Acorns, and Credit Karma. Credit Karma raised $869M and is valued at approximately $4B
• Blockchain - While crypto is currently out of favor for many, blockchain is still an exciting prospect. Opendoor is bypassing real estate agents and brokers to disrupt the housing market. Receiving over $1B in funding last year, it is currently valued at $3.7B.

These are the sectors getting the most Fintech funding now (with payment processing the clear leader).

In my opinion, real disruption is brewing in the personal finance & Wall Street sectors ... and funding is ramping up there as we speak.

This Fintech sector reminds me of biotech.   Solutions have to be more mature and fully-tested before unleashing them on the public.  But winners will Win!

Wall Street is one of the smaller sections in this infographic.  Nonetheless, I think you'll be reading a lot more about this space soon.  Here are some of the companies worth noting.

• Symphony  does secure communications for companies like JP Morgan and Goldman Sachs. It helps with internal communication, and client-centric communication, and has various bots and apps to decrease decision time. 
• Addepar claims to "power the global financial system".  It's a performance reporting platform meant to provide better insights, and connect assets to goals. 
• Carta does equity management; helping private & public companies manage their cap tables, investments, and equity plans. 

Not seen on these lists are all the smaller companies at the beginning of their innovation cycle, and the companies doing their best to stay under the radar. More competitors and more opportunities mean more reason to keep your cards close to your chest. 

The funding cycle is always two steps behind the innovation cycle, which means ideas we've been hearing about from the likes of Gartner will be seeing increased publicity soon. 

I think 2019  will be a great year for innovation. What about you?

Here Are Some Links For Your Weekly Reading - February 17th, 2019

NASA's Mars Opportunity Rover has officially lost contact with earth after a fierce dust storm. Its last message was "My battery is getting low and it's getting dark." The rover's original mission was scheduled for 90 days ... it lasted 14 years. 

 

via XKCD

 

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

 

Lighter Links

• A Quantum Future Awaits. (Science)
• Can We Make Artificial Intelligence Ethical? (Washington Post)
• Life's Secret Ingredient: A Radical Theory of What Makes Things Alive. (NewScientist)
• What Does "Dead" Mean? the Debate Continues Some 50 Years after Harvard Defined Death. (Forbes)
• Scientists Have Built a Real Star Trek 'Replicator' that Builds Objects with Light. (ScienceAlert)

 

Trading Links

• Warning: Stocks Have Only Been Stretched this Thin Once in the past 150 Years. (MarketWatch)
• From the Year When Nothing Worked in the Financial Markets to the Month When Everything Did. (CNBC)
• Mark Zuckerberg Adds $6.2 Billion in a Day, Vaulting to No. 5 Richest in World. (OCRegister)
• American Billionaire Hedge Fund Manager Has Spent $700M on Personal Real Estate in Five Years. (CNW)
• There's a New Movie Coming out about High-speed Trading on Wall Street, and It Looks Bonkers. (BizInsider)

 

 

Presenting at IBM Think! 2019

This week, I spoke on stage at IBM's Think! 2019 conference in San Francisco. Our topic was "Gaining a Financial Edge through Fast Data and Analytics."  I think it went well (both the presentation and our exposure to lots of useful technology, talent, and opportunities).   

Moscone Center was filled with people clamoring for information about artificial intelligence, big data, and flexible computing (think of it as being able to do what you want locally, in the cloud, or with a hybrid cloud ... or through hardware or software).  That means solutions are becoming independent of how they are produced, delivered, or consumed.

Here is a picture of our team there.

 

 

Another cool topic that got lots of attention was Quantum Computing.  Here is a picture of me with one of the first Quantum Computers.

 

 

Pretty Cool!  But, remember, the hype cycle precedes the adoption and benefits cycle.  This will be an interesting decade.

The conference was in San Francisco.   That is where my oldest son lives. Lucky for him, the most romantic Valentine's Day dinner is one spent with your dad right?

 

 

I thought it was fun.  For them, at least there was Absinthe involved to dull the pain.

The Bizarre and Surreal Works of Deep Learning AI

One thing that Deep Learning excels in is analyzing pictures & videos, and creating facsimiles or combining styles. If you want to create art with deep learning look no further than the Deep Dream Generator or deepart.io which use Convolutional Neural Networks to combine your photo with an art style (if you want to do it on your phone another cool tool to check out is Prisma). 

via SubSubRoutine

Deepfake is it's exactly what it sounds like ... the use "Deep Learning" to "Fake" a recording.  For example, a machine learning technique called a Generative Adversarial Network can be used to superimpose images onto a source video.  That is how they made this fun (and disturbing) Deepfake of Jennifer Lawrence and Steve Buscemi.

 

via YouTube

While this is a fun example, Deepfakes create very real concerns. They're often used for more "nefarious" purposes (e.g., to create fake celebrity or revenge porn and to otherwise make important figures say things they never said).  It's likely you've seen videos of Trump or Obama created with this technology.   But it is easy to imagine someone faking evidence used at trial, trying to influence business transactions, or using this to support or slander causes in the media.

As fakes get better and easier to produce, they will likely be used more often.  So, as a reminder, don't trust everything you see on the internet. 

But also ... Technology is pretty freaking cool. Right?

 

The Blind Leading the Blind: The Super Bowl Indicator

Trying to get rich quick? Want to know if the markets going to be bull or bear this year?

Look no further than the "Super Bowl Indicator".

The theory is a Super Bowl win for a team from the AFC foretells a decline in the stock market and a win for the NFC means the stock market will rise in the coming year. 

There is one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start. 

If you accept that caveat, it has been on the money 33 years out of 41 - an 80% success rate. Sounds good, right?

Come on ... you know better.

Here are some other "fun" stock market fallacies:

• January Indicator
• Aspirin Count Theory
• Hemline Indicator
• Sports Illustrated Swimsuit Indicator
• Men's Underwear Index
• Big Mac Index

Back to Reality

Rationally, we understand that football and the stock market have nothing in common.  And we probably intuitively understand that correlation ≠ causation. Yet, we crave order, and look for signs that make markets seem a little bit more predictable.

The problem with randomness is that it can appear meaningful. 

Wall Street is, unfortunately, inundated with theories that attempt to predict the performance of the stock market and the economy. The only difference between this and other theories is that we openly recognize the ridiculousness of this indicator.

More people than you would hope, or guess,  attempt to forecast the market based on gut, ancient wisdom, and prayers.

While hope and prayer are good things ... they aren’t good trading strategies..

As goofy as it sounds, some of these "far-fetched" theories perform better than professional money managers with immense capital, research teams, and decades of experience.

I have a thought experiment I often ask people that come into my office. 

What percentage of active managers beat the S&P 500 any given year?

... Now, what percentage beat the S&P 500 over 15 years?

The answer is about 5% (and that's in a predominantly bull market).  That's significantly worse than chance. That means something they're doing is hurting, not helping. 

via Gaping Void

There's simply too much information out there for us to digest, process, rank, and use appropriately.

Every second you spend looking at a market is a second wasted.

There are people beating the markets — not by using the Super Bowl Indicator ... they're doing it with more algorithms and better technology. 

There will never be less data or slower markets.

Onwards.