Capitalogix

Tackled on Thanksgiving

Happy Thanksgiving!

My children came to town, and we continued our tradition of spending time together watching some football. The top photo is from 2008. 

 

After looking at this picture, I recognize the burden I impose on my sons.  Some would call it crushing. 

 

 

That's my oldest son, Ben. He's a good sport.

My youngest son, Zach, was happy to make sure that I got mine too. 

 

 

He still plays Rugby. 

I am thankful for my family, my company and that I continually face a better class of challenges ... forging a path to a bigger future.

What about you?

Here Are Some Links For Your Weekly Reading - November 25th, 2018

 I remember when they told me that eating meat was bad for my health ...

 

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

Lighter Links  

• Is It Possible to Replay the Tape' of Evolution? (Futurity)
• Should You Be Eating a High-Fat, Low-Carb Diet like Keto? Scientists Weigh In. (Gizmodo)
• An 1861 Japanese Book of American History. (Neatorama)
• Beijing to Judge Every Resident Based on Behavior by End of 2020.(Bloomberg)
• How Many Fake Accounts are There on Facebook? Here's a Clue: 1.5 Billion Fake Accounts Were Removed in Just the past 6 Months. (Neatorama)

 

Trading Links

• Mark Cuban Explains Why Dallas Wasn't Selected as Amazon's HQ2 Location. (SportsDay)
• Jerry Jones: Wouldn't Sell Cowboys for Less Than $10 Billion.(Profootballtalk)
• Beyond Meat Continues to Sizzle, Announces IPO. (Forbes)
• Masayoshi Son: the Man behind a $90B Empire. (TechInAsia)
• How Juul, Founded on a Life-Saving Mission, Earned a $16B Valuation Despite the Controversy. (FastCompany)

Storage Wars

Have you ever seen the posts showing what happens in a minute on the Internet?  The speed and scope of activity is amazing ...  so is how fast it is increasing.

The same is true for storage.  It is getting bigger and cheaper quickly.

This picture shows an IBM VP holding a 10 MB hard drive from the 1960s.   

via novartistic

When it was invented, I bet they wondered how someone could ever fill it.  Now imagine what it cost back then.

For context, here are some things you can do with 10 MB of space:

• Download approximately 3 songs
• or 5 medium-sized photos
• or store 50-100 HTML e-mails
• or a 3 minute low-quality video (or 48 frames of 4k footage).

Things are changing.

Here's a link to a 256 GB flash drive that you can buy for about $50 dollars ... and here's a link to a working prototype of a 1 TB flash drive.

Here are some things you can do with 1 TB of space:

• Store 17,000 hours of music
• or an 85,899,345 page word document. (source)
• or 250 full-length movies
• or 310,000 photos.

I wonder how someone could ever fill it?

Crazy!

Here Are Some Links For Your Weekly Reading - November 18th, 2018

This is how we warm-up for Thanksgiving in Texas ...

 

 

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

Lighter Links  

• Is this AI? We Drew You a Flowchart to Work It Out. (TechReview)
• In Defense of "Designer Babies". (Reason)
• China's Artificial Sun is Now Hot Enough for Nuclear Fusion. (Futurism)
• Science Confirms: Earth Has More Than One 'Moon'.(BigThink)
• Sign Your Address up for USPS Informed Delivery Before Scammers Do. (LifeHacker)

Trading Links

• Billionaire Ray Dalio Says Capitalism is Not Working for Most People. (Barrons)
• Bank of Japan's Balance Sheet Now Larger Than Country's GDP. (Reuters)
• Meat Has a Replacement but No One Knows What to Call It. (Bloomberg)
• Here are the Most Outrageous Incentives Cities Offered Amazon in Their HQ2 Bids. (Buzzfeednews)
• A Virtual Assistant Called Abbie is Picking the Best Bonds for Traders to Buy or Sell. (TechReview)

 

The Six Biggest Mistakes Ordinary Investors Make

It's your livelihood, it's your retirement, it's your future. 

Tony Robbins released an infographic on the six biggest mistakes ordinary investors make. 

1. Seeking confirmation to your own beliefs
2. Conflating recent events with ongoing trends
3. Overconfidence
4. Swinging for the fences
5. Staying Home (tendency to invest in things that are familiar)
6. Negativity Bias (tendency to overemphasize negative experiences)

In other words, the biggest threat to your trading profits is your own brain.  Humans are wired to avoid pain and seek pleasure ... and those tendencies just aren't conducive to smart trading. 

It's getting harder to find an edge, let alone maintain one. 

If you don't know what your edge is, you don't have one.

The reality is, over 90% of trades are electronic, and over 70% are algorithmic.

Do you think those numbers are going to increase or decrease?

Firms are using faster computers and smarter algorithms.  On top of that, high-frequency traders are skimming alpha on the executi0n. 

Here's one thing you can predict ... It is getting harder for humans to trade against the machines.

Momentum is building ... but, it already happened.  The new world of trading is quantitative. 

 

 The best way to avoid fear, greed, and discretionary mistakes is to avoid them.

It's a Quant World

Just finished speaking at an algorithmic trading conference, called QuantWorld, in Toronto.

 

AI, big data, and high-performance computing are getting cooler ... in a nerdy way.

At this show, data and methods were the focus ... showing a shift from hardware and low-latency. 

Skynet is turning on!

Woo Hoo!

Eight Major Forces Shaping Our Global Economy

In trading, the holding period (or "time in trade") is shrinking.  Consequently, there is less focus on predicting markets ... and more focus on determining which techniques are making money most predictably.

Markets are not the same as the economy ... and on a macro scale, it is possible to understand and predict the major forces shaping our global economy.

Jeff Desjardins, of the Visual Capitalist, recently highlighted some of the major forces that are changing our global economy.  Here is a summary.

 

The Tech Invasion ... and its Accelerating Progress

 

If you were to look at the biggest companies globally - almost all of them are in tech. Fifty years ago, the largest companies were in commodities (like oil, steel, etc.). Even 5 years ago, the biggest companies were widely "goods" centric. 

 

via Visual Capitalist

But it's more than just the biggest companies. We're experiencing a technological revolution in many subspaces - AI, 3D printing, gene editing, quantum computing, etc.   

Yet, for all the change and disruption we've experienced until today - understand that it is going to get faster, and more pronounced, in the future. 

And, it isn't just the tech that is new.  The pace of its adoption across industries is a game-changer as well.

 

via Visual Capitalist

We are at a point where new technology often gets released before the previous iteration can fully take hold and mature.

It is not just trading that is getting faster, product cycles are compressing, and foundational technologies are disrupted and replaced (or made obsolete) faster than ever as well.

Even global adoption cycles have become viral and near instantaneous.  Think about how fast Pokemon Go (AR) got adopted, or new Smartphones became mainstream.

 

The Evolution of Money, a Changing Wealth Landscape, ... and China

 

Money's definition is changing.  Cash is becoming less common (with the increasing use of credit cards, electronic payments, and payment services like Paypal, Venmo, and ApplePay).  In addition, the public has maintained its interest in cryptocurrencies.

Ultimately, our perception of money may radically change how global economies work. 

On top of that, money is changing hands, the ultra-wealthy are from different industries than before, and the wealthiest countries & companies widely influence politics. 

 

via Visual Capitalist

Consider the economic rise of China. Even though we've been watching China grow for decades, the scope of its population and economic impact can still be difficult to understand. China has over 100 cities with more than 1,000,000 inhabitants.  Even scarier, perhaps, is that China now has more honor students than we have students. 

 

Conclusion

 

Obviously, the global economy is changing.  To see more about the eight forces shaping it, read this.

We live in interesting times.

Onwards.

Visualizing the Global Economy

I've recently been spending more time with economists, while we're not always on the same page when it comes to the interplay with trading, I still find economics interesting. 

Trump's impact on global trade and politics will also be interesting to quantify. 

Take a look at the world economy divided by region (Mexico is part of Latin America for the sake of this graphic). 

 

via howmuch

Some thoughts: 

• Russia probably has the biggest disparity between GDP and land mass.
• This doesn't tell us anything about economic growth, would be interesting to compare this five years ago, and five years from now.  
• Global GDP isn't zero-sum, so this circle can theoretically grow.
• Top 3 economies were the U.S., China, and then Japan (with a large drop between each economy).
• The top 4 countries account for over 50% of GDP.

It will be interesting to see the way Trump's tariffs will affect the world. There are potentially hundreds of billions in annual revenue that would be affected. 

 

 

Here Are Some Links For Your Weekly Reading - November 4th, 2018

Reminder: election day is this Tuesday. 

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

Lighter Links  

• Radical Candor the Surprising Secret to Being a Good Boss. (FirstRound)
• 21 Lessons from Jeff Bezos' Annual Letters to Shareholders. (CBInsights)
• When the 80/20 Rule Fails: the Downside of Being Effective. (JamesClear)
• Stephen Hawking's Final Book Tackles the Big Questions. (BigThink)
• This Chart Shows How Everything Has Changed since Trump Became President. (CNBC)

 

Trading Links

• What Investors Can Learn from Gamblers. (Wall Street Journal)
• A Wealth Management Point of View on Blockchain and Bitcoin.(TheReformedBroker)
• Google Drops out of Pentagon's $10 Billion Cloud Competition.(Bloomberg)
• Bezos Sets New Wealth Record, Losing $19.2 Billion over Two Days.(Bloomberg)
• Godfather' of Chart Analysis Says Damage Done to the Stock Market' is Much, Much Worse' Than Anyone is Talking About. (MarketWatch)

Real or Fake? Data Science Debunks Internet Rumors

A French team, Escalenta, put together a series of debunking videos called "DATA SCIENCE vs. FAKE". 

Here are five that are short, educational, and entertaining. 

• Is cancer the world's first cause of mortality?
• Would cockroaches be the only survivors in the event of a nuclear war?
• Will the world soon run out of oil?
• Will our planet be able to sustain its 9 billion inhabitants in 2050?
• Will China still be the world's most densely populated country in 2100?

These days, it's easy to be confused by fake news, misleading statistics, and hyperbole. 

Hope this serves as a reminder to check your sources and remain healthily skeptical of random factoids delivered through the intertubes.