Capitalogix

Feast on This: The Big Mac Index

In the past, I've shared various "indicators" for markets that just don't make sense — like the Superbowl Indicator. The lesson to learn from those indicators is that we crave order, and look for signs that make markets seem a little bit more predictable even where there are none. 

Wall Street is, unfortunately, inundated with theories that attempt to predict the performance of the stock market and the economy. 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.

Today, I want to talk about a still "out there" index, but one that's a bit more practical from an economics standpoint (remember economics ≠ markets). I don't believe it should influence trading decisions, but I do believe it can teach you something about the practical realities of economies. 

The Economist's Big Mac index seeks to make exchange-rate theory more digestible.  They say it is arguably the world's most accurate financial indicator (based on a fast-food item).

The Big Mac index is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalize the price of a basket of goods and services around the world. For them, the basket is a burger … a McDonald’s Big Mac. The difference the disparity in price between Big Macs, and the actual exchange rate lets you know whether the currency is over or undervalued. 

According to this measure (as of July 15th, 2020), the most overvalued currency is the Swiss Franc at 20.9% above it's PPP rate. In Switzerland a Big Mac costs 6.50 francs. In the U.S. a Big Mac costs $5.71. The implied exchange rate is 1.14, and the actual exchange rate is 0.94 — thus 20.9% overvalued. For contrast, South Africa Rands are the most undervalued (67%) with a Big Mac costing 31 rand and an actual exchange rate of 16.67. 

Click the image below to see the interactive graphic.

via The Economist

The index is supposed to be a guide to the direction in which currencies should, in theory, head in the long run. It is only a rough guide, because its price reflects non-tradable elements ­such as rent and labor. For that reason, it is probably least rough when comparing countries at roughly the same stage of development.

It is not meant to be the most precise gauge, but it works as a global standard because Big Macs are global and it's lighthearted enough to be a good introduction for college students learning more about economics. 

You can read more about the Big Mac index here or read the methodology behind the index here.

I Can't Believe It's Not Steak! (Yes, I Can)

Last week we talked about emerging technologies ... not mentioned were emerging technologies in the meat space. 

Most of us have seen the meat alternatives grow in popularity with vegan sausages, hamburgers & more. In fact, the meat substitute industry is valued at around $5 Billion, and is expected to grow to 8.1 billion by 2026.

I've tried an impossible burger, and while it's certainly not as good as a hamburger yet - it's better than I expected. 

The most recent innovation is 3d-printed meat. Yes, you can print steak. Now, 3D bioprinting is still very early in its lifecycle and is primarily being used for medical purposes. Theoretically, down the line, it could be used to create meat that didn't come from a true living animal. 

Today, however, an Israeli start-up is printing plant-based steaks that supposedly match the taste and texture of steak better than alternatives. 

via Reuters

Supposedly, 3D printing allows you to better capture the muscle, blood, and fat that characterizes real meat. 

These steaks are expected to be available at high-end European restaurants before the end of the year ... Would you try one?

Perhaps the most important question, if you could eat a steak that didn't come from a cow, but you couldn't taste the difference, would you be willing to switch?

At some point, I think it is likely for practical sustainability issues.

We live in interesting times!

Fintech, AI & Analytics - My Webinar with IBM

Back in June, I participated in a series of webinars for IBM. The focus was on building smart and secure financial services. My talk, specifically, was on advanced computing and the new world of trading. Challenging times drive advancement - and what better time to talk about advancements in technology (and their applications) than in the midst of a global pandemic. 

You can watch a replay of the Fintech webinar here. There are several interesting presentations.  If you just want to watch my presentation, it starts at the 5:16 mark.

In addition, I've uploaded a different version of just my talk that you can watch directly here.

 

 

In the past. trading used to be about people trading with people. Markets represented the collective fear and greed of populations. So price patterns and other technical analysis measures really represented the collective fear and greed of a population. If you could capture that data and figure out certain statistical probabilities, you might have had an edge. The keywords is "might have". 

If you had more information than your competitors - an information asymmetry - you had an amazing edge. At one time that was being able to print out reports on stocks from that new-fangled technology called the internet. As time passed, it became harder and harder to gain an asymmetric information advantage. 

The rules, the players, and the game have all changed. Today, technological asymmetry is a major factor, and your edges come from things like bigger and faster servers and low latency connections to markets.

In the future, I see those edges combining as artificial intelligence starts to leverage exponential technologies and new data sources (like alternative data and metadata feedback loops). It is easy to imagine a time when information is the fuel, but your ability to digest and parse that information is the engine. 

I talk about much more in the video but boiling down the main points,  ask yourself (in business, in trading, in life) are you separating the signal from the noise?

A technological advantage doesn't mean anything if you're plugging in inaccurate or biased data into it. 

We've talked about it over the past few weeks with the never-ending news cycle - but it's a lesson that's infinitely applicable. 

Onwards! 

Carol's Keeping Me In Shape

As I get older, I become more conscious of my mental and physical health. It's easy as an entrepreneur or business person to lose track of your health - but investing in your personal health can be the best thing you do for your business.

Many of my friends now believe that with technology and a sustained focus on health & longevity, they can live past 100. They're paying attention to genetic, physiologic & biochemical makeup, cognitive function, body composition, cardiovascular performance, hormonal status, and much more. Whether they're going to live past 100 or not, I can see the daily results in the quality of their life and the way they look. 

It's the reason I started working with APEX, Dr. Jeffrey Gladden's concierge medical wellness practice.

They've got me eating salads, taking supplements, and thinking about what it takes to be healthy, fit, and vital. 

The goal is to enjoy life though ... Not to deprive yourself as this image portrays ...

 

Exercise is also an important part of the "healthy, fit, and vital" equation.

With gyms being closed during the recent Quarantine, I found another tool that I fell in love with.

Her name is Carol; an AI fitness bike that personalizes a HIIT workout for you,  based on your fitness and your preferred workout length. It makes it way easier for me to fit workouts into my schedule (and way harder to justify skipping a session). 

 

The promise is an "hour's worth" of exercise compressed into an 8-minute workout that really only has two 20-second periods of intense effort.

The science is sound. My experience is that it works for me.  I've done it for about two months now.  The results are undeniable (in terms of muscle tone, endurance, 20% improvement on many of the metrics tracked by the bike, etc.).

The more you use it the smarter it gets. It automatically adjusts to give you exactly the resistance you need to keep you motivated and to continue making progress.

I've been impressed. Working-out at home has always been a struggle for me. I've bought other tools for lifting or cardio, but they tend to end up as coat racks or space fillers. 

Exercise has a "social" component for some people ( comes to mind). Some people need the "social" component of exercise to get through hard workouts (think Peloton or OrangeTheory.) The Carol bike doesn't fully satisfy that part of exercise ... but they do a great job of keeping the session short, fun, and gamified (so that you know where you are, how you are progressing, and where you stand in the rankings).  The combination of the efficiency of the workouts - and being able to see that you are getting fitter, objectively, has been just what I needed. 

Besides Carol's website, here is a link to check out their YouTube channel. 

Onwards. 

Here Are Some Links For Your Weekly Reading - May 24th, 2020

 

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

 

Lighter Links:

• We are Doing in a Few Months What Would Normally Take a Drug Development Process Years to Do' with AI. (ZDNet)
• Findings From The AI Index Annual Report. (Stanford-AI)
• Terrifying Black Light Videos Show How Easy It Is to Catch Coronavirus. (BGR)
• Why Zoom Meetings are So Dissatisfying. (Economist)
• Travelers Now Scoring $700 Business Class Flights to Europe with Sneaky Loophole. (DMarge)

 

Trading Links:

• Hertz Files for Bankruptcy after 16,000 Employees Were Let Go. (Forbes)
• One Chart to Catch You up on 2020 ... And the Economy. (HowardLindzon)
• Second Stimulus Check Proposes $1,200 Extra with Round 2. Here's the Situation. (CNet)
• The World's 25 Richest Billionaires Have Gained Nearly $255 Billion in Just Two Months. (Forbes)
• What History Tells Us about the Accelerating AI Revolution. (Wall Street Journal)

Here's to Rebirth and Spring Cleaning

Happy Holidays!  I hope you had a great weekend.

For Christians, today is Easter Sunday - the holiday celebrating the Resurrection. 

For Jews, it's still  Passover - the holiday recounting the Exodus from Egypt. 

The overlap can be seen in DaVinci's Last Supper, a Passover Seder, and last meal Jesus ate before his crucifixion.  

For both, it's a holy and family-centric time. A reminder to appreciate what we have, and how we stand on the shoulders of our ancestors. 

One of the memorable phrases from Exodus is when Moses says "Let my people go!"  For generations, people assumed he was talking to the Pharoh about his people's freedom. After a week of eating clogging matzoh, matzoh balls, and even fried matzoh ... for many Jews "Let my people go" takes on a different meaning.

For Jews, a notable part of the ritual Seder dinner is naming each of the 10 plagues that rained over Egypt and saying "never again".

Perhaps, this year, COVID-19 gets added the list? 

Yet, just like the Jews making it through slavery, the plagues, and 40 years wandering through the wilderness and desert before entering the Promised Land ... we too will make it through this. 

With that said, some of what happened is good.  Mine your experience for the things you want to keep doing (or continue not doing) once things go back to "normal".  In addition, some of those close to me continue to remind me that being sheltered-in-place is a great excuse to do both a physical and mental spring cleaning. 

Hope you had a great weekend. 

Onwards!

Coronavirus Tracker

Fears around the Coronavirus continue to mount. Quarantine of the superbug has been tough ... the disease shows up in more countries every week, and the death toll is likely being underreported in China. 

That being said, the death toll compared to the "recovered" toll should give you hope that if you're relatively healthy and get proper treatment, your survivability rate is very high.

Here is an interactive tracker if you're curious to see a visual representation of it's spread.

 

1hakr via Visualist.io

Keeping yourself at a low risk of contraction is pretty simple. You know what you need to do to avoid it, but, as a reminder: wash your hands, don't share food/drinks with strangers, avoid touching your face, and don't go to China till you believe the "all clear."

How do you believe this will affect the markets and economy?

Here Are Some Links For Your Weekly Reading, February 23rd, 2020

 

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

Lighter Links:

• What It Means to Be Human in the Age of AI. (CNet)
• Mommy Can't Talk Right Now She's Dopamine Fasting. (TheCut)
• I Went to a High-End Psychedelic Retreat to Address My Anxiety. (Vice)
• Inside the World of High-End Coffee | Annals of Obsession | the New Yorker. (YouTube)
• Most Dietary Supplements Don't Do Anything. Why Do We Spend $35 Billion a Year on Them? (WashPost)

 

Trading Links:

• Why Cryptocurrency Markets Defy the Laws of Economics. (BU)
• Michael Bloomberg Has Taken Andrew Yang's Place as the Cryptocurrency Candidate. (TechReview)
• It Has Never Been Easier to Launch a New Brand. (Economist)
• Elon Musk's SpaceX to Raise $250 Million, Valuing It at $36 Billion. (Uk)
• Elon Musk Says He'll Put a Million People on Mars by 2050. (Futurism)

Spicing Up Valentine's Day

Valentine's Day is coming up. 

Does it matter?  Could it? 

Are you at least planning on having a little fun?

 

 

Love is an interesting concept. It can be a noun (a "thing") or a verb (an "action").  Perhaps it can be both ...  an emotion that you act on? 

Likewise, the words "I love you" can be a declaration of how you feel to someone ... or a command to yourself to treat a person with love.

On a practical note, I found a gift that really worked for me.  It's called "Lovebox" ... and, no, it's not a sex toy. 

via GIPHY

Lovebox is a tool to deepen emotional connections.  It consists of a lidded wooden box with a heart attached to the front and a phone app for you to use to compose your messages.  Inside the Lovebox is a screen, a wifi connection, and a little motor.  When you send the box a message, the heart spins to notify the recipient that they have a message.

 

The Lovebox gives me an opportunity to send special messages to my wife whether I'm home or away. I know that she loves seeing the heart spinning (and I believe that it makes us a bit closer each time she lifts the lid to see her message).  Lovebox creates anticipation.

I was unsure how my wife would respond  ... But she LOVES it ... and looks forward to receiving messages (and reminds me if I forget or seem to be running late with them). 

With that said, she made it clear she didn't want me pre-writing messages and having the app drip them to her like a marketing campaign.  So, of course, my next message was "A robot wrote this."

We've been using Lovebox for over six months and it still seems fresh and fun.  Another example of how technology can improve human lives.

Hope you  (and your special someone) have a Happy Valentine's Day.

Sickcare vs. Healthcare

WARNING ... the next picture is potentially NSFW. You've been warned!

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Are you mentally ready?

Sorry for the shock! It's a picture of me getting tested at APEX, Dr. Jeffrey Gladden's concierge medical wellness practice. 

Apex treatment plands are individually tailored to optimize your health, human performance, and longevity. They begin with a deep dive into your underlying genetic, physiologic & biochemical makeup, and then benchmark neurocognitive function, body composition, cardiovascular performance, hormonal status and much more. Ultimately, they help you rethink your concepts of aging and decline. Think about it, how many more decades of being healthy, fit, and vital do you want?

Over the past couple of weeks I have shared multiple articles on fitness: 

• Part 1,  Finding A Way
• Part 2, Measuring Normalized Behavior 
• Part 3, Getting Used To A New Normal

It got me thinking about the difference between the way we view healthcare and what healthcare really should be. Healthcare takes care of you once you're sick, but it should really help you stay healthier for longer. 

Many of my friends now believe that with technology and a sustained focus on health & longevity, they can live past 100. They're paying attention to genetic, physiologic & biochemical makeup, cognitive function, body composition, cardiovascular performance, hormonal status and much more. 

And whether they're going to live past 100 or not, I can see the daily results in the quality of their life, and the way they look. 

I fully intend on being here for a long time ... So, I'm building the habits to keep me healthy. I'm investing in wellness care so I don't have to invest in healthcare. 

I encourage you to ask yourself how you can do the same. Ask yourself  "how good can I be?" and "how long can I sustain that?"

What a great investment.