Capitalogix

US Spending in 2021

In a prior post, we looked at the Global GDP in 2021. Now, let's look at US Revenue vs. Expenditures in 2021. 

 

So, from the start, we can see a 2,770-billion-dollar deficit last year. The #1 expenditure was income security. For those who don't know, income security is an extremely broad spending category. It covers everything from tax credits and unemployment to housing assistance, foster care, and many other welfare programs. It's somewhat of a catch-all for services that help people get necessities. 

Surprisingly, the US pays more per person for healthcare than countries with nationalized healthcare. 

Looking at 2021 isn't the best indicator of America's spending history as a whole; there were a lot of one-time events - and a pandemic. Usually, the deficit isn't that staggering. 

via Congressional Budget Office

While the deficit may grow out of control, debt is a powerful tool - not just a liability.  Nonetheless, given our current economic situation, inflation, and rising interest rates, the strategy that got us here might not be the best strategy to get us where we want to go.

What are your thoughts? 

Here Are Some Links For Your Weekly Reading - July 17th, 2022

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

Lighter Links:

• Biden is Very Unpopular. It May Not Tell Us Much About the Midterms. (FiveThirtyEight)
• The 23 Best New Productivity Apps for 2022. (FastCompany)
• Meet the Man Keeping Blockbuster Alive. (DallasNews)
• Was Warfare Responsible for the Origin of Complex Civilisation? (NewScientist)
• Create an Action Figure Version of Yourself With Hasbro's "Selfie Series". (Hypebae)

 

 

 

 

Trading Links:

• Does Elon Musk Have a Strategy? (HBR)
• JPMorgan CEO Dimon Sums up U.S. Economy in One Paragraph And It Sounds Bad. (CNBC)
• Where Did the Stock Market's $7 Trillion Loss in Value Go? (Marketplace)
• The Speedy Downfall of Rapid Delivery Startups. (Wired)
• Why Hasn't the Russian Economy Tanked Yet? Putin Has Been Preparing for this Moment for Years. (Fortune)

 

 

 

Happy Father's Day 2022

For Father's Day, my youngest son took me to see Top Gun 2 in DFX.  It's been a while since I've been in a movie theatre, and this was a movie worth doing the right way.  It lived up to the hype. 

He also took me to brunch and invited his girlfriend - a rare occasion that I hope becomes more common.

It's been ten years since he started working with me at Capitalogix. Here's his first professional pic and his most recent.  Time flies while you are getting older!

As a father, having great kids is a double blessing.  On one hand, it's nice to be proud of who your kids are and the things they do.  On the other hand, it's also nice to feel proud of the small part you played in helping them become who they are.  It's also my first Father's Day as a grandfather.   After decades of messing with my kids, now I get to mess with a new generation! 

Of course, I also look back ... and spent some time thinking about my father and his terrific influence on so many lives.  

My Dad was incredibly loving.  Yet, he was also incredibly demanding.

For example, after winning the State Championship in the shot put, I watched him run down from the stands.  I figured he was coming down to celebrate.  Instead, he looked deeply into my eyes and asked whether I was disappointed that I did not throw a personal best that day?  I replied: "But Dad, I won." He smiled and recognized that winning was important too ... then he reminded me that the other throwers were not the real competition.  In life, to be and do your best, the competition is really with yourself; and we both knew I could do better.

My Dad believed in setting high standards.  He explained that most people's lives are defined by their minimum standards.  Why?  Because once those standards get met, it is easy to get distracted by other things and meeting the minimum standards for them as well.

Here is something else worth sharing; it was one of his favorite sayings.  "The difference between good and great is infinitesimal."  This applies to many things.  For example, people who are good take advantage of opportunities; people who are great create them.  The point is to set a higher standard and to have a better life.

Well, that should explain a little of the dysfunction ...  but, if you can't mess up your own kids, whose kids can you mess up?

Hopefully, you had a happy Father's Day weekend. 

Dall-E .... Not Wall-E: AI-Generated Art

Neural networks creating images from text isn't new.  I wrote about it in 2019 when AI self-portraits were going viral. 

 

Mauro Martino via YouTube

Just like VR is getting a new lease on life, despite its age, AI-generated art is getting another 15-minutes of fame. 

This past week, a new model called Dall-E Mini went viral.  It creates images based on the text prompts you give it – and it's surprisingly good.  You even can give Dall-E absurd prompts, and it will do its best to hybridize them (for example, a kangaroo made of cheese). 

Unfortunately, like our current reality, Dall-E may not be able to produce cheap gas prices.  Nonetheless, it is fun to try.  Click the image to enter the concepts you want Dall-E to attempt to represent.

via Dall-E mini

While the images themselves aren't fantastic, the tool's goal is to understand and translate text into a coherent graphic response.  The capabilities of tools like this are growing exponentially (and reflect a massive improvement since I last talked about AI-generated images).

Part of the improvement is organic (better hardware, software, algorithmic evolution, etc.), while another part comes from stacking.  For example, Dall-E's use of GPT-3 has vastly increased its ability to process language. 

However, the algorithms still don't "understand" the meaning of the images the way we do ... they are guessing based on what they've "seen" before.  That means it's biased by the data it was fed and can easily get stumped.  The Dall-E website's "Bias and Limitations" section acknowledges that it was trained on unfiltered internet data, which means it has a known, but unintended, bias to be offensive or stereotypical against minority groups. 

It's not the first time, and it won't be the last, that an internet-trained AI will be offensive. 

Currently, most AI is essentially a brute force application of math masquerading as intelligence and computer science.  Fortunately, it provides a lot of value even in that regard. 

The uses continue to get more elegant and complex as time passes ... but we're still coding the elegance. 

 

Onwards!

A Look At The Best Athletes

There is a huge difference between good and great.

Apparently, there is often a huge difference between the great and the greatest.

In sports, there are many fantastic athletes whose names we will remember.  Then there are the athletes who stand apart from the rest ... like Michael Phelps or Usain Bolt. 

I recently stumbled upon a few charts highlighting the stratification between the top 1% and the #1. 

Tom Brady

via NY Times

To put that statistic in perspective, no other quarterback has even played in 35 postseason games ...  but that is another measure of Tom Brady's greatness. 

Jerry Rice

sdbernard via Reddit

Some prominent names are missing from this list - like Julio Jones or Megatron - but, clearly, Jerry's performance stands apart from other legends of the game.  For context, Julio Jones only had 61 TDs, which is relatively low on this chart, but averages 92 yards per game ... which is so high that he'd be off the chart. 

Wayne Gretzky

via NumberHound

Wayne Gretzky is a sports legend, but this chart really puts it in perspective.  Leader by a large margin in both assists and goals.  He also has one of my favorite quotes -

“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

Here's another interesting Wayne Gretzky stat: 

Together, Wayne and Brent hold the NHL record for most combined points by two brothers - 2,857 for Wayne and 4 for Brent,^[2] and are second overall in points scored by any number of brothers (behind the six brothers of the Sutter family who combined for 2,934 NHL points - 73 more than Wayne and Brent, although the Gretzkys' combined totals are greater than any five of the six Sutters.) - Wikipedia on Brent Gretzky

Serena Williams 

via Yahoo!Sports

What about Nature versus Nurture?

Genetics and upbringing might play a part in greatness.  There are several great sibling combos like the Gretzkys, the Mannings, and the Williams sisters. 

Both Venus and Serena are dominant athletes, but Serena is in the running for one of the most dominant athletes in any sport. 

Have you seen any other crazy stats like these?  I'd love to see them. 

Top 10 Most Overhyped Technologies (From 2008)

Just because something is overhyped, doesn’t mean it’s bad. Gartner's hype cycle is a great example of this. Every technology goes through inflated expectations and a trough of disillusionment, regardless of whether they're a success or failure. Sometimes a fad is more than a fad. 

Humans are pretty bad at exponential thinking. We're not bad at recognizing periods of inflection, but we're very bad at recognizing the winners and losers of these regime changes. 

 

 

There are countless examples. Here's a funny one from Maximum PC Magazine in 2008. It shows that hype isn't always a sign of mistaken excess.  This list purported to show things that were getting too much attention in 2008.  Instead of being a list of has-beens and failures, many of these things rightfully deserved the attention.

 

It's been 14 years since this came out. How did the predictions hold up?

Facebook has become Meta, and is one of the big five. The iPhone has sold more than 2.2 billion phones, and accounts for more than half of Apple's total revenue. And the list keeps going. Multiple GPU video cards, HD, 64-bit computing, and downloading movies from the internet ...

It's hard to believe how poorly this image aged. 

The trend is your friend while it continues. Just because something is overhyped - doesn't mean you shouldn't be excited about it. 

Onwards!

The OODA Loop: Making Fast Decisions

I recently came across an interesting technique that fighter pilots use to make fast and accurate decisions in high-stakes situations. 

The Air Force calls it an OODA Loop.

It is an iterative feedback model designed by Colonel John Boyd that serves as a foundation for rational thinking in chaotic situations like dogfights.

It stands for Observe, Orient, Decide, Act. 

via Wikipedia

Why do people use decision models?  Obviously, to make better decisions.  But really, they use models to create a process that avoids many of the mistakes or constraints that prevent good decisions.

You make countless decisions every day - and at a certain point, you reach decision fatigue. It can be harder to make decisions when you are tired, after you've made too many, or when the intensity of the environment distracts or drains you. 

It's one of the reasons I rely on artificial intelligence. Here are some others. 

• Best practice becomes standard practice. 
• It accounts for signal and noise.
• It attempts to quantify or otherwise make objective assessments, comparisons, and choices. 
• And, it often gives you a better perspective by letting you apply and compare different models or decision techniques to achieve the desired outcome.

Nonetheless, many algorithms are dynamic and adaptive automation of processes or strategies that humans have used successfully before.

So, let's take a closer look at the OODA Loop, which stemmed from analyzing many interactions between and among fighter pilots during battle and training. 

Observe

The first step is to observe the situation to build the most accurate and comprehensive picture possible. The goal is to take in the whole of the circumstances and environment. It's not enough to observe and collect information, you must process the data and create useful meaning. 

It's the same with data collection for an AI system. Ingesting or collecting data isn't enough. You have to be able to apply the data for it to become useful. 

Orient

This step is less intuitive but very important. When you orient yourself, you're recognizing strength, weakness, opportunity, and threat to identify how changing the dimensionality or perspective alters the outcome. 

It's reconnecting with reality in the context of your cognitive biases, your recent decisions, and more. Have you received new information since starting?

I think of this as carrying a map and pulling out a compass while exploring new lands. Sometimes you need to remember where you started, and sometimes you need to make sure you're going where you think you are. 

Decide

The last two steps provide the foundation for taking action. When there are multiple decisions in front of you, observing and orienting help you choose wisely. 

In business and with AI, you can go through these loops multiple times. 

Act 

The best-made plans mean nothing if you don't act on them. Once you've taken action, you can reobserve, reorient, and keep moving forward. 

Conclusion

Like most good mental models, The OODA loop works in many situations and industries.

Speed is often a crucial competitive advantage. For example, knowing (and taking decisive action) while others are still guessing (and taking tentative action) is something I call time arbitrage. 

Said another way, you make progress faster by walking in the right direction than by running in the wrong direction. 

These processes (and technology) also help us grow more comfortable with uncertainty and uncomfortableness. Markets are only getting more volatile. Uncertainty is increasing. But, when you have the ability to adapt and respond, you can survive and thrive in any climate. 

Happy Mother's Day

 To those of you with young children, here's a peek into your future.

After years of hard work and your best efforts (OK, mostly your best efforts) ... I predict that your adorable bundles of joy will someday wish they could send you this card.

So, take a moment to think about your Mom ... and remember that she was very young when she did those things to you ...

... and what you make them mean is up to you.

Here's a funny clip from SNL in honor of Mother's Day.

 

via SNL

Hope you celebrated all the important mothers in your life. And, to the mothers, I hope the people around you recognize how much you sacrificed for them. 

Happy Mother's Day. 

Here Are Some Links For Your Weekly Reading - May 1st, 2022

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

Lighter Links:

• What is Web 3.0? Here's What the Internet Will Look Like In the Future. (LaptopMag)
• Amazing Video Shows a Tiny Jumping Robot Like Nothing You've Ever Seen. (BGR)
• 103 Bits of Advice I Wish I Had Known. (Kevin Kelly’s Technium)
• Does (Hand) Size Matter? Inside the NFL Draft's Fear of Tiny-Handed QBs. (GQ)
• This $2 Billion Personal Submarine is So Huge that It Can Dwarf a MegaYacht. the Vessel is Almost Three Times Longer Than a Football Field, It Has Lavish VIP Suites, a Helipad and Even an Open Deck Swimming Pool. (LL)

 

Trading Links:

• Bored Ape Metaverse Frenzy Raises Millions, Disrupts Ethereum. (Bloomberg)
• Can Capitalism Survive? 80 Years After Schumpeter's Answer. (AIER)
• Americans are Showing Inflation Fatigue, and Some Companies See a Breaking Point. (FoxBusiness)
• Foreclosure Filings are Up 132% From a Year Prior. Here's What that Means for the Housing Market (And It's Not What You Might Think). (MarketWatch)
• Warren Buffett and Charlie Munger Called Out Stock-Market Gamblers, Dismissed Bitcoin as Worthless, and Underlined the Risks of Inflation. Here are Their 12 Best Quotes from Berkshire Hathaway's Annual Meeting. (Markets)

How Tech Giants Make Their Money

In 2021, the Big Five – Alphabet (Google), Amazon, Apple, Meta (Facebook), and Microsoft - generated over $1.4 trillion in revenue.

How did they generate that revenue? We know they sell products ... but we also know that we're often the product they sell. 

Google and Facebook each make a lot of money selling you (or data about you) to advertisers. 

The image below shows how Alphabet generated its revenue.   The full infographic shows that breakdown for each of the Big Five.

Click to view the other companies via visualcapitalist

Apple, Amazon, and Microsoft, primarily sell products (like more traditional businesses). On the other hand, almost 98% of Meta's revenue (and 81% of Google's revenue) comes from advertising. 

Unsurprisingly, all five companies saw significant growth during the pandemic. 

Though the economy shrank in the past two years, societal changes continued to push demand for big tech's products and services. 

Will growth continue or slow down? 

I'm curious what you think.