Capitalogix

Super Bowl 2020

A friend has two tickets for the 2020 SUPER BOWL — both box seats. He paid $2,500 for each ticket, but didn't realize last year when he bought them that it was going to be on the same day as his wedding. If you are interested, he is looking for someone to take his place — it’s at St. Dominic's Church in San Francisco at 3pm. Her name is Melissa . She's 5'7 about 140 lbs. She's a good cook, too. She'll be the one in the white dress.

 

As for the Super Bowl, it seems like this will be a good matchup. The KC Chiefs are in it for the first time in 50 years (and have an amazing offense), while the 49ers are coming off a series of tough seasons (but have an amazing defense). It will also be a Super Bowl without Bill Belichick's scowl gracing our screens. 

It's not just the fans that are excited about the matchup, it's also the bookies. Two years ago, gamblers set a record by placing $158.6 million in Super Bowl bets. Expect more of the same with gambling now legalized in an additional 13 states beyond Nevada. 

 

If you're still looking for a bet – there's another wishful thinking approach you could take to find one ... it is called the "Super Bowl Indicator."

 

 

The theory is that 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. So, if you're hoping for a strong S&P you'd be rooting for 49ers. 

There's one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start (or as a data scientist would caution ... they did that to fit the data better). 

With that "adjustment," at one point the SBI was "right" 33 years out of 41 - an 80% success rate. Sounds good, right?

Come on ... you know better. It's been wrong four of the last four years ... another sign of spurious correlation if you weren't sure. 

Here are some other "fun" stock market fallacies:

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

 

Back to Reality

Rationally, we understand that football and the stock market have little 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 sometimes ask people. 

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

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

Recently, the answer is about 5% (and that's in a predominantly bull market).  For the record, that's significantly worse than chance. Perhaps 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. A good reminder that if you don't know what your edge is ... you don't have one!

Onwards.

Here Are Some Links For Your Weekly Reading - January 19th, 2020

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

Lighter Links:

• Artificial Intelligence: How to Measure the I' in AI. (TheNextWeb)
• Samsung Sheds Light on Its 'Artificial Human' Project. (EnGadget)
• Secrets from a Former FBI Negotiator on How to Get What You Want. (TheLadders)
• Here's the Advice Mark Cuban Would Give His 20-Year-old Self. (CNBC)
• Want to Grow 10X? Here are 17 Books about Business and Life You Should Read in 2020. (TheLadders)

 

Trading Links:

• The Decade of the "Young Old" Begins. (WorldIn)
• 2019 A Year to Forget for Hedge Funds. (Benzinga)
• Fortnite Made $1.8 Billion in 2019. (CNN)
• Amazon Partners with Lamborghini, Rivian to Offer Alexa Voice Assistant in Vehicles. (CNBC)
• Apple Made Investors Half a Trillion Dollars Last Year. Time to Hedge Your Bets. (Barrons)

Law of Diminishing Returns

At some point, more of the same stops paying off ...

 

via Sketchplanations

Nature (and common sense) reminds us that equilibrium is important. For example, when you exercise too much you get injured, when you drink too much water you get poisoned, etc. 

This concept applies almost everywhere.

• It's why diversification is so important in portfolio construction theory. 
• Or, why you don't want to put all your eggs in one basket (concentrating your risk).
• And, my favorite, it's also why you shouldn't only eat vegetables.

 

A related nugget of wisdom from the extreme ... too much of a good thing is a bad thing. 

Here Are Some Links For Your Weekly Reading - January 12th, 2020

As the Australian wildfires rage on - an inestimable number of animals have died.

If you wish to donate to help relief efforts, you can do so with any of these trusted sources. 

• The Australian Red Cross
• GIVIT - Donating Essential items to Victims
• St. Vincent De Paul Society
• The Nature Conservancy Australia

 

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

Lighter Links:

• 20-year-old McDonald's Burger Still Looks Brand New, Smells like Cardboard. (FoxNews)
• Japanese Woman Turns 117 Years Old, Extends Record as World's Oldest Person. (Reuters)
• China Quietly Confirms a Third CRISPR-Edited Baby Has Been Born. (ScienceAlert)
• Pope Francis Apologizes for Losing His Patience after Slapping Woman's Hand. (FoxNews)
• Fresh Cambridge Analytica Leak Shows Global Manipulation is Out of Control'. (TheGuardian)

 

Trading Links:

• Jeff Bezos is Still the Richest Person in the World. (CNN)
• 4 High-Potential Sectors for AI and ML Startup Success. (Readwrite)
• Tesla Delivered 367,500 Cars Last Year. (CNN)
• The Market Surged Last Year. Don't Expect the Same in 2020. (New York Times)
• It Was a Dismal Year for Hedge Funds: Here Are 2019'S Fund Closures and Family-Office Conversions. (ZeroHedge)

 

Happy Hanukkah! (and Happy Holidays!)

It's that time of year again.  Wow, how time flies. End of the year and the first night of Chanukah - the Jewish festival of lights. 

We light the Menorah (Chanukah candles), eat latkas (potato pancakes), exchange gifts, spin the Dreidel (a gambling toy), and enjoy a sense of family togetherness for 8 days and nights.

That's a long time right?! Sometimes it seems even longer with my family. 

As a gift to all of you, here is "The Chanukah Song," performed by comedian Adam Sandler on Saturday Night Live.  It became an instant classic (and he since released a second, third, and fourth version.)

Here is the video. And, if you're feeling left out - here's Adam Sandler's Christmas Song.

 

via SNL

It's not too different from Christmas. 

The cynic in me believes the gift part of the holiday was invented by merchants.

Regardless, the Capitalogix team has been in a festive mood and the office has been filled with holiday cheer.

 From my family to yours, Happy Holidays!

Here Are Some Links For Your Weekly Reading - December 8th, 2019

For a candidate with an "age" issue, not sure if this was a smart move ...

 

 

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

Lighter Links:

• Don't Apologize for Having High Standards. (LinkedIn)
• Automation is Not Intelligence. (Forbes)
• How to Talk to Aliens. (Economist)
• 52 Things I Learned in 2019. (Medium)
• McLaren Unveils $1.7 Million Supercar with No Roof and a Windshield Made of Air. (CNN)

 

Trading Links:

• When to Buy into Aramco. (Wall Street Journal)
• How Spices Have Made, and Unmade, Empires. (New York Times)
• The First New US Airport since 2010 is in North Dakota's Oil Country. (TPG)
• This Widening Crack in the Mortgage Market Could Sink U.S. Home Prices. (MarketWatch)
• One Man's Quest to Challenge Wall Street With a New Silicon Valley Stock Exchange. (Telegraph)

Is WiFi Becoming Part of Our Hierarchy of Needs?

My wife's mother and sister were staying with us last week.  We also had two other house guests.  And our Internet service went out.  Not just momentarily, but for days.  Catastrophe!

Is Internet access becoming one of our basic human needs?

In 1943, psychologist Abraham Maslow published his famous “Hierarchy of Needs”. The idea was simple: the essential survival needs in the lowest level of the pyramid must be satisfied before the individual can turn his or her attention to the next level, and so on. Maslow’s “essential needs” are physiological; food, water, shelter, and physical safety.

Today, as we approach the 2020s, perhaps we need to add one more layer to Maslow’s pyramid: WiFi.

 

 

OK, humans probably don’t really need WiFi more than food, but without it, we feel frustrated and "twitchy". 

My solution: dual providers and a fail-over router.  

On a higher level, is Internet access a "basic human right" that should be handled like the New Deal treated electricity at the beginning of the 20th Century?

Expect to hear more about this (and not just because Bernie Sanders made it a campaign issue).

Here Are Some Links For Your Weekly Reading - December 1st, 2019

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

Lighter Links:

• How Artificial Intelligence and Machine Learning is Changing Medicine. (NewsNetwork)
• The Lines of Code that Changed Everything. (Slate)
• Why All Birds CEO Just Asked Amazon to Steal Its Idea. (Inc)
• Storytelling is a Powerful Communication Tool Here's How to Use It, from TED. (Ideas)
• 3,000-Year-Old Tablet Describing Babylonian Noah's Ark Tale Could Be 'Earliest Ever Example of Fake News,' Scholar Says. (FoxNews)

 

Trading Links:

• Eyeing Presidential Bid, Michael Bloomberg Makes Big Television-Ad Buys. (Wall Street Journal)
• This Invisible Company Powers Almost the Entire Finance Industry. (Forbes)
• Malls are Dying. the Thriving Ones are Spending Millions to Reinvent Themselves. (Washington Post)
• These Maps Show How Many People Will Lose Their Homes to Rising Seas – And It's Worse Than We Thought. (Popular Science)
• Billionaire Hedge Fund Manager Ray Dalio Says the Economy Isn't Growing Because 'The World Has Gone Mad'. (CNBC)

Here Are Some Links For Your Weekly Reading - November 24th, 2019

Hope you are ready for the Thanksgiving holidays.

 

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

 

Lighter Links:

• Gartner's Top 10 Strategic Technology Trends for 2020: the Good, the Obvious, the Renamed & the Missing. (Forbes)
• New Cardiology A.I. Knows If You'll Die Soon. Doctors Can't Explain How It Works. (DigitalTrends)
• The Science is Extremely Clear: You Need to Prioritize Sleep. (Wired)
• How to Get Die-Hard Meat Eaters to Try Impossible Burgers: Trick Them. (Wall Street Journal)
• Japan's Cheapest Hotel Will Charge You Just $1 Per Night If You Don't Care About Privacy. (OddityCentral)

 

Trading Links:

• The USPTO Wants to Know If Artificial Intelligence Can Own the Content It Creates. (TheVerge)
• 100 of the World's Most Promising Start-ups to Watch in 2019. (CNBC)
• Bezos Interested in Seahawks? Maybe. NFL Interested in Bezos? Definitely. (WashingtonPost)
• The American Dream is Alive in China. (Palladium)
• How Jim Simons Became the Most Successful Investor of All Time. (Economist)

Sea-Thru Sea

An engineer and oceanographer, Derya Akkaynak, created an algorithm that removes the water from underwater images - meaning it takes away the haze & tint that come with most underwater photos. It doesn't require a color chart either (though it does need distance information it gathers through numerous photographs from different angles). 

Check it out. 

 

via ScientificAmerican 

From the abstract: 

The Sea-thru method estimates backscatter using the dark pixels and their known range information. Then, it uses an estimate of the spatially varying illuminant to obtain the range-dependent attenuation coefficient. Using more than 1,100 images from two optically different water bodies, which we make available, we show that our method with the revised model outperforms those using the atmospheric model. Consistent removal of water will open up large underwater datasets to powerful computer vision and machine learning algorithms, creating exciting opportunities for the future of underwater exploration and conservation.

Essentially, the algorithm goes through every pixel and color balances the image based on collected data on distance/color degradation.

As with most algorithms of this type - the more data we feed it, the better it gets. Sea-thru already has great applications for furthering ocean-based research, but the follow-up question is can this algorithm be extrapolated outward to deal with other atmospheric conditions outside of water - smog, etc. 

What other uses can you imagine?  It is not hard to imagine how this could be applied to market data either ... Interesting stuff!