Capitalogix

Triumph Through Trials: Becoming Anti-Fragile

Many of our best decisions, timeliest course corrections, or significant innovations occur after a seemingly disastrous occurrence. That's why many psychologists and self-help gurus encourage people to focus on the hidden gift that many of these experiences provide.

It's there if you look for it. That painful event becomes the catalyst for either something new, a better way, or a level-up.

The goal isn't just to survive - it's to thrive. While a robust business can withstand shocks and a resilient business can recover from them, an anti-fragile business improves and grows stronger when exposed to volatility, randomness, disorder, and stressors.  The interesting thing about this concept is that it doesn't mean not fragile. It means things that weaken other systems are actually the things that strengthen you. 

Of course, that's not the case for everyone or every event ... It takes the right mindset and the right actions to turn a trial into a triumph. 

As we see the world changing rapidly, both through AI and through Trump's presidency, I think back to 2008 and how a prior incarnation of algorithms fared against it (spoiler alert: not nearly as well as this time). They say the things that don't kill you make you stronger. Here's my trial into triumph story about that. 

 

Via Howard Getson's YouTube Channel.

Too many people become victims of their circumstances instead of choosing to be the master of their destinies. 

Life is harder for people who live a life of least resistance. Doing the hard things and making the most of bad times makes life better and, ultimately, easier. 

Tony Robbins calls this the Threshold of Control. If you push through the fear and the struggle ... as you persevere, eventually, what was scary becomes easy. You've increased your threshold, and that's often a permanent improvement.  

Here is a list of the seven steps I use to transform almost any situation.

Seven Best Practices for Uncertain Times.

1. Accept Reality: We are where we are. Focus on being complete with what happened before this – and think about this as a new beginning with an even bigger future.
2. Do Something Positive: Take action and build momentum and confidence. Big wins are great. Yet, in scary times, even small items are worth noting, building upon, and stacking. Let progress build positive momentum for you.
3. Take Care of Yourself: Increase your physical activity, meditation, and massage. Take time to eat and sleep well. Many studies show decision-making suffers when you're stressed. Caring for yourself goes a long way to improving many other things.
4. Communicate More: The natural tendency is to hide or to recuperate in private. Instead, be open and receptive to help and ideas from friends, partners, or wherever it may come.
5. Creative Destruction: The old game and the old ways of thinking are over. Shift your energy to what is working. Commit to the result you want rather than the process.
6. Increase Your Options: It often takes a different level of thinking to solve a problem than the level of thinking that got you there in the first place. So, be open to opportunities, new possibilities, and more ways to win.
7. Choose a Bigger Future: Instead of resigning yourself to playing small and doing with less, recognize that a clearing creates space for something even better. Choose what you want and call it into existence through your thoughts and actions.

They say everything happens for a reason. The secret is that you get to choose the reason, what it means to you, and what you're going to do about it. Choose well, and someday, you could look back on this time as one of the best things that ever happened to you.

Are we in a Stock Market Bubble?

The S&P 500's price-to-earnings ratio (CAPE) has recently been nearing historic highs. Traders think that signals that market valuations might be overheated. 

In December of last year, it hit 37.9, over double its long-term average of 17.6. For context, it has only exceeded that level during the Dot-Com bubble and in 2021. 

 

via visualcapitalist

Overheated prices mean that there's a significant gap between company earnings and stock prices. That disparity translates to speculation and hope driving the stock price instead of more quantitative data. 

For some historical perspective, after the Dot-Com bubble, the S&P declined by 40% in the following two years. And after its 2021 peak, the S&P sank almost 20%. 

While AI enthusiasm has brought a spark to the markets, the question is, is that hype hiding deeper issues?

On a broader note, my message to you would be that if you don't know what your edge is, you don't have one. Investors and traders should understand market indicators, economic trends, and other world factors – mainly because it's important to be educated (or at least informed). Of course, merely understanding these things does not translate to a reliable trading strategy or an edge in today's environment. 

Lastly, just because something has been true in the past does not mean it predicts the future. In trading, we use the phrase "past performance is not indicative of future results" to remind us that there is a difference between a coincidence and a correlation. Indicators like CAPE study the past, so it is dangerous to assume you can use them to predict the future. For better or worse, whether markets go up or down is based on much more than earnings and stock prices. 

But, with that said,  Warren Buffett just did something worth noting ... He sold his holdings in the S&P 500 index funds he tells everyone to buy. So why did Buffett just sell them himself?

We live in interesting times.  

Onwards!

Is The NYSE Moving To Texas?

While I mainly discuss entrepreneurship and technology trends, I still have a soft spot for trading, which remains a large part of what we do at Capitalogix. While we've broadened the industries in which we use our Capitalogix Insight Engine, it was originally built with trading technologies in mind. We have exciting new partnerships there, including a new fund.

As we look forward, I thought it was a good time to look back as well.

I'm sure you have heard about open outcry trading pits in Chicago and New York—where traders flashed hand signals lightning quick to buy and sell commodities like cattle, corn, gold, and pork bellies. Those pits, which were made famous in the movie Trading Places, thrived for decades. Nevertheless, the practice has lost out to a faster, cheaper, and quieter competitor: the computer and electronic trading.

In 2016, I visited the Chicago Mercantile Exchange and took this video in front of the S&P trading pit during live trading hours. 

 

via my YouTube Channel.

In the video, I remarked that even though it looked empty - trading volume was higher than ever. Meaning that trading had once again evolved beyond the way it used to happen. According to the CME Group, by 2015, public outcry had fallen to 1% of total volume. Here is a video of what the S&P trading pit used to look like.

 

"...the change in the pit isn't a harbinger of death for futures trading;  it's the signal of a new era." 

 

At the time, it didn't feel like a bold statement to me – because what was coming felt inevitable. And it has proven to be true. Markets have changed radically since 2016. And you can bet that the changes aren't done, as AI and exponential technologies promise to transform markets and trading again.

The process of trading and clearing is moving beyond human capabilities. As the old duties of the Exchange fade away, the focus must be on the dangers, opportunities, and strengths of a bigger future. That means new games to play, new risks to navigate, and a new set of rewards to capture.

 

Nearly empty CME trading pits in 2016 (specifically, the S&P and Eurodollar)

The new game involves not only new players, methods, and markets ... but also a new geography.

Yes, as more things become digital, geography still matters.

In 2018, the Intercontinental Exchange acquired CHX and rebranded it to the NYSE Chicago. Now, that branch of the NYSE is moving to Dallas. 

This follows announcements in 2024 of the launch of the Texas Stock Exchange, which has backing from people like Rick Perry. 

Texas is rapidly becoming an even larger economic hub. It boasts the highest number of NYSE listings, Nasdaq recently established a large base here, and companies representing more than $3.7 trillion in market value list Texas as their headquarters.

Meanwhile, lawmakers are pushing to make Texas even more business-friendly. With no corporate or personal income tax, Texas has one of the lowest tax burdens in the nation. The state also offers incentives for corporations to relocate.

All of this can be taken as a reminder that opportunities, talent, and resources concentrate where energy and funds flow. 

If you want to talk more about how to launch a business in Texas or anything Capitalogix is working on, reach out. 

A Look At Last Week's Tech Breakthroughs

We live in exciting times!

No, I'm not talking about how fast the DOGE team is terraforming government.

I'm talking about how fast the insights of exponential technologies are compounding the real-world implications of where we are and where we are going.

In past issues, we've talked about how quickly the world is changing, how fast innovations happen, and why it's not about today's tools but rather the value and capabilities of the foundational assets we build upon ... and, ultimately, the things that makes possible.

Today's commentary is different from our usual posts. Yes, the inspiration came from my weekly curation of links selected based on what captured my attention or imagination. However, today's post is about the sheer volume and density of groundbreaking innovations competing for mindshare and investment dollars. And while commercial success is a great way to keep score, we'll explore what this accelerating pace of innovation means for our future and the world.

 

So, here is a list of some of the things that made headlines this week.

• After 17 years of research, Microsoft has announced a massive breakthrough in quantum computing, resulting in a new state of matter and their new Majorana 1 chip. 
• Google announced its new AI co-scientist to help accelerate research for scientists ... and it's already finding novel breakthroughs on decade-long problems.  
• xAI released Grok 3, a significant advancement in the reasoning and performance of their LLM and a competitor to other top models like DeepSeek-R1. 
• Clone Robotics unveiled a video of "ProtoClone," a faceless musculoskeletal android robot with 1000 muscles and over 200 degrees of freedom.
• Nvidia and Arc Institute launched a new AI Bio model - Evo 2 - trained on over 100k species. This doesn't just analyze genomes ... it creates them. 
• Sakana.AI introduced the AI CUDA Engineer, an agentic AI system that automates the production of CUDA kernels 10-100x faster than with common machine learning,
• Claude announced their intention to include reasoning and web search in Claude 4.
• France sustained a Nuclear Fusion plasma reaction for 1,337 seconds - a 25% improvement over the previous record. 

Some may not matter to you now. Try re-reading the list while letting yourself be amazed at what is happening!

Any one of these is a momentous achievement that would have sounded like science fiction even 10 years ago. Now, that's one week of achievement. 

As someone whose company invents things for a living, I understand that none of these breakthroughs were actually invented last week. Obviously, a long and winding road leads to each of those announcements. However, it's remarkable to see so many significant innovations reaching the stage of public announcement simultaneously.

It's hard to quantify the impact of these innovations on not only the tech industry - but the world. 

Think about the implications. Google's co-scientist is already solving problems that humans haven't been able to solve for decades. Clone is building robots that will use the next generations of AI to transform how we think about what artificial intelligence looks like. 

Not to mention the improvement in quantum computing and nuclear fusion, industries that I've been paying attention to since the 90s. 

While any of these topics would have made a good article, in my opinion, the whole is more impressive than the sum of its parts.

If I had to pick one of those topics to highlight, I think it's now time to start focusing more on quantum computing. 

To start, here's an hour-long interview with Satya Nadella about Microsoft's new quantum chip - and what it means for AI & business. 

 

via Dwarkesh Patel

Most of you probably aren't interested in watching the whole thing, but here are some of the highlights. 

• They've created a new state of matter called a topological superconductor.
• The qubits created with topological superconductors are fast, reliable, and small ... very small.
• These new qubits are 1/100th of a millimeter, meaning we now have a clear path to a million-qubit processor.
• To put that in perspective, imagine a chip that can fit in the palm of your hand yet can solve problems that even all the computers on Earth today combined can't! 
• Satya doesn't believe in making claims about how quickly AGI is coming.
• However, he believes it is useful and productive to set a benchmark of making the world 10% better.
• He also believes the topological superconductor breakthrough makes quantum computing a practical reality that can happen in a few years - not decades +.

Prepare for things to get more interesting.

We do live in exciting times!

Investment in AI is Rising ...

It’s no surprise that capital raising is moving toward AI - and often generative AI. 

 

via visualcapitalist

From 2023-2024, over $26 billion flowed into the sector - including big deals like Inflection, xAI, and Anthropic. 

While many of the biggest investments were in foundational models and infrastructure, some money is now moving into targeted AI applications. 

AI isn’t just for researchers and the tech giants anymore ... it’s becoming more commercial.

Realistically, AI is overhyped – and there is a lot of competition. Yet, few firms have operationalized AI in a meaningful way. 

With that said, here is a question worth considering.

Where are the AI applications capable of generating returns that justify the infrastructure, investment, and focus?

The next battle will likely be in the AI Applications space. To keep it short, why hasn’t it happened yet ... and what will likely create the value we’re looking for?

 

Why Haven’t AI Apps Taken Off Yet?

  •  Cost vs. Value Gap: Many AI applications are still experimental or add only incremental value.

  •  Compute Bottlenecks: AI compute costs remain expensive, limiting broader adoption.

  •  Enterprise Hesitation: Many companies are still figuring out how to integrate AI into their operations in a way that delivers real ROI.

 

Where Might the Value Come From?

For AI investments to pay off, applications must solve big problems, not just serve as experimental tools. The highest-value areas likely include:

  •  AI copilots and automation (Enterprise AI reducing labor costs and bottlenecks)

  •  Autonomous systems (AI for analytics, compliance, and logistics)

  •  AI-driven discovery (Accelerating breakthroughs in capabilities and performance)

  •  Next-gen digital assistants (LLMs with memory, context, and long-term utility)

 

Right now, AI apps are where mobile apps were in 2008 — there is plenty of potential, but only a handful of genuinely indispensable use cases. 

Companies like Capitalogix that crack the code on industrial-grade AI applications, will drive the next wave of value creation.

It’s fun and rewarding to watch artificial intelligence become available to everyone.

As the cost of “intelligence” decreases, let’s hope more people take advantage of the opportunity.

However, the sad truth is the opposite is also more likely. As AI becomes more available, it becomes easier for it to become a distraction. 

Remember the Internet? When it first started, most of the uses were academic. Now, despite there being functionally infinite ways to use the internet to improve your life and make you smarter, most people use it for memes and distractions. 

When you think about AI, don’t just think about artificial intelligence ... Think about amplified intelligence. That is the term I use to distinguish between the technology and what people really want ... which is the ability to make better decisions, take smarter actions, and continuously improve performance.

AI isn’t about taking away the humanity from your business or automating away the things you love. It’s about allowing you to be more human – doing more of the things you’re best at - that give you energy and bring you joy.

How Americans Spend Their Money

I’m sure you remember  James Carville’s famous line, “It's the economy, stupid.”

Seasons come and go, as do political regimes, but one constant remains: people focus on the economy ... and their wallets.

Recently, my inbox has seen a deluge of wild claims about spending, waste, inflation ... and worse.

This morning,  I saw several sources citing Robert Kiyosaki’s recent warnings of an impending market crash, massive layoffs, depression, and even war.

Mass market hype aside, I thought it would be interesting to examine these issues and how typical Americans spend their money.

A quick glance shows that household debt recently approached $18 trillion, and credit card debt surpassed $1 trillion. 

But, why? 

The chart below came from VisualCapitalist. It shows “How Americans Spend Their Money.”

 

via visualcapitalist

Unsurprisingly, almost half of consumer spending goes toward housing and transportation. 

While this has slightly outpaced inflation, it hasn’t by much. 

Meanwhile, spending in some areas surged well beyond wage and overall inflation levels. For example, Americans spend 21% more on food than in 2021. A closer look shows that the cause isn’t just inflation. Food and beverage companies increased their operating profits by 79% from 2019-2023. 

Educational spending and healthcare spending are also rising.

How do you think the Trump administration’s actions will impact the economy and the wallets of typical Americans?

Many of my close friends and advisors are optimistic about the Trump administration’s actions and expected impacts. However, as I’ve often noted regarding technological change, people are good at noticing big turning points – but struggle with predictions about the second and third-order consequences of these shifts.

How do you see this playing out?

Business Lessons from the NFL

Today was Super Bowl Sunday 2025. As a fan, I found myself rooting for the Philadelphia Eagles today. But at times, I was rooting for Patrick Mahomes and the Chiefs out of respect for the talent and the incredible record they’ve compiled.

Meanwhile, it also made me think about my home team, the Dallas Cowboys, and how long it’s been since we’ve had any real post-season success. 

Obviously, the Jones family has done many things right. According to Forbes, for the ninth straight year, the Dallas Cowboys are the world’s most valuable sports team, worth an estimated $10.1 billion — the first to cross the 11-figure threshold and $1.3 billion beyond their closest competition.

They’ve mastered winning in the business sense, even when they struggle on the field.

Jerry Jones does a lot right in building his “Disney Ride.” However, this post will focus more on what the coaches and players do to win. 

 

Business Lessons From the NFL

 

I’m regularly surprised by the levels of innovation and strategic thinking I see in football.

Football is something I used to love to play. And it is still something that informs my thoughts and actions.

Some lessons relate to teamwork, while others relate to coaching or management.

Some of these lessons stem back to youth football ... but I still learn from watching games – and even more, from watching Dallas Cowboys practices at The Star. 

Think about it ...  even in middle school, the coaches have a game plan. There are team practices and individual drills. They have a depth chart listing the first, second, and third choices to fill specific roles. In short, they focus on the fundamentals in ways that most businesses don’t.

The picture below is of my brother’s high school team way back in 1989. While lots have changed since then, much of what we will discuss in this post remains timeless.

 

 

Losing to an 8th Grade Team

The scary truth is that most businesses are less prepared for their challenges than an 8th-grade football team. That might sound disrespectful – but if you think about it ... it’s pretty accurate. Here is a short video highlighting what many businesses could learn from observing how organized sports teams operate, particularly in setting goals and effectively preparing for challenges.

via YouTube.

If you are skimming, here is a quick summary of the key points in the video.

Organization and Preparation

• Structure: Football teams have a clear hierarchy, including a head coach, assistant coaches, and trainers.
• Practice: Teams engage in regular practice sessions to prepare for games, emphasizing the importance of training.
• Game Plan: They develop strategies and a game plan before facing opponents, including watching game films to understand their competition.

Dynamic Strategy

• Adaptability: Teams adjust their strategies based on the game’s flow, recognizing whether they are on offense or defense.
• Audibles: Just as a football team may call an audible when faced with unexpected defensive setups, businesses should adapt their strategies in real time.

Learning From Experience

• Post-Game Analysis: Coaches review game films to identify what worked and what didn’t, learning from past experiences to improve future performance.
• Continuous Improvement: Ongoing training is crucial in businesses, similar to how football players receive coaching during practice to enhance their skills.

Importance of Coaching

• Role of Coaches: Coaching is crucial for developing talent and focusing on achieving defined goals.
• Encouragement of Growth: Active coaching leads to better outcomes and overall improvement.

 

A Deeper Look Into the Lessons

There is immense value in the structured coaching and preparation that sports teams exemplify. Here are some thoughts to help businesses adopt similar principles that foster teamwork, adaptability, and continuous improvement.

Vince Lombardi once famously started training camp by announcing, “Gentlemen, this is a football.” He stressed the hidden power of mastering the fundamentals. Beyond that, he believed that how you do something is how you tend to do everything ... which led to his famous  quote, “Football is not just a game, but a way of life.”

So, let’s start at the beginning.

Football teams think about how to improve each player, how to beat this week’s opponent, and then how to string together wins to achieve a higher goal.   

The team thinks of itself as a team. They expect to practice. And they get coached.

In addition, there is a playbook for both offense and defense. And they watch game films to review what went right ... and what they can learn and use later.

Contrast that with many businesses. Entrepreneurs often get myopic ... they get focused on today, focused on survival, and they lose sight of the bigger picture and how all the pieces fit together. 

The amount of thought and preparation that goes into football - which is ultimately a game - is a valuable lesson for business. 

What about when you get to the highest level? If an 8th-grade football team is equivalent to a typical business, what about the businesses that are killing it? That would be similar to an NFL team. 

Let’s look at the Cowboys. 

 

Practice Makes Perfect

How you do one thing is how you do everything. So, they try to do everything right. 

Each time I’ve watched a practice session, I’ve come away impressed by the amount of preparation, effort, and skill displayed.

During practice, there’s a scheduled agenda. The practice is broken into chunks, each with a designed purpose and a desired intensity. There’s a rhythm, even to the breaks.

Every minute is scripted. There’s a long-term plan to handle the season ... but, there was also a focus on the short-term details and their current opponent.

They alternate between individual and group drills. Moreover, the drills run fast ... but for shorter periods than you’d guess. It is bang-bang-bang – never longer than a player’s attention span. They move from drill to drill, working not just on plays but also on skill sets (where are you looking, which foot you plant, how to best use your hands, etc.).

They use advanced technology to get an edge (including player geolocation monitoring, biometric tracking, medical recovery devices, robotic tackling dummies, and virtual reality headsets). 

They don’t just film games; they film the practices ... and each player’s individual drills. Coaches and players get a personalized cut on their tablets when they leave. It is a process of constant feedback and constant improvement. Everything has the potential to be a lesson. 

 

Beyond The Snap

The focus is not just on the players and the team. They focus on the competition as well. Before a game, the coaches prepare a game plan and have the team watch videos of their opponent to understand tendencies and mentally prepare for what will happen.

During the game, changes in personnel groups and schemes keep competitors on their toes and allow the team to identify coverages and predict plays. If the offense realizes a play has been expected, they call an audible based on what they see in front of them. Coaches from different hierarchies work in tandem to respond faster to new problems. 

After the game, the film is reviewed in detail. Each person gets a grade on each play, and the coaches make notes for each person about what they did well and what they could do better.

Think about it ... everyone knows what game they are playing ... and for the most part, everybody understands the rules and how to keep score (and even where they are in the standings). Even the coaches get feedback based on performance and look to others for guidance. 

Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.

Challenge accepted.

And, just for fun, here’s a video of me doing a cartwheel after a Dallas Cowboys win.

 

via YouTube.

Sports make you do funny things.

Whether you are watching or playing – Enjoy the game!

Here Are Some Links For Your Weekly Reading - February 9th, 2025

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

Lighter Links:

• OpenAI's Deep Research Smashes Records for the World's Hardest AI Exam, With ChatGPT O3-Mini and DeepSeek Left in Its Wake. (TechRadar)
• You Can Try DeepSeek’s R1 Through Perplexity—without the Security Risk. (FastCompany)
• The Recruitment Effort that Helped Build Elon Musk’s DOGE Army. (Wired)
• Humans are Evolving Before Our Eyes on the Tibetan Plateau. (ScienceAlert)
• How to Naturally Boost Your Dopamine, Oxytocin, Serotonin, and Endorphins. (FastCompany)

 

 

Trading Links:

• The True Cost of a Super Bowl Ad? You Don’t Want to Know. (FastCompany)
• Trump Says America Was at Its Richest in the Late 1800s. Is That True? (MarketWatch)
• The “5 Types of Wealth”: Why You’re Wealthier Than You Think. (BigThink)
• America’s Most Generous Philanthropists 2025. (Forbes)
• Why the AI World is Suddenly Obsessed With a 160-Year-Old Economics Paradox. What Is It – And What Does It Mean Today? (NPR)

 

 

Betting On The Super Bowl Champion ...

Are you trying to get rich quickly? Do you want to know if the markets will be bull or bear this year?

Look no further than the “Super Bowl Indicator”. It has to be real; the winning percentage is high, and there’s even a Wikipedia page about it.

 

Image via NFL/Getty Images.

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, for those who care more about markets than football, you’d be rooting for the Philadelphia Eagles. 

There is one big caveat (among lots of others) ... it counts the Pittsburgh Steelers as NFC because that’s where they got their start. 

If you accept that, the Super Bowl Indicator has about a 68% success rate. Sounds good, right?

Come on ... you know better.

Here are some other “fun” stock market indicators:

• 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. We also probably intuitively understand correlation ≠ causation. Yet, we crave order, and look for signs that make markets seem slightly 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 instinct, ancient wisdom, or 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.

To get a better perspective, here is a thought experiment to try. 

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

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

The answer is that, on average, less than 33% of active managers beat the S&P in any given year. Last year, 43% beat the Index. Even more interesting is that over a 15-year period, the numbers drop much further. Depending on who is measured, only 12% of active managers and about 5% of U.S. Equity Funds beat the S&P over a 15-year period.

Here are a couple of things to consider when you evaluate those statistics. First, market statistics represent predominantly bull market periods (and underperformance tends to spike during bear markets). Second, the statistics mentioned were for professional traders and funds (and most retail traders do considerably worse than that). Third, and perhaps most importantly, the implication is that professional traders’ “intelligent” choices often turn out worse than chance. That means something they’re doing is hurting performance (rather than helping it). 

via Gaping Void

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

There will never be less data or slower markets.

The only thing you can predict confidently about the markets is that volatility and noise will increase.

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

Let me know if you want to learn more about that.

Onwards.

Are you trying to get rich quickly? Do you want to know if the markets will be bull or bear this year?

Look no further than the “Super Bowl Indicator”. It has to be real; the winning percentage is high, and there’s even a Wikipedia page about it.

 

Image via NFL/Getty Images.

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, for those who care more about markets than football, you’d be rooting for the Philadelphia Eagles. 

There is one big caveat (among lots of others) ... it counts the Pittsburgh Steelers as NFC because that’s where they got their start. 

If you accept that, the Super Bowl Indicator has about a 68% success rate. Sounds good, right?

Come on ... you know better.

Here are some other “fun” stock market indicators:

• 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. We also probably intuitively understand correlation ≠ causation. Yet, we crave order, and look for signs that make markets seem slightly 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 instinct, ancient wisdom, or 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.

To get a better perspective, here is a thought experiment to try. 

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

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

The answer is that, on average, less than 33% of active managers beat the S&P in any given year. Last year, 43% beat the Index. Even more interesting is that over a 15-year period, the numbers drop much further. Depending on who is measured, only 12% of active managers and about 5% of U.S. Equity Funds beat the S&P over a 15-year period.

Here are a couple of things to consider when you evaluate those statistics. First, market statistics represent predominantly bull market periods (and underperformance tends to spike during bear markets). Second, the statistics mentioned were for professional traders and funds (and most retail traders do considerably worse than that). Third, and perhaps most importantly, the implication is that professional traders’ “intelligent” choices often turn out worse than chance. That means something they’re doing is hurting performance (rather than helping it). 

via Gaping Void

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

There will never be less data or slower markets.

The only thing you can predict confidently about the markets is that volatility and noise will increase.

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

Let me know if you want to learn more about that.

Onwards.

My Thoughts on Deepseek as an AI Entrepreneur & Hedge Fund Manager

Every now and then, a moment comes along that forces everyone to stop and rethink what they thought they knew. DeepSeek—a relatively unknown AI startup—just delivered one of those moments.

Imagine this: last week, a company most people had never heard of claimed to have built a cutting-edge AI model for just $5.6 million – and they made it open source. Meanwhile, industry giants like Meta, Google, and OpenAI spend hundreds of millions—sometimes billions—on similar efforts. The implications are massive, and investors felt it immediately.

Within hours, Nvidia’s stock price plunged 16.86%, wiping out over $600 billion in market value. Other AI-heavy stocks followed suit. The reaction? Panic, speculation, and a flood of questions:

• Have we been overpaying for AI development?
• Is brute-force scaling the wrong path?
• What does this mean for the balance of power in the AI world?

What’s happening here isn’t just a new startup making waves. It’s a fundamental shift in how AI is built—and it could change the competitive landscape for years to come.

What makes DeepSeek different?

To me, the main point is that, until recently, AI companies have been treating LLMs like an arms race—the more GPUs, the better. That’s part of why LLMs have become so expensive. Meanwhile, DeepSeek took an efficiency-first approach that reduced computational waste and more efficiently used GPU resources.

This type of disruption will become increasingly frequent across all industries. Exponential technologies are accelerating innovation cycles and opening unexpected development paths. While these discontinuous innovations may seem like isolated surprises, they’re becoming a fundamental part of the competitive landscape. The key isn’t to react to each disruption individually - it’s to develop better strategies for operating in this rapidly evolving environment.

In this case, Deepseek’s breakthrough wasn’t about doing more of what its competitors were good at. Instead, they thought of something else they could do to well to compete. Their breakthrough wasn’t about power ... it was about perspective. It is a good reminder and blueprint to study.

Some think the key message is that businesses no longer need to stock up on Nvidia’s best GPUs to have an advantage. Even if that is true, it begs the question: Will the demand for high-end GPUs decline if AI processing needs start shrinking? Asked another way, if other AI companies also use efficiency-first architecture, will Nvidia’s dominance weaken?

From my perspective, the answer is that Nvidia will continue to grow. I’m excited about a world where the companies that can afford to spend the most money don’t necessarily win. Increased accessibility to high-performing AI models means more entrepreneurs can join the space and create new businesses with novel approaches. Ultimately, many more businesses will build AI into their infrastructure, and chip sales will continue to expand.

AI isn’t just about computing power anymore – it’s about creativity and utility, too. Constraints have always bred innovation, and as companies begin to do more with less, I think you’ll see a shift in the balance of power.

What about America and data privacy?

Despite my excitement about the AI boom, there are valid privacy fears. When I discussed TikTok a few weeks ago, it was clear that the U.S. was taking a stronger stand on protecting its citizens from foreign interference. DeepSeek presents challenges.

To start, it does censor content deemed sensitive by the Chinese government – that also means that particular historical and political topics are met with ambiguous or sanitized responses.

It collects all of your user inputs, any personal information you share, and technical details like your keystroke patterns. They do explicitly tell you this in their Terms of Service. The data is stored in China, raising concerns about legal oversight and privacy laws.

You likely have very little recourse if your data is accessed by or shared with external entities.

My Thoughts

First, DeepSeek is undoubtedly exciting. Even if they’ve embellished their story, the result is impressive. However, it’s also not the end of Nvidia or American-based AI companies. 

Knowing when to sprint and when to jog is an important skill.

AI is shaping our digital world, and DeepSeek is a massive force function in the industry. It is ultimately a good thing for AI (yes, even the Chinese competition).

However, you should probably ask yourself if the benefits of using Deepseek outweigh the risks.

When I coach people on using generative AI, I’ve always urged caution about sharing your sensitive IP with publicly hosted GPTs. Even with OpenAI or Meta, there are clear risks.

It’s also clear that China isn’t the only entity trying to track you or better use your data. As a reminder, if you don’t know how someone is making money off a product … you’re the product. They’re commoditizing you and your data.

That being said, It’s important to be proactive, and it seems to become even more important every week. The landscape is shifting so quickly.

Even so, you have time.

Being proactive also means being smart. As a user of the tools, you don’t need to switch to DeepSeek. Even as a non-tech entrepreneur, now is the time to explore the AI uses that excite you, not to force big leaps. 

If you’re like me and are an entrepreneur in the space, you should certainly take the lessons from DeepSeek and think about how to apply these ideas in your ecosystem.

But my #1 lesson for AI adoption is the same as my #1 lesson for building any habit: Start small - and start in a way that gives you energy.

Humans are good at seeing big changes on the horizon but notoriously bad at predicting what those changes will be.

The goal isn’t to be so fast that you beat everyone else … just to be fast enough not to be left behind.

Onwards!