Capitalogix

Here Are Some Links For Your Weekly Reading - October 4th, 2020

Did you watch the first presidential debate this week? I have friends on both sides of the fence, but we all agreed the debate was a mess. 

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

Lighter Links:

• Don't Neglect the Thing that Makes You Weird - People Probably Admire it. (Freakonomics)
• Mindfulness for Skeptics. (RealSimple)
• Elon Musk: Neuralink Brain Implant Will Improve 'Bandwidth' of Human Communication. (CNet)
• The Typical Progression of Covid-19 Virus. (CNBC)
• Why Magic Mushrooms are the next Big Booming (and Legal!) Drug Market. (Observer)

 

 

Trading Links:

• President Trump Tests Positive for Covid. Why the Stock Market Isn't Getting Hammered. (Barrons)
• There's No Place to Hide Anymore When the Stock Market Plunges. (Wall Street Journal)
• Big U.S. Banks to Report Profit Plunge as Pandemic Recession Takes Hold. (Investing)
• Manhattan Apartment Sales Tumble 46%, Leaving 10,000 Homes on the Market. (DailyMail)
• SEC is Willing to Try' a Tokenized ETF, Chairman Says. (CoinDesk)

 

Can A Minute Be Faster? A Look At The Internet Minute

As I get older, time seems to move faster ... but it's also true that as I get older, more is accomplished every minute. 

Technology is a powerful force function.

Every couple of years I revisit a chart about how much data is generated every minute on the internet.  

In reverse chronological order, here's 2018, 2015, and 2011. 

Here's an excerpt from 2015 for some perspective: 

Compared to 2008 here is what's happened with social networks:

• The number of people online has more than doubled from 1.4 billion to over 3 billion
• Facebook has gone from 80 million users to more than 1.4 billion
• Twitter had 2 million accounts and now it is 300 million and counting.
• The number of smartphones was 250 million in 2008 and today there are more than 2 billion. That is an 800% increase!

Today this is what happens every minute on the web.

• 4 million search queries on Google
• Facebook users share 2.46 million pieces of content
• Email users send 204 million messages

Over the course of its (pretty short) history, the internet has been arguably the most important battlefield for relevancy and innovation. 

So, what does the internet look like in 2020?

DOMO via VisualCapitalist

Partially as a result of the quarantine, you're seeing an increase in digital cash transfers with tools like Venmo, an increase in e-commerce shops like Shopify, and an increase in (you guessed it) collaboration tools like Zoom or Microsoft Teams. 

This year, DOMO also created a chart that shows the services that have appeared in the graphic since 2012. It's an interesting way to look at the relevancy and staying power of different companies and technologies. 

We're currently in a time period of massive competition and turnover. Innovation means incumbents are being challenged every day, and the status quo doesn't stay that way for long. Even within the S&P 500, you're seeing companies stay a member for shorter periods of time.  

You have to stay on your toes to maintain an edge. I think you can expect increased competition, increased volume, and as a result, increased noise vying for your attention or fueling your distraction. 

Here Are Some Links For Your Weekly Reading - September 27th, 2020

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

Lighter Links:

• AI Should Change What You Do, Not Just How You Do It. (HBR)
• Twitter CEO Explains How Bitcoin, Blockchain Will Revamp Its Business. (Decrypt)
• The 12 Best Fitness Apps Right Now. (GearPatrol)
• Scientists are Preparing to Implant the World's First Human Bionic Eye that Will Allow the Blind to See. (AOL)
• Freezing Bodies for Reanimation' in China and Why the Country's Cryonics Tech Has the Potential to Leapfrog the West. (South China Morning Post)

 

 

 

 

Trading Links:

• The 12 Richest Tech Billionaires in the World Ranked. (South China Morning Post)
• Wall Street is about to Start Trading Water for the First Time. (EuroNews)
• Why Investors Want 50% of Stocks above 200-Day Moving Average. (SeeItMarket)
• A Complete Mess: Traders Fear Volatility Long after Election Day. (Bloomberg)
• Wall Street's Campaign Donations to Biden are Five Times Larger Than Those Going to Trump. (CNN)

 

 

Do You Agree to These Terms?

One of the biggest lies on the internet (and there are too many lies to count) is "I have read and agree to the terms of service(ToS)."

There is a plug-in that might help.

Terms of Service Didn't Read has summaries of most ToS, ratings for their user-friendliness and a browser plug-in so when you're about to sign one you can make sure it's safe. 

via TOSDR

Unfortunately, many of the ToS tell you that they're going to use your data, sell it to spammers, etc. For example, I talked about how a shadowy Russian company was behind FaceApp and owned the rights to photos you uploaded. 

Luckily, not every clause in a ToS is legal, and won't necessarily hold up in court - but that doesn't mean you shouldn't be protecting yourself. 

So, check out TOSDR, it's not perfect ... but it's probably better than nothing.

AI & Intellectual Property With Rich Goldstein

It has been a crazy ride.

I studied psychology and philosophy at Duke in the early '80s.  Then I got both an MBA and a law degree at Northwestern University in Chicago. 

My first job out of school was doing corporate and securities work at a law firm in Dallas.  By the early '90s, I knew that I was an entrepreneur. 

Regardless, the path seemed random as I was going down it ... but looking back, it all seems to make some form of sense. 

I recently did a podcast with a patent lawyer friend, Rich Goldstein. We talk about that, what it's like working with my son, the difference between practicing law and creating AI, innovation, and the role of Intellectual Property and its protection. 

I think it's a good listen. Check it out. 

 

The State of Democracy

I feel very lucky to live in America and lucky to live in a democracy ... but democracy is a term that encompasses a wide spectrum of activity and governments. In the same way that Republics and Capitalism also represent a wide spectrum of activity.

America has adopted a form of all three of those underlying structures, but it changes with each regime change, and as we adapt to the complexities of modern-day civilization.  

It's worth understanding the nuances of what brand of democracy you live in - and what would make it ideal (in your opinion).

That's a much too complicated question to answer in the scope of this article, but a great starting point is understanding the world spectrum of Authoritarian -> Full Democracy, and how the different countries score. 

Luckily, visualcapitalist put together a great interactive graphic based on the Democracy Index global ranking (as of 2019). Click the image to see the interactive version.

via visualcapitalist

Before I get into the rankings, a quick look at the classifications within the Democracy Index. It bases the score on 60 questions that cover things like the electoral process, civil liberties, government functions, and political culture. 

• Authoritarian Regime: 0.0 - 3.99
• Hybrid Regime: 4.0-5.99
• Flawed Democracy: 6.0-7.99
• Full Democracy: 8.0 - 10.0

Topping the list is Norway, and the most Authoritarian regime is North Korea.

Unfortunately, based on this metric, the U.S. (which is one of the oldest democracies in the world) was downgraded to a flawed democracy as of 2016, after teetering for many years. Some stated reasons for this shift are the growing distrust in public institutions, an upshot in ideological purity, and less bipartisan efforts. 

 Since 2006, when the Index was created, Democracy has actually been decreasing globally. Today, around half of the world's population lives in a democracy of some sort, with only 5.7% living in a "full democracy". 

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

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

Lighter Links:

• Facebook Robots Shut down after They Talk to Each Other in Language Only They Understand. (Independent)
• Finding Beauty in the Imperfection. (Entrepreneur)
• Colors Evoke Similar Feelings around the World. (NeuroScienceNews)
• Alicia Keys: NPR Music Tiny Desk Concert. (YouTube)
• How Conspiracy Theories are Shaping the 2020 Election and Shaking the Foundation of American Democracy. (Time)

 

Trading Links:

• Trillions What is a Trillion Dollars?(InformationIsBeautiful)
• NYSE Signals It Will Exit New Jersey If State Taxes Stock Trades. (Wall Street Journal)
• There are Now 17,000 Bitcoin Millionaires. (Decrypt)
• Are You an Investor or a Gambler? the Stock Market Knows. (Wall Street Journal)
• JPMorgan Creates New Team to Trade Shares of Pre-IPO Giants Including SpaceX, Robinhood, and Airbnb. (CNBC)

Innovator Mindsets

To some, new technology is a good thing.  To others, less is more.

Most people simply "tolerate" technology transitions, some people drive them, and others crave them and use them as a catalyst for growth or strategic advantage.

In the image, above, the blue line represents consumer adoption (taken from Geoffrey Moore's "Crossing the Chasm", while the yellow line represents market share. 

As you can see, only 2.5% of the population drive innovation (or adopt it early enough to help drive the Alpha & Beta versions of emerging technologies). 13.5% make up the Early adopters, who help get it ready for the mainstream.  Then the early and late majorities are the groups that ultimately consume (or use) the mature product. Meanwhile, Laggards are often forced kicking and screaming into “new” technologies as the early adopters are well on their way to subsequent iterations. 

Even if you are not an innovator, here are a few Innovator Mindsets that I find useful. 

1. You Believe There’s A Better Way
   • Wherever you are, you know that there is a best next step and you are eager to find it and take it.
   • You recognize that the opportunity for more (or better) often lies just beyond the constraints or problems of the current way.
   • The bigger future fuels your efforts. When initial excitement fades, understanding what the bigger future can bring helps you power through.
2. You Are Comfortable Being Uncomfortable
   • You understand that Pioneers sometimes take arrows in the back.
   • When creating a new reality, you expect some resistance as a result of the law of averages. Escaping the status quo takes a lot of momentum, but it’s worth it. 
   • You recognize when victory is near.  In a quirk of human nature, too many people quit just before they would have won. Don’t make that mistake.
3. You Know Where You're Going, Even If You Are Not Sure How You're Going To Get There
   • Your goal should be your North Star. A clear direction is important to ensure that activity leads to progress.
   • Measure progress and momentum rather than the distance from your goal.
   • It is easier to course-correct while in motion.
   • If you’re too committed to a path that isn’t leading in the right direction, you might find what Blockbuster, RadioShack, and Kodak found.
4. You Are Married To Questions (Not Necessarily Answers)
   • Everything works until it doesn’t; and nothing works forever.
   • It’s easy to find an answer and think it’s the right one, but there’s always a best next step or a better way.
   • Figure out what you want and how to get it. This is much more empowering than focusing on what you don’t want or why you can’t get it.
   • Ask questions that focus on opportunities or possibilities rather than challenges or what you want to avoid.
   • Energy flows where focus goes.
   • Commit to finding a way!

I plan on sharing more Innovator Mindsets.  Let me know what you think.

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.

Gartner's 2020 Hype Cycle For Emerging Technologies

Each year, I share an article about Gartner's Hype Cycle for Emerging Technologies. It's one of the few reports that I make sure to track every year. It does a good job of explaining what technologies are reaching maturity, but which technologies are being supported by the cultural zeitgeist. 

Technology has become cultural. It influences almost every aspect of every-day life, and it's also a massive differentiator in today's competitive landscape. 

Sorting through which technologies are making real waves (and will impact the world) and which technologies are a flash in the pan, can be a monumental task. Gartner's report is a great benchmark to compare reality against. 

2019's trends lead nicely into 2020's trends. While there have been a lot of innovations, the industry movers have stayed the same - advanced AI and analytics, post-classical computing and communication, and the increasing ubiquity of technology (sensors, augmentation, IoT, etc.). 

What's a "Hype Cycle"?

As technology advances, it is human nature to get excited about the possibilities and to get disappointed when those expectations aren't met. 

At its core, the Hype Cycle tells us where in the product's timeline we are, and how long it will take the technology to hit maturity. It attempts to tell us which technologies will survive the hype and have the potential to become a part of our daily life. 

Gartner's Hype Cycle Report is a considered analysis of market excitement, maturity, and the benefit of various technologies.  It aggregates data and distills more than 2,000 technologies into a succinct and contextually understandable snapshot of where various emerging technologies sit in their hype cycle.

Here are the five regions of Gartner's Hype Cycle framework:

1. Innovation Trigger (potential technology breakthrough kicks off),
2. Peak of Inflated Expectations (Success stories through early publicity),
3. Trough of Disillusionment (waning interest),
4. Slope of Enlightenment (2nd & 3rd generation products appear), and
5. Plateau of Productivity (Mainstream adoption starts). 

Understanding this hype cycle framework enables you to ask important questions like "How will these technologies impact my business?" and  "Which technologies can I trust to stay relevant in 5 years?"

That being said - it's worth acknowledging that the hype cycle can't predict which technologies will survive the trough of disillusionment and which ones will fade into obscurity. 

What's exciting this year?

Before I focus on this year, it's important to remember that last year Gartner shifted towards introducing new technologies at the expense of technologies that would normally persist through multiple iterations of the cycle. This points toward more innovation and more technologies being introduced than in the genesis of this report. Many of the technologies from last year (like Augmented Intelligence, 5G, biochips, the decentralized web, etc.) are represented within newer modalities. 

It's also worth noting the impact of the pandemic on the prevalent technologies. 

For comparison, here's my article from last year, and here's my article from 2015. Click on the chart below to see a larger version of this year's Hype Cycle.

via Gartner

This year's ~30 key technologies were selected from over 2000 technologies and bucketed into 5 major trends:

• Composite Architectures represent the organizational shift to agile and responsive architectures due to decentralization and increased volatility. Emphasis is on modularity, continuous improvement, and adaptive innovation to respond to changing market conditions (like in trading, or in businesses rapidly shifting to remote). Sample technologies include embedded AI and private 5G
• Algorithmic Trust is a direct result of increasing data exposure, fake news, and biased algorithms. As a result, technologies have been built to "ensure" identities, privacy, and security. A great example is more technologies being created on the blockchain. Other examples include explainable AI and authenticated provenance
• Beyond Silicon is in its infancy, but represents the limitations of Moore's law and the physical of silicon. This has led to new advanced materials with enhanced capabilities being used, and other simple materials being used. Examples of this technology can be seen in  DNA computing and storage, quantum computing, and biodegradable sensors. 
• Formative AI is the shift towards more responsive AI; models that adapt over time and models that can create novel solutions to solve specific problems. Sample technologies include generative AI, self-supervising learning, and composite AI. 
• Digital me represents the integration of technology with people, both in reality and virtual reality. Past hype cycles have introduced implants and wearables, but the potential applications of the technology are growing, especially in response to social distancing.  Examples are health passports, Two-way BMI, and social distancing technologies. 

I'm always most interested in the intersection of AI and advanced analytics. This year, it looks like many of the fledgling AI technologies have become integrated and more advanced. Much like the formative years for children, formative AI represents a new era in AI maturity. Models are becoming more generalized, and able to attack more problems. They're becoming integrated with human behavior (and even with humans as seen in digital me). 

As we reach new echelons of AI, it's actually more likely that you'll see over-hype and short-term failures. As you reach for new heights, you often miss a rung on the ladder... but it doesn't mean you stop climbing. More importantly, it doesn't mean failure or even a lack of progress.  Challenges and practical realities act as force functions that forge better, stronger, more resilient, and adaptable solutions that do what you wanted (or something better).  It just takes longer than you initially wanted or hoped.

To paraphrase a quote I have up on the wall in my office from Rudiger Dornbusch ... Things often take longer to happen than you think they will, and then they happen faster than you thought they could. 

Many of these technologies have been hyped for years - but the hype cycle is different than the adoption cycle. We often overestimate a year and underestimate 10. 

Which technologies do you think will survive the hype?