The 34th Annual Ig Nobel Prize ceremony took place last Thursday at MIT. Every year since 1991, around the time the recipients of the genuine Novel Prizes are announced, the Ig Nobel Prize awards the ten achievements that "first make people laugh, and then make them think. They're meant to celebrate the imaginative and encourage more interest in the sciences.
The first award for Biology was awarded to Robert Klark Graham, for pioneering development of the Repository for Germinal Choice, a sperm bank that accepted donations only from Nobellians and Olympians. While I jokingly tell my kids they have "superior genetic potential," this type of research and belief can have serious consequences.
In 1996, Physicist Robert Matthews earned a prize for his paper "Tumbling Toast, Murphy's Law and the Fundamental Constants," which sought to explain why toast tends to fall buttered-side down.
In 2002, another physicist, Arnd Leike, earned the honor after using the law of exponential decay to explain the behavior of beer foam.
And in 2017, Marc-Antoine Fardin earned the honor for using fluid dynamics to finally answer the eternal question: "Can a cat be both a solid and a liquid?" In case you are squeamish, no blender was involved in that experiment.
While these are funny examples, they're rooted in real science. As is the focus of this article, this year's Ig Nobel Prize for Demography.
In my circles, it is becoming more common to discuss how to live past 100 — and not just how to live beyond that number ... but to do so with a high quality of life.
A popular concept around that subject is Blue Zones - areas where people seem to live longer and healthier. There's even a Netflix documentary on the subject. Notable places include Sardinia, Italy; Okinawa, Japan; and Ikaria, Greece.
Saul Justin Newman challenged that belief with his research, which found that extreme age records tend to come from areas with no birth certificates, rampant clerical errors, pension fraud ... and even short life spans.
While longevity in the zones has primarily been attributed to diet, community, and genetics, Newman found that many of these claims were based on errors - or outright fraud. Instead, these regions are actually characterized by the opposite of what you would expect ... low incomes, low literacy, high crime, and short lifespans.
To a certain extent, it makes sense. In areas where you're struggling to make ends meet ... why wouldn't you commit pension fraud? In fact, in 2010, the Japanese government realized that over 80% of the people aged over 100 were actually dead. Part of what made this possible was that America bombed the halls of records in that area during the war.
Here's an interview with Saul Justin Newman on the subject. He's tracked over 80% of the people aged over 110 worldwide. Almost none of them have a birth certificate. Only about 10% have a death certificate.
What does this mean for human longevity?
While the stories of these 110-year-olds may mostly be fake - as mentioned in my recent article - longevity is on the rise, and there are many modalities to increase your lifespan.
The goal isn't just to stay alive longer; it's to live life to its fullest for as long as possible.
There are people living to 100, and there are plenty of people living healthily into their 70s, 80s, and 90s.
We're taking steps in the right direction. Technology and medicine are both evolving quickly.
But, like with longevity data, improvements in any space need to be met with a grain of salt.
If it sounds too good to be true ... it generally is. Not always. But, generally.
Old School Wisdom Isn't Always So Wise ...
When I first got interested in trading, I relied on traditional sources and old-school market wisdom. For example, I studied the Stock Trader’s Almanac.
While there is some real wisdom in some of those sources, most might as well be horoscopes or Nostradamus-level predictions. Throw enough darts, and one might hit the bullseye.
Traders love patterns ... from head-and-shoulders, to Fibonacci sequences, and even Elliot Wave Theory.
Here’s an example from Samuel Benner, an Ohio farmer. In 1875, he released a book titled “Benner’s Prophecies: Future Ups and Downs in Prices,” where he shared the often-referenced chart called the Benner Cycle. Some claim it’s been accurately predicting market fluctuations for over 100 years. Let’s check it out.
Here’s what it gets right ... markets go up and down ... and that cycle continues. Consequently, if you want to make money, you should buy low and sell high ... It’s hard to call that a competitive advantage.
Mostly, you’re looking at vague predictions with +/- 2-year error bars on a 10-year cycle.
However, it was close to the dotcom bust and the 2008 crash ... so even if you sold a little early, you’d have been reasonably happy with your decision to follow the cycle.
We use a form of cycle analysis in our models … but it’s more rigorous, nuanced, and scientific than the Benner Cycle. The trick is figuring out what to focus on – and what to ignore.
Just as humans are good at seeing patterns, even where there are none ... they tend to see cycles that aren’t anything but coincidences.
In trading, “alpha” measures the excess return created by manager skill rather than luck or movement of the underlying market. As you might guess, both “art” and “science” are involved in that calculation. Profitable traders want to believe it’s a sign of their skill, while losing traders prefer to blame luck.
Nicholas Nassim Taleb pointed out in “Fooled by Randomness” that many successful traders, even those with decades-long careers, were likely more lucky than skillful. They just happened to be at the right firm, on the right trading desk, at the right time.
That said, I believe technology, algorithms, and AI are evolving into Amplified Intelligence - the ability to make better decisions, take smarter actions, and continually improve performance. We’re about to experience a huge asymmetric advantage ... those who understand technology and science (math, statistics, game theory, etc.) will have a real edge over those relying on more primitive techniques or gut instinct.
In a sense, this is another type of cycle.
The best traders I know believe that “smart money” takes “dumb money”. While it may sound harsh, this cycle has played out repeatedly over time. Cutting-edge science can seem like magic to those who don’t understand it. However, these capabilities give a significant advantage to those who possess and use them.
I believe the gap between smart and dumb money is widening. That represents a massive opportunity for those who recognize what’s coming.
This is a reminder that just because an AI chat service recommended something that made money, doesn’t make it a good recommendation. Those models may do some things well ... but they also might just have made a lucky prediction at an opportune time. Making scientific or mathematically rigorous market predictions probably isn’t an area to trust ChatGPT or one of its rivals (at least if you don’t understand how to ask AI to do something that you understand and believe gives you a real edge).
If you don’t know what your edge is, then you don’t really have one. This becomes even more important in the age of AI. It doesn’t matter if AI does what it’s supposed to unless you believe it is doing what you want.
Be careful out there.
Posted at 06:18 PM in Books, Business, Current Affairs, Ideas, Market Commentary, Science, Trading, Trading Tools, Web/Tech | Permalink | Comments (0)
Reblog (0)