Capitalogix

I See You

It feels like we're always being watched, right?

It's not just me?

From governments, to Google, to Facebook ... it feels like it's impossible to have any expectation of privacy today. Amazon knows what I want before I do. 

This is an issue that cuts both ways. On the one hand, increased surveillance means we are arguably safer – because the digital omniscience makes it harder to get away with crimes ... but all this extra data on us makes it easier to commit other crimes and to suffer from the increasing lack of privacy. 

Paul Bischoff via Comparitech

Unsurprisingly, 8 of the top 10 most-surveilled cities in the world were in China. It's even less surprising with the Hong Kong protests and the new social credit system. 

My eldest son spent several years focused on cybersecurity. One of his "warnings" was that everyone's been hacked - not everyone has been targeted. 

I find that somewhat comforting. 

If everyone's information is out there, that's a lot of noise to sift through. 

Still, this is one of the issues that will be increasingly important.  Big Data with an AI parser creates a new set of promises and perils.

Hedge Funds: Do Not Go Gentle Into That Good Night

Hedge Funds - and active managers in general - have been under fire for several years. Almost 50% of Hedge Funds saw a decline in assets under management (AUM) in 2018.

On the surface, it makes sense ... during a long-term bull market, indexes and other passive options like ETFs become en vogue. During a bear market, active management offers more opportunities to outperform the market. 

Hedge funds are designed to, you guessed it, hedge risk. So, when investors see less risk in indexes, the demand for active management declines. Especially when performance declines as well. 

via Bloomberg

When something monumental changes the past is left behind and you begin a new future. When electricity was created, no one was going to make candles the primary form of lighting. After the introduction of the car, horses & buggies were never going to be the #1 mode of transportation, and we're also seeing that with the adoption of AI & automation. 

Most changes aren't monumental.

I have a fundamental belief that things go in and out of phase and that what's once old is often new again. You see it with fashion, music, phones - etc. First phones got bigger in order to do more, then smaller for convenience, and then larger again so that old dudes like me can read the text. 

I believe it's the same with active management - the techniques may have gone out of phase - but active management still offers the potential outperformance. The trend mirrors the stock market; bulls turn to bears when buyers run out - so as outflows from funds continue to peak, and funds continue to close, it seems reasonable that there will come a time when demand rises again. 

At that point, "active management" will give way to "Active Switching™" (which goes beyond stock picking to choose the markets, techniques, time frames, risk levels, allocation strategies, etc. using a variety of techniques, data sources, and real-time contextual clues).

This is part of what's covered in my upcoming book, "Next On Wall Street: Understanding AI's Inevitable Impact on Trading."

Looking forward to launching that book in early 2020.

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).

What Do You Do When AI Beats You?

When Beethoven was at the peak of his career, several of his contemporaries struggled to deal with the realization that they may never create anything that lived up to his creations. Brahms, for example, refused to make a symphony for 21 years. Schubert is quoted as saying, "Who can ever do anything after Beethoven?"

We're apparently seeing the same effect via Artificial Intelligence. 

When it comes to popular AI, not much surpasses the popularity of AI's growing chokehold on gaming. Recently, I've shared about AI winning at video games,  but in 2016 I shared about humans losing to AI in Go for the first time. 

What it is:  A computer has just beaten the world's best Go player. AlphaGo, a program created by Google-owned AI company DeepMind, beat European Go champ Fan Hui all five times they played in tournament conditions, and also won 99.8% of Go games against other computer programs. Unlike IBM's Deep Blue, which defeated chess champ Garry Kasparov, AlphaGo wasn't programmed to play Go. Instead, as Nature reports, it learned how to play via a general-purpose algorithm that interpreted the game's patterns.

Why it's important:  AlphaGo's learning technique means it can recognize complex patterns, long-term planning and decision-making: refined skills that were once stricly human in nature. Imagine the possibilities when neural networks like AlphaGo, infinite computing and the 'Internet of Everything' converge.

via - Google AI Algorithm Masters Ancient Game Of Go - February 2016

This week, a former Go champion who was beaten by DeepMind retired after "declaring AI invincible." 

Lee Se-dol quit for a couple of reasons. According to him, even if he's the #1 human, there's an undefeatable entity above him and he felt he had failed his country by losing to the AI. It's an unfair fight - AI plays untold millions of games to learn to play better and it doesn't get tired, bored, sick, distracted.  - we can't do that.

Much like Beethoven, AI is discouraging competition. 

Was Lee wrong to quit? It's hard to say, but as AI gets better at more activities, it's an issue we're going to see more often. There's always someone (or something) better - and a purely utilitarian approach isn't necessary or productive. 

I'm an advocate of intelligently adopting AI, and a believer that the scale of AI's "wins" is going to skyrocket - but I'm also a believer in the idea that "the game isn't over until I win". If I enjoy something, I'm not going to let 2^nd place stop me. 

 

 

The passionate pursuit of a goal is valuable regardless of the result, and bettering yourself at a skill - like Go - may not be a sustainable job, but it can still make a great hobby. 

AI is coming - but it doesn't have to be joy-sucking. 

Onwards! 

 

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)

Happy Fibonacci Day

Yesterday was Fibonacci Day - 11/23  -  because when the date is written in the mm/dd format (11/23), the digits in the date form a Fibonacci sequence: 1,1,2,3. A Fibonacci sequence is a series of numbers where a number is the sum of the two numbers before it.

 

Arthur Benjamin via TED

The Fibonacci Sequence is one of the ways that nature has a way of repeating itself fractally. You can see the sequence in nature, art, architecture, music, geometry (and in the eyes of certain traders, in the Markets). 

It fascinates me how many places these patterns occur naturally. 

Interesting stuff!

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! 

Here Are Some Links For Your Weekly Reading - November 17th, 2019

The holiday season is coming fast.

 

 

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

Lighter Links:

• What's New in Gartner's Hype Cycle for AI, 2019. (Forbes)
• What Monkeys Can Teach Us About Being Human. (NPR)
• Why It's Time to Take Electrified Medicine Seriously. (Time)
• What's CRISPR Doing in Our Food? (Gastropod)
• The Problem that Google Solved with Quantum Supremacy.(DataScienceCentral)

 

Trading Links:

• Why Hedge Fund Billionaire Ray Dalio Loves Silicon Valley.(Finance)
• Tokenized Venture Capital. (DailyFintech)
• Betting on Bitcoin Prices May Soon Be Deemed Illegal Gambling. (Economist)
• Map: The Richest Person in Each U.S. State. (Money)
• Here's What Quantum Supremacy Does and Doesn't Mean for Computing. (TechReview)