Capitalogix

Getting Educated Before You Vote!

Early voting has started, and if all goes to plan, we’ll know who will be the President on Tuesday, November 5th. Realistically, it’s more likely that you’ll know who you think the President is ... but the country may still be officially undecided.

It has gotten more challenging to exercise truly educated decision-making through the fog of fake news and the growing echo chambers of noise surrounding the candidates (and their policies).

The reality is that most of our news sources are tinted by the lens of their ideology - which is okay. That means they’re appealing to their targeted audience. 

That being said, it may also be worth looking at the same news story from a comparative news source from the other spectrum - or even better, a primary source when it comes to science/economics. I found two tools that help me do this kind of comparison easily – Ground News and Particle.

Ground News is a news aggregation platform that makes it easy to compare news sources, read between the lines of media bias, and break free from algorithms. Key features and benefits include:

• Source comparison: Allows users to see how different news outlets cover the same story, grouped by political leaning (left, center, right)
• Bias distribution: Shows the breakdown of political orientation for news sources covering each story
• AI-generated summaries: Provides summaries of coverage from different political perspectives
• Blindspot feature: Helps users identify stories not widely covered by their preferred sources
• Ownership information: Shows the ownership/financial interests behind news outlets.

Particle is a news reader app that delivers AI-powered news summaries to help you understand more, faster. It was created by an ex-Twitter alumni. The Particle app lets you browse a personalized list of stories to get you up-to-speed at a glance ... or go infinitely deeper to understand various perspectives, broader context, and how a story has unfolded over time. They’re still in private beta. You can sign up for the waitlist here.

Here’s a chart that shows where news sources rank. You can click the image for an interactive version with more details. And, if you’re curious about their methods, click here. 

via Ad Fontes Media

On top of reading various news sources, there are a couple of other tools I like: 

• FiveThirtyEight - Uses graphics to tell visual stories on valid statistics. Named after the number of electoral votes. Also has a visual presidential forecast. 
• RealClearPolitics - Aggregates news from various sources, as well as writing their own opinion pieces. Also has a good visual on the current state of the presidential, senate, and house races. 
• Brittanica ProCon - Tracks the stated positions of politicians on various issues. It can be sorted by candidate and by issue. It also has a quiz you can take to assess which candidate you actually resonate with. 
• Politifact & FactCheck - Both sites fact-check presidential statements, party statements, and more. We know politicians often lie by omission or focus only on the specific stats that are relevant to their point. Fact-checking helps you gain a more holistic picture. 

You are probably sick and tired of all the noise surrounding the election. However, our democratic system thrives on the intricate system of checks and balances powered by information sharing and continuous debate. This process compels the government to remain responsive and accountable to the people. 

Remember, choosing not to vote is still a choice ... and getting out to vote is the only way to make sure that your voice is heard - whether or not you believe in the health of America's democracy. 

 

Here Are Some Links For Your Weekly Reading - October 19th, 2024

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

Lighter Links:

• Pope Francis and the Vatican Just Created an “AI Bible” Reshaping Faith in the Digital Age. (TheBrighterSide)
• People Think They Already Know Everything They Need to Make Decisions. (ArsTechnica)
• 8 Expert Tips for Getting Started With NotebookLM. (Google)
• Chinese Humanoid Robot is the 'Fastest in the World' Thanks to One Surprising Addition. (UniladTech)
• Copy of US Constitution Found in Filing Cabinet Sells for $9M. So, Somebody Does Still Value the Constitution. (BBC)

 

Trading Links:

• OpenAI's Advantage Over Rival AI Companies Vanishes, Report Finds. (Fortune)
• Nvidia’s Shocking Truth vs. The Dot-Com Bubble. (JoshBelanger)
• The Next Wave of AI Won’t Be Driven by LLMs. Here’s What Investors Should Focus on Instead. (Fortune)
• Amazon Announces Nuclear Power Deals as Tech Giants Scramble for More Clean Energy. (GeekWire)
• ForecastTrader – Futures-Based Prediction Market for the Presidential Election and Other Things. (ForecastTrader)

 

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.

The Law Of Diminishing Returns

At some point, more of the same stops paying off ... it is called the law of diminishing returns.

 

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! 

And of course ... Be moderate in everything, including moderation.

Here Are Some Links For Your Weekly Reading - October 6th, 2024

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

Lighter Links:

• How to Use ChatGPT to Brainstorm Anything. (Geeky-Gadgets)
• Why We Love Moo Deng — The Science Behind Our Obsession With Baby Animals. (Forbes)
• Try Perplexity for Search🔥. (WonderTools)
• These US Cities Hit 110 Degrees in October – Get Used to It. (Vox)
• Israel's Paradox of Defeat – How the Country's Military Success Is Producing Political Failure. (ForeignAffairs)

 

Trading Links:

• Why OpenAI Burns Through Billions. (Axios)
• AI Training Data Dilemma: Legal Experts Argue for 'Fair Use'. (Forbes)
• Amazon's New AI Chatbot Could Change How Employees Work Forever. (GreyJournal)
• America's One-Two Punch of Good Economic News. (Axios)
• Mark Cuban Warns the U.S. Must Win the AI Race ‘Or We Lose Everything’. (Fortune)

 

Are You As Smart As You Think You Are?

VisualCapitalist just shared an infographic showing the Average IQ by state. It caught my eye and my interest.  Here it is.

 

via VisualCapitalist.

When I first examined the chart, I focused on the state-by-state differences. Honestly, I was taken aback that some states scored higher than others. And by that, I mean it wasn't necessarily the states I would've predicted. But then I took a closer look at the scale and realized these differences are probably insignificant. The results essentially show that, on average, states' intelligence levels are... well, average.

I know a lot of smart people.

I also know many people who think they're smarter than they are (even the smart ones ... or, perhaps, especially the smart ones). 

It's common. It's so common that there's a name for it—the Dunning-Kruger Effect.

Have you ever met someone who's so confident about what they think that they believe they know more than an expert in a field? That's the Dunning-Kruger effect. It's defined as a cognitive bias where a lack of self-awareness prevents someone from accurately assessing their skills. 

Here's a graph that shows the general path a person takes on their journey towards mastery of a subject. 

via NC Soy

The funny thing about the above image... it's not actually a part of the paper on the Dunning-Kruger Effect. But it's now so commonplace that people report that chart as fact—a fitting example of the effect. 

David Fitzsimmons via Cagle Cartoons

Recognizing the "victims" of this effect in our daily lives can often be funny or frustrating. But we're all prone to this; it's a sign of ignorance, not stupidity. 

This is a problem with all groups and all people. You're not immune to it, even if you already know about the cognitive bias resulting from the Dunning-Kruger Effect. 

It should be a reminder to reflect inward - not cast aspersions outward. 

Two different ways that people get it wrong, first is to think about other people and it’s not about me. The second is thinking that incompetent people are the most confident people in the room, that’s not necessarily true.

Usually, that shows up in our data, but they are usually less confident than the really competent people but not that much... - David Dunning

To close out, even this article on the Dunning-Kruger presents a simplification of its findings. The U-shape in the graph isn't seen in the paper, the connection that lack of ability precludes meta-cognitive ability on a task is intuitive, but not the only potential takeaway from the paper. 

Regardless, I think it's clear we are all victims of an amalgam of different cognitive biases. 

We judge ourselves situationally and assume "the best". Meanwhile, we often assume "the worst" of others. 

We can do better ... it starts with awareness.

Progress starts by telling the truth.

Remembering The 'Crazy Ones'

On September 28th, 1997 (almost exactly 17 years ago today), Apple released perhaps one of the most recognizable commercials of all time. I remember being mesmerized the first time I saw Apple Computer's iconic "Crazy Ones" video as part of their Think Different campaign.

Steve Jobs originally recorded a version of "The Crazy Ones" himself, but chose to release the Richard Dreyfuss narrated version. 

 

via Youtube

Here is the text version of the script.

Here's to the crazy ones.
The misfits.
The rebels.
The troublemakers.
The round pegs in the square holes.

The ones who see things differently.

They're not fond of rules.
And they have no respect for the status quo.

You can quote them, disagree with them,
glorify or vilify them.
About the only thing you can't do is ignore them.

Because they change things.

They push the human race forward.

While some may see them as the crazy ones,
we see genius.

Because the people who are crazy enough to think
they can change the world, are the ones who do.

    –     © 1997 Apple Computer, Inc.

Click here for extra material about the video and campaign. 

I think it has held up pretty well, and I had this piece of art commissioned for my office. 

There's a lot to be said for carving your own path, pushing past perceived limits, and accomplishing something hard to ignore. 

Here Are Some Links For Your Weekly Reading - September 22nd, 2024

 

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

Lighter Links:

• Ex-Pentagon Official Discusses Government's Hunt for UFOs: 'I Have to Be Careful What I Say'. (People)
• The Russian Bot Army that Conquered Online Poker. (LongReads)
• The Mr. Beast Memo is a Guide to the Gen Z Workforce. (Kyla)
• The 7 ‘House Rules’ of Marriage—By a Psychologist. (Forbes)
• Scientists May Soon Be Able to Translate the Languages Plants Use to Communicate. (BGR)

 

Trading Links:

• How Intel Fell From Global Chip Champion to Takeover Target. (Wall Street Journal)
• The Top 100 Gen AI Consumer Apps. (A16Z)
• Breaking Down OnlyFans’ Stunning Economics. (MatthewBall)
• How the Super-Rich Signal Their Wealth to Each Other. (WSJ)
• Peter Thiel Predicts the 2024 Election Won't Be Close: 'One Side is Simply Going to Collapse'. (Insider)

 

Remembering Ikigai In Stressful Times

Over the past century, life expectancies have soared while birth rates have declined. This unusual combination of population dynamics creates significant demographic and socioeconomic challenges for societies worldwide.

To put things in perspective, adult diapers now outsell baby diapers in Japan. Think about how that likely reshaped Japan's workforce and consumer markets.

Getting old is tough, and it gets tougher the older you get.   As a result, finding your 'reasons for being' and joy in life becomes even more important ... it may also be the secret to living longer and healthier.

Many people (all over the world) struggle to get up in the morning. 

There's a Japanese concept called Ikigai that may help.

Ikigai centers around finding purpose as you grow older. Paradoxically, it makes sense to start the process as early as possible. 

 

via InformationIsBeautiful

Finding your "reason to be" and living with purpose is a key to making the most of your time.

The graphic highlights something interesting (yet almost counter-intuitive) … When two areas intersect, it creates something positive (e.g., a passion or a mission).   However, where three areas intersect, it creates a pain point (for example, it could be what you're good at, you love doing it, the world needs it … but it doesn't make you any money – so now you're struggling).

It's worth examining and thinking about for a bit.

On a related note, here is a TEDx talk about the nine common diet and lifestyle habits that help people live past 100 ... whether or not they take you past 100, they're probably a good place to start. 

 

 

TED-ED via YouTube

And here is a link to Dan Sullivan's e-book, My Plan for Living to 156. That may sound outrageous, but it's worth reading because Dan shares surprisingly valuable insights in this book. It doesn't matter whether you actually live to be 156; what matters is living as if it were true. Someone who believes they're approaching the end often looks for excuses or an off-ramp rather than seeking purpose, meaning, and a Bigger Future. By shifting your perspective, you can create a more purposeful and fulfilling life, regardless of your actual lifespan.

Live long and prosper!

The Secret To Competing Against Tech Giants

The last time I drove in New York City traffic, I complained that "I didn’t understand why people came here" because it was too crowded.

That reminds me of one of Yogi Berra’s famous quotes. “Nobody goes there anymore because it’s too crowded.”

He said that about a famous restaurant where he used to work.

The same is true in business. Opportunity draws a crowd ... but the best opportunities are often in areas of less competition.

For entrepreneurs, oversaturation can turn products into commodities, reducing profit potential. Conversely, many shy away when a challenge seems insurmountable, creating unexpected opportunities for those willing to take the risk.

As an entrepreneur, I’m drawn to projects others might dismiss as science fiction. These are the challenges that often lead to the most groundbreaking and rewarding outcomes.

Moonshot Projects

Moonshot projects offer a unique advantage. While they may seem daunting, their audacious nature often means less competition and greater potential for transformative impact and extraordinary profits.

A moonshot project is a highly ambitious, transformative endeavor that seeks to solve a significant problem or create a revolutionary innovation. These projects are characterized by:

• Audacious Goals: They aim for breakthroughs that seem nearly impossible to achieve.
• Disruptive Impact: They strive to create solutions that are vastly superior to existing offerings, often by introducing entirely new paradigms.
• High-Risk, High-Reward: These projects embrace the potential for failure in pursuit of groundbreaking results.
• Long-Term Focus: They prioritize long-term impact over short-term gains.
• Technological Advancements: They leverage cutting-edge or even nascent technologies.
• Paradigm Shifts: They challenge conventional wisdom and industry norms.

Moonshot projects are inherently challenging. They demand significant resources, interdisciplinary collaboration, and a willingness to venture into the unknown. This perceived difficulty often deters potential competitors, creating a unique opportunity for those willing to take the risk.

When successful, they push the boundaries of what is possible and redefine the landscape of their respective fields.

In part, that is why a 10X mindset is particularly well-suited for Moonshot projects. By aiming for a tenfold improvement over existing solutions, you’re essentially operating in a space with little to no competition or opposition. This allows you to redefine the rules of the game and establish a sustainable competitive advantage.

Our strategy of creating a unique, sustainable competitive advantage aligns perfectly with the Moonshot approach. By choosing to play a different game (with an asymmetric edge), we’re not just competing; we’re fundamentally changing the playing field.

I’m not interested in going head-to-head with tech giants on their turf. Instead, the goal is to carve out our own niche, focused on using our unique abilities to push boundaries and extend our edge. Being slightly ahead of the competition can be a powerful attractor. It often leads potential competitors to seek collaboration rather than confrontation. They might approach you with ideas, money, or opportunities, aspiring to share in your advanced position and capabilities. This dynamic can create unexpected partnerships and accelerate progress in ways that benefit everyone involved.

When interviewing potential team members, I often share a crucial insight: if you’re seeking a job where you work 9-to-5 solving problems so you can go home feeling satisfied, this might not be the right fit.

We tackle challenges of a different magnitude. Our projects rarely have quick solutions. Instead, we focus on making steady progress towards ambitious goals.

I sometimes joke that our motto should be: “We suck less.” Nevertheless, the underlying truth is more profound. It’s about understanding your ultimate objective and recognizing that each step moves you in the right direction, no matter how small.

This approach aligns with our belief in playing a different game. We don’t just compete; we redefine the rules of engagement, creating our own metrics for success and pushing boundaries in ways that traditional thinking often overlooks. Kind of like this quote:

“I have not failed. I've just found 10,000 ways that won't work.” - Thomas Edison

It doesn’t make sense to challenge a bigger and better-funded competitor in an area where they have an asymmetric advantage. In other words, don’t compete with giants at their own game.

Choose to play a game you expect to win.

Playing a different game is a theme at Capitalogix. We believe that you control the game you’re playing, the rules, how you keep score, and even how you evaluate success. These things inform where to spend time, where to invest money, and even what looks like an opportunity to you. 

Wouldn’t you rather compete in areas where you can create a unique, sustainable competitive advantage? Personally, I want to invest in the things that extend the edges that let us win.

Why? Because ... Mediocrity Is Expensive!

What you lack in size or computer power, you can make up for in creativity, agility, and innovation. 

We sought to create a niche in the investment industry, not through computing power, but through unique approaches to age-old problems. We use AI and data science to enhance decision-making. 

We have an incredibly narrow and consistent focus. Within that area, we are willing to take on problems others avoid and pursue goals that others say are impossible. 

Our niche limits risk and lets us fail faster ... and learn faster. This allows us to take confident action while others are tentative. 

Most big companies - and most of our competitors - are afraid to be wrong. They have to protect their infrastructure, cash cows, and short-term performance metrics. It makes sense (from their perspective) that playing it safe means they’re secure. - but that’s not how it works. 

You can’t challenge the status quo when you are the status quo. 

10x Improvement Is Often Easier To Achieve Than 10%

 

Astro Teller via TED

"In 1962 at Rice University, JFK told the country about a dream he had, a dream to put a person on the moon by the end of the decade.The eponymous moonshot. No one knew if it was possible to do, but he made sure a plan was put in place to do it if it was possible.That's how great dreams are. Great dreams aren't just visions, they're visions coupled to strategies for making them real." - Astro Teller

Incremental change is hard - it’s finding new ways to do the same thing, and you often end up competing in very red oceans - saturated markets where you’re competing on price.

Moonshots sound harder, but you create your own niche, and the constraints of a new idea force creativity and energy. If you’re going after a goal that no one has accomplished before, it’s impossible to be in a red ocean, and it’s easier to mobilize a team around something exciting and new than decreasing some arbitrary metric by 2%. 

 

There are a couple of important lessons to keep in mind when pursuing the unknown.

• Forget what you know - self-reported “experts” are limited by their worldview. If you’re trying to get a different result, you won’t do it by playing by the same rules your predecessors followed. Heuristics are great for making life easier - but they’re very limiting when trying to create something new. 
• Attack the hardest problems first - your biggest problems are your biggest opportunities. If you don’t deal with the big problems now, you’ll never get around to it, and you’ll waste time, energy, and potentially realize you have to pivot much too late.  
• Be comfortable being uncomfortable - Most people find failure taboo, and they’re deathly afraid of it. Tony Robbins talks about our tendency to avoid pain more actively than we pursue pleasure, and it’s true in business. But failure is a part of business. The people I consider most successful got there through incredible pain tolerance and increasingly intense problems that they continued to conquer. 
• Have a short memory for pain - Focus on the gain, not the pain. People often focus on not having enough money, not enough time, or simply not having enough. That scarcity mindset is dangerous and can lead to getting lost in pain and fear. Acknowledging the pain/fear and moving forward from a place of abundance and opportunity helps create opportunities. 

As well, a clear identity is important. You have to understand what you’re pursuing and how you want to attack the problem. At Capitalogix, we’ve gotten very in tune with our goals. 

We invent techniques that identify and adapt to what happens in markets. We apply the lessons learned from past experiences, data science breakthroughs, and hard work to eliminate the fear, greed, and discretionary mistakes that are the downfall of most traders and decision-makers.

Small businesses don’t have a monopoly on these mindsets and these opportunities, but companies like Y Combinator, X(and no, I don't mean the company formerly known as Twitter), or HeroX are few and far between ... Elon Musk is famous for moonshots like Tesla, SpaceX, Starlink, Neuralink, Xai, etc. Google and Microsoft pursue moonshots as well. 

Good news ... the future is big enough for them and you. 

Choose something that lights you up and leverages what you already know and who you already are.

So what’s your moonshot?