Capitalogix

Here Are Some Links For Your Weekly Reading - February 6th, 2022

Have you paid attention at all to the Spotify controversy?

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

Lighter Links:

• How Emerging Tech Will Influence Freedom, Industry, and Money In the Metaverse. (VentureBeat)
• Here's What Henry Kissinger Thinks About the Future of Artificial Intelligence. (Gizmodo)
• Boston Scientists Create "Robots" that are Capable of Reproduction. (CBS News)
• Eureka Moments Come From Deep Within Subconscious Brain. (GreekReporter)
• Revenge: The Neuroscience of Why It Feels Good In the Moment, But May Be a Bad Idea In the Long Run. (NeuroScienceNews)

 

Trading Links:

• The Tech Sell-Off Has Some Venture Capitalists Worried the Good Times May Be Coming to an End. (CNBC)
• Have We Hit Peak Unicorn? (GeekWire)
• Here's Where the Jobs Are In One Chart. (CNBC)
• Amazon In Talks To Purchase Fitness Equipment Producer Peloton. (AppleInsider)
• Amazon Added More to Its Market Capitalization on Friday Than Any Company Ever Had in a Single Day. (MarketWatch)

 

How Much Electricity Does Bitcoin Use?

Electricity use is one of the common complaints people have when talking about Bitcoin adoption and mining. 

So, how much energy have we been using to mine Bitcoin?

More than you might’ve guessed.

The world is changing.

via Daily Infographic

I know several people that are getting more into mining as cryptocurrency continues to grow in popularity (despite the downturn). 

While this amount of energy usage is startling - and bad for the environment - there are many ways to reduce the consumption of electricity by cryptocurrencies. 

On the other hand, this might be an interesting alternative data source that gives us a different perspective about the ongoing popularity and commitment people have towards a currency.

 

Here Are Some Links For Your Weekly Reading - January 30th, 2021

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

Lighter Links:

• Elon Musk Called Biden a 'Damp Sock Puppet In Human Form' After the President Highlighted EV Production By GM and Ford But Not Tesla. (Insider)
• Behind Meta's Claim of Building World's Fastest AI Supercomputer. (AnalyticsIndia)
• We Finally Have Jetpacks and No One Cares. (Kottke)
• Birth of the Omicron Family: BA.1, BA.2, BA.3. Each As Different As Alpha is From Delta. (Forbes)
• A Master Economist on Increasing Tipping, Strategic Quitting, Maximizing Charitable Fundraising, Baseball Cards, Theory of Mind, and Valuable Decisions On the Margin. (TimFerriss)

 

 

 

Trading Links:

• What the Regime Will Do To Fight Private Digital Currencies. (Mises)
• U.S. SEC Approves New U.S. Exchange With Blockchain Feed, Faster Settlement. (Reuters)
• The Stock Market Slump is Raising Recession Fears But the Actual Data Isn't So 'Ominous,' Analyst Says. (Markets)
• Even Early Enterprise Metaverse Solutions are At Least 3-5 Years Away. (VentureBeat)
• Elon Musk Says Tesla's Humanoid Robot is the Most Important Product It's Working On and Could Eventually Outgrow Its Car Business. (News)

 

 

2022 Predictions

About a month ago, I shared visualcapitalist's 2021 predictions to check how well they fared at the end of the year. 

Honestly, the list was pretty good. It wasn't perfect, but you wouldn't expect it to be. 

In that article, I asked this question: 

What's going to happen as a result of the continuing pandemic, inflation, interest rates, the ongoing supply chain issues, and the growing anxiety and unrest brewing underneath the surface of the new normal? In January, we'll get to see VC's predictions. Before that, what do you expect to happen in 2022? - How'd These 2021 Predictions Fair?

With that, here are visualcapitalist's 2022 predictions: 

via visualcapitalist

Let's be clear - most predictions are either vague and easily guessed (and therefore not helpful) or random conjecture. 

But, there's value in prediction, and there's value in analyzing the data before you. The caveat is that prediction is better when it's applied to human nature and not the machinations of fate, and data can be a distraction if it's not being carefully curated and analyzed to remain relevant to your goals. 

For example, I agree with their general direction for technology. Tech is continuing to grow in influence, and as Web 3.0, the blockchain, and AI mature as platforms for sub-technologies, I think their importance is only going to skyrocket. 

Prediction can also be entertainment. I certainly catch myself looking for patterns and differentiators for everything from whether my meal is going to come to the table correctly, to who's going to win the Super Bowl. 

I know the chances are low, but I still think it's going to be the Cowboys ... 

How Markets Performed in 2021

2020 was a roller coaster of volatility, and while 2021 was as well, most asset classes saw improvements as the world reopened. 

But it wasn't all smooth sailing.  There were significant supply chain struggles and rising inflation ... not to mention the rising cases of COVID. 

Regardless, markets are not the economy, and while there are numerous factors to think about, I've always found markets interesting. 

via visualcapitalist

2021 was a year of rampant speculation, in part because so many systematic traders underperformed.  For example, Renaissance reportedly saw ~15 billion in outflows last year (despite double-digit returns) as their clients likely moved towards more "exciting" opportunities. 

Of course, some of those "exciting" opportunities were cryptocurrency-related.  Moreover, chasing performance like that is often mean-reverting.  Yet, I've seen a massive increase in interest among various business groups in crypto, Web 3.0, and the Blockchain. 

Cryptocurrencies

While crypto generally performed well in 2021, 2022 has seen a drop that erased over $1 trillion in value. 

via visualcapitalist

The reality is that crypto markets matured a lot in 2021.  The thousands of coins are mostly a distraction, but there are many interesting coins from various sectors with interesting technology behind them.  There is increased infrastructure and decreased correlation between coins.  Unfortunately, not enough to keep this drop from affecting the whole space. 

So the question is, is this a "discount" for people to buy into the space, or a sign of future troubles?

It's no secret that I've always been a fan of Blockchain but cautious of cryptocurrencies. 

I think there is a lot of money to be made speculating in cryptocurrencies, but how much of that money being made is attributed to luck vs. skill?

Crypto's are interesting, in part, because they're a digital currency decentralized over a peer-to-peer network.

The more people are willing to accept it as a medium of exchange, the more valuable it becomes (and the more it becomes a stable store of value).

Supposedly, decentralization provides it safety from censorship and government interference - meaning it has value as an international currency and as a currency for black-market transactions.  But, in my opinion, that remains to be seen (and I consider it unlikely for most cryptocurrencies).

However, the worth of a Bitcoin isn't just based on sentiment (on one hand, there are desires to avoid fiat currency vagaries, government interventions, and scrutiny, while having a fair price discovery method, etc.  ... on the other hand, there are also the costs to mine a Bitcoin, transaction fees, etc. and crypto has recently been under fire for its huge environmental impact).

Compared to a reserve currency – whose worth is primarily influenced by trade value and other macroeconomic factors - watching crypto's volatility can be scary. 

That being said, as adoption increases and more businesses enable it, it's possible that it will continue to legitimize.  For the time being, I remain a long-term skeptic because there is too much working against it. 

Many of my initial complaints are centered on coins as currency.  I get that there are already many interesting uses of Blockchain that will also help to bring credibility to coins as a store of value. 

The question for me is, even if cryptocurrency is here to stay long-term (and avoids government control), which coins will it be?  Do they even exist today?

I'm positive there is money to be made related to the Blockchain, NFTs, and cryptocurrencies.  But, at this point, it's a speculators game, and I think the best way to capitalize on this trend sustainably is to sell picks and shovels for the gold rush, instead of trying to stumble upon gold. 

 

 

Betting On The Super Bowl

Trying to get rich quickly? Want to know if the markets going to be bull or bear this year?

Look no further than the "Super Bowl Indicator".

The theory is 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. 

There is one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start. 

If you accept that caveat, it has been on the money 33 years out of 41 - an 80% success rate. Sounds good, right?

Come on ... you know better.

Here are some other "fun" stock market fallacies:

• 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.  And we probably intuitively understand that correlation ≠ causation. Yet, we crave order and look for signs that make markets seem a little bit 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, ancient wisdom, and 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.

I have a thought experiment I often ask people that come into my office. 

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

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

The answer is about 5% as of 2019 (and that's in a predominantly bull market), and I have to imagine it's only gotten worse in the past two years.  That's significantly worse than chance. That means something they're doing is hurting, not helping. 

via Gaping Void

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

Every second you spend looking at a market is a second wasted.

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

There will never be less data or slower markets.

Onwards.

Visualizing Global GDP in 2021

There are numerous ways to look at or measure the global economy (including trade blocs, big industry movers, or debt). Another way to get a global overview is to compare GDP.

When trading was slower and more deeply tied to an investor mindset, economics played a more significant role in fundamental analysis. As the holding period (or "time in trade") shrinks, there is less focus on predicting markets over the long term ... and more on determining which techniques are making money now.

Even though markets are not the same as the economy, on a macro scale, many believe that it is possible to create value by understanding and the global economy better.  

With that, take a look at the $94 trillion world economy, divided by region. 

 

via visualcapitalist 

Some thoughts: 

• Global GDP was $87 trillion in 2019 and $84 trillion in 2020. So, while COVID did negatively impact GDP initially, it has rebounded and risen again as if 2020 hadn't interrupted the trend. 
• Since 2018, China has been slowly gaining ground on the U.S.'s lead 
• Global GDP isn't zero-sum, so countries doing better doesn't necessarily mean other countries are doing worse 
• The top four countries - U.S., China, Japan, and Germany - make up over half of the world's GDP. 
• Based on GDP growth, Libya, Guyana, Macao, the Maldives, and Ireland have the world's fastest-growing economies. 

To put these numbers in perspective, the world economy was approximately $3 trillion in 1970, and GDP is estimated to double again by 2050. 

Crazy stuff.

How'd These 2021 Predictions Fair?

I write about the future of technology often. 

But, sometimes, it's fun to see what others have to say as well.

Every year Visual Capitalist puts together a list of their predictions for the coming year. As we reach the final two weeks of 2021, I figure it's worth taking a look!

Here was their "bingo card" for 2021.

via visualcapitalist

Honestly, that was a pretty good set of predictions.  While some of this list didn't pan out, much of it did. We're seeing a growing exodus from major cities (where people lived to pursue opportunities previously available only in such places), movies are recovering, and hybrid work models are all the rage. 

Could they have predicted how much of an issue COVID would pose throughout the year? Probably not. 

As we near the end of 2021, there's a lot of uncertainty in the air.

Global markets have the jitters - and we don't see the increased volatility changing anytime soon. 

What's going to happen as a result of the continuing pandemic, inflation, interest rates, the ongoing supply chain issues, and the growing anxiety and unrest brewing underneath the surface of the new normal? In January, we'll get to see VC's predictions. Before that, what do you expect to happen in 2022?

Here Are Some Links For Your Weekly Reading - December 19th, 2021

 

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

Lighter Links:

• The Tech Revolution Has Reached Warp Speed: What Lies In Store For 2022. (VanityFair)
• NFL Postpones Three Games Due To COVID-19 Outbreak. (NBC Sports)
• The NFL Pivots To Less Covid Testing, Not More, To Thwart Disruptions. (WSJ)
• Seoul the First City to Enter the Metaverse. (ThisCityKnows)
• For the First Time In History, a Spacecraft Has 'Touched' the Sun. (ScienceAlert)

 

Trading Links:

• What Will Work Look Like In 2022? Glassdoor Makes Four Predictions. (Protocol)
• Is Bigger Better? Global Debt Reaches a Record $226 Trillion. (EurasiaReview)
• Core Inflation Shoots to Highest Level Since 1992.(Statista)
• The Regional Breakdown of Stock Market Sectors Over Time. (VisualCapitalist)
• Bruce Springsteen Sells Music Catalog to Sony for $500 Million. (The Wrap)

A-To-Z of The Internet Minute in 2021

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. In fact, the amount of data in the digital universe effectively doubles every two years. 

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 (2021 #: 5.2 billion) 
• Facebook has gone from 80 million users to more than 1.4 billion (2021 #: 2.89 billion
• Twitter had 2 million accounts and now it is 300 million and counting. (2021 #: 206 million ACTIVE users after a big bot deletion)
• The number of smartphones was 250 million in 2008 and today there are more than 2 billion. That is an 800% increase! (2021 #: 6.37 billion)

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

Throughout 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 2021?

DOMO via visualcapitalist 

Looking at the list, we see new editions like Clubhouse and Strava. Partially due to the quarantine, you're still 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. 

Just to pick out some of the key figures in the chart this year. 

• Amazon users spend $283,000
• 6M people shop online
• TikTok users watch 167M videos
• and, Zoom hosts 856 minutes of webinars. 

Before 2020, I already thought that big tech had a massive influence on our lives. Yet, somehow this past year has pushed their impact even higher. 

One other thing this chart also helps put into perspective is the rapid rate of adoption. As you look at different year's charts, you can see how quickly apps have become part of the cultural zeitgeist. 

How do you think these numbers will grow or change in 2022?