Capitalogix

Here Are Some Links For Your Weekly Reading - October 10th, 2020

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

Lighter Links:

• The Quantum Internet Will Blow Your Mind. Here's What It Will Look Like. (Discover)
• The US Military is Trialing Augmented Reality Goggles for Dogs. (CNN)
• Modern Science Didn't Appear until the 17Th Century. What Took So Long? (NYT)
• Qantas Airways 'Flight to Nowhere' that Sold out in Minutes Takes Off. (FoxNews)
• What Really Happens When You Become an Overnight Millionaire? (Marker)

 

 

Trading Links:

• Tesla Plans to Offer Machine-learning Training as Web Service with Its New 'Dojo' Supercomputer. (Electrek)
• Analysis: We Read the Antitrust Case against Amazon, and these are the Key Takeaways.  (GeekWire)
• Father of VIX Warns Options Glitch is Costing Investors Millions. (Bloomberg)
• Economists are More like Storytellers Than Scientists Don't Let the Nobel for Economic Sciences' Fool You. (TheConversation)
• The Stock Market Won't See the Bullish Outcome It's Expecting from a Biden Win Unless There's a Full Blue Wave, a JPMorgan Stock Strategist Says. (BusinessInsider)

How Machines Learn: Big Brother Is Watching

The ubiquity of Machine Learning algorithms remains a topic of interest because we, as a society, still haven't come to terms with what "acceptable" use looks like, and what privacy looks like in the post-AI world. 

Algorithms are helping you pick out your next gift on Amazon, controlling what you find on Google, they're suggesting new music for you on Spotify, and they're doing their best to keep you on their website.

They're following you in stores, on the streets, and many would argue they're tracking your phone calls, text messages, and more. 

With all that being said, I do think it's important to have a cursory knowledge of the things that impact our lives ... so, even if you're not an AI-aficionado, I think it's important to somewhat understand how machines learn, and how powerful they're becoming. 

The video is a bit simple in its explanations, but it describes some important concepts.

 

CGP Grey via Youtube

The video focuses on Genetic Algorithms, which is one type of machine learning – and neglects some of the other more complicated approaches.

As machine learning gets more complicated and evolved, it gets harder for a human to understand what makes it good … and that's okay. Understanding the direction AI is heading is more important than truly understanding the intricacies. 

It's human nature to feel safer when we understand something. It's human nature to envision machines as making human-like decisions, just faster.

Of course, just because it suits human nature to believe something, that doesn't make it true. 

Part of what makes machine learning exciting is that it can do a lot of things well that humans are really bad at. 

In reality, it doesn't matter why a bot is making a decision, or what inputs the bot is making the decision on. What matters is the performance and level of decision-making in relation to itself and to other options (and whether the bot is biased).

With respect to trading, focusing on the markets is a distraction.

For the most part, I don't care how markets are doing.

I care how our systems are doing and I care how the portfolio is doing.

It's a brave new world, and not only is big brother watching, but algorithms are too.

Live long and prosper!

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)

 

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)

 

 

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)

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.

Data Really Is Beautiful

I think most data scientists or traders would agree that some charts are just prettier than others.

Whether it's due to the artistry of the creator, the results shown, or an insight or perspective illuminated ... I am sometimes surprised by the beauty of a chart. 

After looking at thousands of charts, some really do look "pretty" and others look "ugly" to the trader.  Perhaps this stems from an intuition honed through many trials of separating luck from skill?

Taking a different approach is Stoxart, created by a visual designer at Nike named Gladys Orteza.  She has been turning stock charts into landscape artworks related to the company they reference.  All that's missing is the warning that past performance doesn't guarantee future results.

Here is an example of her art inspired by Ford's performance in the last year.  Maybe she should have titled it "Sunset".

via LLMoonJ

 Another fun one is a year of Tesla performance. 

via LLMoonJ

Here's a link to see more Stoxart. 

My Talk With The Sustainable Family Wealth Summit

I recently had the chance to speak at a wealth summit helping to educate family offices on the different opportunities available to them. Because of my work around the hedge fund space - and with emerging technologies like AI - I was brought in to focus on both topics for their audience.

The financial industry is intimidating - especially to newcomers - and while this summit is targeted towards family offices with $5MM+ in liquid assets, the lessons are accessible to any level of wealth. 

The presentation was somewhat of a departure from my normal talking points because it was more focused on the basics of hedge funds & trading in general.  Nonetheless, I think it's worth watching.  This clip shows my response to the moderator's previous presentation.  The presentation provides an introduction to hedge funds and alpha generation now and into the future.  We also talk about Madoff, performance fees, the 2008 crash, "why a hedge fund?" and a lot more. 

 

 

Hope that helped.  Let me know what you think.