Capitalogix

Talking AI, Analytics, and Trading With IBM

I'll be speaking at an IBM Webinar on June 18th. The focus is on using AI, analytics, and advanced computing to improve trading research. Click here to sign-up. 

Here Are Some Links For Your Weekly Reading - June 7th, 2020

 

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

Lighter Links:

• How Science Fails. (Aeon)
• When Everyone Can Work from Home, Who Goes Back to the Office? (Quartz)
• Nvidia's AI Recreates Pac-Man from Scratch Just by Watching It Being Played. (TheVerge)
• Demystifying Deep Learning and Artificial Intelligence. (TheNewStack)
• Your Organization Needs a Proprietary Data Strategy. (HBR)

 

Trading Links:

• United Airlines Restores Flights at 150 U.S., Canadian Destinations in July, Add Nonstops. (USAToday)
• Apple Share Price Hits All-time High after Recovering from COVID-19 Losses. (Cult of Mac)
• Zoom Reported a Perfect Quarter. Why Its Stock Reaction Could Suggest Trouble for Much of Tech. (Barrons)
• What Does the Shocking Unemployment Report Really Mean? (The Atlantic)
• Markets are Upside down Right Now as Young Hedge Fund Chiefs Face Their First Crisis. We Dug up What the Biggest Managers from Cliff Asness to David Tepper Said They Learned from Last Major Economic Downturn. (BusinessInsider)

 

Here Are Some Links For Your Weekly Reading - May 31st, 2020

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

Lighter Links:

• SpaceX Launches New Era of Spaceflight with Company's First Crewed Mission. (NationalGeographic)
• Space Exploration's next Frontier: Remote-Controlled Robonauts. (Bloomberg)
• As States Start to Reopen, Here's Where People are Going. (Washington Post)
• Primer: Demystifying Data Science. (TheNewStack)
• Meeter is a New Mac App for Quickly Joining Zoom Meetings, Google Hangouts, and More. (9to5Mac)

 

Trading Links:

• Is China Overtaking the US as a Financial and Economic Power? (TheGuardian)
• Singapore's Financial Centre Will Emerge as Big Winner of a Draconian Chinese Law. (Insider)
• The UN Says a New Computer Simulation Tool Could Boost Global Development. (TechReview)
• U.S. Stock Market is Overpriced by 16%, Warns Oxford Think-Tank. (CCN)
• A Wall Street Firm Studied Every Crash over the past 100 Years and Concluded that the Unusual Performance of 7 Tech Stocks is Masking the Risk of a Prolonged Meltdown. (BusinessInsider)

Here Are Some Links For Your Weekly Reading - May 24th, 2020

 

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

 

Lighter Links:

• We are Doing in a Few Months What Would Normally Take a Drug Development Process Years to Do' with AI. (ZDNet)
• Findings From The AI Index Annual Report. (Stanford-AI)
• Terrifying Black Light Videos Show How Easy It Is to Catch Coronavirus. (BGR)
• Why Zoom Meetings are So Dissatisfying. (Economist)
• Travelers Now Scoring $700 Business Class Flights to Europe with Sneaky Loophole. (DMarge)

 

Trading Links:

• Hertz Files for Bankruptcy after 16,000 Employees Were Let Go. (Forbes)
• One Chart to Catch You up on 2020 ... And the Economy. (HowardLindzon)
• Second Stimulus Check Proposes $1,200 Extra with Round 2. Here's the Situation. (CNet)
• The World's 25 Richest Billionaires Have Gained Nearly $255 Billion in Just Two Months. (Forbes)
• What History Tells Us about the Accelerating AI Revolution. (Wall Street Journal)

Putting 2020's Job Losses in Perspective

Despite rolling re-openings, the economic effects of this "great lockdown" are still mounting. 

More than 36 million unemployment claims have been filed in the last two months - with 3 million coming last week. Over 14.7% of the population is unemployed. 

via NY Times

That being said, just like with COVID-19 cases, we're past the peak. 

Unfortunately, also like COVID-19 cases, the consequences are protracted, and we're unsure if any of our treatment plans are truly alleviating the problem. 

The speed of this shutdown and its impact on employment has been almost unprecedented.

(April 17th, 2020) via visual capitalist

During the Great Depression, unemployment reached 24.9%, and there is no modern equivalent. Today, that would leave 41 million Americans out of work. But the short-term effects of this lockdown are significantly worse than anything in recent memory. 

Luckily, the current crisis is happening on a much faster scale than any of the previous examples. The aforementioned crises generally took several years to happen with unemployment peaking at the tail-end of the recessions. Perhaps we have already passed the peak in only two months?  Same story, different topic ... are the financial markets.  The hit was deeper and quicker than in previous crises, as long as you think the damage has already been done.

Due to this situation stemming from a global pandemic, which resulted in a forced lockdown ... there is an argument to be made for this not being a normal crash.  As a result, there's room for optimism (or skepticism).

Frankly, this is an unprecedented situation.  Governments have taken massive action.  We all know they don't do these types of things during good times.  The question is will it be enough, and if so, for how long? 

Also, actions have consequences.   If governments can really do this, and it works, then why wouldn't they continue?

I suspect because it doesn't really work ... or at least, too much of a good thing is bad for you too.

As normal economic activity resumes, I look forward to seeing how much of the damage is temporary. There are clearly industries that were hit hard - air travel, hotels, etc. - but almost all industries expect to see a rebound. 

Meanwhile, even though Georgia reopened, their initial jobless claims are still rising. Unemployment tracks the business cycle, so as businesses and spending ramp back up, the response should accelerate.  But, it's unclear when that will happen and how protracted the pain will be.

As a reminder, though the lockdown is ending, the economic effects will ripple for a long-time. The length of the ripples depends on our response. 

We live in interesting times!

Selective Attention: What Are You Missing?

Sticking with the philosophy theme, I encourage you to watch this video below on selective attention. 

Daniel Simons' experiments on visual awareness have become famous.  The primary conclusion drawn from his research is that we can miss incredibly obvious things, right in front of us, if our attention is focused elsewhere.

While watching the video, count how many passes the team in white makes. 

This is worth doing so you experience it yourself.

OK, click the video to do it now.

via Daniel Simons and Christopher Chabris (Click Here To Read The Full Paper)

First, did you get the number of passes correct? Second, did you see the gorilla?

If you have already seen this video or heard of the study, it's much easier, but most people absolutely miss the Gorilla, despite it not being hidden. 

Think about how often your focus blinds you to the obvious.

This next video demonstrates "change blindness".  In an experiment, 75% of the participants didn't notice that the experimenter was replaced by a different person.

 

via Derren Brown

Warning: Objects In Your Attention Span Are Fewer Than You Perceive.

It's well known that we often miss objects in our field of view due to limited attention and change blindness, but, it's true with more than just sight. Moment by moment, the brain selectively processes information it deems most relevant. Experiments, like these, show the limits of our capacity to encode, retain, and compare visual information from one glance to the next. 

More importantly, this suggests that our awareness of our visual surroundings is far more sparse than most people intuitively believe.  Consequently, our intuition can deceive us far more often than we perceive.

 

via Pickles

As an entrepreneur, when I focus fully on something, it's as if everything else goes away. That level of focus can be a gift - but it can also be a curse. In Genius Network, we have a form we fill out at the beginning of each meeting. In it is a diagram where you rate your score on 8 factors: physical environment, career, money, health, friends & family, significant other, personal & intellectual growth, and fun & recreation

It's rare that I'm fully succeeding in all 8 ... we only have so much focus and bandwidth, it's inevitable I'll miss things. Clearly, in an information-rich environment, attention is a scarce and essential resource. So, pay attention (or automate the things you know need to be done right, every time).

What are you currently prioritizing, and what's falling to the side due to that focus? What are you missing?

Hope this was a helpful reminder. Let me know what you think about posts like this.  Thanks.

Active Management In The Wake of Pandemic

It's apparent that the first 4 months of the year have been anything but normal ... Challenging to say the least.

The increased volatility and noise tested active managers' mettle intensely and often. While even a blind squirrel finds a nut in a forest (for example, during a bull market ...) this type of environment provides an increased opportunity for both under and outperformance as luck and skill collide. 

History will show that the majority of funds struggled in the first quarter of 2020 - driven by the volatility and uncertainty in the midst of a global pandemic.

Investors pulled out ~$33 billion when asset values initially plunged. Yet, the rush to cash was only the beginning, in the first quarter, asset value plunged $366 billion. Redemptions hit large hedge funds the hardest. Meanwhile, funds with less than $1 billion under management only lost $1.6 billion to net redemptions. 

That being said, as is often the case in both volatile and bear markets - people are checking out the state-of-the-art active management strategies. Interest in hedge funds is at a three-year high, as many people fear that what used to work simply isn't good enough anymore.

I suspect that technology-enhanced strategies will gain ground during the next few years as A.I. and exponential technologies get better and gain traction in asset management, risk control, and data management.  Algorithms will improve, hardware will get faster, digital signal processing will become more accurate, and it will be easier to identify and produce data sources that increase the efficiency, effectiveness, or certainty of outcomes.  The likely result will be a reduction in the cost to produce a unit of alpha, which bodes well for forward-looking investors.

As we slowly move toward normalcy, what can we expect to see?

Institutional Investors are optimistic as well.  Here are selected responses from a survey of 125 institutions.

via Institutional Investor

94% of respondents said that their institutions had done a good job managing response to COVID-19, with 44% believing they'd done very well. This contrasts with their belief on how the government handled the crisis, but shows an opportunity for a strong rebound for businesses. 

In past weeks, I've focused on this crisis as an opportunity for reflection and growth. Personally, I continue to brainstorm ways to combine the old way and the new way to create something better. Institutional Investors express similar sentiment here. 

via Institutional Investor 

As of 4/21/2020, 66% of respondents believe the focus should be on the health of the public, that will likely soon shift to stabilizing the economy, and subsequently shift to growing the economy. 

I believe we'll see similar responses from active managers and from entrepreneurs. This is an opportunity to improve operations, adopt better practices, and set higher standards. 

It doesn't make sense to shoot for going back to where we were.  This much pain and effort likely creates the fertile ground for something better.

Onwards! 

Here Are Some Links For Your Weekly Reading - May 3rd, 2020

 

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

Lighter Links:

• China Has Started a Grand Experiment in AI Education. It Could Reshape How the World Learns. (TechReview)
• I Have Seen the Future And It's Not the Life We Knew. (The Atlantic)
• Army Ranger School is a Laboratory of Human Endurance. (Outside)
• Watch Picasso Make a Masterpiece. (YouTube)
• Michael Jordan Reportedly Once Turned down a $100 Million Appearance Fee. (FTW)

 

Trading Links:

• Buffett's Berkshire Posts Nearly $50 Billion Loss as Coronavirus Causes Pain. (Reuters)
• Bets against the Stock Market Rise to Highest Level in Years. (Wall Street Journal)
• NYSE Research Shows Humans on Exchange Floor Limit Volatility, COO Says. (Cheddar)
• Nasdaq, Cboe Fix Feeds Facing Options Overload. (WatersTechnology)
• China's National Blockchain Will Change the World. (CoinDesk)

 

Elon Musk's Twitter Tirade

Elon Musk wiped $14 billion dollars (9.5%) off Tesla's value with one tweet. 

He went on a Twitter tirade focused on the unfairness of COVID-19 lockdowns, on selling all of his personal possessions, and singing the Star-Spangled Banner. 

The tweet that took the cake was "Tesla stock price is too high imo" (in my opinion).

via Elon Musk

Musk also announced that he and his girlfriend, Grimes (who is a musician), are scheduled to have their baby on Monday.

Back to business ... remember that Musk has run afoul of the SEC for tweeting about Tesla shares in 2018, when he tweeted about potentially taking Tesla private. That is was recently settled. As part of that, Musk agreed to a pre-approval process for tweets that included public statements that could move Tesla's stock price. 

Perhaps he forgot? 

Sometimes, less is more!

Here Are Some Links For Your Weekly Reading - April 26th, 2020

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

Lighter Links:

• Harvard Professor Wants to Ban Homeschooling Because It's Authoritarian'. (NYPost)
• Amazon Asks Workers to Request Leave If They Continue Staying at Home. (EnGadget)
• You Can Now Download the Government's Controversial Contact Tracing App. (Timeout)
• A Startup is Pitching a Mind-Uploading Service that is 100 Percent Fatal. (TechReview)
• Burning Man is Going Virtual, and So are the Orgies. (Vice)

 

Trading Links:

• This Pandemic is Over. Let's Stop the Economic Suicide, and Get Back to Work. (RealClearMarkets)
• Negative Oil Prices Were a Warning, Not an Anomaly. (Bloomberg)
• Ken Fisher on Nixing the VIX. (RCM)
• Hedge Funds are on Defense and Testing the Stamina of a $5 Trillion Stock Rally. (Bloomberg)
• Who's On Top in the S&P 500 Before and After the Coronavirus?(SeekingAlpha)