Capitalogix

It's a Quant World

Just finished speaking at an algorithmic trading conference, called QuantWorld, in Toronto.

 

AI, big data, and high-performance computing are getting cooler ... in a nerdy way.

At this show, data and methods were the focus ... showing a shift from hardware and low-latency. 

Skynet is turning on!

Woo Hoo!

Eight Major Forces Shaping Our Global Economy

In trading, the holding period (or "time in trade") is shrinking.  Consequently, there is less focus on predicting markets ... and more focus on determining which techniques are making money most predictably.

Markets are not the same as the economy ... and on a macro scale, it is possible to understand and predict the major forces shaping our global economy.

Jeff Desjardins, of the Visual Capitalist, recently highlighted some of the major forces that are changing our global economy.  Here is a summary.

 

The Tech Invasion ... and its Accelerating Progress

 

If you were to look at the biggest companies globally - almost all of them are in tech. Fifty years ago, the largest companies were in commodities (like oil, steel, etc.). Even 5 years ago, the biggest companies were widely "goods" centric. 

 

via Visual Capitalist

But it's more than just the biggest companies. We're experiencing a technological revolution in many subspaces - AI, 3D printing, gene editing, quantum computing, etc.   

Yet, for all the change and disruption we've experienced until today - understand that it is going to get faster, and more pronounced, in the future. 

And, it isn't just the tech that is new.  The pace of its adoption across industries is a game-changer as well.

 

via Visual Capitalist

We are at a point where new technology often gets released before the previous iteration can fully take hold and mature.

It is not just trading that is getting faster, product cycles are compressing, and foundational technologies are disrupted and replaced (or made obsolete) faster than ever as well.

Even global adoption cycles have become viral and near instantaneous.  Think about how fast Pokemon Go (AR) got adopted, or new Smartphones became mainstream.

 

The Evolution of Money, a Changing Wealth Landscape, ... and China

 

Money's definition is changing.  Cash is becoming less common (with the increasing use of credit cards, electronic payments, and payment services like Paypal, Venmo, and ApplePay).  In addition, the public has maintained its interest in cryptocurrencies.

Ultimately, our perception of money may radically change how global economies work. 

On top of that, money is changing hands, the ultra-wealthy are from different industries than before, and the wealthiest countries & companies widely influence politics. 

 

via Visual Capitalist

Consider the economic rise of China. Even though we've been watching China grow for decades, the scope of its population and economic impact can still be difficult to understand. China has over 100 cities with more than 1,000,000 inhabitants.  Even scarier, perhaps, is that China now has more honor students than we have students. 

 

Conclusion

 

Obviously, the global economy is changing.  To see more about the eight forces shaping it, read this.

We live in interesting times.

Onwards.

Visualizing the Global Economy

I've recently been spending more time with economists, while we're not always on the same page when it comes to the interplay with trading, I still find economics interesting. 

Trump's impact on global trade and politics will also be interesting to quantify. 

Take a look at the world economy divided by region (Mexico is part of Latin America for the sake of this graphic). 

 

via howmuch

Some thoughts: 

• Russia probably has the biggest disparity between GDP and land mass.
• This doesn't tell us anything about economic growth, would be interesting to compare this five years ago, and five years from now.  
• Global GDP isn't zero-sum, so this circle can theoretically grow.
• Top 3 economies were the U.S., China, and then Japan (with a large drop between each economy).
• The top 4 countries account for over 50% of GDP.

It will be interesting to see the way Trump's tariffs will affect the world. There are potentially hundreds of billions in annual revenue that would be affected. 

 

 

Here Are Some Links For Your Weekly Reading - November 4th, 2018

Reminder: election day is this Tuesday. 

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

Lighter Links  

• Radical Candor the Surprising Secret to Being a Good Boss. (FirstRound)
• 21 Lessons from Jeff Bezos' Annual Letters to Shareholders. (CBInsights)
• When the 80/20 Rule Fails: the Downside of Being Effective. (JamesClear)
• Stephen Hawking's Final Book Tackles the Big Questions. (BigThink)
• This Chart Shows How Everything Has Changed since Trump Became President. (CNBC)

 

Trading Links

• What Investors Can Learn from Gamblers. (Wall Street Journal)
• A Wealth Management Point of View on Blockchain and Bitcoin.(TheReformedBroker)
• Google Drops out of Pentagon's $10 Billion Cloud Competition.(Bloomberg)
• Bezos Sets New Wealth Record, Losing $19.2 Billion over Two Days.(Bloomberg)
• Godfather' of Chart Analysis Says Damage Done to the Stock Market' is Much, Much Worse' Than Anyone is Talking About. (MarketWatch)

Is the Market Sell-off Going to Continue?

October has been tough on equity markets this year. 

For example, the S&P 500 opened to a sea of red this past early last week.

 

 

McDonald's was one of the few green spots on that heat map.  Which reminds me, Mickey D's is becoming a little more modern by adding online and touchscreen ordering.

For some context, the S&P is on pace for it's worst sell-off since 2010 ... while the NASDAQ hasn't been hit like this since post-Lehman in 2008. 

Is it a correction or a blip?

Historically, midterm elections inspire uncertainty among investors that dissipates quickly as soon as they're over. Once that uncertainty is resolved, the S&P gains an average of 31% the following year.

Markets exist to trade ... and confusion is a primary catalyst.  As such, many people believe the market will rally ... while others believe that the traditional midterm effect could be blunted. 

For all the confusion in today's society, it's good to see that some things don't change.

Onwards.

Farm Tank Podcast - AI Trading, The Cowboys & Pablo Escobar

I was recently on Jordan Van Trump's Farm Tank podcast. 

On the podcast, we talked about artificial intelligence & trading, the Cowboys, my trip to Columbia, and a bunch of other things. 

Worth a listen. Check it out. 

Here are some highlights:

• "You have to really enjoy the people you do business with. It's important to know who's fun to be around, who's going to be a net add, who's going to create energy, and who's going to have ideas." (5:55)
• "I had a computer. Back then, only secretaries typed. I had a lot of people telling me it looked bad for a lawyer to have a computer, but I loved it and pretty quickly it became a competitive advantage." (15:20)
• "One of the most important business lessons I learned is you have to understand what you want. So much of what I see in business is people telling me what they don't want." (19:00)
• "I found that 10 times better is often easier to achieve than 10% better. If you're going for a 10% change, then you're bringing the past forward and you're trying to figure out what you can adjust." (20:00)
• "Learning and growing are huge. For me, it's about raising the standard, getting comfortable with being uncomfortable, seeing the bigger picture, and creating breakthroughs. In order to do that I surround myself with people who think differently." (22:45)
• "There's a difference between good and great and that difference is infinitesimal. You have to find not only what you're excellent at, but also what gives you energy because every day you fight the good fight and compete with everybody else."(58:00)

 

I'll be at The Van Trump conference, in Kansas City, on November 28th. Hope to see you there.

Does Entry Level Still Mean Entry Level?

We often hear millennials complaining about today's job climate.

How can I get job experience if I can't even get a job to get experience?

 Is there any validity to that belief system?

Apparently, yes. 

According to TalentWorks, after analyzing a random sample of over 95,000 job listings they discovered that 61% of full-time "entry-level" jobs require 3+ years of experience. 

 

via TalentWorks

Turns out "Experience Inflation" is a real thing.  Brings context towards the shift away from traditional education I mentioned a couple months ago. 

TalentWorks also found that three, five, and eight years are the magic numbers for upgrading your job title.

Mid-level jobs open up to you after five years, and senior level jobs open up after eight.

I guess Millennials get a pass on this one ... just this once. 

With that said, we've had great success with the few high school interns we hired.  Perhaps the passion and interest that caused them to look for serious work, so early,  was a great way for them to get experience (and an early indicator of true talent)?

Something To Celebrate ...

Capitalogix hosted a party for a private group of investors, partners, and friends this week.

 

 

We celebrated how far we've come and how excited we are about where we're going. 

I am grateful for all the help and advice that got us here.  If the past is any predictor, we're going to need a lot more. 

Thanks for being a part of our journey.

Onwards!

Entrepreneur Weekly Podcast - AI and the Futures Industry

You are the average of the five people you spend the most time with.  ~ Jim Rohn

 

Surrounding yourself with the right people, and joining peer groups like Strategic Coach, Genius Network, Vistage, or the Entrepreneurs' Organization is vital to your growth. They bring together brilliant minds and industry transformers together in forums focused on innovation, creative disruption, and possibility. 

Peer groups help you set (and raise) standards. They help bring new capabilities, but also new possibilities, new found energies and a reconnection to your purpose, mission, and values. 

If you're not ready for that commitment, listening to podcasts from those people that have done what you want to do and gone where you want to go is a great step towards reaching those same goals.

In that vein, I recently went to Alaska with some friends.  While there, I got to be on Entrepreneur Weekly with some of my close friends from Genius Network.

The following podcast features me and these guys:

• Nick Nanton of DNA Films - an Emmy award-winning director and powerful storyteller
• Mike Koenigs of You Everywhere Now - a serial entrepreneur and 13-time #1 bestselling author 
• and Randy Garn, CMO of Skipio

 

The entire episode is less than 39 minutes. My piece starts around the 11:30 mark and goes for about 5 minutes.  I open with a pretty big claim ... Check it out! 

 

Pursue Passionately 

 

If you understand what you really want and if you focus on that, rather than what you don’t want or all the things that are wrong; as long as you’re moving in that direction, and you don’t give up,  the result is inevitable.  ~ Howard Getson

 

When I was a kid, I couldn't imagine being where I am today ... nor could I imagine the path that took me here. 

Looking back, it all makes sense. I didn't always know where I was going ... but I was passionate about business, and I was driven towards a greater purpose.  From selling painted sand terrariums at the farmer's market to building an artificial intelligence powered hedge fund there's a common thread and a driving force. 

Don't be afraid to take the risks that may injure your present to make way for your future. 

 

The Fourth Industrial Revolution

 

The advent of AI is going to be as dramatic for society as the invention of electricity.  ~ Howard Getson

 

Artificial intelligence will solve problems and create opportunities on a scope and scale that is beyond our current comprehension. 

I was lucky to be in the right place at the right time to build this company and capitalize on this opportunity.  Realize, however, that I had to recognize the vision before there was an opportunity to capture. 

Life is about making your future bigger than your past.  There are plenty of opportunities out there if you know what you want.

Let me know what you are passionate about.  I'd love to help.

A Rennaissance in Mathematics: The Mathematician Who Cracked Wall Street

Jim Simons is a mathematician and cryptographer who realized that the complex math he used to break codes could help explain financial patterns – and he made billions because of it in his notoriously secretive hedge fund firm called Renaissance Technologies. 

He is famous not only for the duration of his success and the size of his results ... but also for the way he made his money (with much lower volatility and risk than his peers and competitors). 

His background is impressive.  Simons taught at Harvard and MIT and worked with the NSA.  Here is a video where he shares some thoughts in a 2015 TED talk interview.  It's worth a watch. 

 

TED via Youtube

Interesting stuff ... I hope you got something from it. 

Despite advanced math still being a mystery to many,  most rely on it more than ever ... for example, look at what we're seeing with the growth of machine learning and AI.

 

The Heart of AI is Still in Humans

 

Simons built a team of mathematicians whose motivation was doing exciting mathematics and science (rather than hired guns who could be lured away by money).

That doesn't mean money wasn't a motivator, but it hits on something important. 

The heart of good math and good AI will always benefit from the quality of the humans around it. You still have to champion integrity, culture, and purpose.

 

Better Math as a Competitive Advantage

 

We stayed ahead of the pack by finding other approaches and shorter-term approaches to some extent ... but the real thing was to gather a tremendous amount of data – Jim Simons

 

If you've been to our office, or heard me speak, you know how important I believe those ideas are to continuing prosperity. 

Constant innovation on a massive scope and scale create more ways to win.

Onwards!