Capitalogix

Here Are Some Links For Your Weekly Reading - September 15th, 2019

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

Lighter Links:

 

• New Blood Test Accurately Predicts When People Will Die within 5-10 Years. (BigThink)
• What Brain Supplements Can and Can't Do, According to a Neuroscientist. (FastCompany)
• The No. 1 University in America Now Comes with a Total Sticker Price of Over $293,000. (MarketWatch)
• Tim Cook Used a Specific Communication Strategy in Apple's iPhone Keynote. Here's Why Every Public Speaker Should Too. (Inc)

 

Trading Links:

• Counting on a Black Swan Event? There's an ETF for That. (Bloomberg)
• Jack Ma Ends 20-Year Reign at Alibaba with $41.8 Billion Net Worth. (Fortune)
• China's New Digital Currency Could Encourage Worldwide Use of the Yuan, Says CEO. (CNBC)
• The US Deficit Topped $1 Trillion. the Year's Not Even over Yet. (CNN)
• Trashing Fed 'Boneheads,' Trump Calls for Central Bank to Cut Interest Rates to 'ZERO'. (Politico)

 

(Re)Inventing The Wheel

When I think about the invention of the wheel, I think about cavemen.  But that isn't how it happened.

Lots of significant inventions predated the wheel by thousands of years.  For example, woven cloth, rope, baskets, boats, even the flute were all invented before the wheel (and apparently not invented by cavemen).

While simple, the wheel worked well (and still does).  Even now, the phrase "reinventing the wheel" is used derogatorily to depict needless or inefficient effort. But how does that compare to sliced bread (which was also a pretty significant invention)?

Despite being a hallmark of innovation, it still took more than 300 years for the wheel to be used for travel.  With a bit more analysis, it makes sense. In order to use a wheel for travel it needs an axle, and it needs to be durable, and loadbearing, requiring relatively advanced woodworking and engineering. 

 

 

All the aforementioned products created before the wheel (except for the flute) were necessary for survival.  That's why they came first. As new problems arose, so did new solutions.

Necessity is the mother of invention. 

Unpacking that phrase is a good reminder that inventions (and innovation) are often solution-centric. 

Too many entrepreneurs are attracted to an idea because it sounds cool. They get attracted to their ideas and neglect their ideal customer's actual needs. 

If you want to be disruptive, cool isn't enough. Your invention has to be functional, and it has to fix a problem people have (even if they don't know they have it.) The more central the complaint is to their daily lives the better.  

 

Henry Ford famously said: “If I had asked people what they wanted, they would have said faster horses.”

Innovation means thinking about and anticipating wants and future needs.

Your customers may not even need something radically new. Your innovation may be a better application of existing technology or a reframe of best practices. 

Uber didn't create a new car, they created a new way to get from where you want with existing infrastructure and less friction.

What Does The Average NFL Player Look Like (By Position)

Football season is officially underway! In honor of that, here's a look at each position's composite player!

As you might expect, different sports have a different ratio of ethnicities. For example, you might expect more Pacific Islanders in Rugby or Asians in Badminton.

The same is true for different positions on a football team.  Apparently, offensive linemen are more likely to be white while running backs are more likely to be black. 

Here is a visualization that shows what happens when you average the top players' faces in various positions?

osmutiar via Reddit

Composites are interesting.

While you may be thinking "this player must be unstoppable" ... statistically, he's average.

The "composite" NFL player would be the 848th best player in the league. He's not a starter, and he plays on an average team. 

We found the same thing with our trading bots.  The ones that made it through most filters weren't star performers.  They were the average bots that did enough not to fail (but failed to make the list as top performers in any of the categories).  The survivors were generalists, not specialists.

In an ideal world, with no roster limits, you'd want the perfect lineup for each granular situation. You'd want to evaluate players on how they perform under pressure, on different downs, against other players, and with different schemes. 

That's what technology lets you do with algorithms. You can have a library of systems that communicate with each other ... and you don't even have to pay their salary (but you will need data scientists, researchers, machines, data, alternative data, electricity, disaster recovery, and a testing platform).

You won't find exceptional specialists if your focus is on generalized safety. Generalists are great, but you also have to be able to respond to specific conditions.

Onwards.

Getting Used To A New Normal

In the first part of this exercise series, I talked about mindset and action.

In Part 2, I talked about normalizing your habits and picking consistent, normalized metrics. This doesn't just work at the gym; it applies to life and business as well. 

Today, I want to explain how and why this helps. To do so, we will talk about controlling your arousal states. 

Watch the video, it is only 90 seconds.

 

 

Chemically, most arousal states are the same.  Meaning, the same hormones and neurotransmitters that make you feel fear also can make you feel excited.  They affect your heart rate, respiration, etc.  ... Though, the outside stimuli you experience likely determines how you interpret what is happening.  

In most situations, a heart rate of 170 beats per minute is an indicator of extreme danger (or an impending toe-tag).  If I felt my heart racing like that in a meeting, it might trigger a fight or flight instinct.  I prefer conscious and controlled responses.  So, I train myself to recognize what I can control and to respond accordingly.

One way I do that is by being mindful of heart rate zones during exercise.  

My goal is to get as close to 170 bpm as I can, then stay in that peak zone for as long as possible.

Here is a chart showing a Fitbit readout of an exercise session.

 

As you can see, every time I reach my limit ... I get my heart rate back down.  It becomes a conscious and controlled learned behavior.

Here is a different look that shows effort based on my maximum heart rate.  It is from an app called Heart Analyzer.  

 

 

Recognizing what this feels like is a form of biofeedback; it's not only gotten me better at controlling what happens after my heartrate reaches 170 but at identifying when I'm close – even without a monitor. 

Now, when my heart rate is at 170 bpm (regardless of the situation), I don't feel anxious ... I think about what I want to do. 

I currently use an Apple watch with the HeartWatch app to measure heart rate during the day.  The Oura Ring is what I use to measure sleep and readiness.

These are useful tools.

It's the same with trading ... Does a loss or error harsh your mellow – or is it a trigger to do what you are supposed to do?  

Getting used to normalized risk creates opportunity.  

When you are comfortable operating at a pace, or in an environment, that others find difficult – you have a profound advantage and edge.

Here Are Some Links For Your Weekly Reading - September 1st, 2019

 

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

Lighter Links:

• Google and Amazon Use Smart Speakers for 'Surveillance,' Top Tech Investor Says. (Finance)
• Streaming TV is about to Get Very Expensive Here's Why. (TheGuardian)
• Professional Video Game Player Signs Deal with Adidas. (CNW)
• Giant Virus Has Evolved Its Own Kind of CRISPR to Destroy Invaders. (NewScientist)
• Pole-Dancing Robot Strippers' to Perform Next to Human Dancers on Stage at Nightclub. (TheSun)

 

Trading Links:

• Surprise, Surprise, Warren Buffet Was Right: Machine-Managed Investment is a Better Bet. (Forbes)
• How ETFs Swallowed the Stock Market. (Wall Street Journal)
• Do We Really Want a Microsoft of Marijuana? (New York Times)
• Businesses Can Now Claim Their Trademark Blockchain Domains, Before It's Too Late. (Finance)
• Ray Dalio Warns of 'Serious Problems' and a Bond 'Blow-off' as a Repeat of the Late 1930S Looms. (CNBC)

 

 

Measuring Normalized Behavior – Stop Worrying and Love The Pain

When your doctor tells you that you are fat, it is easy to discount (because you pay them to tell you that).  When your massage therapist tells you that you are getting fat, you've got to listen (because they're trying to be nice to get a better tip).

Well, for the past two months, I've been getting back into fitness.

I used to be a competitive athlete.  In the past, for me, exercise was about gaining an edge and competing better.  In a sense, that is still true (just on a different field).   Now, I work out to stay healthy, fit, and vital while managing the challenges of running a company, navigating an overbooked calendar, and traveling every week.

In my last post on mindset and action, I talked about the habit of conditioning yourself to take the next best step.

This is about focusing on the right things so you can best measure progress.

 

 

Normalizing your habits and picking the right metrics isn't just a habit for the gym.  It's a habit you should pick up in life. If you don't set the right measuring stick you'll always be unhappy or underperform. 

Plan forward – but measure backward ... you have to make sure you're not so focused on the horizon that you don't track what you've accomplished. 

Normalizing the result makes this easier and better.

In running, for example, it is the time it takes me to finish one mile, while never going above 170 heartbeats per minute.

Meanwhile, in trading, we do this by comparing different opportunities based on a constant risk level (for example, the expected return for the next day of $1M, assuming a 2% maximum drawdown).  It doesn't matter what market we trade, or how many trades the system makes ... we can make a fair comparison and get better insights about performance.

Hope that helps.

Here Are Some Links For Your Weekly Reading - August 25th, 2019

 

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

 

Lighter Links:

• How to Take a Moneyball Approach to Business Data and Analytics. (TechRepublic)
• The Best Books on Philosophy of Technology. (FiveBooks)
• Explainer: What is Quantum Machine Learning and How Can It Help Us? (The Conversation)
• Most Top AI Researchers in the U.S. are Foreign. (Axios)
• Alien Life on Exoplanets May Be 'More Abundant and Active' Than on Earth, Say Scientists. (Forbes)

 

Trading Links:

• Burgundy Wine Investors Have Beaten the Stockmarket. (Economist)
• Bonds are the Most Expensive They've Been in 64 Years. Here's What That Means for Your Portfolio. (Fortune)
• What is High-Frequency Trading and How Does It Work? (TheStreet)
• The CEOs of Nearly 200 Companies Just Said Shareholder Value is No Longer Their Main Objective. (CNBC)
• Bugatti is Making Only 10 of these $9 Million Supercars. (CNN)

What Are The Most Important Issues Facing The U.S. Today?

According to a Gallup poll, these are the most important issues facing the U.S. today. 

via Statista

In July, immigration topped the list, presumably by people on one side of the political spectrum, followed by the government (likely by people on the other side of the spectrum). 

Surprisingly to me, the economy and the trade war were nowhere to be found. 

Whether or not we have to worry, they seem fairly germane issues. I started writing an article on yield curves and the fear of recession before realizing our Chief Investment Officer, John DeTore, was already writing his own letter on it. So, I'll deal with some of the surrounding issues here.

To start, the U.S. imports nearly 4.5x what it exports to China. 

via howmuch

While the USA's GDP is the highest globally, China is gaining quickly. 

Meanwhile, China is still the biggest holder of U.S. debt – and is currently allowing the Yuan to weaken to try and make its products more competitive and offset tariffs. 

It feels like we're losing some ground.  But, everybody seems to feel that right now.  The next chart shows that sentiment about the economic situation has been globally gloomy.

 

via Statista

Everything seems different, yet everything seems the same.  Markets tend to climb a wall of worry before falling off a cliff ... and then repeating the cycle.

Trends continue until broken.

Seems like a time for caution.  But, historically, times like these seem to have great opportunities hidden in them. 

Onwards!

Here Are Some Links For Your Weekly Reading - August 18th, 2019

Larry Kudlow confirmed that Trump wants to buy Greenland.

 

 

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

 

Lighter Links:

• MIT's New Interactive Machine Learning Prediction Tool Could Give Everyone AI Superpowers. (TechCrunch)
• Why You Need Innovation Capital and How to Get It. (HBR)
• The Myth of Rational Thinking. (Vox)
• The Hotel Hackers Are Hiding In The Remote Control Curtains. (Bloomberg)
• Watch the Meaning of Life: One of the Best Animated Short Films Ever Made Traces the Evolution Life, the Universe & Beyond. (OpenCulture)

 

Trading Links:

• Amazon's Most Lucrative Business is Headed to Space. (Quartz)
• Training a Single AI Model Can Emit as Much Carbon as Five Cars in Their Lifetimes. (TechReview)
• These Indicators Show Where You'll See the Eventual Recession Hit First. (Globe&Mail)
• Big Techs Raise Important Issues Globally beyond Traditional Financial Risks. (Forbes)
• We are Very Close to Peak Fintech, with More Than 10,000 Startups Jumping into the Boom. (Quartz)

Finding A Way – Just Do It!

It's hard to fight Mother Nature.

Willpower isn't always enough. 

The trick is recognizing that you can create conditions that make your success much more likely.

No matter how much internal resolve you have, changing the story you tell yourself, and the environment you create for yourself, are reliable ways to make meaningful and lasting change.

Is How You Do Something, How You Do Everything?

On some level, I think so.  To make the point, let me start with a brief story. 

I was at the gym and getting pretty close to the end of my workout.

Frankly, I was at a point where being done was way more attractive than the option of doing additional exercise.

Over time, I've developed many habits and beliefs that focus on finding the best next step - or a way to do just a little bit more. So this time, I used reverse-counting to help me finish that workout strong.

I started with 10 push-ups. I know I can do 10 push-ups, even at the end of a hard workout. Without putting my knees down, I can rest in plank position for a moment or two ... then I do nine more push-ups. That has to be easier than 10, right? Then eight more ... seven ... six. You get the point.

Each set is a little bit harder than the one before; but mentally I'm prepared for it, and can convince myself that I'm so much closer to the goal.

So I get to three, and sweat is dripping off my nose, my arms are shaking, and my hips want to sway. Somehow knowing that there are only two more sets, then only one more, allows me to finish.

That story could have been about creating profitable trading systems, developing a new database, or recovering from a setback.  It's about finding a way, regardless of external circumstances.

Finding a Way to Do Just a Little Bit More.

There are many times that it seems easier to do nothing, or to give up. That's just not my nature. It's not in my "nurture" either.

My father used to say that the secret to success was getting up. What he meant was that if someone knocked you down 10 times, then the secret to success was getting up 11 times. And if someone knocked you down another time, then the secret was to get up 12 times. There's a lot of truth in that.

I laugh when I think of all the little things I do that condition me to take the best next step. Here are a few examples of small things that help define that mindset.

• I never stop reading until I finish a chapter.
• Also, when I play a strategy game on my iPhone, I never stop until I win.
• And, when I play a strategy game that I'm good at, I never stop until I achieve a certain score. 

It doesn't matter if I'm frustrated or tired.  I find a way.  Each of these things, in its own small way, helps condition me to know that I can do anything I commit to do.  Ultimately, what that means is that regardless of what happens, my outcome depends most on what I choose to do.

Sometimes these habits seem silly, quirky, or even a little bit OCD to me. Yet, they serve me.

Many benefits come from knowing that the game's not over until you say it is ... or until you win.

Moreover, it's comforting to know that there's always a best next step, or at least a different perspective that will create new opportunities and possibilities.

I tend to take that perspective in business as well. We focus on the progress we're making, and what that makes possible, rather than how far we are from the ultimate goal. Why? Because, as we continue to make progress, the things we shoot for are bigger and farther away. Focusing there would always show a shortfall. Obstacles and setbacks become the raw material for new growth, ideas, and strategies.  The trick is getting back up, isn't it?

Sometimes the best advice is simple. Nike got it right in their ad ... Just Do It.