Capitalogix

Ending The World With A Paperclip

Every week I send out an e-mail on Fridays with 20 light links and 20 market-moving links. If you're not getting that e-mail, you can sign up here. On Sundays, I send out our weekly commentary (which this article is a part of, along with 5 new light links and 5 new market-moving links (you can sign up here).

My son sees the links before they're posted. He was interested in one of this week's links - The Way the World Ends: Not with a Bang But A Paperclip. 

As a result, he played the game Paperclips to completion.  While he characterizes it as “wasting a whole night,” I think it gives us insight into the addictive nature of clicker games and into how the world as we know it could end with a paperclip. 

There are spoilers ahead, so if you intend on wasting three hours on a browser game, you may want to skip this article ... no, you're good? OK, here it is. 

Frank Lantz via Decision Problem

The game starts with you clicking a button to create paperclips but quickly spirals from there. Through setting up automation to create paperclips and then to have it start automatically buying the wire for you, you begin focusing on other projects - specifically creating a better trading algorithm to leverage the money you're making and improving your company's AI and Quantum Computing capabilities. 

Hmm, starting to sound familiar ...

Initially, your AI is focused purely on maximizing paper clip demand and production.  It can increase marketing to increase demand and make your autoclippers more efficient to produce more paperclips per unit wire. If you look at the projects in the above screenshot you can see projects like: 

• Full Monopoly - Establish full control over the worldwide paperclip market
• Global Warming - A robust solution to man-made climate change
• HypnoDrones - Autonomous aerial brand ambassadors

Projects like curing cancer or solving global warming gain trust and allow you to invest more money in processors and memory (which end up setting you up to take over the world.)

Fast forward to Zach beating the game ...

Frank Lantz via Decision Problem

When you release the HypnoDrones all of the resources become available for Paperclip production, and you gain full autonomy. Your inner benevolent dictator feels satisfied and your mother’s expectations for your potential are partially fulfilled.

At this point in the game, Zach had created less than half a billion paperclips but was worth several billions of dollars. It took him 2 hours and 44 minutes to beat the game. 

Is it a game, a parable, a prediction – or an advanced intelligence’s test of human nature?

 

Here Are Some Links For Your Weekly Reading - February 16th, 2020

 

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

Lighter Links:

• Growth Mindset vs. Fixed Mindset: Which One Do You Have? (Addicted2Success)
• 5 Soon-to-Be Trends in Artificial Intelligence and Deep Learning. (Forbes)
• How Many Hours of Sleep is Enough? Age Chart Shows What You Need to Feel Rested. (Inverse)
• The Way the World Ends: Not with a Bang But a Paperclip. (Wired)
• Drinking Alcohol Every Day Can Speed up Brain Aging by One Week Per Session, According to a Study of More Than 17,000 People. (Insider)

 

 

 

Trading Links:

• Tesla Stock is Soaring. Madness or Visionary Investing? (APNews)
• The Decade That Completely Transformed Venture Capital. (Quartz)
• The 13 Hottest IPOs to Watch for in 2020. (Kiplinger)
• The Edison of the Slot Machines. (TheParisReview)
• Elon Musk's Mind-reading Technology Could Be about to Take a Big Leap Forward. (ZDNet)

Pay-To-Play: Bloomberg 2020

Mike Bloomberg is spending an astonishing amount on his presidential run. Something you can do when you're a billionaire.

Bloomberg is worth approximately $62B, so while most campaigns are being run on donations, he's outstripping them purely with his own bank account. 

via theimpossiblesalad

 

He's outspent everyone else in the Democratic field combined. His most recent stunt was a major social media push. 

He leveraged several of the largest accounts on Instagram by collaborating with a company called - Meme2020. I wish that was a joke. 

 

 

From the NYT, "Memers" include: 

 @MyTherapistSays, @WhitePeopleHumor, @TheFunnyIntrovert, @KaleSalad, @Sonny5ideUp, @Tank.Sinatra, @ShitheadSteve, @adam.the.creator, @moistbudda, @MrsDowJones, @TrashCanPaul, @cohmedy, @NeatDad, @FourTwenty, @GolfersDoingThings, @DrGrayFang, @MiddleClassFancy and @DoYouEvenLift.

 

Those accounts reached a purported 60 million followers. They received $150 per post.

The content is one of those  "stranger than fiction" experiences, where the posts are so surreal that the creators have to acknowledge "yes this is really sponsored by Mike Bloomberg."   

This approach, and Bloomberg in general, raises several questions about running a race in 2020. 

Astroturfing and Memes

Remember, this is intended to sway public opinion in a political campaign. Bloomberg is a geriatric billionaire who has approximately 0% of the youth vote. While most of these memes mocked Bloomberg for being old and out of touch, the effort likely had the opposite effect. It's mildly insidious. 

These posts have nothing to do with demonstrating Bloomberg's electability. They don't deal with stop and frisk, or any of his other policies. They're running the campaign a football player might run for student body president in high school. Luckily, there's been pushback. 

The style of ads - astroturfing - where sponsors make their ads appear as if they're supported by grassroots participants, isn't new. But, Bernie Sanders and Donald Trump have done much better with seemingly authentic content driven by meme culture. 

The question to ask about Bernie and Donald's success with the internet is, how much is authentic and how much is manufactured?

Are We Creating A Plutocracy?

Michael Bloomberg's campaign has crossed over $350MM in spending across channels. He went from a nonexistent option, to earnestly in the running through ubiquity.  

It's worth asking the question "Can our democracy be bought?"

via Business Insider

A plutocracy is when a government is run by the wealthy elite. To a certain degree, money is power, and the wealthy's effect on the world is unavoidable. The inverse is also true, with influence and drive, money often follows.  The issue comes when the wealthy are the only influence, and when that money becomes the deciding factor in electability.

It's hard to beat nearly unlimited money working in partnership with corporate support and media bias. The reality is, in the same way that corporations are people, they also have biases. Media companies undoubtedly influence the messaging you see. And, as impervious as we believe we are, the messaging we see influences the reality we perceive. 

My takeaway for you is not to be for or against any candidate; it's to be pro-democracy and pro-meritocracy. 

I hope we vote on the issues instead of just the personalities.

Evaluate which issues are most important to you and which candidates best support those issues. Here's a link to Donald Trump's positions, and a link to the positions of the Democratic candidates.

I'm curious to see who wins the Democratic primary, and what that means for the election. 

Who you got?

Do you think Bloomberg has a chance?

Here Are Some Links For Your Weekly Reading - February 9th, 2020

 

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

Lighter Links:

• Humans are Hardwired to Dismiss Facts that Don't Fit Their Worldview. (FastCompany)
• Timeless Truths about Disruptive Innovation. (Forbes)
• 98.6 Degrees Fahrenheit Isn't the Average Anymore. (Wall Street Journal)
• Apps Could Soon Predict When You'll Die: the Science of How. (Inverse)
• Google Keeps a Scary Amount of Data on You. Here's How to Find and Delete It. (CNet)

 

 

 

Trading Links:

• Why We're Failing to Regulate the Most Powerful Tech We've Ever Faced. (VentureBeat)
• Goldman Sachs and Amazon May Soon Be in the Banking Business. (Quartz)
• Intercontinental Exchange Makes Takeover Offer for EBay.(Wall Street Journal)
• Macy's to Close 125 Stores and Slash 2,000 Jobs Over Next Three Years. (USAToday)
• Godfather' of Technical Analysis Says Stock-market Downturn is Going to Get Worse: I am Looking at a 10% Drop Maybe a Little Bit More'. (MarketWatch)

 

 

 

Events & The Stock Exchange (1990 - 2018)

We all understand that events affect the stock market. Predicting what events will affect the stock market is an entirely different beast. 

Christian Spreafico put together an infographic website that tracks one key event per month, and that events effect on the monthly closure of the major stock exchanges. 

Events are split into categories: Politics, War, Terrorism, Calamity, Economy, Sports. 

At the top of the infographic, you can see the indexes' performance. Below, you can see the effect of the categories over time. 

The infographic starts with the US invasion of Panama, and ends with the beginning of the Yellow Vests Movement (a political movement for economic justice in France. 

via Christian Spreafico

It's fun to look through month-by-month and track the movement. 

An interesting inflection point I found started in July of 2010. At this point, the effect of politics on the global indices was negative. Issues with the European Union and Obama's election both caused drops. Since 2010, the effect of politics on the economy has been staggeringly positive (excluding the December 2015 UN Climate Change Conference). 

That includes a massive spike in the NYSE, NASDAQ, and TOKYO when Occupy Wall Street started in September of 2011.

Interest aside, I struggle with sharing this infographic because it's a gross oversimplification of the various driving factors of both our economy and markets. The biggest event isn't the only event and we don't know on which metric Christian decided which event was the biggest. In other words, correlation doesn't prove causation.

Nonetheless, if you don't take this too seriously, it's an interesting look back through time. 

What caught your eye?

Here Are Some Links For Your Weekly Reading, February 2nd, 2020

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

Lighter Links:

• MIT Professors Sound Alarm on US Falling Behind on AI. (CA)
• Doomsday Clock Moves to 100 Seconds to Midnight - Closest Point to Nuclear Annihilation Since Cold War. (FoxNews)
• The Bill Belichick Trade Turns 20 on Monday. (ProFootballTalk)
• Incentive Competitions and the Challenge of Space Exploration. (Interesting Engineering)
• How Time-Travel Works in Fiction: a Concise Breakdown of How Time Travel Functions in Popular Movies, Books & TV Shows. (OpenCulture)

 

Trading Links:

• Peter Diamandis: in the next 10 Years, We'll Reinvent Every Industry'. (TheGuardian)
• 5,000 Years of Interest Rates. (DailyReckoning)
• Will We Ever Stop Talking about the VIX? (RCM Alternatives)
• How to Make a Billion Dollars on Horse Racing. (Bloomberg)
• Tesla is More Valuable Than GM, Ford CombinedDespite Selling 98% Fewer Cars. (Observer)

 

 

On Ambient Computing and Privacy

I like to think of myself as on top of technology trends - but I heard a new term recently. 

Ambient Computing represents the ubiquitous computing reality we're transitioning toward: Sensors, displays, etc. embedded throughout the world. If you think about Smart Homes, or the Internet Of Things, these are building blocks for ambient computing. 

We've already seen some early examples of this technology gaining adoption - and it's developing fast. 

I flip-flop between excitement about the cornucopia of useful applications and fear of the safety and privacy concerns these technologies will inevitably create ... or have already created.

 

James O'Malley via Twitter

A couple of weeks ago, I talked about the surveillance state - and how many cameras different places now have (Spoiler Alert: China has a ridiculous number). That, paired with facial recognition technologies, means that ubiquitous technology has "interesting" consequences. 

It's hard to imagine a country like China not abusing that technology, but it's also hard to imagine the US not abusing that technology. The temptation is too high. An example being the repeated requests by the US government for backdoor access into iPhones.  

It's a slippery slope, and unfortunately, the few often ruin a technology for the many. I err on the side of protecting the many from the few, but it's up to you to decide where your comfort level with lack of privacy is. 

To a certain extent, privacy is now a fallacy (or at least it doesn't mean what it used to mean)... but that doesn't mean you shouldn't try to protect what privacy you have left.

Gong Xi Fa Cai!

Chinese New Year happened this weekend.

So, Gong Xi Fa Cai … which translates to "Best wishes for a prosperous New Year!"

I went to Indonesia to celebrate with Jennifer's side of the family in Jakarta.

It was nice to see her parents.

 

 

Here's a picture of the immediate family at this year's gathering. Quite a group. 

 

 

It's interesting to think about how many New Year celebrations there are.  In addition to Chinese New Year, the Muslims have Hari Raya Idul Fitri; Jews have Rosh Hashanah; of course, there is January 1st (and there are many others).

Which is correct?  I think the answer is all of them. Regardless of your chosen New Year, it provides an opportunity to celebrate, share, reflect, plan, and commit to the right actions.

As I think about it, the same principle applies to trading. It's all a matter of perspective.

At some level, there really isn't a correct answer as to which trading style is best. The best style is the one that works. Trading styles go in and out of phase, and if you get too attached to the style of trading, you get detached from profit.  As any experienced trader can tell you, edges decay, people catch on, trends change.

It is a lot easier to go to a party when there is a party to go to... The trick is finding the celebration in the first place.

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

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

 

Lighter Links:

• 8 AI Trends We're Watching in 2020. (O)
• Navigation Apps Changed the Politics of Traffic. (CityLab)
• There's No 'Going Dark:' Always-On Surveillance Posing Risks to US Covert Operations. (TD)
• 6 Predictions About Data in 2020 and the Coming Decade. (Forbes)
• Data is Only the Beginning. Connecting the Dots Creates Knowledge. However, It is Wisdom Which Translates Insights into Impactful Decisions. (LinkedIn)

 

Trading Links:

• How 5 Big Tech Companies Really Make Money. (Infographic)
• Capitalism Draws Fire, Despite Strong Global Economy. (Wall Street Journal)
• Immune Discovery 'May Treat All Cancer'. (BBC)
• How to Raise a Billionaire: Maye Musk on Where Elon Gets His Drive. (Forbes)
• Toyota Invests $394 Million in Electric Air Taxi Company Joby Aviation. (Forbes)

 

 

Super Bowl 2020

A friend has two tickets for the 2020 SUPER BOWL — both box seats. He paid $2,500 for each ticket, but didn't realize last year when he bought them that it was going to be on the same day as his wedding. If you are interested, he is looking for someone to take his place — it’s at St. Dominic's Church in San Francisco at 3pm. Her name is Melissa . She's 5'7 about 140 lbs. She's a good cook, too. She'll be the one in the white dress.

 

As for the Super Bowl, it seems like this will be a good matchup. The KC Chiefs are in it for the first time in 50 years (and have an amazing offense), while the 49ers are coming off a series of tough seasons (but have an amazing defense). It will also be a Super Bowl without Bill Belichick's scowl gracing our screens. 

It's not just the fans that are excited about the matchup, it's also the bookies. Two years ago, gamblers set a record by placing $158.6 million in Super Bowl bets. Expect more of the same with gambling now legalized in an additional 13 states beyond Nevada. 

 

If you're still looking for a bet – there's another wishful thinking approach you could take to find one ... it is called the "Super Bowl Indicator."

 

 

The theory is that 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. So, if you're hoping for a strong S&P you'd be rooting for 49ers. 

There's one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start (or as a data scientist would caution ... they did that to fit the data better). 

With that "adjustment," at one point the SBI was "right" 33 years out of 41 - an 80% success rate. Sounds good, right?

Come on ... you know better. It's been wrong four of the last four years ... another sign of spurious correlation if you weren't sure. 

Here are some other "fun" stock market fallacies:

• January Indicator
• Aspirin Count Theory
• Hemline Indicator
• Sports Illustrated Swimsuit Indicator
• Men's Underwear Index

 

Back to Reality

Rationally, we understand that football and the stock market have little 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 sometimes ask people. 

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

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

Recently, the answer is about 5% (and that's in a predominantly bull market).  For the record, that's significantly worse than chance. Perhaps 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. A good reminder that if you don't know what your edge is ... you don't have one!

Onwards.