Capitalogix

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)

The Show Must Go On (But In VR)

Several states are conditionally reopening. 

As they reopen, it's important to think about a new normal. I'm excited about what we'll accomplish on the backside of this pandemic. 

It challenged what we do and how we do it.  In many ways, the thing that doesn't kill you makes you stronger.

With that said, I saw this video, and it struck a chord. It shows a famous orchestra playing the theme to 2001: A Space Odyssey updated for 2020's social distancing. You’ve got classical music played by classical musicians – together, but only via technology.  This new form borrows from the past but creates something new.  As a result, we experience a new dawn.

via Opera North

I encourage you to think about what the Quarantine made better for you, your family, your business, the country, or the world?

 Sure, there are things that suck ... but there are things that surprised! 

Think about the things that you did more of during this period.  Are there new things that will make sense to continue as we move back to normal?  Are there things that you did less of – and it somehow made things better (or made room for better things)?

How can you combine the best of the old with the best of the new to create something even better?

Things are going back to normal ... but you get to decide your new normal ... and it can be better than your past.

Stay safe and enjoy the ride,

The Age of AI: How Far Is Too Far?

Let's take a break from talking about the Coronavirus to talk about something else that will affect the global population. 

Of course, it's the pace of innovation and the effects of AI. I've been on the record for years saying things like

• AI will transform the planet much like electricity did
• Data will be more valuable than oil 
• And, the only thing more impressive than our population growth is our technology growth 
• Or, from the precautionary side, Artificial intelligence isn't a substitute for lack of the real thing

It can be difficult to have a nuanced discussion around AI online. There's a lot of PopSci around it, people conflate a very diverse range of algorithms and intentions into the general "AI", and realistically when you get too in-depth into what algorithms are best for what problems, most people lose interest. 

That's why I'm personally a proponent of any discussions around AI. Awareness is important, and if more people can understand the basics, then some subset of them will become better educated... rinse and repeat. 

Robert Downey Jr. and YouTube partnered for an 8-part docuseries on the Age of AI. I've only watched one episode, but that episode did a decent job of addressing the highest-level issues with AI. 

 

via YouTube Originals

I won't go through the whole video with you - because  you're quarantined and I think it's worth watching, but there are a couple of points I wanted to re-emphasize. 

Your Data Is Becoming More Important, Not Less Important

"Everyone's concerned about identity theft. Meanwhile, they're giving all their data for free on the internet. I'm what I like. I'm what I don't like. I'm where I go, I'm who I know. I'm what I search. I'm my thumbprint. I am my data" - will.i.am

My son, Zach, has ultimately given up on privacy - his argument is that everyone's information is out there anyway. Even my eldest son, Ben, who is a cybersecurity expert, has semi-resigned himself to his data being out there. He takes many precautionary measures but recognizes that he's not truly anonymous. 

In the video, Will.I.Am is getting an authentic reproduction of his face, mannerisms, and voice - they even got the pimple he had during the day of filming. In doing so, he specifically asks for the voice to be a bit robotic. He does this "for his mom" but in reality, it's to make clear - this is a robot, not me. It's avoiding the Uncanny Valley. 

We're at an intersection where it's going to become harder to decide what's real and what's fake. With deepfake video and audio, protecting your personal brand and identity becomes difficult, and simultaneously more important. 

The Path Forward

The road to AI supremacy is long and fraught with booby traps, potential missteps, and ethical issues. Questions like "how far is too far?" will have to be answered, and countries will likely strive to unite around shared rules of ethical AI. 

If there's anything that makes me confident about our ability to successfully travel that road, it's looking at humanity's ability to adapt. The reality is, we've been working symbiotically with "machines" since the very beginning, but our definition of the machine simply continues to improve. It's fractal, and each time the technology we're adopting gets bigger, so does the eventual positive effect on day to day life. 

AI adoption is a big step, but the positive effect it can have on our lives is astronomical. 

Onwards!

What Can My Dogs Teach Us About Trading?

I wrote this back in 2008. With minor updates, it seems relevant again.

Some dogs run fast; other dogs do tricks … my 100-pound lab, Duke's best talent was his ability to remain immobile in almost any situation (some call it "laziness" … I prefer "calm" or being "even-tempered").

At the other end of the spectrum are our two small dogs, Boo and Jasper. Boo, our 20-pound mix between a Beagle and a Boston terrier. Let's just say that he has a higher metabolism than Duke. 

When Boo hears a noise, he lets out an involuntary, barely audible, sound.  His body becomes rigid and his head cocks.  He becomes alert and carefully tunes his ears to their most sensitive setting, seeking any information that will help identify the "danger." He's now primed for the next intrusion.

Usually, there are no other disturbances to follow, and the noise is cataloged and soon forgotten. His alertness level slowly subsides over the next 10-15 minutes or so.  He'll go back to napping, a little more fitfully this time … and just a little bit on edge.

Things get a little more interesting when another noise surfaces shortly after the first one.  What could once be dismissed now must be treated as a threat – and just to be safe, a threat of the highest order.  Now the appropriate response is a series of barks, nervous glances, pacing, rushing off in the direction of the noise to investigate, and a barrage of barks meant to sound more menacing than the source of the noise.  Who or what is it? How much harm can they cause? How grave is the threat?

Jasper, our high-anxiety mutt, is never off alert. He doesn't know what's a threat, and what's not, so he's always creating threats out of nothing and riling up our other dogs. 

Duke is a different story.  Nothing upsets Duke more than Boo or Jasper getting on high alert.  The same noise that prompted Jasper and Boo to become alert does nothing to Duke.  However, the first time that they make noise,  Duke becomes alert. The second time they make noise, Duke starts vocalizing; and the third time, all 4 of our dogs start yapping. Once they start yapping, then the neighbor's dogs start yapping, and suddenly our neighborhood is a cacophony of dog barks.

The same thing happens in the market with people.

In the market, it is the second noise - and subsequent noises - that creates the equivalent of the Homeland Security "Red Alert." Once an elevated level of alertness has been established, it takes a long period of relative calm for it to subside.  And when on "Red Alert" … any additional noises (for example, the responses of the other market participants) - big or small - will highlight, magnify, and further validate the issue.

But, like in the story "The Boy Who Cried Wolf," even legitimate threats are ignored after too many false alarms (or prolonged periods of constant alert).  So, bad news about the economy isn't as likely to get people excited after the past few weeks.

As people (or bots) become "used" to today's new normal, It'll be interesting to see what sprouts up. The longer away from the initial episode, the more real the effect can be attributed. 

The unfortunate reality is that the Boo and Jasper style "overreaction" to a crisis can exacerbate the long-term effects of the crisis. To balance that, on the macro level, a stronger pandemic response has been shown to increase economic recovery.

This has been the theme from the beginning. Don't personally panic, but respond aggressively on the city, state, and national level. 

Food for thought. 

Building Your New Normal

Last week, I introduced the idea of a new normal. 

As a small business owner, in the midst of this pandemic, I'm not thinking about what's necessary to continue doing what I was doing yesterday. I'm focused on what I can do to prepare for tomorrow. Things won't go back to the way they were, but they will go back to normal. Only, it will be a new normal. It's a good lesson in being attached to a result, not a medium for a result. 

The "new normal" is a topic that has been coming up in a lot of different places, because of the situation in which we all find ourselves. 

These Are Not Unprecedented Times

I've heard a lot of people use the phrase "these are unprecedented times" but they're not. Ignoring how many different industry-disrupting era's we've had (think the Dot Com Bubble), we've also had numerous pandemics, and we're better prepared to handle them today than at any other time in history.  

Here is a short video from Simon Sinek that I thought was relevant, well-done, and inspiring. I encourage you to watch it.

 

via Simon Sinek

What Comes Next?

"I'm not worried about what I do, I'm worried about why I do it." - Simon Sinek

After some time, things will go back to "normal." Your goal for today should be to sow the seeds to today that prepare you for that day. I'll backtrack a step and acknowledge, if you're struggling to survive, survival comes first. Regardless, you need to make sure you're asking yourself the right questions.

When you ask better questions, you get better answers. 

What will you need when it's back to business as usual? How can you help others better themselves through this period? Who can you help?

If the theme for right now is building a new normal, one of my life's themes is the belief in moonshots and exponential thinking. 

Your response to this pandemic should be the same as your response to disruptive innovation. 

You should be attracted to a result, not a medium, and paying attention to how you can capitalize on the wave. 

Blockbuster, RadioShack, Kodak, all went out of business due to shortsighted myopia in the face of change. 

Opportunity or Chaos ... You get to decide!

Onward!

Here Are Some Links For Your Weekly Reading - March 29th, 2020

 

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

Lighter Links:

• How the Pandemic Will End. (The Atlantic)
• A New Way to Explain Explanation. (TED)
• 20 New Technology Trends We Will See in the 2020s. (ScienceFocus)
• Smile? Results from the 2020 World Happiness Report are In. (New York Times)
• Warren Buffett's Brilliant 25/5 Rule Was Fake. Here's What He Really Said about Achieving Success. (Inc)

 

Trading Links:

• Disneyland and Disney World Will Remain Closed Indefinitely. (CNet)
• The Dow Just Had Its Best Week since 1938. It's Time to Go Shopping for Beaten-Up Stocks.(Barrons)
• Dollar Falls during Coronavirus Pandemic, Biggest Weekly Drop since 2009. (FoxBusiness)
• Understanding the Economic Shock of Coronavirus. (HBR)
• Paul Tudor Jones Says Stocks Could Retest Lows as Virus Peaks but Will Be Higher in 3 to 5 Months.(HedgeCo)

"Chart of The Century": A Look At Inflation, Free Market Forces and Trade Wars.

This post considers the “Chart of the Century” created and named by Mark Perry, an economics professor and AEI scholar. This chart has gotten a lot of attention because it’s loaded with information regarding the types of challenges faced by the Fed and other Washington policymakers.

Perry’s most recent version reports price increases from 1998 through the end of 2019 for 14 categories of goods and services along with the average wage and overall Consumer Price Index.

It shows that prices of goods subject to foreign competition — think toys and television sets — have tumbled over the past two decades as trade barriers have come down around the world. Prices of so-called non-tradeables — hospital stays and college tuition, to name two — have surged.

From January 1998 to June 2019, the CPI for All Items increased by exactly 59.6% and the chart displays the relative price increases for 14 selected consumer goods and services and average hourly earnings.

Lines above the overall inflation line have become functionally more expensive over time, and lines below the overall inflation line have become functionally less expensive. So, for example, housing has approximately kept pace with inflation. 

Mark Perry Via Carpe Diem

There are a lot of ways to take this chart. You can point to items in red - whose prices have exceeded inflation as government-regulated or quasi-monopolies. You can point to items in blue as daily commodities that have suffered from ubiquity, are subject to free-market forces, or as goods that are subject to foreign competition and trade wars. Looking at the prices that decrease the most, they’re all technologies. New technologies almost always become cheaper as we optimize manufacturing, components become cheaper, and competition increases.  

Compare “tradable” goods like cell phones or TVs (with lots of competing products) to less tradable “goods” like hospital stays or college tuition, and unsurprisingly they’ve gone in opposite directions. 

There are a lot of complex economic relationships displayed in this chart, and we’ve only covered the basics. 

What did you take from the chart?

How do you think the Coronavirus will impact the future of policy - and the shape of this chart?

Here Are Some Links For Your Weekly Reading - March 1st, 2020

 

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

Lighter Links:

 

• When that AI Company' Isn't Really an AI Company. (TechCrunch)
• The Catholic Church Proposes AI Regulations that Protect People'. (TheVerge)
• Musicians Algorithmically Generate Every Possible Melody, Release Them to Public Domain. (Vice)
• Saudi Arabia: Riyadh Suspends Pilgrimage Visas Amid Coronavirus Concerns. (Worldview)
• Warren Buffett Says He Prefers Mike Bloomberg in the Democratic Presidential Race. (CNW)

 

 

Trading Links:

• Dow Loses 12% for Week on Coronavirus Panic; Fed Says It Will Act 'Appropriately'. (TheStreet)
• These are the Only 7 Stocks in the S&P 500 that Rose While the Market Plunged. (MarketWatch)
• Gold Prices Tumble Amid Reports of Margin Calls. (Investing)
• Nearly 40% of Europeans in Their Late 20S Still Live at Home. (Quartz)
• MIT Published a List of the 9 MegaTrends that Will Shape the World in 2030. Here's What They All Have in Common. (Inc)

Mountains Out of Molehills: Media Inflammation

The U.S. stock market had a rough week (like most markets around the world). The Dow Jones Industrial Average (the "Dow") had one of its worst weeks since the financial crisis in 2008, losing about 12%.

Still, the Dow is near its historical highs, and the fundamentals of our economy aren't in freefall (as one might guess with all the fearmongering). 

As I mentioned last week, many attribute the drop to the Coronavirus and its potential effect on trade, travel, industry, etc.  For example, several prominent news sources released (hopefully erroneous) articles stating that 38% of beer drinkers wouldn't drink Corona due to the Coronavirus.  Yup!

There are two key points I want to make. The first is that the media tends to make mountains out of molehills (because their job is to get you to pay attention to their news) and the second is that markets are random to you or me. 

Mountains Out of Molehills

It shouldn't come as a surprise to you that the media exacerbates situations. Whether it's a terrorist attack, a virus scare, or a bad trading day - the media posts headlines and teasers designed more to attract attention than to educate. 

The interactive graphic below shows the news cycle for things ranging from asteroids and vaccines to ebola and zika.  An interesting reminder.

(Click To View Interactive Infographic) via InformationIsBeautiful

The result is hysteria, fear and greed, or discretionary mistakes ... all things better avoided. 

Regardless, when it comes to trading, if you don't know what your edge is ... you don't have one.  And it's tough to find a "signal" in a sea of noise. 

via Gaping Void

Markets Are Random

Experienced traders have a saying: it isn't the news that matters ... what matters is the reaction to the news.  Consequently, part of the reason that markets seem random is that you or I can't predict the market's changes (accurately and reliably) based on the information we have.  In other words, if market profits were easily captured by being smart and well informed, professors wouldn't teach because they'd be on their yachts. 

This past week,  you could attribute the losses to fear of the Coronavirus ... but there are also fears around the 2020 election, the fact that stocks were already considered overvalued, fears of recession, and more.

You don't know how much was caused by program trading or bots reacting to bots – or by a host of less obvious potential causes or contributing factors, like businesses either liquidating or taking positions in the regular course of their business (meaning as bona fide purchasers rather than speculators).

The truth is no one knows for sure what caused the drop.

Nonetheless, one thing that you should know is that volatility and noise will increase.  It is almost inevitable.

Humans have a need for certainty and understanding. So when we don't know why something happens we find stories to fill in those gaps. But they're just that ... They're stories. We can theorize all day long about what's moving the market, but it makes no difference.

It's not what happens that matters, it is what you do that matters. 

Onwards!

Here Are Some Links For Your Weekly Reading, February 23rd, 2020

 

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

Lighter Links:

• What It Means to Be Human in the Age of AI. (CNet)
• Mommy Can't Talk Right Now She's Dopamine Fasting. (TheCut)
• I Went to a High-End Psychedelic Retreat to Address My Anxiety. (Vice)
• Inside the World of High-End Coffee | Annals of Obsession | the New Yorker. (YouTube)
• Most Dietary Supplements Don't Do Anything. Why Do We Spend $35 Billion a Year on Them? (WashPost)

 

Trading Links:

• Why Cryptocurrency Markets Defy the Laws of Economics. (BU)
• Michael Bloomberg Has Taken Andrew Yang's Place as the Cryptocurrency Candidate. (TechReview)
• It Has Never Been Easier to Launch a New Brand. (Economist)
• Elon Musk's SpaceX to Raise $250 Million, Valuing It at $36 Billion. (Uk)
• Elon Musk Says He'll Put a Million People on Mars by 2050. (Futurism)