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!
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.
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.
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.
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.
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.
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.
Obviously, the global economy is changing. To see more about the eight forces shaping it, read this.
We live in interesting times.
Onwards.
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:
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.
Reminder: election day is this Tuesday.
Here are some of the posts that caught my eye recently. Hope you find something interesting.
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.
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:
I'll be at The Van Trump conference, in Kansas City, on November 28th. Hope to see you there.
Today, the technology universe is more uniform than you'd think. All of the top 20 technology companies are based in America and China.
Since 2013, China has added 5 to their side and America has lost 1.
Here is the list.
It's also interesting to note that there's a steep dropoff between the "giants" and the companies lower down the ladder. There isn't a single company with a valuation between $200 billion and $450 billion.
To put it in a different perspective, here's a pie chart showing the market capitalization of the top 5 tech companies in comparison to the bottom 282 S&P 500 companies.
via Michael Batnick
It can be hard for a tech company to break into the upper echelons. However, with tech, change is the only constant.
What are some of the companies you think have a chance to enter the realm of these giants?
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:
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.
"Progress is the attraction that moves humanity." ~ Marcus Garvey
Human expansion and development is without precedent. We're in an entirely new territory. People could "only imagine" many of the things we take for granted today.
To put it in perspective.
via OurWorldInData
While growth is slowing down, and we're reaching carrying capacity, the population is still on the rise.
Technology is Growing Exponentially
“Technology goes beyond mere tool making; it is a process of creating ever more powerful technology using the tools from the previous round of innovation.” ~Ray Kurzweil
The only thing that's perhaps more impressive than our population growth is our technological growth. For the first ~ 64,000 years of humanity, we relied upon the verbal transfer of information. The creation of writing and the formal recording of knowledge was the tinder for a blaze of progress.
The above graph stops in 1990, and it's almost hard to quantify the growth since then. Nonetheless, Moore's Law does a good job of adding some context (even if it is coming to an end).
Moore's law is the observation that the number of transistors in a dense integrated circuit doubles about every two years. Extrapolated outwards, we can expect more technologies to evolve every two years, if not faster.
Information is the fuel for so much of human progress and it most embodies the future to me. We create more data today than in all of history and digest more data today than ever before.
As our ability to parse information increases ... so do our capabilities.
History is defined by asymmetric information, but our future may not be. The growth in information creation and digestion - I believe - will have massive effects on how we congregate, what we create, and how we interact with each other and the corporate world around us.
I can't begin to imagine what my children's children will have at their disposal.
What's the coolest future-tech you expect to see in your lifetime?
The Six Biggest Mistakes Ordinary Investors Make
It's your livelihood, it's your retirement, it's your future.
Tony Robbins released an infographic on the six biggest mistakes ordinary investors make.
In other words, the biggest threat to your trading profits is your own brain. Humans are wired to avoid pain and seek pleasure ... and those tendencies just aren't conducive to smart trading.
It's getting harder to find an edge, let alone maintain one.
If you don't know what your edge is, you don't have one.
The reality is, over 90% of trades are electronic, and over 70% are algorithmic.
Do you think those numbers are going to increase or decrease?
Firms are using faster computers and smarter algorithms. On top of that, high-frequency traders are skimming alpha on the executi0n.
Here's one thing you can predict ... It is getting harder for humans to trade against the machines.
Momentum is building ... but, it already happened. The new world of trading is quantitative.
The best way to avoid fear, greed, and discretionary mistakes is to avoid them.
Posted at 05:00 PM in Business, Current Affairs, Market Commentary, Science, Trading, Trading Tools | Permalink | Comments (0)
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