Capitalogix

Here Are Some Links For Your Weekly Reading - January 20th, 2019

Most citizens don't have big savings account to buffer them against an unexpected expense or loss of income.

The Government Shutdown is one of the curveballs most workers haven't planned for adequately.

 

Actions have consequences.

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

 

Lighter Links

• Full Translation: China's 'New Generation Artificial Intelligence Development Plan' (2017). (Newamerica)
• Apple Buys 50 Business Class Seats from San Francisco to Shanghai Every Day. (MacRumors)
• Ford Built a Sweaty Robot Butt to Simulate Your Sweaty Human Butt. (BGR)
• Intimate Portraits of People over 100 Years Old Reveal the Beauty of Aging Bodies. (MyModernMet)
• Costco is Selling a 27-Pound Tub of Mac and Cheese that Lasts 20 Years. (BusinessInsider)

 

Trading Links

• Fear of Algorithm Trading is Really Just the Fear of the Unknown. (Quartz)
• Hedge Funds Suffer Worst Year since 2011. (FT)
• Nearly Half of Workers Earn Less Than $30,000. (Ritholtz)
• Michael Dell Gets $12 Billion Richer with Break from Public Eye. (Fortune)
• The New Impossible Burger 2.0 Won Everyone's Mouth at CES 2019, but That's Just the Beginning. (Forbes)

A Quick Visit to Cuba

I went to Havana with a diverse group of business people, financial professionals and representatives from the US Fed. 

Here is a photo taken with some of the classic cars that proudly dominate the roads despite cheaper Russian and  Chinese alternatives.

 

 

The city was beautiful … dirty and broken, for sure … but still beautiful.  Here is a view from my hotel room.

  

 

I commented that it was almost like seeing a severely wounded elephant. You can tell that it's hurt (and barely a shadow of its old self). Nevertheless, you can see the amazing bone structure. It is easy to imagine what it once was.

In Cuba, the geography and the architecture are amazing. However, money hasn't been spent on the upkeep. Even though people live there, it seems surreal (almost like a post-apocalyptic wasteland).

 

 

In the story of Exodus, the Jews spent 40 years wandering the desert after escaping from Egypt. That means two generations of people, who didn't remember life as slaves, were ultimately the ones who entered the “Promised Land”.

On some level, that's how Cuba is now. Most inhabitants weren’t born (or can’t remember) the 1960s. They have known nothing but this.

Cuba is an interesting place … and I’d bet that it has an interesting future.

The “lack” had a side effect. It produced a mutation. A portion of society grew more resourceful and resilient.

 

 

Like natural selection … nature finds a way.

The rules change, the players change, even the game itself changes ... That is how new ideas and new leaders emerge.

Sometimes, almost no one notices. Sometimes they do. 

Ultimately, change remains the only constant.

Onwards!

A.I. in Film: A Retrospective

AI has been around in science fiction for over 1oo years. As it becomes reality, it's amusing to look at different depictions and attempt to connect the dots. 

AI first broke onto the film scene with Metropolis in 1927. "Maria" the evil robot disguising herself as a human played on many human fears; deception, lack of control, and perhaps most importantly being replaced.

Maria represented a future that was bleak and set the foundation for AI in cinema. Since then, there have been approximately 100 movies starring AI.

According to Enlighten Digital,  52% of movies portray AI positively, which means it's about 50/50, and there has been a 144% increase in AI movies since 2010 - so we're becoming more saturated with AI.

According to a study by Cambridge, seeing more films portraying robots (whether positive or negative) is associated with more positive attitudes toward robots. This is in line with the theory that the more exposure one has with "out-group" members (i.e. robots, or people of other races) the more positive one's attitude toward them. 

 

(Click to view Full Size) via NovaStor 

The depiction of AI has always been a reflection of its time ... as our values, ambitions, and technology has changed, so has on-screen AI. 

So what does today's AI look like?

On HBO, we have Westworld. In movies, iRobot, Chappie, and Blade Runner 2049 ... it's clear the promise and the peril of AI has continued to evolve.

These movies all have different tones but there's a trope that remains common from that initial film in 1927 to films in 2018. 

We're always imagining that next step. What's going to happen as AI becomes (in some ways) smarter than us? What's going to happen when our creations surpass our control? What's going to happen if the line between human and robot blurs?

There are a lot of advancements in real-life, in respect to AI. As such, there is a lot of movement on AI ethics, and how to best limit or best enable AI. 

In film, we gravitate toward two extremes - utopias and dystopias. In real life, we can recognize those extremes are unlikely ... but the effect of AI is still profound. 

We're expanding a technology with the ability to radically change our world - for better or worse - so it's important to keep a purpose-driven approach. We can't lose track of humanity in the pursuit of AI. 

Metropolis's final title card (that first AI movie from 1927)  still rings true ... "The Mediator Between the Head and the Hands Must Be the Heart"

 

Onwards!

Here Are Some Links For Your Weekly Reading - December 30th, 2018

Christmas Eve saw Dow's historic low ... but it was immediately followed with a 1086 point rally (its largest single-day gain). The S&P and Dow both rallied approximately 5%.

 

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

Lighter Links

• A Nobel Prize-winning Psychologist Says Most People Don't Really Want to Be Happy. (Quartz)
• There is No Such Thing as Conscious Thought. (Scientific American)
• Automated Cyber Attacks are the next Big Threat. Ever Hear of 'Review Bombing'? (Entrepreneur)
• NASA's Scientists Formed a Club to Dream up Uses for AI like Self-replicating Robots and Harpooning Comets. (Quartz)
• A Chinese Company Said It Created a Photo with Such a High Resolution that You Can Zoom from Thousands of Meters Away to See People's Facial Expressions. (BusinessInsider)

 

 

Trading Links

• Alan Greenspan: Investors Should Prepare for the Worst. (CNN)
• 5 Charts that Explain the Global Economy in 2018. (WEForum)
• The 7 Most Anticipated IPOs in 2019. (Fool)
• Wall Street Quietly Shelves Its Bitcoin Dreams. (Bloomberg)
• After a $2 Billion Company Bonus, Every Employee at Juul is Now a Millionaire. (RobbReport)

The Psychology Behind Gambling (and Everyday Traders)

Vegas and Wall Street share a lot in common. 

Over Time ... The House Wins

Casinos only offer to play games that they expect to win.  In contrast, gambling customers play even though they know the odds are against them.

Why does this happen?  The rush of a win, the chance of a big win, and random reinforcement are common factors that incent people to play lotto, go to a casino, or try to trade.

Chemicals like adrenaline and dopamine play a part as well.  Even in a sea of losses, your body can't help but crave the chemical reward of even a small win, 

The "House" knows this and engineers an experience that takes advantage of it.  

In the case of casinos, every detail is meticulously crafted to extract you from your money - from carpet patterns to the labyrinthian layouts, the music, the lights and even the games themselves. 

Here is an infographic that lays it out for you. 

Bojoko via DailyInfographic

Most people aren't gamblers ... the fear of losing big inhibits them.  However, when people were instructed to "think like a trader," they showed considerably less risk-aversion when gambling. 

 

The illusion of control convinces us we can overcome the statistics. 

 

When you almost get it right - when you miss the jackpot by one slot on a slot machine, when you just mistime a trade to get a big win - you're more likely to play longer, and place bigger bets ... because you're "so close". 

It's human nature to want to feel in control. 

This is why you find a lot of superstitious traders & gamblers. If you wear this lucky item of clothing ... if you throw the dice in this particular way ... if you check your holdings at this time every day ... you have control. 

There is a big difference between causation and correlation. 

It is not hard to imagine that the majority of a trader's activities do little to create a real and lasting edge.  

 

Skill vs. Luck

There are games of skill, and there are games of chance.

In a casino, poker and blackjack are considered games of skill.  In contrast, slot machines are considered a game of chance.

In trading, predicting markets is much different than using math and statistics to measure the performance of a technique.

Much of what we do is to figure out how to eliminate the fear, greed, and discretionary mistakes humans bring to trading.

In trading, "Alpha" is the measure of excess return attributed to manager skill, rather than luck or taking on more risk.

We believe in Alpha-by-Avoidance ... Meaning much of what we do is figure out what to ignore or avoid so that the majority of the games we play are games of skill rather than games of chance.

Are you playing the right game?

 

Here Are Some Links For Your Weekly Reading - December 2nd, 2018

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

Lighter Links 

• The 10 Best Books of 2018, According to Amazon.(BusinessInsider)
• Great Apes and Ravens Plan without Thinking. (Phys)
• Elon Musk: Ticket to Mars Will Cost about $200,000.(BigThink)
• Game of Thrones' Creator George R.R. Martin Assures Fans: Writing is Coming. (Wall Street Journal)
• Would a Universal Genetic Database Be a Crime-Solving Wonder, or an Orwellian Nightmare? (SingularityHub)

 

Trading Links

• Microsoft Passes Apple to Become Most Valuable U.S. Company. (MacRumors)
• 50 Companies to Watch in 2019. (Bloomberg)
• What Bear Markets Look Like. (AVC)
• International Stocks Will Beat US Stocks over next Decade: Vanguard Group. (CNBC)
• The World's 37 Richest, Healthiest, Happiest, and Most Prosperous Nations. (BusinessInsider)

 

 

Here Are Some Links For Your Weekly Reading - November 25th, 2018

 I remember when they told me that eating meat was bad for my health ...

 

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

Lighter Links  

• Is It Possible to Replay the Tape' of Evolution? (Futurity)
• Should You Be Eating a High-Fat, Low-Carb Diet like Keto? Scientists Weigh In. (Gizmodo)
• An 1861 Japanese Book of American History. (Neatorama)
• Beijing to Judge Every Resident Based on Behavior by End of 2020.(Bloomberg)
• How Many Fake Accounts are There on Facebook? Here's a Clue: 1.5 Billion Fake Accounts Were Removed in Just the past 6 Months. (Neatorama)

 

Trading Links

• Mark Cuban Explains Why Dallas Wasn't Selected as Amazon's HQ2 Location. (SportsDay)
• Jerry Jones: Wouldn't Sell Cowboys for Less Than $10 Billion.(Profootballtalk)
• Beyond Meat Continues to Sizzle, Announces IPO. (Forbes)
• Masayoshi Son: the Man behind a $90B Empire. (TechInAsia)
• How Juul, Founded on a Life-Saving Mission, Earned a $16B Valuation Despite the Controversy. (FastCompany)

Storage Wars

Have you ever seen the posts showing what happens in a minute on the Internet?  The speed and scope of activity is amazing ...  so is how fast it is increasing.

The same is true for storage.  It is getting bigger and cheaper quickly.

This picture shows an IBM VP holding a 10 MB hard drive from the 1960s.   

via novartistic

When it was invented, I bet they wondered how someone could ever fill it.  Now imagine what it cost back then.

For context, here are some things you can do with 10 MB of space:

• Download approximately 3 songs
• or 5 medium-sized photos
• or store 50-100 HTML e-mails
• or a 3 minute low-quality video (or 48 frames of 4k footage).

Things are changing.

Here's a link to a 256 GB flash drive that you can buy for about $50 dollars ... and here's a link to a working prototype of a 1 TB flash drive.

Here are some things you can do with 1 TB of space:

• Store 17,000 hours of music
• or an 85,899,345 page word document. (source)
• or 250 full-length movies
• or 310,000 photos.

I wonder how someone could ever fill it?

Crazy!

Here Are Some Links For Your Weekly Reading - November 18th, 2018

This is how we warm-up for Thanksgiving in Texas ...

 

 

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

Lighter Links  

• Is this AI? We Drew You a Flowchart to Work It Out. (TechReview)
• In Defense of "Designer Babies". (Reason)
• China's Artificial Sun is Now Hot Enough for Nuclear Fusion. (Futurism)
• Science Confirms: Earth Has More Than One 'Moon'.(BigThink)
• Sign Your Address up for USPS Informed Delivery Before Scammers Do. (LifeHacker)

Trading Links

• Billionaire Ray Dalio Says Capitalism is Not Working for Most People. (Barrons)
• Bank of Japan's Balance Sheet Now Larger Than Country's GDP. (Reuters)
• Meat Has a Replacement but No One Knows What to Call It. (Bloomberg)
• Here are the Most Outrageous Incentives Cities Offered Amazon in Their HQ2 Bids. (Buzzfeednews)
• A Virtual Assistant Called Abbie is Picking the Best Bonds for Traders to Buy or Sell. (TechReview)

 

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. 

1. Seeking confirmation to your own beliefs
2. Conflating recent events with ongoing trends
3. Overconfidence
4. Swinging for the fences
5. Staying Home (tendency to invest in things that are familiar)
6. Negativity Bias (tendency to overemphasize negative experiences)

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.