When I woke up this morning, I saw that Dak Prescott, the star quarterback for the Dallas Cowboys, signed a new contract, making him the highest-paid player in NFL history. His new four-year, $240 million deal makes him the league’s first $60 million per year player.
If you are curious, here is a list of the highest-paid NFL players in 2024.
Each of the 32 teams has an active roster of 53 players. That is 1,696 active roster players. Add the practice squad and account for injuries, and in a typical season, you end up with about 2,100 players per season.
Now that the NFL Football season is officially underway, I thought it would be interesting to look at each position’s composite player.
As you might expect, different sports have a different ratio of ethnicities, builds, and features. The same is true for different positions on a football team. For example, you might expect more Pacific Islanders in Rugby or Asians in Badminton. You expect NBA players to be taller, swimmers to have longer arms, and football players to have more muscle.
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 reality, you need both.
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 various schemes.
On a related but slightly different note, I recently read a post called “Why Generalists Own the Future.” It says that, in the age of AI, it’s better to know a little about a lot than a lot about a little. But part of that rationale is that it is easy to find or create digital specialists to do the things people used to do.
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.
How ‘Bout Them Cowboys!
Old School Wisdom Isn't Always So Wise ...
When I first got interested in trading, I relied on traditional sources and old-school market wisdom. For example, I studied the Stock Trader’s Almanac.
While there is some real wisdom in some of those sources, most might as well be horoscopes or Nostradamus-level predictions. Throw enough darts, and one might hit the bullseye.
Traders love patterns ... from head-and-shoulders, to Fibonacci sequences, and even Elliot Wave Theory.
Here’s an example from Samuel Benner, an Ohio farmer. In 1875, he released a book titled “Benner’s Prophecies: Future Ups and Downs in Prices,” where he shared the often-referenced chart called the Benner Cycle. Some claim it’s been accurately predicting market fluctuations for over 100 years. Let’s check it out.
Here’s what it gets right ... markets go up and down ... and that cycle continues. Consequently, if you want to make money, you should buy low and sell high ... It’s hard to call that a competitive advantage.
Mostly, you’re looking at vague predictions with +/- 2-year error bars on a 10-year cycle.
However, it was close to the dotcom bust and the 2008 crash ... so even if you sold a little early, you’d have been reasonably happy with your decision to follow the cycle.
We use a form of cycle analysis in our models … but it’s more rigorous, nuanced, and scientific than the Benner Cycle. The trick is figuring out what to focus on – and what to ignore.
Just as humans are good at seeing patterns, even where there are none ... they tend to see cycles that aren’t anything but coincidences.
In trading, “alpha” measures the excess return created by manager skill rather than luck or movement of the underlying market. As you might guess, both “art” and “science” are involved in that calculation. Profitable traders want to believe it’s a sign of their skill, while losing traders prefer to blame luck.
Nicholas Nassim Taleb pointed out in “Fooled by Randomness” that many successful traders, even those with decades-long careers, were likely more lucky than skillful. They just happened to be at the right firm, on the right trading desk, at the right time.
That said, I believe technology, algorithms, and AI are evolving into Amplified Intelligence - the ability to make better decisions, take smarter actions, and continually improve performance. We’re about to experience a huge asymmetric advantage ... those who understand technology and science (math, statistics, game theory, etc.) will have a real edge over those relying on more primitive techniques or gut instinct.
In a sense, this is another type of cycle.
The best traders I know believe that “smart money” takes “dumb money”. While it may sound harsh, this cycle has played out repeatedly over time. Cutting-edge science can seem like magic to those who don’t understand it. However, these capabilities give a significant advantage to those who possess and use them.
I believe the gap between smart and dumb money is widening. That represents a massive opportunity for those who recognize what’s coming.
This is a reminder that just because an AI chat service recommended something that made money, doesn’t make it a good recommendation. Those models may do some things well ... but they also might just have made a lucky prediction at an opportune time. Making scientific or mathematically rigorous market predictions probably isn’t an area to trust ChatGPT or one of its rivals (at least if you don’t understand how to ask AI to do something that you understand and believe gives you a real edge).
If you don’t know what your edge is, then you don’t really have one. This becomes even more important in the age of AI. It doesn’t matter if AI does what it’s supposed to unless you believe it is doing what you want.
Be careful out there.
Posted at 06:18 PM in Books, Business, Current Affairs, Ideas, Market Commentary, Science, Trading, Trading Tools, Web/Tech | Permalink | Comments (0)
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