Capitalogix

Here Are Some Links For Your Weekly Reading - November 15th, 2020

The  upcoming holiday season seems a little different this year.

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

Lighter Links:

• How Your Life Will Be Measured after You Die. (ThriveGlobal)
• Shapeshifting Materials Could Transform Our World inside Out. (Discover)
• Alexa Can Now Guess What You Want before You Even Ask for It. (ZDNet)
• Physics Can Solve Key Challenges Facing AI, Study Finds. (JPost)
• The Greatest Competitive Advantage May Not Be What You Think. (Entrepreneur)

 

Trading Links:

• Beyond Buffett – Does Value Investing Still Work? (Economist)
• Quant Shock that Never Could Happen' Hits Wall Street Models. (Bloomberg)
• The Overnight Business Boom that Took a Century. (Wall Street Journal)
• Biden's First 100 Days: Here's What to Expect. (NPR)
• The Pandemic is Revealing a New Form of National Power. (The Atlantic)

When Trading Worlds Collide: Timeless Wisdom & Evolutionary Technology with Matthew Piepenburg

Earlier in the Pandemic - in June - I had a Zoom meeting with Matthew Piepenburg of Signals Matter. Even though it was a private discussion, there was so much value in our discussion we decided to share parts of it here. 

While Matt's understanding of markets is based on Macro/Value investing, we use advanced AI and quantitative methods for our approach. 

As you might expect, there are a lot of differences in how we view the world, decision making, and the current market environment.  Nonetheless, we share a lot of common beliefs as well.   

Our talk explores a number of interesting areas and concepts.  I encourage you to watch it below. 

 

 

To summarize a couple of the key points, markets are not the economy, and normal market dynamics have been out the window for a long time. In addition, part of why you're seeing increased volatility and noise is that there are so many interventions and artificial inputs to our market system.

While Matt and I may approach the world with very different lenses, we both believe in "timeless wisdom". 

Ask yourself, What was true yesterday, today, and will stay true tomorrow? 

That is part of the reason we focus on emerging technologies and constant innovation ... they remain relevant. 

Something we can both agree on is that if you don't know what your edge is ... you don't have one. 

 

Hope you enjoyed the video.

Let me know what other topics you'd like to hear more about. 

Onwards!

Here Are Some Links For Your Weekly Reading - November 8th, 2020

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

Lighter Links:

• Video: An Exclusive Look inside Microsoft's Election Security War Room'. (ABCNews)
• Forget Traditional Election Maps – This is What the US Vote Really Looks Like. (NYPost)
• Taught by Nature: New Technology Inspired by the Animal Kingdom. (Flipboard)
• Psychedelic Psilocybin 101: The Science of Magic Mushrooms. (Flipboard)
• Want to Calm Your Anxiety in Just 8 Minutes? Neuroscience Says Take a Deep Breath and Listen to This. (Inc)
  
  

Trading Links:

• Texas Becomes First State to Top One Million COVID-19 Cases. (24/7 Wall St)
• Fears of Transition 'Chaos'. (Barrons)
• FTC Likely to Sue Facebook on Antitrust Violations by End of November. (Politico)
• Here Comes the next IPO Wave. (TechCrunch)
• Warren Buffett's Berkshire Hathaway Swings Back into Action, Spending a Net $4.8 Billion on Stocks and a Record $9 Billion on Buybacks in the 3Rd Quarter. (BusinessInsider)

The VIX Going Into The Election

Tuesday is election night - so there's a lot of fear and uncertainty from both sides about the consequences. 

So how do you track and understand that fear? With the CBOE's VIX. 

The VIX is an index that's commonly known as the "fear gauge." It tracks how quickly asset prices move (or, in other words, their "volatility"). 

While you can't invest in it directly, you can invest in derivative products like VIX futures, ETFs, inverse ETFs, and more. 

The infographic below is a good primer, and you can download RCM's full white-paper here.

 

Covid cases are building, the Senate didn't pass another support bill and is now adjourned until November 9th, and you have pre-election market jitters.  As a result, the VIX trading volume is hitting new highs. 

Overall, a higher risk environment than normal. 

For context, the VIX has averaged 26.30 since August but got as high as 82.69 in March. 

In the past week, after a pretty bad S&P 500 sell-off,  it's gone back above 38. 

There are many ways to study and use the VIX, but ultimately, tracking it in any form helps you understand the current state of fear in market participants. 

I'd love to hear how you use the VIX or other tools to measure or forecast market stress and volatility.

Before You Vote: Getting Educated

Early voting has started, but, if all goes to plan, we'll know who will be the President on November 3rd. 

The fears of fake news and the growing echo chambers around candidates (and policies) mean it can be tough to truly make an educated decision. The reality is, most of our news sources are tinted by the lens of their ideology - which is okay. That means they're appealing to their targeted audience. 

That being said, it may also be worth looking at the same news story from a comparative news source from the other spectrum - or even better, a primary source when it comes to science/economics. 

Here's a chart that shows where news sources rank. You can click the image to go to an interactive version with more details. And, if you're curious about their methods, click here. 

via Ad Fontes Media

On top of reading various news sources, there are a couple of other tools I like: 

• FiveThirtyEight - Uses graphics to tell visual stories on valid statistics. Named after the number of electoral votes. Also has a visual presidential forecast. 
• RealClearPolitics - Aggregates news from various sources, as well as writing their own opinion pieces. Also has a good visual on the current state of the presidential, senate, and house races. 
• Brittanica ProCon - Tracks the stated positions of politicians on various issues. Can be sorted by candidate, and by issue. It also has a quiz you can take to assess which candidate you actually resonate with. 
• Politifact & FactCheck - Both sites fact check presidential statements, party statements, and more. We know politicians often lie by omission, or focus only on the specific stats that are relevant to their point. Fact-checking helps you gain a more holistic picture. 

 

As a last warning on believing anything you hear, most polls I've seen put Biden in the lead ... but if you remember 2016, you know the polls are working on incomplete information. Clinton had a lead on most polls and lost to President Trump. 

We live in interesting times!

Here Are Some Links For Your Weekly Reading - October 18th, 2020

 

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

Lighter Links:

• The Only Four Books Bill Gates Has Rated Five Stars. (Medium)
• Meet the 2020 Nobel Laureates. (Flipboard)
• How Crowd Forecasting Can Predict the Future. (Axios)
• Nvidia Will Build the 'World's Fastest AI Supercomputer'. (TechRadar)
• Record Avalanche of Early Votes Transforms the 2020 Election. (APNews)

 

 

Trading Links:

• Six NFL Teams Return Positive COVID-19 Tests in 24 Hours, and Why It's Important. (NESN)
• Fed Officials Call for Tougher Regulation to Prevent Asset Bubbles. (Reuters)
• As US Election Nears, Hedge Funds Gauge Far-reaching Market Impact of Trump-Biden Battle. (HedgeWeek)
• Beware Stock Market Divergence and Double Top Patterns!. (SeeItMarket)
• Young and Dumb' Traders Have Created a Total Nightmare' in the Stock Market, Fund Manager Warns. (MarketWatch)

 

Have You Voted?

It's election season! Early voting is now open in most places. 

Regardless of your preference, it doesn't count if you don't vote. 

Gandhi once said, “Be the change you wish to see in the world." This wasn't exactly what he meant … nevertheless, one of the ways you can impact the world is by impacting who gets chosen to represent us in government.

 

2020 has shown how important choosing the right leader is for the country and each of us.

 

I have friends on both sides of the political spectrum, and I hear complaints from both sides. The one thing we all can agree upon is that not enough people (who claim to care) actually get out and vote.

 

It is one thing to whine about the status quo … It is quite another to get up, get out, and do something about it.

 

Combat fake news and media sensationalism by doing some research choosing candidates you think will leave us better than they found us.

If you're not sure where your polling location is, check here. 

How Normal Is Your Face?

Project SHERPA recently released an AI-powered tool that analyzes your face and reveals how average it is. 

It's called How Normal Am I?

via How Normal Am I?

It's an interactive video that uses your webcam to walk you through the various assessments on BMI, emotion, beauty, etc.  At the end, it'll give you your life expectancy, and then your "normal score".

It's not the most complex use of AI, but it provides interesting insights, and is becoming increasingly prevalent. 

Governments, police stations, retail stores, etc. all use this technology to track individuals, and if you remember one of my previous articles - there are plenty of cameras to go around. 

If you did the demo, were you surprised by the results?

Interesting stuff!

Here Are Some Links For Your Weekly Reading - October 10th, 2020

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

Lighter Links:

• The Quantum Internet Will Blow Your Mind. Here's What It Will Look Like. (Discover)
• The US Military is Trialing Augmented Reality Goggles for Dogs. (CNN)
• Modern Science Didn't Appear until the 17Th Century. What Took So Long? (NYT)
• Qantas Airways 'Flight to Nowhere' that Sold out in Minutes Takes Off. (FoxNews)
• What Really Happens When You Become an Overnight Millionaire? (Marker)

 

 

Trading Links:

• Tesla Plans to Offer Machine-learning Training as Web Service with Its New 'Dojo' Supercomputer. (Electrek)
• Analysis: We Read the Antitrust Case against Amazon, and these are the Key Takeaways.  (GeekWire)
• Father of VIX Warns Options Glitch is Costing Investors Millions. (Bloomberg)
• Economists are More like Storytellers Than Scientists Don't Let the Nobel for Economic Sciences' Fool You. (TheConversation)
• The Stock Market Won't See the Bullish Outcome It's Expecting from a Biden Win Unless There's a Full Blue Wave, a JPMorgan Stock Strategist Says. (BusinessInsider)

How Machines Learn: Big Brother Is Watching

The ubiquity of Machine Learning algorithms remains a topic of interest because we, as a society, still haven't come to terms with what "acceptable" use looks like, and what privacy looks like in the post-AI world. 

Algorithms are helping you pick out your next gift on Amazon, controlling what you find on Google, they're suggesting new music for you on Spotify, and they're doing their best to keep you on their website.

They're following you in stores, on the streets, and many would argue they're tracking your phone calls, text messages, and more. 

With all that being said, I do think it's important to have a cursory knowledge of the things that impact our lives ... so, even if you're not an AI-aficionado, I think it's important to somewhat understand how machines learn, and how powerful they're becoming. 

The video is a bit simple in its explanations, but it describes some important concepts.

 

CGP Grey via Youtube

The video focuses on Genetic Algorithms, which is one type of machine learning – and neglects some of the other more complicated approaches.

As machine learning gets more complicated and evolved, it gets harder for a human to understand what makes it good … and that's okay. Understanding the direction AI is heading is more important than truly understanding the intricacies. 

It's human nature to feel safer when we understand something. It's human nature to envision machines as making human-like decisions, just faster.

Of course, just because it suits human nature to believe something, that doesn't make it true. 

Part of what makes machine learning exciting is that it can do a lot of things well that humans are really bad at. 

In reality, it doesn't matter why a bot is making a decision, or what inputs the bot is making the decision on. What matters is the performance and level of decision-making in relation to itself and to other options (and whether the bot is biased).

With respect to trading, focusing on the markets is a distraction.

For the most part, I don't care how markets are doing.

I care how our systems are doing and I care how the portfolio is doing.

It's a brave new world, and not only is big brother watching, but algorithms are too.

Live long and prosper!