Counter-intuitively when all news is bad news, it becomes good news. After receiving series of negative news both substantial and not, the market suddenly rebounds with the expectation that Federal reserve will further cut interest rates at the end of October 2019.
As it is now, it seems the market is trading with a narrow band of USD300 and USD290 for the SPY
not necessary to get numbers further back than six months
stock market subjected to fractal distribution
it is possible to generate returns of up to 140% per year by trading on stocks that are moving within a range
going all in on each position each time leads to a very low Sharpe ratio
Sharpe ratio should be calculated separately for method and for SnP benchmarked against US treasury interest rates. The difference is the actual returns
On Rambo Last blood
A movie is a reflection of the culture and attitude of an age. Rambo was a very popular cultural icon during the eighties and the early nineties when memories of the Second World War and the Cold War against the communist were still very fresh in the minds of the people in America.
If you looked at the world today through the eyes of someone like Rambo, you would have been able to easily draw facts to back the narrative painted by Trump prior to being elected president.
When operating in an environment of uncertainty, a decision maker formulates multiple often competing narratives in the head that best explains majority of the facts presented. He calibrates the weightage assigned to the probability of each narrative as new pieces of data become available. He simultaneously utilizes multiple ones that are assigned high plausibility in his decision making to strive for the best possible expected outcome . It is a cognitively demanding iterative activity that goes on indefinitely.
common themes between movie and Trump’s narrative
Mexico drug cartels
Mexico prostitution rings
The world is a dark place
illegal border crossing
poor border fence
Protagonist is in his 70s
Freedom fighter who fought the communist in Vietnam and Russia
For us to be able to successfully apply artificial intelligence on any domain, the following needs to be true
The behavior the system to be modeled must not be stochastic
The state of the system must be decipherable by the data scientist
it should be possible to understand the state in which the system is at through interpretation of data gathered
The domain can be modeled
the parameters for modeling the domain must be well defined
Only when all three premise are true can we determine where the adjustment should be made when a model fails to predict an outcome
The financial markets is stochastic in the short run.
The underlying parameters are constantly changing and thus hard to model due to the emergent nature of impacts caused by human activities. The data is qualitative and thus hard to convert into clean quantitative datasets.
While the price movements are obvious it is hard, it is hard to attribute impact to the various parameters.
As such, it requires human neural networks that consumed all these qualitative data to perform the prediction/decision making.
Climate is both an enabler and disruptor of human endeavors. Nature balances the population it supports. Technology enables increased rate of energy extraction from environment to further human purposes.
Conducive climate results in bountiful yield and has allowed Rome to rise. Land is cleared and trade networks flourish during the rise of the empire. Clearance of wild lands unlocked microbes into the human civilization.
Microbes evolve to utilize humans and other mammals as vectors of infection. Dense population and connected trading network serve as a multiplier. The worst pandemic is the white pestilence (Black Death). This wiped out more than half of human population.
Trading network collapse as a result of the decimated population. Military rank diminishes both as a result of population decimation. Problem is further compounded by collapse of financial system which makes it difficult to sustain an army.
Grounds are fertile for spread of monotheistic dooms day religion like Christianity. Emperor Justinian converts to Christianity. Classical Greek school of thoughts gets displaced.
Climate change for the worse force nomads with superior military power to migrate westwards into Roman territory.
Roman Empire with decimated population gets further crippled.