An evening of insights with the Hutters

The idea route for a startup is to employ a small skeleton crew to focus on mining for the insights on human behavior that will support a viable business model before raising money and scaling up the operations.

Big organizations tend to forget the insights that original lead to the founding of the company

If there is a company out there that is solving a problem you are trying to find a solution for but you cannot think of it off the top of your head, they might as well have been dead.

What you think might work usually is not so. It is only when you land up in a promising domain and start mining for insights in that domain do you start finding ones that are useful for building a company from.

Humans are motivated beyond pain and pleasure

No one has considered links themselves as important data elements.

It is usually the simplest actions backed by the most fundamental insights that drives the largest consumer adoption.

People feel that sense of accomplishment when they gather stuff thanks to our hunter gathering roots . They might not even need it at the end of the day.

Social book marking just died when most of their operators pivoted away from the central idea in 2005

  • Stumble upon
  • Digg
  • Reddit
  • Pintrest
  • Trello

The mass adoption of Slack and Quip might be a great channel for growing such an idea again but for the enterprise space.

The success of YouTube can be speculated to be due to:

  • In baked flash media code into browsers
  • Increase in bandwidth
  • Delaying the payment of royalty fees and taking down of copyrighted contents
  • They got sold for 1.2billion but paid of 750million in terms of royalties

Mark Cuban is a fake billionaire for selling Real networks to AOL which eventually got shut down after six months.

Related readings

  • Tory Higgins, “Beyond Pleasure and Pain: How Motivation Works”
  • Tory Higgins, “Shared Reality”

Observations at the heart of Permian basin

Office for the day. A proxy of view into the heart of the Permian basin as I get my car wheels aligned

The level of auto traffic along the Cedar Street, Pecos Texas is a very clear proxy on the health status of the US Oil industry.

Factors negatively impacting economic activities in the area:

  • US Elections: Oil companies operating in area put activities on hold awaiting for forthcoming mandate
  • Holidays: Demand for oil drops
  • COVID pandemic: Demand for oil drops

Responsiveness of lagging indicators:

  • Lag time between events and lagging indicators within the region is typically 24 hours
  • Layoffs can happen within 24 hours of environment triggers
  • Rapid hiring can happen within 24 hours of environment trigger
  • On occasions, rapid hiring and layoffs could happen simultaneously in different sectors

Qualitative background:

On mornings during times of Economic boom in the Oil industry, the Pilot center across the street could be observe lined with trucks rushing to fuel up as they go about transporting out their cargo to their destinations.

On such days, the empty parking lot in front of Custom Mufflers Tire Repair center could be seen filled up with trucks getting their wheels serviced.

With the election of President Biden, a bill was past that totally stopped all oil and gas related activities in New Mexico. This has resulted in the damping of traffic heading north along Cedar Street for the foreseeable future.

 

Observed second and third order impact of GameStop frenzy on market stability

Investment Funds market exposure strategies can be categorized primarily into three types.

Type 1: Long only strategy: funds that buy and hold positions.

Type 2: Short only strategy: funds that primarily borrow and short shares

Type 3: Market neutral strategy: funds that hold half their position in long and half their positions in short attempting to gain from some form of arbitrage between performers and losers.

To increase profit funds would typically be leveraged. Levels of leverage is dependent on how aggressive each individual fund is. Long Term Capital Management for example, a fund that went bankrupt in 1998, was leveraged up to 20X for some of its positions.

During a recent frenzy co-ordinated efforts by Redditers bid up prices of stock symbols like GameStop and AMC. From a fund management perspective, funds belonging to Type 2 and Type 3 were heavily impacted by this black swan event. As losses in their short positions mounted, many received margin calls from their lenders.

It is likely that Type 3 unwinded the bulk of their long positions to cover their margin calls. This had the net impact of driving down share prices of other unrelated stock symbols as observed in the US Equities sell off chart above.

Depressed share prices due to the unwinding of long positions by Type 3 lead to a follow on cascading effect where Type 1 had to unwind their leveraged long position.

This large scale unwinding activity could be inferred from the inverted yield curve observed on 31st Jan 2021. This inversion could also be interpreted as funds opting to maintain liquidity levels by moving heavily into positions like short term US Treasury and cash as they await for the market gyration to settle.

The last time the yield curve was observed to be extremely inverted was on 26th Feb 2020, during the initial onset of the COVID-19, pandemic as illustrated below

That was rectified when the Federal reserve lowered interest rates to 0% and started quantitative easing on 13th March 2020.

General thoughts of training trading bot

  • regime change occurs on the average every 3 months and the model gets outdated.
  • early signs of outdated model includes consistent non-commit signals
  • initial changes to trading parameters will tend to yield poor initial outcomes.
  • Good outcomes will require time to play itself out
  • Buying on the MACD bullish reversal tends to be too late in a volatile market. Potential gains from the reversal would have most likely played out by then
  • Drastically reducing number of outstanding positions leads to inefficiency of capital deploy as capital is left idling around with a bullish trend plays itself out
  • Explore buying when negative MACD trend slows down.

Key lessons learned from 2020 coronavirus sell offs – DONT TALK ABOUT TRADING

  • Key weakness of my profile Yang Wood Day Master profile
    • easily confused when provided with too much conflicting social signals
    • slow in decision making process
    • recommendations: avoid unnecessary conversations and stick to simple system that works
  • Do not enter into positions until SPY MACD bullish crossover occurs.
  • Practice “Let’s not talk about trading”
    • When people ask how you pay for your expenses, just reply money from parents.
    • When people send messages about trading related stuff just don’t reply
    • Too many inputs from unqualified personnels creates confusion in the mind leads to bad decision
    • Arguments is a time sink, creates a lot of unnecessary stress, drains will power, emotional and mental strengths. This leads to poor decision making when it matters
    • Wasting time explaining the obvious to people does not lead to me having more money in my pocket whereas giving people wrong info leads to bad relationships later on.
    • Set positions and forget
    • Do not waste time debating about news on social networks. It leads to hurt feels amongst friends and relatives.
    • No point reading news as bulk of the macro signals are already reflected in the prices of index by SPY. It does not generate profit.
    • Don’t attempt to derive satisfaction and self-worth from trading profits. If you feel good now you will probably feel like shit later when profits start diving
    • Do not talk about profits made during trades, makes others who did not make that money feel bad about themselves.
    • Do not talk about losses made during trades, provides others the opportunity to make you feel even worse with their useless feedbacks.

Related references

Chat with Quynh on trading

News sources utilized

  • Zacks
  • Motley Fools

Buy rumors and sell on news

  • rumors are not official news but signals that a news might be coming soon
  • continuous upwards movement of share price for few days means news might be announced soon
  • once news is out share price will adjust based on actual numbers

Buy on over reaction to bad news and sell on recovery

  • There is usually overreaction

The dichotomy between privacy and health

1984: Big Brother is Watching

Across multiple literature, its been stated privacy versus health will be one of the primary dichotomy societies around the world will need to juggle with as technological advances are made in the fields of artificial intelligence, communications (surveillance) and medical science (genetic research).
 
What is surprising was the rate at which the Corona pandemic catalyzed this change. In light of this, it is fascinating to observe how different societies position along the spectrum. Some societies has opted for surveillance to the maximum extend possible with current technology while others opted for its polar opposite going to the extend of staging mass protests against it use. 
 

Related readings:

  • The AI Economy, Roger Bootler
  • To Be a Machine, Mark O’Connell
  • Irrational Exuberance, Shiller, Robert J.
  • Life 3.0: Being Human in the Age of Artificial Intelligence, Max Tegmark
  • Mind Children The Future of Robot, Hans Moravec
  • The Singularity Is Near, Ray Kurzweil
  • 1984, George Orwell