Saturday, May 7, 2011

Robotics lurches forward to the corner of What? and Who Knows?

I can't recall the last time there was a week of such interesting development in robotics, or virtual prosthetics, or both. First, there was this video from Boston Dynamics (no relation to Massive Dynamic, I presume) to which I will add no comment:

OK, cool. Then there was this (in the prosthetic department): "the "Kiss Transmission Device" – a prototype gizmo designed to allow its users to virtually lock tongues." Demonstration can be seen below.

Again I will refrain from too much comment, but clearly this could be integrated into larger systems.

Also in the prosthetic department: "Japanese company Neurowear is creating a range of fashion items that are operated using brainwaves, including a pair of movable cat ears." Story appears here. Obviously, the difference that makes a difference here is the brainwave controllability, the "ears twitch through a range of different positions, which correspond to different brain activity."

Connect the dots......I'm value-neutral on what this might signify.

And there's also (finally) this story on machine altruism.  "If Hamilton's hypothesis was correct, 'successful' virtual robots were likely to be those that were closely related and shared food with each other; that would help to ensure that at least one of them -- and some of the genes of both—would make it to the next round."

Perhaps we should start thinking a little more clearly, or carefully, about where this might be going. At any rate, change is inevitable, you might want to meet it halfway---which seems to be just around the corner.

Friday, January 21, 2011

Why call it Schumpeter?

In 2009, the Economist magazine launched a column named after the great Austrian economist Joseph Schumpeter. The first column discussed the reasons for naming itself after him. Excerpt below:
     "Joseph Schumpeter was one of the few intellectuals who saw business straight. He regarded business people as unsung heroes: men and women who create new enterprises through the sheer force of their wills and imaginations, and, in so doing, are responsible for the most benign development in human history, the spread of mass affluence. “Queen Elizabeth [I] owned silk stockings,” he once observed. “The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort…The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.” But Schumpeter knew far too much about the history of business to be a cheerleader. He recognised that business people are often ruthless monomaniacs, obsessed by their dreams of building “private kingdoms” and willing to do anything to crush their rivals.
     "For Schumpeter the people who kept this gale blowing were entrepreneurs. He was responsible for popularising the word itself, and for identifying the entrepreneur’s central function: of moving resources, however painfully, to areas where they can be used more productively. But he also recognised that big businesses can be as innovative as small ones, and that entrepreneurs can arise from middle management as well as college dorm-rooms.
     "Schumpeter was born in 1883, a citizen of the Austro-Hungarian empire. During the 18 years he spent at Harvard he never learned to drive and took the subway that links Cambridge to Boston only once. Obsessed by the idea of being a gentleman, he spent an hour every morning dressing himself. Yet his writing has an astonishingly contemporary ring; indeed, he seems to have felt the future in his bones. The gale of creative destruction blew ever harder after his death in 1950, particularly after the stagflation of the 1970s. Corporate raiders and financial engineers tore apart underperforming companies. Governments relaxed their hold on the economy. The venture-capital industry exploded, the computer industry boomed and corporate lifespans shortened dramatically. In 1956-81 an average of 24 firms dropped out of the Fortune 500 list every year. In 1982-2006 that number jumped to 40. Larry Summers, Barack Obama’s chief economic adviser, argues that Schumpeter may prove to be the most important economist of the 21st century."

Wednesday, January 19, 2011

What Great Chess Players Can Teach Investors

Does your investing style match any of these 3 Grandmasters?
It strikes me the constant iterative calculation of risk and reward that each chess move requires should translate well in to the investing world.
With this in mind, let's look at a few world champions and see how their style matches up to various investment styles. It will be interesting to hear from fellow investors and see which chess players they think they resemble. Trust me, this is not as batty as it seems!

Tigran Petrosian

Tigran Petrosian (not to be confused with his young namesake) is my favourite player and widely regarded as the greatest defensive player in history.
Petrosian's style is characterised by risk aversion first and an incredible patience in waiting to exploit any errors by his opponent. He preferred to quietly develop behind closed positions and sought to cramp his rival's development at every opportunity. Board position was so important to him that he often made sacrifices in order to gain positional advantage.
Paul Keres once said "Petrosian was a player who spent more time considering his opponent's possibilities than his own."
So the Petrosian investor thinks about risk, risk, risk. When he looks at a company, he is always focusing on trying to foresee and avoid the negatives while also strengthening the underlying strategic position. This type of investor will tend to miss out on stellar gains but should avoid disastrous blowups.
However, if you are willing to make sacrificial investments in order to suit the overall plan, hedging and diversifying should come naturally, as they help contain overall risk.
One criticism of Petrosian was that his approach tended to make him draw too many games through lack of initiative. Similarly, the Petrosian investor will spend a lot of time looking at situations and avoiding them because of risk aversion. However, they will wait until the price is right and then move to take advantage.
I think this game is very instructive of Petrosian's style.

Anatoly Karpov

Karpov is a former world champion and great rival of Garry Kasparov. In a similar vein to Petrosian, he preferred closed positional play to the uncertainty of open tactical battle.
Karpov said of his style that:
"the game may be continued in two ways: one of them is a beautiful tactical blow that gives rise to variations that don't yield to precise calculation; the other is clear positional pressure that leads to an endgame with microscopic chances of victory.... I would choose the latter without thinking twice. If the opponent offers keen play I don't object; but in such cases I get less satisfaction, even if I win, than from a game conducted according to all the rules of strategy with its ruthless logic."
Karpov sought to eliminate uncertainty and gradually work out a strategic plan that involved total control of the game.
A Karpov investor will seek to make money across all market conditions and not look to take risk unnecessarily. But they would be more aggressive than Petrosian and take more initiative in seeking to impose their overall strategy.
One downside of Karpov's approach could be that, should his opponent disrupt his overall plan, it is questionable as to how he would be able to react. Nevetheless, if a Karpov investor gets his investment approach correct, he will find it a lot easier to keep replicating results.
I think they would prefer a mechanical based approach that did away with too much discretionary decision making. If it goes wrong, they just look to adjust the system.
There's a good example of Karpov's play here.

Mikhail Tal

Tal's style was relentless attack, relying on intuitive thrusts that created open tactical battles. He would deliberately open up novel and complex positions, in order to intimidate and crush his rivals.
Naturally, this would create imperfection in his play, but few could match his calculative speed or skill. Although this style is seen as risky, Tal has the best record in chess Olympiads and only lost twice in 101 games.
A Tal investor is an archetypal trader, relying on gut feel and instinct to make decisions. He is not worried about the odd loss as the imposition of his style means he will have more winners than losers. Tal investing is all about calculated risk and having the confidence and courage to take initiative whilst unsafe in the knowledge that you are in uncertain territory. Trading against Tal would not be fun!
He said "later, I began to succeed in decisive games. Perhaps because I realised a very simple truth: not only was I worried, but also my opponent".
Tal's play can be seen here.
Which one are you?

Tuesday, December 21, 2010

10,000 Hours of reading about 10,000 hours

No, seriously, here's another nice take on the concept from Harvard Business Review.

"Here, then, are the six keys to achieving excellence we've found are most effective for our clients:
  1. Pursue what you love. Passion is an incredible motivator. It fuels focus, resilience, and perseverance.
  2. Do the hardest work first. We all move instinctively toward pleasure and away from pain. Most great performers, Ericsson and others have found, delay gratification and take on the difficult work of practice in the mornings, before they do anything else. That's when most of us have the most energy and the fewest distractions.
  3. Practice intensely, without interruption for short periods of no longer than 90 minutes and then take a break. Ninety minutes appears to be the maximum amount of time that we can bring the highest level of focus to any given activity. The evidence is equally strong that great performers practice no more than 4 ½ hours a day.
  4. Seek expert feedback, in intermittent doses. The simpler and more precise the feedback, the more equipped you are to make adjustments. Too much feedback, too continuously, however, can create cognitive overload, increase anxiety, and interfere with learning.
  5. Take regular renewal breaks. Relaxing after intense effort not only provides an opportunity to rejuvenate, but also to metabolize and embed learning. It's also during rest that the right hemisphere becomes more dominant, which can lead to creative breakthroughs.
  6. Ritualize practice. Will and discipline are wildly overrated. As the researcher Roy Baumeister has found, none of us have very much of it. The best way to insure you'll take on difficult tasks is to ritualize them — build specific, inviolable times at which you do them, so that over time you do them without having to squander energy thinking about them."

Tuesday, November 16, 2010

Metaphor Mind

From a nice piece by Robert Sapolsky (John A. and Cynthia Fry Gunn Professor of Biology, Neurology and Neurosurgery at Stanford University):

There’s another domain of unique human skills, and neuroscientists are learning a bit about how the brain pulls it off.

Consider the following from J. Ruth Gendler’s wonderful “The Book of Qualities,” a collection of “character sketches” of different qualities, emotions and attributes:
Anxiety is secretive. He does not trust anyone, not even his friends, Worry, Terror, Doubt and Panic … He likes to visit me late at night when I am alone and exhausted. I have never slept with him, but he kissed me on the forehead once, and I had a headache for two years …
Compassion speaks with a slight accent. She was a vulnerable child, miserable in school, cold, shy … In ninth grade she was befriended by Courage. Courage lent Compassion bright sweaters, explained the slang, showed her how to play volleyball.
What is Gendler going on about? We know, and feel pleasure triggered by her unlikely juxtapositions. Despair has stopped listening to music. Anger sharpens kitchen knives at the local supermarket. Beauty wears a gold shawl and sells seven kinds of honey at the flea market. Longing studies archeology.

Symbols, metaphors, analogies, parables, synecdoche, figures of speech: we understand them. We understand that a captain wants more than just hands when he orders all of them on deck. We understand that Kafka’s “Metamorphosis” isn’t really about a cockroach. If we are of a certain theological ilk, we see bread and wine intertwined with body and blood. We grasp that the right piece of cloth can represent a nation and its values, and that setting fire to such a flag is a highly charged act. We can learn that a certain combination of sounds put together by Tchaikovsky represents Napoleon getting his butt kicked just outside Moscow. And that the name “Napoleon,” in this case, represents thousands and thousands of soldiers dying cold and hungry, far from home.

Wednesday, November 3, 2010

Dictionary of the Near Future

Three Definitions from Douglas Coupland's Dictionary of the Near Future:

STANDARD DEVIATION Feeling unique is no indication of uniqueness, and yet it is the feeling of uniqueness that convinces us we have souls.

IKEASIS The desire in daily life and consumer life to cling to “generically” designed objects. This need for clear, unconfusing forms is a means of simplifying life amid an onslaught of information.

CRYSTALLOGRAPHIC MONEY THEORY The hypothesis that money is a crystallization or condensation of time and free will, the two characteristics that separate humans from other species.

Wednesday, October 27, 2010

Country ETFs: debt, correlation, GDP

1. "...some markets seem to be less in tune with the dips and advances of the S&P 500 than others. In particular, three country ETFs stand out as exhibiting a relatively low correlation with the S&P over the past two years..."

2. Levels of Public Debt as a % of GDP from 2009, a list by country

3. put 'em together and you get: "five ETFs [OK, three] focused on countries with low debt-to-GDP ratios"

4. For bonus points, what country ETF is featured on both ETF lists?