A Smarter Computer to Pick Stocks
November 25th, 2006This is a funny article about black box trading systems, along with quotes from crackpot, technology fetishist and (would you believe?) hedgefund manager, Ray Kurzweil.
Sure, “invest” your money in a half cocked bum fight between super computers!
Via NY Times:
Ray Kurzweil, an inventor and new hedge fund manager, is describing the future of stock-picking, and it isn’t human.
“Artificial intelligence is becoming so deeply integrated into our economic ecostructure that some day computers will exceed human intelligence,†Mr. Kurzweil tells a room of investors who oversee enormous pools of capital. “Machines can observe billions of market transactions to see patterns we could never see.â€
The listeners, attendees of a conference sponsored earlier this month by the Capital Group Companies, are slightly skeptical. Some have heard that Mr. Kurzweil, 58, who takes more than 150 vitamins and supplements a day, believes people will eventually live forever. Others know he has said that in 2045, man and machine will achieve “singularity,†and humans will hold their breath for hours thanks to nanomachines in our bloodstreams.
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But as these new techniques proliferate, some worry that promotion is outpacing reality. These techniques may be better for marketing than stock picking.
“Investment firms fall over themselves advertising their latest, most esoteric systems,†said Mr. Lo of M.I.T., who was asked by a $20 billion pension fund to design a neural network. He declined after discovering the investors had no real idea how such networks work.
“There are some pretty substantial misconceptions about what these things can and cannot do,†he said. “As with any black box, if you don’t know why it works, you won’t realize when it’s stopped working. Even a broken watch is right twice a day.â€
U.S. Dollar in Strong Decline
November 25th, 2006Via: Financial Times:
A sharpening slide in the US dollar unnerved global markets on Friday as investors sought to protect themselves from the possibility of sustained dollar weakness.
As US markets were closing on Friday , the euro stood at a 19-month high of $1.309, up 1.2 per cent, while sterling gained 0.9 per cent to a 1½-year peak of $1.9333. The yen climbed 0.5 per cent to ¥115.66.
European and Asian stock markets suffered the fallout from the dollar’s decline with exporters to the US the worst performing stocks in all regions. But on commodity markets, dollar-denominated prices tracked higher as gold, copper and oil became cheaper in other currencies.
The euro’s strength could put the European Central Bank under fresh political pressure not to raise interest rates again after the expected quarter percentage point rise to 3.5 per cent on December 7.
The dollar has now fallen this year by more than 10 per cent against the euro and 12 per cent against sterling. Some economists suggest the greenback has further to slide given a weak economic outlook in the US, and the prospect of interest rate cuts there next year.
The Day The Earth Nearly Died
November 24th, 2006This is a fascinating read.
Via BBC:
250 million years ago, long before dinosaurs roamed the Earth, the land and oceans teemed with life. This was the Permian, a golden era of biodiversity that was about to come to a crashing end. Within just a few thousand years, 95% of the lifeforms on the planet would be wiped out, in the biggest mass extinction Earth has ever known. What natural disaster could kill on such a massive scale? It is only in recent years that evidence has begun to emerge from rocks in Antarctica, Siberia and Greenland.
Research Credit: TR
‘The Bastards Got Me’
November 24th, 2006Via: Times Online UK:
The poisoned Russian spy breathed defiance at the Kremlin as the effects of a mystery cocktail pushed him towards his death last night.
“I want to survive, just to show them,†Alexander Litvinenko said in an exclusive interview given just hours before he died.
Too weak to move his limbs and visibly in great pain, the former Russian intelligence officer suggested that he knew he may not win his struggle against the lethal chemicals destroying his vital organs. But he said the campaign for truth would go on with or without him.
“The bastards got me,†he whispered. “But they won’t get everybody.â€
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He also managed a joke at his own expense, suggesting that his poisoning was proof that his campaign against the Kremlin had targeted the right people. “This is what it takes to prove one has been telling the truth,†he said.
He was referring to allegations he made in a book, The FSB Blows up Russia, which accuses the Russian security services of causing a series of apartment block explosions in Moscow in 1999 that helped to propel Mr Putin into the presidency.
CIA Operatives at Scene of RFK’s Assassination
November 23rd, 2006Via BBC:
New video and photographic evidence that puts three senior CIA operatives at the scene of Robert Kennedy’s assassination has been brought to light.
The evidence was shown in a report by Shane O’Sullivan, broadcast on BBC Newsnight.
It reveals that the operatives and four unidentified associates were at the Ambassador Hotel, Los Angeles in the moments before and after the shooting on 5 June, 1968.
The CIA had no domestic jurisdiction and some of the officers were based in South-East Asia at the time, with no reason to be in Los Angeles.
More: Bobby and Alexander
Research Credit: West
Evidence-Based Technical Analysis
November 22nd, 2006The fallacy of technical analysis is interesting. How was I able to make money with these tools in the past? Luck, combined with a market that was trending mostly up; that’s how. In actuality, throwing chicken entrails against the wall would have roughly the same predictive capability as my multi period stochastics, moving averages and all the rest of it. I didn’t have to read a 528 page book to figure that out. I simply started to lose money.
If anyone out there is working on black box trading systems, Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals, by David R Aronson, looks like it could be invaluable. So, grease up the rotor on your propellerhead cap and find someone to slide the food and caffeine under the door:
Evidence-Based Technical Analysis is a breakthrough book in that it rigorously applies the scientific method and recently developed statistical tests to determine the true effectiveness of trading strategies, rules or systems discovered by data mining. Traditional technical analysis – as currently practiced – is more like a faith-based folk art than a science, the author asserts. These subjective interpretive methods cannot be back-tested or evaluated, yet many believe that they are effective. The author explains that because of various cognitive biases and illusions, such as hindsight bias, illusory correlations, etc., people often adopt beliefs that are unsupported by evidence or even contradicted by evidence. For example, the famous head and shoulders pattern – a cornerstone of traditional TA when tested objectively – has been shown to have no predictive power. Yet many TA texts and most TA experts believe in the pattern’s efficacy. To move technical analysis forward, the author proposes a new type of technical analysis, which he calls: evidence-based technical analysis or EBTA. Unlike traditional technical analysis, EBTA is restricted to objective methods whose historical profitability can be quantified and then rigorously scrutinized. The author provides a new statistical methodology specifically designed for evaluating the performance of rules that are discovered by data mining, a process in which many rules are back-tested and the best performing rule(s) is selected. Experimental results presented in the book show that data mining is an effective approach for discovering useful rules. However, the historical performance of the best rule (s) is upwardly biased – a combined effect of randomness and data mining. Thus new statistical tests are needed to make reasonable inferences about the future profitability of rules discovered by data mining. Most importantly, in a data mining case study the author evaluates more than 6,400 signaling rules applied to the S&P500 Index using these new tests. For technical analysts and traders, the book is a wake-up call to abandon subjective, interpretive methods and embrace an approach that is scientifically and statistically valid. For other traders, the rigorous testing of trading signals/rules may make their data mining efforts more productive and stimulate the development of new systems, signaling rules.
Related: The Magic Mystery Dot
The World’s First Creationist Museum
November 22nd, 2006Via The Guardian:
Just off the interstate, a couple of junctions down from Cincinnati’s international airport, over the state line in rural Kentucky, the finishing touches are being put to an impressive-looking building. When it is finished and open to the public next summer, it may, quite possibly, be one of the weirdest museums in the world.
The Creation Museum – motto: “Prepare to Believe!” – will be the first institution in the world whose contents, with the exception of a few turtles swimming in an artificial pond, are entirely fake. It is dedicated to the proposition that the account of the creation of the world in the Book of Genesis is completely correct, and its mission is to convince visitors through a mixture of animatronic models, tableaux and a strangely Disneyfied version of the Bible story.
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As you stand in the museum’s lobby – the only part of the building approaching completion – you are surrounded by life-size dinosaur models, some moving and occasionally grunting as they chew the cud.Beside the turtle pool, two animatronic, brown-complexioned children, demurely dressed in Hiawatha-like buckskin, gravely flutter with movement. Behind them lurk two small Tyrannosaurus Rexes. This scene is meant to date from before the Fall of Man and, apparently, dinosaurs.
Theological scholars may have noticed that there are, in fact, no dinosaurs mentioned in the Bible – and here lies the Creationists’ first problem. Since there are undoubtedly dinosaur bones and since, according to the Creationists, the world is only 6,000 years old – a calculation devised by the 17th-century Bishop Ussher, counting back through the Bible to the Creation, a formula more or less accepted by the museum – dinosaurs must be shoehorned in somewhere, along with the Babylonians, Egyptians and the other ancient civilisations. As for the Grand Canyon – no problem: that was, of course, created in a few months by Noah’s Flood.
But what, I ask wonderingly, about those fossilised remains of early man-like creatures? Marsh knows all about that: “There are no such things. Humans are basically as you see them today. Those skeletons they’ve found, what’s the word? … they could have been deformed, diseased or something. I’ve seen people like that running round the streets of New York.”
UK: Roadside Fingerprint Reading
November 22nd, 2006Via The Guardian:
Police trials of a hand-held electronic fingerprint reader are being launched.
Experts hope the device will save massive amounts of police time and money by allowing officers to identify suspects on the roadside without having to take them to the station.
A pilot scheme – called Project Lantern – will be used in Luton, Bedfordshire, by officers targeting motoring offences.
The gadget allows officers to search 6.5 million fingerprints archived on the National Automated Fingerprint System, with the trial aiming to give them a result within five minutes.
Liberty Dollars Not Legal Tender, United States Mint Warns Consumers
November 22nd, 2006Look what happened to the last guy who tried to change the funny money situation.
Via U.S. Mint:
Under 18 U.S.C. § 486, it is a Federal crime to pass, or attempt to pass, any coins of gold or silver intended for use as current money except as authorized by law.
UK: ‘Supernannies’ to Tackle Antisocial Children
November 22nd, 2006Via The Guardian:
A team of “supernannies” is to be sent to some of Britain’s most deprived areas to help parents control antisocial children, Tony Blair revealed today.
The parenting experts will be sent to 77 areas with high levels of unruly behaviour, teenage pregnancies and truancy from school.
The £4m scheme will also force the parents of disruptive children to attend parenting courses.
