24 November 2017: Black Friday

Today is Black Friday. To consumers, this expression sounds like music to their ears. But stock market investors do not like the adverb ‘Black’ in general. Surely, they do like it when listed companies operate in the blackBut, mostly, investors associate the term with disaster. The Wall Street Crash of 1929, also known as The Great Crash, started on 24 October (‘Black Thursday’) and reached its (negative) climax on 29 October (‘Black Tuesday’). Almost sixty years later, ‘Black Monday’ was added to the Black week. On 19 October 1987, stock markets around the world crashed. (In Australia and New Zealand, the 1987 crash is also referred to as ‘Black Tuesday’ because of the time zone difference). And then there is ‘Black Wednesday’ (16 September 1992), when UK government members John Major and Norman Lamont were forced to take the pound out of the European Exchange Rate Mechanism. So, basically, we are missing a ‘Black Friday’ in the history of stock markets. Will Black Friday become Black Friday today (if you know what I mean)? 

white-chapel-logo-smallStocks ended mostly lower in thin, pre-holiday trade Wednesday. The NASDAQ was able to squeeze out another record close. The S&P 500 lost 0.08%, while the Dow lost almost 0.3%. The NASDAQ climbed to 6867 points, gaining slightly under 0.1%. Volatility rose, but this rise happened mostly in the last 15 minutes of trading, after trading of regular stocks had ended. The VIX gained 1.5%. UVXY ETFs lost more than 2% for the day. XIV ETNs added almost 1%.
Danny Daredevil recorded a loss and his RSS dropped to 9%. He is longing for an end to this year (with his yearly result currently at -73%), which stands in contrast to the previous year (which saw a yearly return of 303%).  Adventurous Anny is still holding cash. Her RSS remained at 15%. Solid Suzy and Lazy Larry do not want the good mood among investors that has been so characteristic for 2017 to end. Their RSS rose to 78%.
None of our models gave a trading signal at the end of Wednesday’s session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

9.32%

-72.88%

-21.53%

5%

Adventurous Anny Cash 6 March 2017

15.37%

15.37%

6.34%

22%

Solid Suzy XIV 6 March 2017

77.59%

77.59%

21.41%

123%

Lazy Larry
XIV 6 March 2017

77.59%

77.59%

21.41%

123%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

RS_v05-smallRené’s Reflections @ Friday: Sculpting the future

Every block of stone has a statue inside it and it is the task of the sculptor to discover it. — Michelangelo

We are now at the dawn of the era of Artificial Intelligence (AI) and Robotics. Bold statement: One of the numerous fields in which these transformative technologies will eventually dominate us human beings, is that of creativity. (And by ‘eventually’ I mean: ‘sooner than you would expect’). Johann Sebastian Bach may no longer be among us, but the time will come when we will listen to AI-generated Bach compositions that are indistinguishable from ‘the real thing’. We will then also listen to new guitar solos played by Jimi Hendrix, and see Marilyn Monroe act again in AI-generated movies. It all sounds virtually impossible at the time of this writing. But let’s read this text again, say in 2030.

I want to share two videos with you which I found on YouTube, and that inspired me a lot. The first one is a lecture by Google Brain researcher Douglas Eck, who discusses a ground breaking project ‘to generate art and music with deep nets and reinforcement learning’. The second one is a lecture by Blaise Agüera y Arcas. Just like Douglas Eck, he is a principal scientist working for Google. In his lecture, he shows ‘how neural nets trained to recognize images can be run in reverse, to generate them. The results: spectacular, hallucinatory collages (and poems!) that defy categorization. “Perception and creativity are very intimately connected,” [..] “Any creature, any being that is able to do perceptual acts is also able to create.”‘