- Using artificial intelligence… to trade stocks
- This new Wi-Fi technology isn’t a threat to 5G
- COVID-19 was never a “black swan.” This is.
Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
I wish I had better news to share going into the weekend. The U.S. unemployment claim numbers came in yesterday at 3.2 million. That puts the seven-week total at 33.5 million.
The U.S. unemployment rate now sits at a mind-bending 14.7%, and it is going higher. For context, that’s the worst unemployment rate since 1939 (17.2%). The worst rate ever was in 1933 at 24.9%. Let’s hope that we don’t come close to that.
And there is a major problem right now affecting the job markets and the ability to reopen the global economy. Most countries and states have shut down the schools for the remainder of the school year.
Decisions to keep the schools closed are being made despite the positive data that we have now. Some are even looking to remain closed for part or all of the next academic year that begins in the fall.
This would be a terrible mistake for our children and grandchildren. And for those who don’t have children, this is terrible for society at large and the global economy.
If children aren’t returning to school, it makes it very difficult for working parents to return to their jobs. And if they don’t return to work, local, regional, and national economies won’t recover quickly.
Students are absolutely the lowest-risk category for getting sick from COVID-19. They are far more likely to catch influenza than become sick from COVID-19.
These protracted closures are unnecessary. Schools should be the first part of society to reopen, but instead most states and countries are making them the last. They have it completely backward.
These decisions are nothing but virtue signaling “in the best interests of the safety of the children.” But the reality is the complete opposite. The toll on children’s intellectual, emotional, and even physical well-being is far worse and absolutely heartbreaking.
Now let’s turn to our insights…
Leveraging artificial intelligence for stock trading…
For our first question, a reader is curious about artificial intelligence and its potential applications in stock trading…
I realize the Elon Musk’s “Quantum AI” for share trading is a SCAM. But is it impossible to achieve? Considering how astonishing technology – that you reveal – is shifting the odds in stock trading with enormous data collected from wide and far and processed through a powerful – but still conventional – computer, that indicates that Elon Musk (or someone else) is not far away anymore from achieving just what that article claims.
– Gerhard G.
Hi, Gerhard. Thanks for writing in.
Your comment caught my attention. I had no idea what you were referring to at first. After a bit of digging, I did manage to find online reviews of a trading platform called Quantum AI. The trading platform claims to leverage quantum computing and artificial intelligence for stock trading.
I couldn’t see the trading platform or the associated website myself. So all I have to go off us is the reviews from others. But based on the evidence presented there, this system certainly looks like a fraud.
According to the reviewer, the company even went so far as to concoct a fake headline that claimed Elon Musk – Tesla and SpaceX founder and CEO – had spent $3 billion over three years to develop the trading platform.
So let’s be sure to steer clear of Quantum AI. And to be clear, any program that promises to send interest of 10%, 110%, and even 250% after one day is definitely a fraud. Those kinds of numbers are far worse than Bernie Madoff’s Ponzi scheme.
But as for your question, is it possible to leverage artificial intelligence for stock trading? The answer is yes.
Perhaps the most famous example of a fund that leverages predictive models for stock trading is the Medallion Fund from Renaissance Technology.
The fund collects petabytes of data to assess statistical probabilities and pattern recognition for the direction of equities. It’s estimated that Medallion has delivered annualized returns as high as 80% a year, before fees.
Medallion Fund is the most famous example, but it’s not alone. It’s estimated that more than 1,300 hedge funds make a majority of their trades thanks to predictive models.
So, yes, leveraging artificial intelligence for stock trading is a very real – and potentially lucrative – strategy. And there is even an angle using quantum computing.
Today’s quantum computers are very good at solving multivariable optimization problems. It is possible to run machine learning software for complex problems – like predicting outcomes of complex systems – on a quantum computer.
Unfortunately, I suspect very few of us would ever have the opportunity to invest in one of these funds. Medallion Fund, for instance, is open exclusively to the employees of Renaissance. In fact, it has been closed to outside investors since 1993.
But as I explained last week, my mission is to “balance the scales” in favor of the retail investor. I want investors who follow my work to have an edge over Wall Street, not the other way around.
And that got me thinking about the potential applications of artificial intelligence in stock trading. Why couldn’t my readers utilize this same technology to place the same kind of high-probability trades?
For close to a year, this is a project I’ve been quietly developing. It’s still too early to share any of my findings with readers. But I hope to have an update in the coming months.
And if this type of research product – an “AI Trader” – is something readers would be interested in, I’d be happy to hear your feedback. Write to me here.
Wi-Fi 6E is not competition for 5G…
Next up is a question about Wi-Fi 6E…
Is Wi-Fi 6 competition for 5G? Does the expansion of unlicensed spectrum for Wi-Fi 6 affect the future value of 5G companies?
– Ed B.
Thanks for the question, Ed.
For readers who missed it, Wi-Fi 6E refers to a network that runs over a 6 GHz frequency band. Today, Wi-Fi networks run over 2.4 GHz and 5 GHz frequency bands. And they are completely congested.
Simply look at all the Wi-Fi networks that are in range of you right now. You’ll likely see dozens of networks. And the result is that these networks interfere with each other. If you’ve ever had your computer or smartphone lose connection to your Wi-Fi network for seemingly no reason, it’s likely this is the cause.
But the amount of spectrum unlocked for Wi-Fi 6E is quadruple the amount that is available today to the current generation of Wi-Fi. New wireless routers that can access the 6 GHz frequency bands could provide networks speeds up to 100 times faster than what some of us use today.
So is this technology a threat to the 5G wireless rollout?
Not at all. And the difference is easy for us to understand.
I’m sure many of us connect our smartphones to our Wi-Fi networks when at home. But as soon as we leave the house, we lose connection to that network, and our device switches over to a 4G network.
The same will be true with Wi-Fi 6E and 5G wireless networks. At home, we may enjoy using our Wi-Fi 6E. But when we’re on the go, we’ll rely on the lighting-fast 5G networks. And there are certain applications that only 5G can accomplish.
We’ve spoken about how 5G networks will be leveraged to manage fleets of autonomous semitrucks. An 18-wheeler will be rolling down the highway with no driver in the front seat. And when the semi arrives at its destination and needs to navigate something tricky like a loading dock, a human driver can take control of the wheel from a remote command center.
We can look at 5G and Wi-Fi 6E as complementary technologies. And Wi-Fi networks of any kind help to offload data traffic from 4G and 5G wireless networks. This helps smooth out data traffic and reduce congestion.
COVID-19 was never the true “black swan”…
Let’s end with one final observation from a reader…
Nassim Nicholas Taleb’s The Black Swan describes a sudden unexpected event with massive impact. COVID-19 looked like a black swan.
[…]
But as it gets closer, we can see that it is not a black swan at all. It’s that other rare bird, the phoenix. It is plunging toward earth, where its destiny is to burn and destroy. It disguised itself as a black swan, and it counted on our unprecedented response to it; the time was ripe. The aftershocks and repercussions from our responses – economic collapse, loss of liberties, and ultimately more death than from the virus itself – could very well burn down societies and nations. Eventually, the phoenix is reborn and rises from the ashes. But what will it look like?
– Steve H.
Thanks for writing in, Steve. You have an interesting take on the situation. And I happen to agree that the virus itself is not the true “black swan.”
After all, pandemics come and go, and many have projected that more will come. It’s estimated that the H1N1 swine virus infected somewhere between 700 million and 1.4 billion people. And as many as 575,400 died, according to the Centers for Disease Control and Prevention (CDC).
As tragic as that was, the global economy never stopped, and there were no lockdowns of any kind.
The black swan event this time wasn’t COVID-19; it was how the world chose to deal with it.
Your analogy of a phoenix seems apt. Everything we once considered “normal” is rapidly being torn down. In its place will be a new world order, dominated by the next generation of technological giants.
And believe me when I say that the tech elites have been waiting for a moment just like this…
It is the moment that the latest generation of “digital-first” technology companies has been waiting for. Consumers around the world, set in their ways of shopping, working, and entertaining offline, have been abruptly forced to change.
Tech companies have been there, waiting quietly for a catalyst to push the entire world to use their phones, tablets, and computers to do everything. No task, and I mean not one, is sacred.
Groceries are ordered online through Amazon (Whole Foods) or Instacart. Lunch or dinner is ordered through Grub Hub, Uber Eats, or Door Dash.
Need prescriptions filled? Home delivery just became a norm whether we order through our local or national pharmacy.
Wine and spirits can be happily delivered to our doors.
Entertainment? Netflix, HBO Now, Amazon Prime, Hulu, Roku, Showtime, and Disney+ all deliver whatever we want at our convenience.
Online dating is happening on Zoom or Google Meet (Hangouts).
Business setting? Zoom or Microsoft Teams. And before we know it, we’ll be hanging out and meeting in augmented and virtual reality settings for a more enhanced, immersive experience.
Masks on airplanes, distancing on public transportation, and temperature checks at entrances will be constant reminders of the lockdown of 2020.
And it will make travel inconvenient. It will dramatically reduce our amount of personal and business travel. And there will be a strong preference for personal travel to be limited to driving distance.
Transactions will be restructured to avoid contact. Retail locations will prefer self-checkouts. More advanced retail environments will evolve to “grab and go” technology similar to Amazon Go stores
In a light switch moment, routine health care visits are now taking place using telehealth providers. Companies will have subscription plans and send out a member’s kit with basic medical diagnostic equipment that anyone can use.
These are just a few of the permanent changes that are happening or have already happened. There will be more.
And, yes, there are severe and exciting investment implications. In the months and years ahead, I’ll be advising my readers to invest in the companies that are well-positioned for these changes.
That’s all the time we have this week. If you have a question for me, be sure you submit it right here. I’ll do my best to get to it next week.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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