March 10, 2023

"Would I bet my child’s life on this being true?", by Howard Rankin, PhD

"It’s still a world of humans", by Michael Hentschel

"Making decisions in uncertainty", by Grant Renier

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A tough fight to maintain NAV

TRADING PERFORMANCE RESULTS OF THE INTUALITYAI SYSTEM HAVE MANY INHERENT LIMITATIONS.  NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN REPORTED PERFORMANCE RESULTS AND RESULTS SUBSEQUENTLY ACHIEVED BY THE SYSTEM OR PORTFOLIO. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF THE SYSTEM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF REPORTED PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

Would I bet my child’s life on this being true?

And in a short sentence, Samuel Langhorne Clemens succinctly sums up the problems with humans:

“Get your facts first, and then you can distort them as much as you please.” – Mark Twain

 With our limited brain power, we consistently look for shortcuts and then convince ourselves we have the answer. Humans are story-tellers who seek consistency and can justify anything. The above quote also neglects another key issue. What are “facts” and how relevant are they? Most of the time, we cherry pick the facts that we have been brainwashed into believing are important and they can then become a self-fulfilling prophecy. 

In an article about this phenomenon: in helpfulprofessor.com, several examples are given including this one.

“During the Great Depression, which took place between 1929 and 1939, false rumors began to spread about the state of banks and their reliability. Many times, a rumor suggesting a bank was incapable of covering its deposits (insolvency) would be started and would cause panic among depositors. Faced with a frightful scenario that they believed to be real, depositors would then withdraw all of their money from their accounts before they bank’s money would run out (or so they thought), which ultimately caused banks to actually become insolvent. In other words, the initial rumor and prediction that banks would run out of money resulted in a self-fulfilling prophecy of banks running out of money during the Great Depression.”

The tendency to believe what we want to believe: and thus potentially reinforce personal and mass delusion is, of course, enhanced by modern day technologies, which allow the immediate sharing of ideas by supposed “experts”. Indeed, it has often been shown that such “influence” is massively overrated and too easily accepted at both an individual and mass level. For example, I know a person who was managing a political campaign for a local candidate, who was running for office in a county of about 50,000 voters. The candidate’s social media became overwhelmed with negative and disparaging comments, and the candidate became very depressed at the vast majority of her social media content. It turned out that all of the negativity was created by 7 people. 7 out of 50,000 voters.

It was Freud’s nephew: Edward Bernays who realized the potential of such manipulation and began the profession of “public relations”. And it’s been all downhill since then.

So, a useful practice for all of us: is to seriously and critically examine any thoughts, opinions and beliefs to which, for one reason or another, we subscribe. Look at each of those ideas and ask yourself this question, “Would I bet my child’s life on this being true?”

by Howard Rankin PhD, psychology and cognitive neuroscience

It’s still a world of humans

Whether we are talking about financial markets or any other markets: it’s still a world of humans, and that includes computers and bots which are programmed by humans. That programming will change as computers replicate and redesign themselves and their own algorithms, seeking optimization in ways in which humans frankly cannot keep up, but that has not yet happened at any relevant scale. 

Artificial intelligence trading is the rage, but despite some massive automated transactions moving markets, human intelligence still plays the most prominent role.

 There is of course both eager expectation and rising concern: that machines, even when faithfully executing human programming, will in their “prime objective” search for the most optimized trading strategies depart from or supersede human instructions, control, and even understanding. The question is whether a combination of human rationality/ irrationality with machine rationality can effectively merge. We call this Intuitive Rationality and that is key to our concept of humanized AI where the limitations of each are enhanced by the other. 

Markets are the product of a confluence of events and attitudes. In other words, changes in human behavior. Fundamentals of stocks are the result of human behavior, and past relationships and performance of those stocks form a foundation of knowledge about the present. Behavioral changes from that foundation forward will determine how accurate any predictions, not whether some pattern in the distant past has any relevance to the changing present. Predictions must be revised continually as change is continual, to assure that predictions are not slavishly followed beyond their relevance. Continual prediction allows continual adjustment and adaptation to changing attitudes and changing reality. 

Human behavior always strongly drives markets: Human behavioral drivers at this time include many fear factors that may not yet be fully baked into the averages. This litany of current risks appears to me almost unprecedented. 

Is IntualityAI “intuiting” something: that accurately reflects investor concerns and behavior? Intuality AI processes data in real time as it changes, and monitors behavioral trends in transactional patterns. It is not a potentially misleading false-probability chartist approach which tries to match a long-irrelevant past pattern to something happening today. Rather, IntualityAI is evaluating current patterns and predicting new realities from changes vis-a-vis a well-characterized base reality. And those changes are monitored in real time to assess if predictions also have to change, permitting real-time adjustment and adaptation. 

Conclusion: Behavioral elements of IntualityAI predictions provide a better, broader perspective on typical mass behaviors of large populations of market movers, while appropriately sensitive to rapid real changes. 

by Michael Hentschel, anthropologist, economist, venture capitalist

Making decisions in uncertainty

Creating behaviors and decisions in really complex: situations and environments can be more accurate when not relying on the idea that 'history repeats itself'. However, we are often threatened by unfolding events for which we don't have historical patterns to help determine what to do next. We will reach deep into our subconscious for some kind of response and create a 'knee-jerk' or some more mysterious 'intuitive' reaction.  Personally, we want that reaction to be based on the best information available.           

Socially is another matter. Among other fears, we don't want to appear wrong.         

The two videos below, watched in sequence: will hopefully explain how humanized AI must know as many facts as possible before making decisions, when problems are really complex.  In the first video, Todd Rose explains how this process often goes very wrong in, "Psychologist debunks 8 myths of mass scale."

Steve Pinker explains how Bayes Rule: can help us navigate through complexity with simple math.  Thomas Bayes, a 18th century cleric and mathematician, had it right. It's taken over 250 years for current mathematicians to begin to risk breaking from 'deterministic' equations and apply Bayesian Probability to our uncertain world.

The first video supports the importance of being aware: of the Evidence, the denominator. IntualityAI labels this as the Environment and is designed to process Influencer data (the weather during a football game), in addition to Objective data (yards gained and lost), to allow it to make decisions with an awareness of the greater environment. Watch this and see what you think. It's at the core of our IntualityAI's mathematics.

We'd like to get your comments at:

by Grant Renier, engineering, mathematics, behavioral science, economics

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