Economics, Advanced Technology, and Social Media

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Fundamental drivers for pricing valuations in public markets have changed. Now, there is a new interaction among factors unseen just recently. Advanced technologies such as artificial intelligence have had a profound impact on the tools available and analysis presented to even the most amateurish investor. Social media, such as Reddit, Twitter, and other platforms, have allowed access to information and influence from media “stars” driving demand in an almost herd-like mentality driving up prices, and causing extreme volatility. Finally, technology has enabled a trading floor to be in everyone’s pocket. That same trading floor allows access to any information on anything from anywhere, and communication with anyone or, via social media, receive communication and information (regardless of how dubious) from anyone about any security or investment strategy.

These factors will cause unprecedented market volatility, along with extreme price movements for well-known (or perhaps more accurately, well-publicized) companies and their securities. While the supply of securities remains somewhat constant, demand for those securities is increasing (sometimes exponentially) because many more investors are now chasing those same securities.

The price of anything cannot escape supply and demand dynamics. Recent IPO activity is an attempt to meet growing demand (and raise capital at attractive prices). The new supply from IPO’s, secondary stock issuances, and most recently and monumentally, SPAC offerings, still do not provide enough supply to quench a growing and overwhelming demand. The valuations, especially those given to the SPAC’s, are entering stratospheric levels that could hardly be justified under normal market conditions. Successful investors are the ones who understand adding return without corresponding risk is the most critical component of successful investing, especially given the new equation for valuation:

Economics + Advanced Technologies + Social Media = Price

These three components are now inexorably linked and constitute an influential role in determining valuation from now on.

The More Things Change…

The pandemic has challenged many preconceived notions about the economy, markets, and public policy – and has impacted the way we live. But the inescapable truth remains unchanged:

There is no magic answer. No solution other than superior skill enables an investor to earn a high return safely and dependably. That is even more true in today’s low-interest rate, low return Tower of Babel world.

First Principles – Disruption’s Source

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“Assume no knowledge” (Socrates) No successful company can create or sustain its competitive strength without constantly examining its First Principles. It means defining a problem effectively, understanding the actions needed, and then implementing those plans. This requires a unique combination of perspective, talent, drive, and organizational flexibility. It is rare, but when discovered, it is…

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AI Does Not Live Up to the Hype

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The history of AI shows that attempts to build human understanding into computers rarely work. Instead, most of the field’s progress has come from the combination of ever-increasing computer power and exponential growth in available data. Essentially, the ability to bring ever more brute computational force to bear on a problem-focused on larger data sets…

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Technology and Turmoil

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Productivity, expansion, and entrepreneurship were enabled through the adoption of new technology. Undeniably, the net economic benefit was substantial. But lives were disrupted, jobs were lost, and what would be seen with a historical perspective as an obvious beneficial choice, was anything but obvious to those so immediately and negatively impacted.

Technological advancements produce net benefits for society. But for every advancement, there is a cost. Leadership and subsequent public policy must address this shortfall. As in the past, the solution has been training and education leading to economic inclusion and prosperous lives.

History has taught us the net benefit of technological advancement, the turmoil it brings, and the solution required.

pandemic time

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Instead of “internet time” we now have “pandemic time.” The need for advanced systems to keep society functioning, manufacturing moving, and give consumers some sense of safety is immediate. Driving innovations – whether those innovations are in health care, technology or other areas of production and manufacturing – is essential to not only offset the…

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Distributed Machine Learning Can Bring Healthcare Breakthroughs

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Over the last decade, the dramatic rise of deep learning has led to stunning transformations in dozens of industries. It has powered our pursuit of self-driving cars, fundamentally changed the way we interact with our devices, and reinvented our approach to cybersecurity.

In health care, however, despite many studies showing its promise for detecting and diagnosing diseases, progress in using deep learning to help real patients has been agonizingly slow. All this could change with distributed learning.